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Age and Financial Decisions

Last update on: Feb 02 2017
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I write regularly about the research on aging and financial decisions. It doesn’t matter how smart you are. Analytical decisionmaking declines, and it begins to decline earlier than most people think. There are ways to deal with this, other than turning your decisionmaking over to other people. But the coping mechanism isn’t what most people use. The vast majority of people rely on rules of thumb and other short cuts that they learned years ago to prevent having to do an analysis. Read more in this post.

Consequently, he said, cognitive collapse is compensated by an increase in crystallized intelligence.

That’s been proven by a new study from the School of Business Administration at University of California, Riverside. After comparing economic decision-making traits of 336 people (about half in their late teens and 20s and half in their 60s, 70s and early 80s), the researchers found that older participants performed as well or better than the younger ones. “The findings confirm our hypothesis that experience and acquired knowledge from a lifetime of decision-making offset the declining ability to learn new information,” said assistant professor of management Ye Li in a Medical News Today article.

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