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Older adults more reasoned when making financial decisions for others

Elderly gathering at a temple in Tokyo. (AFP pic)

AFP Relaxnews

When it comes to making financial decisions on behalf of others, older people are more reasonable and prudent than their younger counterparts, according to a new study from the National University of Singapore.

In a study published in the journal Psychology and Aging, researchers from the National University of Singapore studied financial decision-making in a sample of 191 people from 2016-2017. Ninety-eight of them were young, with an average age of 23, and 93 were older, with an average age of 70.

Participants were invited to carry out a series of tests in which the researchers assessed them based on the choices they made under uncertainties.

Two aspects were taken into account: loss aversion, which is a tendency to weight potential losses more strongly than potential gains; and risk-aversion asymmetry, which looks at the tendency to be risk-averse for potential gains and risk-seeking for potential losses.

After analyzing and comparing the results, the team of researchers discovered that the younger people tended to take more risks when making financial decisions on behalf of others than when making decisions for themselves. The older people, on the other hand, tended to make similar choices for themselves and when acting for others.

According to the researchers, the results suggest that older people may care more about strangers’ welfare when making decisions while younger people may view the finances of others as less important than their own.

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