FRIDAY, Sept. 27 (HealthDay News) -- Seniors can be sharper than
young adults at making financial decisions, mostly because they can
tap into the wealth of knowledge they have accumulated over the
years, new research suggests.
Still, the findings show that older people cannot process
information quite as quickly, so it may take them longer to
understand complex financial situations, said study author Ye Li,
an assistant professor of management at the University of
Also, seniors may not have any advantage over younger people
"when it comes to novel financial decisions, like figuring out how
to invest their 401[k]s," said Li, who was with Columbia
University's Center for Decision Sciences when he worked on the
The public may assume that older people make more bad decisions
than their younger counterparts because brainpower declines with
age. In fact, Li said, the research is mixed: "Older adults seem to
be better at some types of decision-making and worse at others. We
were better trying to understand when and why older people get
better or worse at decision-making."
In this latest study, the researchers sent several rounds of
online questions to 632 participants -- 332 aged 18-29 and 300 aged
60-82. About half of those in each group (173 in the younger group
and 163 in the older) answered the questions in all four
Among other things, the participants answered math questions,
took a vocabulary test, and considered whether it's wiser to accept
a smaller gift certificate now or wait for a larger one later. They
also answered questions that gauged their willingness to take risks
and their understanding of financial issues like debt and compound
The researchers found that the older people "performed as well
as or better than younger participants on all measured
decision-making tasks." In addition, their accumulated knowledge
appeared to make up for their lack of being as quick at processing
Paul Zak, chairman of the Center for Neuroeconomics Studies at
Claremont Graduate University, praised the study.
Overall, the findings are "great news for all of us with gray
hair," he said, because they suggest that accumulated wisdom piles
up and more than counterbalances cognitive decline.
However, he said, the research is flawed because it surveys
people only to age 82. "As a result, the authors of this study
haven't really told us much about cognitive decline and decisions,
only that most of us can likely hold out through our 60s," he said.
"This study has too few participants to have confidence for the
70-plus crowd, but other studies show slow declines, on
"I would still worry about the very old, those who have faced health problems which can impair cognition, and those who have signs of cognitive decline," Zak noted.
The study appears in the September issue of the journal
Psychology and Aging.
For details about
healthy aging, try the U.S. National Library of Medicine.
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