Economic Psychology: How Banking Data Can Predict Cognitive Decline in Older Adults

In the intricate tapestry of our daily lives, few things are as revealing as our financial habits. The way we earn, spend, and save tells a story not just of our economic standing, but increasingly, of our cognitive health. A groundbreaking field at the intersection of economics and psychology is demonstrating that the data quietly residing in our bank accounts could hold one of the earliest and most subtle clues to impending cognitive decline, including conditions like Alzheimer's disease. Long before memory loss becomes obvious to loved ones, a person's financial behavior can act as a "canary in the coal mine," signaling that something is amiss.

The Financial Footprints of a Changing Mind

Managing finances is a complex cognitive task. It requires executive functions like planning, organization, memory, and judgment. Research consistently shows that these are among the first skills to deteriorate in the early stages of cognitive decline. This decline often leaves a trail of financial evidence, sometimes years before a clinical diagnosis is made.

Several studies have pinpointed specific financial red flags:

Missed Payments and Falling Credit Scores: One of the most significant discoveries, highlighted by researchers at Georgetown University and the New York Federal Reserve, is that older adults who are on a path to a dementia diagnosis often start missing bill payments up to six years prior. This can subsequently lead to falling credit scores, which may appear as early as five years before a diagnosis.
Changes in Spending Habits: A person's established spending patterns can change dramatically. For example, a lifelong frugal individual might begin spending extravagantly or making frivolous purchases. A recent major study from the University of Nottingham and Lloyds Banking Group, which analyzed over 66,000 anonymized banking records, found that reduced spending on hobbies and travel, coupled with an increase in household bills, can be an early indicator.
Vulnerability to Scams and Fraud: Impaired judgment can make older adults significantly more susceptible to financial exploitation. The inability to spot scams, which may seem obvious to others, can be a direct result of declining cognitive function. This early stage before a clinical diagnosis is a period of high vulnerability where financial mistakes and abuse can go unnoticed.
Simple Errors and Repetitions: The cognitive strain can manifest in simpler mistakes. This includes making duplicate payments for a bill that has already been paid or an increase in requests to reset banking PINs. These seemingly minor errors, when part of a larger pattern, can be significant.
Unusual Generosity: An NIA-funded study pointed to another surprising indicator: a sudden increase in financial altruism. While generosity is a positive trait, a notable and uncharacteristic increase in willingness to give money away can be linked to the early stages of Alzheimer's disease.

The Science of Prediction: From Data to Diagnosis

This is not mere speculation; it's a field of rigorous scientific inquiry. Researchers are using artificial intelligence (AI) and machine learning to analyze vast, anonymized banking datasets to identify these predictive patterns. A 2024 study from University College Dublin found that by using AI to model banking behavior, they could identify 71% of individuals with Alzheimer's disease and related dementias up to four years earlier than a clinical diagnosis when financial difficulties were considered alongside other factors. For individuals living alone, this accuracy rose to an astonishing 92%.

This approach has led to the concept of "financial biomarkers." Much like clinical biomarkers found in blood or spinal fluid, these behavioral markers in financial data offer a non-invasive way to flag potential cognitive issues. They provide real-world signals of brain function that can be more tangible than some cognitive tests.

"Whealthcare": A New Alliance for Protection

The powerful insights gleaned from financial data have given rise to a new concept: "whealthcare." This term, coined to describe the collaboration between the worlds of wealth and health, envisions a future where financial institutions and medical professionals work together to protect vulnerable adults.

The potential benefits are enormous. Banks and financial services, with their duty of care to customers, are uniquely positioned to spot the early warning signs of dementia through routine data monitoring. By identifying these red flags, they could:

Trigger Early Intervention: An alert could prompt a conversation with the customer and, with consent, a trusted family member or nominee. This can lead to an earlier medical evaluation, which is crucial as new treatments for neurodegenerative diseases are most effective when administered in the earliest stages.
Prevent Financial Ruin: Early detection can safeguard older adults from devastating financial losses due to fraud, scams, or poor decision-making.
Support Families and Caregivers: For family members, especially those who live far away, such a system can provide an essential early warning, enabling them to step in and provide support before a crisis occurs.

Walking the Ethical Tightrope

The prospect of using personal banking data to predict health outcomes is undeniably powerful, but it also walks a fine ethical line. The concerns are significant and must be addressed with extreme care.

Privacy and Consent: The foremost concern is data privacy. How can this be done without violating a person's financial privacy? Experts stress the need for explicit and informed consent, where individuals know exactly what their data is being used for. However, obtaining "informed consent" from someone who may already be experiencing cognitive decline presents a complex challenge.
Algorithmic Bias: Predictive models are only as good as the data they are trained on. There is a risk that algorithms could contain hidden biases, leading to unfair discrimination against certain socioeconomic, racial, or gender groups.
Accountability and Regulation: If a system makes an error, who is accountable? The lines of liability can become blurred between the financial institution, the technology provider, and the healthcare system. This new frontier requires robust governance and regulations that have not yet caught up with the pace of technology. Transparency is paramount; individuals have a right to know how predictions about their health are being made.

The Human Factor: Unawareness and Overconfidence

Compounding the issue is the fact that many older adults are not aware of their own cognitive decline. Research has shown a tendency for individuals to underestimate their cognitive changes. This is particularly dangerous when combined with a lifetime of experience and confidence in managing their own finances. An older person who has always been financially savvy may not recognize their own deteriorating skills, leading them to make poor decisions that result in significant wealth loss. This lack of self-awareness is precisely why an objective, data-driven system could be so valuable—it doesn't rely on a person's self-perception.

The Dawn of Integrated Health Monitoring

The ability to predict cognitive decline through banking data represents a paradigm shift in how we approach aging and brain health. It is a powerful example of how different facets of our lives are interconnected. While the ethical framework must be carefully constructed and stringently enforced, the potential to protect our most vulnerable and enable earlier medical intervention is immense.

This approach won't exist in a vacuum. It will likely become part of a suite of new diagnostic tools, including revolutionary blood-based biomarkers that can detect proteins associated with Alzheimer's disease. By integrating these financial, digital, and biological markers, we are moving toward a more holistic and proactive vision of healthcare—one where a simple, compassionate check on a person's financial well-being could be the first step in safeguarding their cognitive future.