Cross-Validation of the Lichtenberg Financial Decision Rating Scale

The WALLET Study: Financial Decision Making and Key Financial Behaviors Associated with Excess Spending

OBJECTIVES

The Wealth Accumulation and Losses in Later life Early Cognitive Transitions (WALLET) study data was used to examine correlates with excess spending in older adults who do and do not have early memory loss.

METHODS

The WALLET study collected detailed financial information from participants' primary checking account statements (n = 150). Information on participant sociodemographic, health, and disability status, memory functioning, financial decision-making, and financial literacy was also collected. Participants either had no memory problems or early memory loss. Bivariate and multiple regression analyses were conducted.

RESULTS

The early memory loss group had significantly higher excess spending than those with no memory loss. Financial decision-making and higher-risk financial behaviors were also linked to higher excess spending. Early memory loss was no longer statistically significant after accounting for financial stressors and resources.

CONCLUSIONS

The multidimensional nature of financial capacity assessment has long been known. The WALLET study data is unique, however, in that it demonstrates the links between excess spending with decision-making, early memory loss, and a set of specific financial behaviors.

CLINICAL IMPLICATIONS

Real-world assessments of financial management and financial decision-making yield important information about how older adults are managing money and making key financial decisions. Checking account reviews can be used to determine excess spending.

A person-centered approach to financial capacity: early memory loss, financial management and decision-making

OBJECTIVES

Previous research has noted that a person-centered approach to financial capacity assessment is feasible. This study of personal finance included a review of 12 months of checking account statements followed by research interviews to investigate income, spending, financial literacy, and financial decision-making. The objective of the study was to determine the convergent validity of excess spending to contextual aspects of financial decision-making, financial literacy, and early memory loss.

METHOD

Participants were 114 adults over the age of 60 who came primarily from two research registries; the Healthier Black Elders registry and the Michigan Alzheimer's Disease Research Center registry. After sharing their checking statements participants completed two telephone interviews. Bivariate and multivariate analyses were used to compare those with no memory loss to the memory loss group, and to determine which measures were significantly related to excess spending.

RESULTS

There was a significant difference in excess spending between those with early memory loss and those with no memory loss. There was a significant difference in financial decision-making risk scores between the groups, as well as on a memory measure and a financial literacy measure. In a hierarchical regression analysis financial decision-making was the only measure significantly related to excess spending.

CONCLUSION

This study documented the convergent validity of person-centered measures of personal spending and financial decision-making with early memory loss. Early memory loss was related to both excess spending and contextual aspects of financial decision-making.

Financial decision-making deficits in scam cases: how frequent are they?

Due to the rise in scams perpetrated against older adults, Adult Protective Service workers are more frequently involved in investigating these matters. One significant aspect of scam involvement is the assessment of informed financial decision-making. This study examined 175 consecutive scam cases APS workers investigated using a 10-item financial-decision making tool. Two-thirds of the sample displayed deficits in decision-making. The decision-making tool was effective in differentiating those rated as having deficits from those without deficits. Analysis of each scored item found differences between groups on six of the seven items. A review of the item responses illustrates the types of deficits in understanding and appreciation of the scam and its impact on the older person and their family.