How Your Financial Decision-Making Changes As You Get Older

While you might assume that younger adults are more impulsive with their financial futures, new research offers a different conclusion. According to the results of a study conducted by University of Birmingham and the University of Oxford psychologists, older generations are influenced by others far more than younger people.

A tale of two test groups

The researchers studied several dozen subjects separated into one of two groups: 18 to 36 year olds and 60 to 80 year olds. After taking care to provide similarly diverse groups and screening those in the older category for age-related cognitive decline, the psychologists were confident that remaining differences between the groups would be largely due to their age disparity.

Aside from simply providing new information, University of Birmingham professor Patricia Lockwood says the report seems to highlight a serious concern for older individuals.

“In an era of an aging population and increasing misinformation, it is crucial to understand how aging affects people’s susceptibility to influence,” she said. “One key area where people may be influenced is in their preferences for receiving money sooner rather than later. This knowledge is vital for developing interventions to ensure people make good financial choices across their lives.”

How long will you wait?

The study essentially tested whether subjects were more likely to choose an option that delivered a small amount of money right away or promised a bigger payout at a later time. It also tested how much participants were influenced by the decisions of others in the study.

Over the course of the experiment, older subjects were generally more likely to shift their response to the instant reward if others around them did so first.

Based on this propensity, older individuals could be more likely to make an impulsive investment or even fall victim to financial scams.

Chris Agee September 25th, 2024

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