Age differences in financial decision making: T he benefits of more experience and less negative emotions

Participants' Utilitarian Choice Is Influenced by Gamble Presentation and Age

No prior behavioral science research has delved into the impact of gamble presentation (horizontal or vertical) on individuals' utilitarian behavior, despite evidence suggesting that such choices can be influenced by comparing attributes like probability and money in gambles. This article addresses this gap by exploring the influence of gamble presentation on utilitarian behavior. A two-factor independent measures design was employed to explore the influence of the type of gamble presentation and age on participants' utilitarian decision-making preferences. The findings showed a reduced likelihood of participants choosing the non-utilitarian gamble with vertically presented gambles compared to horizontal ones. Consequently, participants' utilitarian behavior was influenced by between-gamble comparisons of available attributes, with utilitarian choices (e.g., choosing Gamble A) being more prevalent in vertical presentations due to a straightforward comparison on the probability attribute. Furthermore, the results also revealed that older participants take more time than their younger counterparts when making utilitarian errors. We attribute this to their abundant knowledge and experience. Future research should explore the comparative psychological processing used by participants in risky decision-making tasks.

Dorsal and ventral fronto-amygdala networks underlie risky decision-making in age-related cognitive decline

Older adults often have difficulty in making decisions under uncertainty, increasing the risk of financial exploitation. However, it is still under investigation about the extent to which cognitive decline influences risky decision-making and the underlying neural correlates. We hypothesized that the individual differences of risk-taking behavior depend on cognitive integrity, in which the dorsal and ventral fronto-amygdala connectivity would play dissociable roles. In the current study, thirty-six young and 51 older adults were tested with the Iowa gambling task combing resting-state and task-related functional magnetic resonance imaging. The results showed significant changes in behaviors and the fronto-amygdala network in older adults relative to young adults. More importantly, age-effect on risk-taking behaviors was remarkably different in cognitively normal and impaired older adults. In resting-state analysis, task performance was positively correlated with the ventral fronto-amygdala connectivity and negatively correlated with the dorsal fronto-amygdala connectivity in cognitively impaired older adults, compared with cognitively normal individuals. Furthermore, task-related analysis confirmed the relationships between dorsal/ventral fronto-amygdala network and risk-taking behaviors depending on cognitive integrity. These findings indicate that the fronto-amygdala network is crucial for understanding altered risky decision-making in aging, suggesting dissociable contributions of the dorsal and ventral pathways in the context of cognitive decline.

Identifying the Relationship Between Economic Prosperity and Quality of Life in Chronic Obstructive Pulmonary Disease Patients

Background Chronic obstructive pulmonary disease (COPD) places a significant economic burden on national healthcare systems, and the economic effects of diseases have long been known. The study aimed to evaluate the association of parental family financial wealth with current economic prosperity and the combined effect of both on health-related quality of life (HRQOL) in a sample of patients with COPD. The moderating effect of birth order is further investigated. Methods The results of the study are based on a purposive sample of 105 COPD patients at the Larisa University Hospital pulmonology clinic (94 males and 11 females), with an average age of 68.9 (SD = 9.2). The data collection was carried out in the spring and summer of 2020. Participants completed the 36-item Short Form Survey (SF-36) and a sociodemographic questionnaire with self-reported parental and current wealth items. A mediation model with the moderation of the indirect effect of parental wealth on current wealth and the direct effect of parental wealth on HRQOL was applied to test the research hypotheses among the variables studied. Results Parental wealth was found to affect current wealth significantly, and both were involved considerably in HRQOL. Birth order had a significant moderating effect on the relationship between parental wealth and HRQOL. Among parental families with lower financial status, patients who grew up as third or later children had significantly lower HRQOL than the first or second children of these families. Neither age nor COPD duration was related to current wealth or HRQOL. Conclusions An intergenerational transmission of poverty was found in our sample. In addition, a birth order effect can provide further insight into the harsher environment that the later children of a low-income family are exposed to and the long-term implications for their HRQOL.

Financial knowledge of pre-university students: Effects of age and gender

Financial education is a constant social concern since it is essential to improve the well-being of individuals and society in general. Wrong financial decisions can have serious consequences that lead to serious economic and even social problems. Therefore, an adequate financial base is necessary and must be instilled from an early age. This work aims to identify the potential effects of two demographic variables, age and gender, on acquiring financial knowledge, delving into the potential moderating interrelationships between them. Applying a set of multi-level (mixed-effects) regression models to a sample of 9917 pre-university students from 175 high schools in Andalusia, our results show that: age and gender are significantly related to the acquisition of financial knowledge of pre-university students. Moreover, gender plays a moderating role in the relationship between age and the acquisition of financial knowledge of pre-university students. This study has practical implications for teachers, students, heads of educational centres and those responsible for educational plans because this paper's results help to better understand the key factors of financial education at a pre-college stage as it identifies significant differences in both age and gender. Policymakers responsible for educational plans are provided with the necessary evidence to propose adapting specific actions to the different student profiles. By doing so, they may design measures to make citizens' financial inclusion possible, resulting in greater welfare for society.

