cognitive ability of late middle aged adults. Because income typically exceeds consumption at this stage in life, sudden decreases in wealth during this period not only decrease the amount of wealth saved for retirement, but there are fewer remaining years left to replenish the lost wealth [@butrica]. The stress of losing substantial wealth during the savings period of the life cycle coupled with the pressure to replenish the lost wealth can lead to stress-related health conditions which in turn reduces the cognitive ability of an individual [@shrira]. In addition, individuals who have received a negative wealth shock may have to reduce consumption of health-enhancing goods and services which in turn leads to poor management of existing chronic conditions, further reducing cognitive abilities [@friedman_con].

Three issues arise when trying to estimate the causal effect of a negative wealth shock on cognitive ability. The first of these is the lack of randomization: negative wealth shocks are not randomly distributed in the population, but rather are confounded by factors such as gender and socio-economic status. The second issue is confounding by indication: the risk of the wealth shock at any point in time may depend on the prior cognitive ability up to the 