What Old Brains? Older Proves Wiser in Financial Decisions

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Old, schmold. Our brains may be getting a little slower as we age, but we more than make up for it in experience when making economic decisions, a new study finds.

The study, by researchers at the University of California, Riverside and Columbia University, tested two groups of subjects - 173 younger (ages 18 to 29) and 163 older (ages 60 to 82) - on how well they understood financial information and made economic decisions.

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Lead author Ye Li, assistant professor in UC Riverside's School of Business Administration, explained in an interview that the study looked at two types of intelligence involved in decision making: fluid, meaning the ability to learn and process new information, and crystallized, the accumulated knowledge learned through experience.

Past research has found that older adults' ability to process new information slows with age, but this study found that the older group performed as well or better than the younger adults on all measures of decision making.

"Experience can help offset" the decline in learning new things, Li said.

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Older adults can also counter the natural slowing of the brain with some assistance, such as an adviser, better tools for calculation, or more education, the researchers found.

The findings have relevance as the nation's aging population grows and is faced with an increasing number of important choices related to retirement finances and health care.

Li agrees that the findings may be counterintuitive, especially with all the news about older people being scammed out of their money. None of the older subjects in the study had cognitive impairment and most had some college education, "so you could question how representative they were of the average older American."

Still, he added, the findings suggest that "if adults in their 30s and 40s have figured out how to invest their money wisely, they're going to be fine in their 60s to 80."

The study was published in the journal Psychology and Aging.


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