Assessing the Core Variables of Business Managers' Intuitive Decision Ability: A Review and Analysis

Business decisions are frequently based on informed intuition in contrast to a formal analysis. Early man used simple intuition, but through time knowledge increases allowed decision makers (DMs) to move to 'objectively informed intuition' (OII). This uses inherent and learnt cognition at both unconscious and conscious levels. A model of business OII is proposed and evaluated using as variables the managers' personal characteristics and their unique set of objectives. The resultant equation allows assessing decision quality and provides a framework for DMs to work on improvements relative to their objectives. The literature suggests OII stems from a DM's makeup (business related phenotype), training and experience in a dynamic trio leading to the defining equation. Analyses show business related phenotype is the most important determinant as well as confirming the proposed theory on the determinants of OII success. Practical methods of improving OII are reviewed, and issues worth further investigation outlined. This research is the first encompassing quantitative relationships explaining business OII quality thus enabling improving OII. Suggested further research may refine the equation and expand its core base. This work involves a range of disciplines as different aspects of human characteristics impact on how decisions are made.

Mapping the knowledge domain of financial decision making: A scientometric and bibliometric study

Based on a 12-year bibliographic record collected from the Web of Science (Thomson Reuters) database, the present study aims to provide a macroscopic overview of the knowledge domain in financial decision making (FDM). A scientometric and bibliometric analysis was conducted on the literature published in the field from 2010 to 2021, using the CiteSpace software. The analysis focuses on the co-occurring categories, the geographic distributions, the vital references, the distribution of topics, as well as the research fronts and emerging trends of financial related decision making. The steady increase of papers published year by year demonstrated the increasing interest on this topic at the international level. The scientometric analysis of the literature showed that financial decision, investment decision, and financing decision stood out of the crowd of the research on FDM, suggesting their important role in FDM and its research. The results of citation burst analysis predicted the focus of topics, i.e., the impact of individual differences such as financial literacy, gender and age on FDM in the coming years. Different from the traditional approach of literature review, this bibliometric analysis offers a scientometric approach to reveal the status quo and the development trend of FDM by macro and quantitative means. In addition, future research directions for the field are recommended.

Assessing numerical reasoning provides insight into financial literacy

Financial literacy is linked to financial well-being and decision making. While financial literacy and numeracy skills are strongly related, the relevance of different aspects of numeracy (mental arithmetic, math achievement, and numerical reasoning) for financial literacy has not yet been examined. Data were collected from 88 cognitively healthy adults, mean age = 50 years (SD = 15); mean education = 15 years (SD = 2); 61% females; with 56% Caucasian, 36% Black, and 90% non-Hispanic. Financial literacy was measured with the widely used Big Three scale, and numeracy was measured with the Wechsler Adult Intelligence Scale-III, Arithmetic subtest; the Wide Range Achievement Test-IV, Math Computation subtest; and the Weller's Abbreviated Numeracy Scale (WANS). Regressions analyses were conducted with financial literacy as the outcome variable and each numeracy measure along with demographics (age, sex, and education) as the predictors. In all the models, only the numeracy measures were significant as individual predictors, with numerical reasoning holding the strongest association with financial literacy, followed by mental arithmetic and math achievement. The current study supports the existing literature that numeracy is important for financial literacy, and provides empirical evidence for the specific contributions of individual numeracy measures that clinicians may use to garner impressions about financial skills.

Understanding financial literacy and associated factors among adult population in a low-middle income country

This study aims to identify whether demographics, socio-economic factors, the usage of the internet, smartphone and bank, and cultural factor affect Vietnamese adults' financial literacy. A sample of 669 participants participated in the online survey questionnaire (response rate of 89.92%). Multivariate general linear model regression shows that adults of younger age have better skills in cash management, credit management, savings and investment, and financial management compared to older adults. The findings suggest that participants with better income could manage savings and overall finance more effectively. Furthermore, respondents with “Uncertain avoidance” in the culture had better skills in cash management, saving, and investment. Meanwhile, preferring masculinity had higher scores in credit management, insurance, and total scale compared to those preferring femininity. The significant contribution of this study is its usefulness for economic players to have assertive financial strategies and policymakers to enhance the level of financial literacy and provide trustworthy financial guidance.

•

The level of financial literacy of Vietnamese adults is at an average level.

•

Using financial management applications support higher financial literacy scores.

•

People preferring uncertainty avoidance are more financially literate.

•

Financial, educational programs are necessary for a sustainable financial life.

How Cues of Being Watched Promote Risk Seeking in Fund Investment in Older Adults

Social cues, such as being watched, can subtly alter fund investment choices. This study aimed to investigate how cues of being watched influence decision-making, attention allocation, and risk tendencies. Using decision scenarios adopted from the “Asian Disease Problem,” we examined participants’ risk tendency in a financial scenario when they were watched. A total of 63 older and 66 younger adults participated. Eye tracking was used to reveal the decision-maker’s attention allocation (fixations and dwell time per word). The results found that both younger and older adults tend to seek risk in the loss frame than in the gain frame (i.e., framing effect). Watching eyes tended to escalate reckless gambling behaviors among older adults, which led them to maintain their share in the depressed fund market, regardless of whether the options were gain or loss framed. The eye-tracking results revealed that older adults gave less attention to the sure option in the eye condition (i.e., fewer fixations and shorter dwell time). However, their attention was maintained on the gamble options. In comparison, images of “watching eyes” did not influence the risk seeking of younger adults but decreased their framing effect. Being watched can affect financial risk preference in decision-making. The exploration of the contextual sensitivity of being watched provides us with insight into developing decision aids to promote rational financial decision-making, such as human-robot interactions. Future research on age differences still requires further replication.

Age differences in COVID-19 risk-taking, and the relationship with risk attitude and numerical ability

This study aimed to investigate age differences in risk-taking concerning the coronavirus pandemic, while disentangling the contribution of risk attitude, objective risk and numeracy. We tested (i) whether older and younger adults differed in taking coronavirus-related health risks, (ii) whether there are age differences in coronavirus risk, risk attitude and numerical ability and (iii) whether these age differences in coronavirus risk, attitude and numerical ability are related to coronavirus risk-taking. The study was observational, with measures presented to all participants in random order. A sample of 469 participants reported their coronavirus-related risk-taking behaviour, objective risk, risk attitude towards health and safety risks, numerical ability and risk perception. Our findings show that age was significantly related to coronavirus risk-taking, with younger adults taking more risk, and that this was partially mediated by higher numeracy, but not objective risk or risk attitude. Exploratory analyses suggest that risk perception for self and others partially mediated age differences in coronavirus risk-taking. The findings of this study may better our understanding of why age groups differ in their adoption of protective behaviours during a pandemic and contribute to the debate whether age differences in risk-taking occur due to decline in abilities or changes in risk attitude.

Understanding aging and consumer fraud victimization in the Chinese context: A two-stage conceptual approach

The relationship between aging and consumer fraud victimization is mixed in the literature. Most studies based on survey data have found older consumers less likely to be fraud victims, while a few studies have found older consumers more likely to be victimized, especially with certain fraud types. We developed a two-stage conceptual framework to differentiate fraud exposure from fraud victimization once exposed. Using nationally representative Chinese data and controlling for confounders, we found that consumers between 65 and 74 face similar risks of being targeted by perpetrators compared to younger groups, while consumers 75+ and older are less likely to be exposed to fraud. However, once exposed, both groups of older consumers are significantly more likely to become fraud victims. In the Chinese context, these two opposing effects led to an overall higher risk of consumer financial fraud victimization by older consumers.

How well do people living with neurodegenerative diseases manage their finances? A meta-analysis and systematic review on the capacity to make financial decisions in people living with neurodegenerative diseases

Self and proxy reported questionnaires indicate that people living with a neurodegenerative disease (NDD) have more difficulties with financial decision-making (FDM) than healthy controls. Self-reports, however, rely on adequate insight into everyday functioning and might, therefore, be less reliable. The present study provides a comprehensive overview and meta-analysis of studies evaluating FDM in people living with an NDD. For this, the reliability of performance-based tests to consistently identify FDM difficulties in people living with an NDD compared to healthy controls is evaluated. Furthermore, the associations between FDM and disease severity, performances on standard measures of cognition and demographics are evaluated. All 47 included articles, consistently reported lower performances on performance-based FDM tests of people living with an NDD (including Alzheimer's disease, mild cognitive impairment, frontotemporal dementia, Parkinson's disease, multiple sclerosis or Huntington's disease) compared to healthy controls. The majority of studies, however, focused on Alzheimer's disease and mild cognitive impairment (k = 38). FDM performance appears to be related to cognitive decline, specifically in working memory, processing speed and numeracy.

