by epSos.de
The Elderly Make Even Worse Decisions Than Teens
[Via Research Blogging – All Topics – English]
The wisdom of aging may not apply to economic decisions. In a study of choices make about money, the oldest people performed the worst—even beating out the usual bad-decision champions, adolescents.
Agnieszka Tymula, a decision scientist at the University of Sydney in Australia, studies economic decision making in humans (and sometimes monkeys). With colleagues at Yale and New York University, she gathered 135 total subjects in four different age groups: teens (12-17), young adults (21-25), “midlife” adults (30-50), and older adults (65-90). All the elderly subjects were screened for dementia to make sure they had healthily aging brains.
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An interesting study based on making quick financial decisions.
And the losers were: older adults. They did much worse with money than teens did. In fact, older adults would have walked away with 39% less money than young adults.
Unexpected.
A Man With A Ph.D. 
As an aged female, surrounded by males, I would like to know how many in the experiment were males and how many were females. It has been my experience that males have no idea what an actual risk is when it comes to finances.
I found a copy of the paper online. Each cohort had about 36 people with half of them being male and half being female. The error bars are pretty tight, suggesting to me that sex does not matter that much (i.e. of all the old men made awful decisions and all the old women made good ones, one would expect a much larger error bar).
They attempted to create a mathematical model for their results which looks quite robust. It fits the data really well. So when they then investigate whether demographic effects mattered, they did not find the being male or female had an effect.
Reading the paper, it appears that the main downfall of the elderly came from seeking less risk when the possible results were positive (i.e. taking %5 rather than a 50% chance of winning $12)but seeking greater risk when the possible results were negative (i.e. refusing a $5 loss and taking a 50% chance of losing $12).
And, when the choice was losing $5 or taking a lottery with a 50% chance to lose $5 (i.e. you should always take the lottery) or when the choice was gaining $5 or taking a lottery with a 50% chance to gain $5 (i.e. you should always take the money), the elderly were five times more likely than young adults (25% vs 5%) to make the wrong choice.
The theoretical maximum a person could have walked away with was $2422.80. The average for the elderly was $1214.87. The middle aged got 1954.69. Most of these losses came from making the wrong decision with regard to a defined gain or loss. The elderly suffered almost 50% of their losses by making the wrong choice. For teens, about 20% of their losses came from the wrong decision here, while for the middle aged, only about 10% came from making the wrong choice here.
The results indicate that sex has little effect on the results. The elderly were much more likely to make the wrong choice. And to be much more inconsistent when making the right choice.