Age is just a number: How age influences intelligent decisions in risky choices
As we navigate through life, the way we manage our money and make financial decisions naturally changes. Previous research has shown that when making financial decisions, older adults are sometimes more willing to take risks than younger adults. But what are the cognitive processes behind these age-related changes in risk taking? The common explanation for shifts in decision-making is that as we age, our cognitive abilities decline, making us less equipped to handle risky or complex financial decisions. But are the differences in risk taking indeed driven by older adults’ limited mental resources? And what do they tell us about intelligence? A new study titled “Older adults select different but not simpler strategies than younger adults in risky choices,” conducted by Florian Bolenz and Thorsten Pachur from Science of Intelligence (SCIoI) in Berlin and published in PLOS Computational Biology, challenges the view that older adults necessarily rely on simpler strategies. The research demonstrates that the decision strategies employed by older adults are just as complex as those of younger adults, though these strategies reflect different risk propensities and motivations.
Reframing cognitive aging
Through a new computational model based on resource-rational strategy selection, the study analyzed data from 122 participants, split between younger (18-30 years old) and older (63-88 years old) adults, as they made decisions in 105 risky scenarios. The resource-rational strategy selection model explains how people make decisions by balancing the payoff of a strategy with the mental effort required, and it suggests that they are influenced by how much they value ease over reward. Researchers simulate decision-making patterns to understand which strategies people use. Contrary to some previous assumptions, the findings show that older adults do not default to simpler strategies. In fact, younger adults often use what’s called the “minimax heuristic.” This strategy focuses on minimizing potential losses – essentially, they play it safe and aim to avoid the worst possible outcome, even if that means missing out on bigger gains.
On the other hand, older adults were found to sometimes use the so-called “maximax heuristic,” which works in the opposite way. Instead of focusing on avoiding losses, the maximax heuristic seeks to maximize the potential for the best possible outcome. In other words, older adults might be more willing to aim for higher rewards despite the higher risk, depending on their goals and circumstances.
To put it more simply, while younger adults seem to focus on minimizing losses, older adults seem to be more driven by maximizing gains. Or think about it this way: Taylor, 30, would rather open a local café, aiming for a steady income and minimizing financial risk. However, Morgan, 64, would be more driven to invest in a global tech start-up, hoping to maximize returns despite the high volatility of such businesses. Both are making smart decisions, seeking bigger rewards based on what matters most to them. This shows that older adults’ decision-making is driven by different, but equally complex motivational factors.
The power of emotions
But there’s more: A key finding of the study is that emotions play a crucial role in decision-making. The scientists reached this conclusion by integrating cognitive as well as motivational factors within their computational model. They found that older adults, who are generally reported as feeling less negative emotions than their younger counterparts, chose less risk-averse strategies in certain situations. A detailed analysis showed that nearly 30% of the age-related differences in decision-making could be linked directly to these emotional shifts. This evidence revealed that it’s not cognitive decline, but rather emotional and motivational changes, driving older adults to approach risk differently.
Consider an older adult deciding whether to invest in a grandchild’s startup. While a younger person might scrutinize every potential risk, an older adult might focus more on the potential rewards and the joy of supporting family, reflecting a strategy driven by positive emotions and long-term satisfaction rather than sheer financial prudence.
Understanding that older adults use different but not simpler strategies can help design better support systems. This understanding can potentially inform public policies aimed at enhancing decision-making among older adults (like customized health information, or tailored retirement-planning systems). By recognizing the motivational factors at play, we can develop more effective interventions that respect and harness the cognitive strengths of older adults.
Advancing intelligence research
Previous research has shown that decision-making under risk is an important manifestation of intelligence. This study contributes to the field of intelligence research by challenging the stereotype that cognitive decline in older adults leads to simpler decision-making in such scenarios. Instead, it underscores the adaptability and resilience of cognitive processes, showing that older adults can and do use sophisticated strategies. By illuminating the interaction between cognitive and motivational factors, the study provides new insights into the nature of intelligence across the lifespan and gives scientists valuable insights into the nature of intelligent decision-making.
