Featured Research

from universities, journals, and other organizations

Older is wiser, at least economically

Date:
September 24, 2013
Source:
University of California - Riverside
Summary:
The brains of older people are slowing but experience more than makes up for the decline. Researchers came up with this conclusion after asking the participants a series of financially related questions.

The study is believed to be the first to measure decision making over the lifespan through the lens of two types of intelligence: fluid and crystallized. Fluid intelligence is the ability to learn and process information. Crystallized intelligence refers to experience and accumulated knowledge.
Credit: DURIS Guillaume / Fotolia

The brains of older people are slowing but experience more than makes up for the decline, a University of California, Riverside assistant professor of management and several colleagues found when asking the participants a series of financially related questions.

Ye Li, the UC Riverside assistant professor, and Martine Baldassi, Eric J. Johnson and Elke U. Weber, all currently or formerly of Columbia University, outlined the results in a paper, "Complementary Cognitive Capabilities: Economic Decision Making, and Aging," which was just published in the journal Psychology and Aging.

The study is believed to be the first to measure decision making over the lifespan through the lens of two types of intelligence: fluid and crystallized. Fluid intelligence is the ability to learn and process information. Crystallized intelligence refers to experience and accumulated knowledge.

Past research has found fluid intelligence declines with age, but provides no definitive conclusion as to whether decision-making abilities declines as people age. Li, a faculty member at UC Riverside's School of Business Administration, and his colleagues set out to answer that question.

Their work has broad implications. As the average age of the world's population rises rapidly, understanding how and how well older adults make decisions is crucial because they are faced with an increasing number of important choices related to their retirement finances and health care. Furthermore, as new laws increase the minimum retirement age, people remain professionally active later in life, with older adults holding many key leadership roles.

To conduct their research, Li and his colleagues recruited a group of 336 people -- 173 younger (ages 18 to 29) and 163 older (ages 60 to 82) -- and asked them a series of questions that measured economic decision making traits. They also administered a battery of standard fluid and crystallized intelligence tests.

These traits included temporal discounting (how much people discount future gains and losses), loss aversion (how much the valuation of losses outweigh gains of the same magnitude), financial literacy (understanding financial information and decisions) and debt literacy (understanding debt contracts and interest rates).

They found the older participants performed as well or better than the younger participants in all four decision-making measures. The older group exhibited greater patience in temporal discounting and better financial and debt literacy. The older participants were somewhat less loss averse, but the result did not reach standard levels of significance.

"The findings confirm our hypothesis that experience and acquired knowledge from a lifetime of decision making offset the declining ability to learn new information," Li said.

The findings also support the fact that older people could be further helped by being provided aids to ease the burden on their decreased fluid intelligence, such as a calculator or advisor, when making significant financial decisions, Li said. On the other hand, younger adults may benefit from more financial education so that they can gain experience with major financial decisions before making them in the real world.

Li and several of his colleagues who co-authored the Psychology and Aging paper are working on a follow-up project that asks adults ranging from 18 to 80 specific questions about decisions such as selecting a health care policy, when to start drawing Social Security and how to pay off multiple credit card balances.


Story Source:

The above story is based on materials provided by University of California - Riverside. Note: Materials may be edited for content and length.


Journal Reference:

  1. Ye Li, Martine Baldassi, Eric J. Johnson, Elke U. Weber. Complementary cognitive capabilities, economic decision making, and aging.. Psychology and Aging, 2013; 28 (3): 595 DOI: 10.1037/a0034172

Cite This Page:

University of California - Riverside. "Older is wiser, at least economically." ScienceDaily. ScienceDaily, 24 September 2013. <www.sciencedaily.com/releases/2013/09/130924141037.htm>.
University of California - Riverside. (2013, September 24). Older is wiser, at least economically. ScienceDaily. Retrieved September 2, 2014 from www.sciencedaily.com/releases/2013/09/130924141037.htm
University of California - Riverside. "Older is wiser, at least economically." ScienceDaily. www.sciencedaily.com/releases/2013/09/130924141037.htm (accessed September 2, 2014).

Share This




More Mind & Brain News

Tuesday, September 2, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Can You Train Your Brain To Eat Healthy?

Can You Train Your Brain To Eat Healthy?

Newsy (Sep. 1, 2014) New research says if you condition yourself to eat healthy foods, eventually you'll crave them instead of junk food. Video provided by Newsy
Powered by NewsLook.com
Coffee Then Napping: The (New) Key To Alertness

Coffee Then Napping: The (New) Key To Alertness

Newsy (Aug. 30, 2014) Researchers say having a cup of coffee then taking a nap is more effective than a nap or coffee alone. Video provided by Newsy
Powered by NewsLook.com
Young Entrepreneurs Get $100,000, If They Quit School

Young Entrepreneurs Get $100,000, If They Quit School

AFP (Aug. 29, 2014) Twenty college-age students are getting 100,000 dollars from a Silicon Valley leader and a chance to live in San Francisco in order to work on the start-up project of their dreams, but they have to quit school first. Duration: 02:20 Video provided by AFP
Powered by NewsLook.com
Baby Babbling Might Lead To Faster Language Development

Baby Babbling Might Lead To Faster Language Development

Newsy (Aug. 29, 2014) A new study suggests babies develop language skills more quickly if their parents imitate the babies' sounds and expressions and talk to them often. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:
from the past week

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins