Social Security and cognition: A surprising link

Social Security may be one of the country's most popular -- and successful -- federal programs, but its benefits may go beyond simply keeping senior citizens out of poverty.

That's a finding in a new study from researchers at the University of Iowa. It showed that higher Social Security benefits paid to senior citizens are linked with improvements in cognitive function. Basically, the bigger the benefit, the better that person weathers the cognitive impairment that can come with age.

Wealth often goes hand-in-hand with better health outcomes because poverty makes it tougher to get quality health care or even live in healthier communities. That sparked the question of how Social Security might be associated with cognitive function, given that the program provides the bulk of household income for many older Americans, noted Padmaja Ayyagari, assistant professor at University of Iowa's Department of Health Management and Policy.

So, Ayyagari and her fellow researcher, assistant professor of economics David Frisvold, looked at how changes to Social Security in the 1970s affected Americans as they aged.

"We went into it thinking we just don't know enough about this topic, and this is one of the first studies to look into this effect," she said about the report, which was published by National Bureau of Economic Research. "The effects are definitely meaningful."

How meaningful? A $1,000 permanent annual increase in Social Security income led to a 2.2 percent improvement in working memory and a 1.4 percent boost to overall cognition, the researchers found.

While Social Security payments are linked to lifetime income, which can depend on education, race and gender, the researchers had the benefit of studying what's known as the Social Security "notch," a glitch that meant seniors born before 1917 received higher payments than those born later. In essence, those born before 1917 received a windfall that wasn't tied to education, greater earnings or other factors that are typically linked to higher Social Security payments.

It's unclear what causes Alzheimer's or dementia, although researchers now believe that factors including education and childhood environment may play roles. All those factors are encountered long before a senior retires, however. By studying Social Security payments through the lens of the notch, Ayyagari said they were able to study a "natural experiment" that could shed light on how the impact of higher income later in life might play a role in cognition.

"Our study suggests that there is a causal relationship," she said, while also noting, "It still could be the case that higher Social Security benefits lead to a better access to care."

Considering the costs of caring for Americans with Alzheimer's and other cognitive problems, the research has far-reaching implications. If Social Security benefits are reduced for the next generations due to the current financial stresses on the program, could it hurt their cognitive abilities as they age and lead to huge burdens on America's health care system, for instance?

"We do find that higher benefits are associated with better cognition, so that implies if benefits are reduced and that results in a reduction of cognitive ability, that's associated with higher spending," she noted. "It could have implications for programs like Medicare and Medicaid."

Policy changes in the 1970s helped the researchers study the impact of higher Social Security payments, which weren't indexed to inflation until 1972. But a flaw in the formula used to index payments after that led to a windfall for workers born after 1910. Basically, those workers' benefits increased at a faster rate than inflation.

Congress corrected the error in 1977 by reducing benefits for those born after 1917, but it used a five-year transition period to gradually lower benefits. Workers born after 1922 were subject to a new formula created in 1977.

The end result was that different cohorts with similar work histories ended up with very different Social Security payments. (A 1988 Social Security Administration publication about the notch noted that "all people born during the years 1910 through 1916 receive an unintended bonus in their monthly Social Security checks -- in effect, a windfall." Americans born after that "are resentful," it added.)

The researchers then considered how aging Americans performed in a longitudinal survey of people born before 1924, which asked respondents to perform simple tests such as subtraction and word recall.

Using those results, the researchers looked at Social Security income for different groups of seniors. The paper reports that the average annual payment for those born from 1915 to 1917 was about $1,200 higher than for other seniors, including those who were younger.

"Individuals affected by the Social Security notch have better cognitive function across all measures, even though these respondents are older," the paper notes. Aside from more income, those Americans also scored higher on the cognitive tests, they found.

So, should individuals take the research to heart when deciding what age to file for Social Security, which can make a difference in benefit levels? Ayyagari said the research is more applicable to how policy decisions affect large populations. For policymakers, she said the question is: "If you're thinking about changes to these programs, then how do we know how these programs affect the health and well being of adults?"