Older is wiser when it comes to experience, knowledge, money
While it’s normal for the brain to slow down in older age, a new study has found that experience and knowledge more than makes up for it.
The finding was made when Ye Li, an assistant professor of management at University of California-Riverside, and several colleagues asked participants in the study a series of financially-related questions.
The results of the study are outlined in "Complementary Cognitive Capabilities: Economic Decision Making, and Aging", which was recently published in the journal Psychology and Aging.
In what is believed to be the first study ever to measure decision making over the course of one’s lifespan, two types of intelligence were explored:
1) Fluid intelligence, which is a person’s ability to learn and process information; and
2) Crystallized intelligence, which has to do with a person’s experience and accumulated knowledge.
Although previous research shows that fluid intelligence diminishes as we age, it does not show any conclusive evidence that decision-making abilities diminish with age.
Accordingly, Ye Li and his colleagues decided to launch an investigation of their own to see what they could find.
As a result of their efforts, new light has been shed on important issues regarding an ever-increasing aging population around the globe.
With the average age of the world's population rapidly rising, it’s critically important to know how well aging adults are making decisions, especially as it pertains to crucial decisions about their finances, their health care and their retirement.
Moreover, there are new laws that increase the minimum retirement age, meaning more older people will continue working later in life, not to mention that those in leadership positions will likely retain those positions, which would result in a greater number of older people leading companies than ever before.
The study involved 336 participants, with 173 of them between the ages of 18 to 29 – and 163 of them between 60 to 82 years old.
Each participant was asked a series of questions designed to measure traits related to their economic decision making abilities. The participants also took a variety of standard I.Q. tests that measured both fluid and crystallized intelligence.
What the research team found was that older participants performed as well or better than the younger participants in all the tests that measured traits related to decision-making. The older participants also demonstrated a higher level of patience and greater knowledge about financial and debt matters.
"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 showed conclusive evidence in support of providing older people with aids (such as a calculator or an adviser) to help them make important financial decisions.
Li added that such aids would counter any decreased fluid intelligence in older people.
He also said that younger adults may benefit from more financial education, which would help them learn about major financial decisions – before they have to actually make them when they get older.
SOURCE: Psychology and Aging, Vol 28(3), September 2013, 595-613. Complementary cognitive capabilities, economic decision making, and aging. Li, Ye; Baldassi, Martine; Johnson, Eric J.; Weber, Elke U. (doi: 10.1037/a0034172)