Seniors Prove Wiser In Financial Decisions
A recent study 1 by researchers at the University of California Riverside and Columbia University used to groups of test subjects, 173 between the ages of 18-29 and 163 between the ages of 60-82. The study was conducted to see how well each group understood financial information and how well they made economic decisions.
Ye Li, a UC Riverside assistant professor, Eric J. Johnson, Elke U. Weber and Martine Baldassi, all either formerly or currently of Columbia University outlined the the results 2, which was published in “Psychology and Aging”
In an interview Li explained that the study looked at 2 types of intelligence involved in decision making; crystalized, knowledge accumulated through experience and fluid, meaning the ability to process new information.
Past research has found that the ability to process new information slows with age, but this particular study revealed that the older groups performed better than younger adults in all measures of decision making.
“Experience can help offset” the decline in learning new things, Li said.
“The findings confirm our hypothesis that experience and acquired knowledge from a lifetime of decision making help offset the declining ability to learn and process new information,” Li said.
The findings also support the fact that older people could be further helped by being provided aides 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.