(ยฉ Miljan ลฝivkoviฤ - stock.adobe.com)
BERLIN — Many people look to their elders when it comes to making wise decisions, but a surprising study findsย that older adults actually make riskier decisions than younger people do.
Researchers at the Max Planck Institute for Human Development determined that not only are older people approaching risks with a more optimistic outlook, they’re also less deterred by the risk of loss.
To reach this conclusion, they looked atย 60 younger adults between the ages of 18 and 30, as well as 62 older adults between the ages of 63 and 88.ย This study differed than similar ones that have been done in the past in the sense that the participants had to choose between two different risky options, as opposed to one option that was risky and one that was not.
The study participants were given a series of problems that required them to make choose between two options that led them to winning or losing money. They completed 105 of the problems after being informed about both the probability of winning or losing, as well as the amount of money that could be won or lost.
The researchers determined that the older people were more likely to make choices that were considered riskier, linking the finding to the older adults having better moods. This is in contrast to the results of other studies that have been done on the topic in the past.
โIf you are in a good mood, you are more likely to see the positive potential outcomes of a decision,” says Thorsten Pachur, the lead author of the study and senior researcher at the institute’s Center for Adaptive Rationality, in a news release.ย “The older participants were more optimistic in their assessments of the possibility of winning; accordingly, they were more daring in their choices. Whatโs more, they gave the same weight to potential wins and potential losses, whereas the younger participants were more focused on avoiding potential losses.โ
Pachur’s team also found that the elderly segment made overall made poorer choices than their younger counterparts, more often than not opting for the choice that was clearly the better option — the option that presented a larger gain of money.
โThese differences in decision quality are attributable to the decrease in fluid intelligence in old ageโthat is, to older adultsโ decreasing ability to process information and solve problems quickly,โ says Pachur.
The study is in the journal Psychological Science.
Paper Summary
Methodology
The researchers employed a multi-faceted approach to examine decision-making in younger and older adults. Participants completed 105 choice problems involving pairs of monetary lotteries, indicating their preferences in each scenario. The problems spanned gain, loss, and mixed domains. Additionally, participants underwent cognitive assessments, including tests of fluid and crystallized intelligence, and completed measures of positive and negative affect. The researchers used statistical analyses to identify age differences in decision quality and risk aversion, and employed computational modeling with Cumulative Prospect Theory to decompose choices into various psychological constructs.
Results
The study found that older adults showed lower decision quality than younger adults, but only in the loss domain. This decline was associated with lower levels of fluid intelligence and numeracy. Interestingly, older adults demonstrated less risk aversion in the gain and mixed domains, which was linked to lower levels of negative affect. The computational modeling revealed that older adults had more optimistic decision weights for gains, higher response noise, and showed no loss aversion, in contrast to the low level of loss aversion observed in younger adults.
Limitations
The study has several limitations to consider. The sample size of 122 participants, while substantial, may not be fully representative of the broader population. The cross-sectional nature of the study means it cannot definitively establish causal relationships between age and decision-making patterns. Additionally, the focus on monetary decisions may not fully capture how aging affects risk-taking in other domains of life.
Discussion and Takeaways
This research challenges simplistic views of aging and risk aversion, revealing a more complex picture. The findings suggest that cognitive and emotional factors independently influence age-related changes in decision-making. The study highlights the importance of considering both cognitive abilities and emotional states when understanding how older adults approach risky decisions. It also underscores the need for tailored approaches in fields like financial advising and healthcare, where understanding risk preferences is crucial. The research opens up new avenues for exploring how motivational and cognitive changes across the lifespan shape decision-making processes.
Funding and Disclosures
The study was supported by grants from the German Research Foundation (DFG) as part of the priority program on New Frameworks of Rationality and by a grant from the Stiftung Suzanne und Hans Biรคsch zur Fรถrderung der Angewandten Psychologie. The authors declared no conflicts of interest with respect to their authorship or the publication of this article.
The article would have been much better if it had given concrete examples.
Exactly what risky decisions is the article talking about? Taking chances when crossing the street or driving a car? Taking excessive chances when making investment decisions? Taking chances by responding to items advertised on TV? Taking chances by opening the door without knowing who is ringing?
How about reposting the article edited to include concrete examples?