Age and Financial Vulnerability Dimensions

Abstract Financial vulnerability (FV) is a multidimensional phenomenon that appears to show different patterns across age groups. However, the evidence on the FV-age relationship remains limited and inconclusive. This lack of definitive findings may stem from limitations in measuring FV, typically through one-dimensional indicators. Using a novel conceptual framework proposed by Voith and Mauser (2024), we explore whether the sensitivity, (low) resilience, and exposure dimensions of FV vary by age and, consequently, which determinants of FV are most effective in explaining FV of generational groups. Using a sample of 7,764 representative Spanish households, the results indicate that age follows an inverse U-shaped relationship with FV and (low) resilience, while it shows a positive association with sensitivity and a negative one with exposure. Evidence also suggests that age shapes the contribution of certain factors to explaining FV. Thus, determinants linked to exposure dimension appear to hold more explanatory power for younger cohorts, whereas certain sensitivity-related factors, such as income level, mortgage, and personal loans, exhibit estimated coefficients that increase across older generations. Advancing knowledge of the relationships between age and FV dimensions is vital for designing more effective age-sensitive interventions to mitigate FV.