DURHAM, N.C. – Just because your mother has turned 85, you shouldn't assume you'll have to take over her financial matters. She may be just as good or better than you at making quick, sound, money-making decisions, according to researchers at Duke University.
"It's not age, it's cognition that makes the difference in decision-making," said Scott Huettel, Ph.D., Associate Professor of psychology and neuroscience and director of the Duke Center for Neuroeconomic Studies. He recently led a laboratory study in which participants could gain or lose money based on their decisions.
"Once we accounted for cognitive abilities like memory and processing speed, age had nothing to do with predicting whether an individual would make the best economic decisions on the tasks we assigned," Huettel said.
Instead of federal laws against discrimination based on age it would be more useful to allow companies to test the cognitive abilities of aging workers. Someone whose mind is aging more slowly could be recognized as worth keeping around to do intellectually challenging work. Or, as is more often the case, an older laid off person applying for work would be able to prove that they still have their mental faculties.
Older and younger research subjects were measured in their cogniive abilities and also in their ability to wisely make financial decisions that put money at risk.
Duke researchers assigned a variety of economic tasks that required different types of risky decisions, so that participants could gain or lose real money. They also tested subjects' cognitive abilities – including both how fast they could process new information and how well they could remember that information. They worked with 54 older adults between 66 and 76 years of age and 58 younger adults between 18 and 35 years of age. .
Smarter older people can beat relatively less smart younger people. This isn't surprising. While old folks who are losing their reasoning abilities get a lot of attention the higher functioning ones attract less notice because they don't need help. Of course, some exceptional oldsters stand out. Warren Buffett is still making excellent financial decisions. Though he was such an outlier in ability he could fall quite a way before his capacity for making investment decisions would fall to the level of a lower ranked genius.
On a bell curve of performance, there was overlap between the younger and older groups. Many of the older subjects, aged 66 to 76, made similar decisions to many of the younger subjects (aged 18 to 35). "The stereotype of all older adults becoming more risk-averse is simply wrong," Huettel said.
"Some of the older subjects we studied were able to make better decisions than younger subjects who scored lower on tests of their cognitive abilities," Huettel said. "If I took 20 younger adults and 20 older adults, all of whom were above average on these measures, then on average, you could not tell them apart based on decisions. On the whole, it is true, more older people process slowly and has poorer memory. But there are also older people who do as well as younger people."
An older worker's mental abilities are at greater risk of deterioration a few years after hired. But some people are underemployed and could lose 5 or 10 IQ points and still have plenty of excess capacity to make their daily work decisions.
Since our populations are aging and governments are already deeply in debt the ability of future generations to retire in their 50s and early 60s is rapidly dwinding. We need to find ways to enable people to work into their 70s. The ability of smarter older people to prove their smarts to prospective employers could do a lot to help in making this adjustment possible.
|Share |||Randall Parker, 2010 June 01 07:26 PM Aging Brain Studies|