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Adults Make Riskier, More Inconsistent Decisions As They Get Older, Study Finds
schliz writes "People aged over 65 make poorer financial decisions and more inconsistent choices than younger individuals with the same IQ, an international research group has found. The study (abstract) had 135 healthy participants aged 12-90 make a series of decisions: for example, choosing between gaining $5 and the chance to win $20 in a lottery. On average, over-65s earned 26-39% less than all other age groups, including adolescents — a finding that could partially explain their susceptibility to problem gambling and scams."
and they have to get rid of it somehow.
...someday you say to yourself "Look, for my entire life I've done the 'right thing' and even now it doesn't help my joints stop aching or buy me a bowel movement, so what the hell, let's try something else."
Someone had to do it.
That's what my dad used to call it when it happened to grandpa. Grandpa went from being a shrewd businessman to being someone we had to keep an eye on at all times (he would fall for every con artist who showed up at his door). That why "Travellers" in particular prey on older people.
The cow says "Moo." The dog says "Woof." The Timothy says "Thanks, valued customer. We appreciate your input."
"Each participant were faced with 320 decisions: for example, choosing between gaining $5 and the chance to win $20 in a lottery."
After a few dozen questions like that, I'd be so bored that I'd start choosing randomly without thinking about it just to get it over with. There's no way in hell I would seriously think about each and every question out of a list of 320.
If you figure you only have 5 to 10 more years left why not take a little more risk. When you have 50 years left to regret the choice it makes more sense to take less risk.
It makes sense to say "feck it!" and live whats left of life to the fullest. Young people would have it in their mind that they are going to be around for another 50-100 years. As I get older myself I find it more and more tempting to try something just to see what happens. When you are young you start off nice and naive and with little to lose so you make risky decisions, spend a couple of decades as a boring risk-averse PHB type who worries about absolutely everything but then after a while you will get tired of that too.
The world is ruled by grey-haired folk who are still a good bit away from retirement, have lots to lose (career, assets, life). Which explains why the world is getting more boring by the day.
I may get flamed for this but screw it. This would explain a lot of the issues we see from the Congress Critters.
I was reading this in my car on the way to the payday loans place and I got so outraged that I drifted out of my lane and hit a parked gasoline tanker. So I figure I might as well park here and finish reading the thread. There's a lot of smoke but with the windows rolled up it isn't too bad.
Oliver's law of assumed responsibility: If you're seen fixing it, you will be blamed for breaking it.
This sort of thing is in the general class of cognitive biases. Another example of this class is the Dunning Kruger effect.
Cognitive biases have a large negative effect on the financial performance of the general public. In particular if you want to be a successful investor it's very important to be aware of this issue.
Daniel Kahneman (a psychologist) won the 2002 Nobel Memorial Prize in Economics because of his pioneering work in the field of Behavioral Economics.
http://en.wikipedia.org/wiki/Daniel_Kahneman
I read about another study where they found financial ability peaked, on average, at 53. Before that you don't have enough experience. Then cognitive decline sets in. YMMV of course.
For all intensive purposes, "whom" is no longer a word. That begs the question, "who cares"?
Some of it could be due to attitudes changing after retirement. Before retirement the idea of having to put back savings for retirement and be careful not to blow your money because you're going to need it later colors your thinking. After retirement you don't need to save up for retirement, and you become very aware that you do not have an entire lifetime ahead of you to worry about anymore. That changes your evaluation of risk.
I hardly believe it's an age issue. You would have to demonstrate that the same person made different decisions at different points in their life. It would be like saying, "The older you get, the more likely you'll not know how to use a cell phone." It's just not true.
The reality is that you have generational cultures. For example, I'd bet older people smoke more too. Doesn't mean I'm going to do it when I get old. I know better now than they did at my age.
As we get older we start realizing that we have less opportunities left to succeed and less time to suffer the consequences of failure. We also come to realize that losing isn't as painful as we always thought it would be, and in the worst case we could end up dead - in which case we won't care. It just makes sense to take more risks. Falling for scams comes from a host of other age-related factors that include both physiological changes and changes in attitude.
You never really know how close to the edge you can go until you fall off.
As a person on the tail end of the boomer generation, I saved a lot of money from my paychecks, I retired at 56, and am living quite comfortably.
We get surely a lot of hate. We're Selfish, entitled, and now foolish. Bloody fucking hell - I don't even collect SS for many years yet. I am not costing you poor abused, persecuted, and robbed of your entitlement everyone elses a damn thing, You want my fucking bank account or something?
Perhaps a different perspective is in order.
I started my career, back in the 70's, and immediately began saving. Pretty conservative investments. A lot of people I worked with at the time said that was pretty stupid. I had people making 3, 4 times as much who saved nothing, Whatever.
Young people have their chance to do the same as long as they have a job . But many don't want to. Just like many of the folks I worked with way back then. Right now interest rates are not that good. But history shows they will eventually go back up. Inflation was the big excuse not to save when I was young. Now it's interest rates. Ignore that. Save. You'll be an idiot for a few years. After that, not so much.
Now for a dose ot truth.
We are at the point, where people who haven't planned well, or people who don't really intend to plan well, resent and hate those who did. But if you are successful in your efforts to make those of us who did plan well poorer, that will not make you wealthy. You'll still be poor, you'll just have more company.
So if you really really gotta hate on us, go ahead. Tha'ts the only thing you'll have though - your hate, and the prospect of trying to live on Social Security. Save your money - no one owes you anything.
The shepherds did so well protecting the flock that the sheep no longer believed that wolves existed.
... possibly because the summary does a very poor job of representing the article, by leaving out the most important part of it.
The elderly are not overall more willing to take risks, it is just that the risks they are taking are different and less consistent. If faced with potential earnings, they'd rather take smaller guaranteed earnings than larger and riskier earnings; exactly the sort of stereotype of the cautious elderly you'd expect.
But if faced with losses they'd rather take the risk of a much bigger loss than the guaranteed loss.
My interpretation is that they are so afraid of losses they'll do anything to avoid them, even irrationally gambling to avoid loss. This sort of fits with the stereotype of keeping money in your mattress to avoid losses in bank charges and taxes, despite the fact that one single fire or robbery would ruin you.