Neural Processing of Narratives: From Individual Processing to Viral Propagation

Narratives, in the form of, e.g., written stories, mouth-to-mouth accounts, audiobooks, fiction movies, and media-feeds, powerfully shape the perception of reality and widely influence human decision-making. In this review, we describe findings from recent neuroimaging studies unraveling how narratives influence the human brain, thus shaping perception, cognition, emotions, and decision-making. It appears that narrative sense-making relies on default-mode network (DMN) structures of the brain, especially precuneus. Activity in precuneus further seems to differ for fictitious vs. real narratives. Notably, high inter-subject correlation (ISC) of brain activity during narrative processing seems to predict the efficacy of a narrative. Factors that enhance the ISC of brain activity during narratives include higher levels of attention, emotional arousal, and negative emotional valence. Higher levels of attentional suspense seem to co-vary with activity in the temporoparietal junction, emotional arousal with activity in dorsal attention network, and negative emotional valence with activity in DMN. Lingering after-effects of emotional narratives have been further described in DMN, amygdala, and sensory cortical areas. Finally, inter-individual differences in personality, and cultural-background related analytical and holistic thinking styles, shape ISC of brain activity during narrative perception. Together, these findings offer promising leads for future studies elucidating the effects of narratives on the human brain, and how such effects might predict the efficacy of narratives in modulating decision-making.

How does decisional capacity evolve with normal cognitive aging: systematic review of the literature

PURPOSE

Aging is associated with increased needs related to complex decisions, particularly in medical and social issues. However, the complexity of decision-making involves many neurological functions and structures which are potentially altered by cognitive aging.

METHODOLOGY

A systematic review was conducted in accordance with PRISMA guidelines to examine changes in decision-making occurring in normal cognitive aging. The keywords "decision making" and "normal aging" were used to find the clinical studies and literature reviews focused on these changes.

RESULTS

A total of 97 articles were considered in the review, and ultimately 40 articles were selected, including 30 studies and 10 literature reviews. The data from these studies were of uneven quality and too disparate to allow meta-analysis according to PRISMA criteria. Nevertheless, a key result of the analysis is the decrease of processing speed with aging. In ambiguous decision-making situations, the alteration of the ventromedial system is associated with changes in motivation profiles. These changes can be compensated by experience. However, difficulties arise for older adults in the case of one-off decisions, which are very common in the medical or medico-social domains.

CONCLUSIONS

Cognitive aging is associated with a slowdown in processing speed of decision-making, especially in ambiguous situations. However, decision-making processes which are based on experience and cases in which sufficient time is available are less affected by aging. These results highlight the relativity of decision-making capacities in cognitive aging.

Decision-Making Competence: More Than Intelligence?

Decision-making competence refers to the ability to make better decisions, as defined by decision-making principles posited by models of rational choice. Historically, psychological research on decision-making has examined how well people follow these principles under carefully manipulated experimental conditions. When individual differences received attention, researchers often assumed that individuals with higher fluid intelligence would perform better. Here, we describe the development and validation of individual-differences measures of decision-making competence. Emerging findings suggest that decision-making competence may tap not only into fluid intelligence but also into motivation, emotion regulation, and experience (or crystallized intelligence). Although fluid intelligence tends to decline with age, older adults may be able to maintain decision-making competence by leveraging age-related improvements in these other skills. We discuss implications for interventions and future research.

Determinants of Indebtedness: Influence of Behavioral and Demographic Factors

This study aims to examine the influence of behavioral and demographic factors on indebtedness by constructing a model using specific determinants. The exploratory method is used through the partial least square (SmartPLS) technique, by surveying 320 respondents in Kuala Lumpur, Malaysia. A self-administered questionnaire was administered to respondents, addressing both demographic and behavioral factors. The results confirmed four of the eight hypotheses stated. Among the determinants, risk perception had a highly significant relationship with both materialism and emotion, while indebtedness had a relationship with emotion and materialism. The findings also indicated that significant differences exist between indebtedness and behavioral factors on the basis of gender, marital status, age, income, and dependence on credit cards and loans. The results may assist various economic players to design better models for credit offerings and address the credit problem in the long term.

Effects of Financial Education and Financial Literacy on Creative Entrepreneurship: A Worldwide Research

The limited attention given to financial education in the development of student competencies can undermine the decision making of individuals in their adulthood. This circumstance has been widely studied in the literature, where the effect of financial literacy on creative entrepreneurship is influenced. The objective of this study is to analyze global research trends on the effect of financial education and financial literacy with the creativity of individual entrepreneurship. For this, a bibliometric analysis was carried out on 665 documents related to the subject of study during 1990–2018 period. The results show the most influential journals, authors, institutions, countries, and areas of knowledge on this scientific research. This work detects the main trends and patterns to offer a vision of the relationship between financial education and creative entrepreneurship. It should be noted that this research area has become a relevant field of study in education, finance, business, and management issues.