Rational decision-making deteriorates with age

Researchers have discovered people aged over 65 are more likely to seek risks and make inconsistent choices and poor financial decisions than other age groups leading to implications for important decisions such as retirement plans.


University of Sydney researcher Dr Agnieszka Tymula and colleagues found that pople aged over 65 were much more likely to be inconsistent in their decisions.

Ageing may affect rational decision-making abilities in the same way it impacts motor skills, memory and other cognitive abilities, according to a new study which has found people over 65 are more likely to make inconsistent choices and poor financial decisions than other age groups.

The researchers from the University of Sydney, New York University and Yale’s School of Medicine also found that the older cohort is the most risk-seeking group of all, which together could lead to implications from retirement plan choices.

Using a detailed socioeconomic profile for individual participants aged 12 to 90 years, the study investigated differences in decision-making in terms of choice consistency, rationality, and the individuals’ preferences for known and unknown risks.

Participants were asked to make a series of financial decisions and choose between options that carried a risk or reward ranging from $5 to $125.

Adults aged 65 and older with numeracy and IQ skills equal with younger study participants make “strikingly inconsistent and irrational choices” compared with the younger cohort, the authors found.

Dr Agnieszka Tymula from the University of Sydney’s School of Economics said she and her colleagues were surprised by the results.

“The fact that older adults were really at their peak of performance in terms of IQ scores and still showed such decline in choice consistency and rationality is really worrying,” Dr Tymula said.

As a result of mistakes, older adults achieved around 39 per cent less than the expected earnings of young (aged 21-25) and midlife (aged 30-50) adults, the study found.

While elders and adolescents were both found to be more likely to take risks than their mid-life counterpart, the over-65s were identified as the most likely to take risks.

The results have implications for how older people make important decisions and may account in part for the high number of elderly people facing problem-gambling or falling victim to online scams, Dr Tymula said.

“It’s also important when considering retirement plan choices,” she said.

“If we found that older people make less money because their preferences for risk were different, I’d say leave it as it is.

“But, since we see that they make more mistakes and are more inconsistent, policy intervention that can help older people maintain rationality and consistency would be desirable,” Dr Tymula said.

The study, Like cognitive function, decision-making across the lifespan shows profound age-related changes, was published this week in the Proceedings of the National Academy of Sciences.

Access the paper: Like cognitive function, decision-making across the lifespan shows profound age-related changes (payment required)



Tags: agnieszka-tymula, decision-making, university-of-sydney-study,

1 thought on “Rational decision-making deteriorates with age

  1. Yet another “Report” that adds to ageism. Perhaps some of the underlying methodology is more of a risk to older people than the decisions they make?

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