The effects of normal aging on multiple aspects of financial decision-making

Financial decision-making (FDM) is crucial for independent living. Due to cognitive decline that accompanies normal aging, older adults might have difficulties in some aspects of FDM. However, an improved knowledge, personal experience and affective decision-making, which are also related to normal aging, may lead to a stable or even improved age-related performance in some other aspects of FDM. Therefore, the present explorative study examines the effects of normal aging on multiple aspects of FDM.

One-hundred and eighty participants (range 18-87 years) were assessed with eight FDM tests and several standard neuropsychological tests. Age effects were evaluated using hierarchical multiple regression analyses. The validity of the prediction models was examined by internal validation (i.e. bootstrap resampling procedure) as well as external validation on another, independent, sample of participants (n = 124). Multiple regression and correlation analyses were applied to investigate the mediation effect of standard measures of cognition on the observed effects of age on FDM.

On a relatively basic level of FDM (e.g., paying bills or using FDM styles) no significant effects of aging were found. However more complex FDM, such as making decisions in accordance with specific rules, becomes more difficult with advancing age. Furthermore, an older age was found to be related to a decreased sensitivity for impulsive buying. These results were confirmed by the internal and external validation analyses. Mediation effects of numeracy and planning were found to explain parts of the association between one aspect of FDM (i.e. Competence in decision rules) and age; however, these cognitive domains were not able to completely explain the relation between age and FDM.

Normal aging has a negative influence on a complex aspect of FDM, however, other aspects appear to be unaffected by normal aging or improve.