Peer Reviewed

Age doesn’t diminish ability to take financial decisions

Getting old does not spell doom when it comes to taking key financial decisions, says a team of researchers led by the University of California (UC), Riverside.

Using credit scores and cognitive ability tests, the researchers found evidence that “crystallised intelligence”, gained through experience and accumulated knowledge, is more important that “fluid intelligence”, the ability to think logically and process new information.

“The findings show that despite cognitive graying, older people’s financial decision making may be more ‘golden’ than a slowing brain might otherwise suggest,” said Ye Li, assistant professor of management and marketing at the UC Riverside’s school of business administration.

For the study, the team analysed 478 people who completed a battery of cognitive, decision-making and demographic measures, including assessments of financial literacy and health literacy.

This data was then merged with participants’ credit scores.

The researchers argue that people who present financial information, such as policymakers or financial services firms, need to take into account the fact that “fluid intelligence” declines in older adults.

Past research has clearly shown that fluid intelligence decreases with old age a phenomenon known as “cognitive decline”.

The paper appeared online in the journal Proceedings of the National Academy of Sciences.


Ye Li, Jie Gao, A. Zeynep Enkavi, Lisa Zaval, Elke U. Weber, and Eric J. Johnson. Sound credit scores and financial decisions despite cognitive aging. PNAS 2014 ; published ahead of print December 22, 2014, doi:10.1073/pnas.1413570112

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