Economic roots of cognitive decline: Tracing early-life shocks to late-life health

Abstract

This study investigates the long-term associations between early-life economic shocks and cognitive decline in later years, emphasizing the mediating roles of education, unemployment, and health-related factors. Using data from the Survey of Health, Ageing, and Retirement in Europe (SHARE), we examine the relationship between childhood economic adversity, such as parental job loss, poverty, and limited access to educational material at home, and cognitive performance in old age. Applying the Karlson–Holm–Breen (KHB) method, we assess how economic and health factors throughout life mediate this association. Our findings indicate that early economic hardship is strongly linked to poorer cognitive outcomes, including lower performance in memory and verbal fluency. Education plays a crucial mediating role, accounting for 20%–25% of the total association, while unemployment and health issues, such as chronic disease and mental health conditions, are associated with cognitive outcomes to a lesser extent. These results underscore the relevance of early interventions, particularly in education and labour market stability, in addressing the long-term cognitive correlates of childhood economic adversity.