The wisdom of aging may not apply to economic decisions. In a study of choices make about money, the oldest people performed the worst—even beating out the usual bad-decision champions, adolescents.
Agnieszka Tymula, a decision scientist at the University of Sydney in Australia, studies economic decision making in humans (and sometimes monkeys). With colleagues at Yale and New York University, she gathered 135 total subjects in four different age groups: teens (12-17), young adults (21-25), "midlife" adults (30-50), and older adults (65-90). All the elderly subjects were screened for dementia to make sure they had healthily aging brains.
At the start of the experiment, researchers gave the subjects $125 in cash. It was theirs to lose—or to more than double, depending on the choices they made. Then subjects made a series of quick decisions. For example, would you rather take a guaranteed loss of $5, or play a "lottery" where you're equally likely to lose $8 or $0? What about a guaranteed gain of $5, versus a lottery an unknown chance of winning $20 that's somewhere between 25 and 75 percent?
In these kinds of experiments, it's normal for people to avoid risk when making money—to accept a guaranteed $5, say, even if a 50-percent shot at winning $12 is a better choice on average. With losses, people act the opposite way; we'd rather enter the lottery than take a guaranteed loss.
There are other decisions that are just plain wrong, though. For example, if given a choice between a guaranteed gain of $5 and a lottery with a chance of winning $5, everyone should take the sure money. But people didn't always do this in the experiment. The two middle age groups made these wrong choices around 5 percent of the time. Teens, 10 percent. And older adults, when given a choice with a clear right and wrong answer, chose incorrectly almost 25 percent of the time.
Over the course of the experiment's 320 decisions, the oldest adults were also the most likely to behave inconsistently, choosing the opposite of what they'd done earlier when facing the exact same choice. (Teens, again, were in second place.)
At the end of the experiment, the researchers gave subjects actual cash (or took it away) based on a subset of the choices they'd made. If every decision had been for real money, the oldest adults would have walked away with a walloping 39 percent less cash than young adults. Middle-aged adults did roughly as well as young adults, and teens did a bit worse—though not nearly as badly as the elderly.
Agnieszka Tymula says the choices in her experiment, which was sponsored by a grant from the National Institute on Aging, are simplified versions of real choices we make all the time. "Most important real life decisions are taken under conditions of uncertainty," she says. When we invest in the stock market or choose a health insurance plan, we have to weigh unknown risks and payoffs. And we may have a harder time making those decisions as we age. The authors write, "Elders borrow at higher interest rates, use credit balance transfers suboptimally, misestimate property value, and pay more fees to financial institutions."
In future studies, Tymula wants to try to pin down what biological changes lead an aging brain to worse choices. "Ideally, we would like to follow a very large sample of people throughout their whole lives," she says, "to precisely identify when changes in decision-making occur and identify risk factors." This might help researchers design treatments that will dial back the brain to a younger mode of decision-making—though not, of course, all the way back to the teenage years. Image: by Artis Rams (via Flickr) Agnieszka Tymula, Lior A. Rosenberg Belmaker, Lital Ruderman, Paul W. Glimcher, & Ifat Levy (2013). Like cognitive function, decision making across the life span shows profound age-related changes. PNAS DOI: 10.1073/pnas.1309909110