TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, March 22, 2007

WSJ: We Peak (Financially) at Age 53

Interesting front-page story in today's Wall Street Journal:  Why Middle Age May Be Healthy For Your Wallet; Your Financial Savvy May Hit Its Peak at 53, Survey of Data Suggests, by David Wessel:

Wsj_page_2_3Baseball players are said to peak in their late 20s. Chess players in their mid-30s. Theoretical economists in their mid-40s. But in ordinary life, there's an obvious tension between sheer smarts, often seen in the supple minds of the young -- and experience, which comes only with age. Which one is more valuable in making personal-finance decisions?

A quartet of economists think they have found an answer. In looking at which consumers get stuck paying those pesky credit-card fees, the economists noticed a puzzling pattern: Younger and older consumers were more likely than others to get hit with easily avoided fees. So the economists expanded their inquiry to loans and other products, and sifted through records of tens of thousands of consumers.

They found that middle-aged adults tend to borrow at lower interest rates and pay fewer fees than younger and older adults. The age at which consumers are least likely to make financial mistakes: a few months past their 53rd birthday, despite all the pressures that accompany middle age. The economists call it "the age of reason."

[Click on chart to enlarge.]

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