January 2, 2019

‘Choosing for You: Diminished Self–Other Discrepancies in Financial Decisions Under Risk in the Elderly’, a recent article in Psychology and Aging by Dr Narun Pornpattananangkul (National Institute of Mental Health, Maryland), Assistant Professor Yu Rongjun, Mr Bing Cai Kok (both NUS Psychology), and others, found that older adults may care more about strangers’ welfare when making financial decisions on behalf of them. Older adults have a stronger inclination to select the same financial choices for others as they would for themselves. In contrast, younger adults take more risks when selecting financial decisions for others even when it may put others at a disadvantage.

To carry out the study, the authors recruited older and younger adult participants in Singapore to complete a number of decision-making tests. They were then assessed based on the choices they made under different scenarios of uncertainty. Computational modelling and behavioural economics tasks were employed to find out more about three aspects of financial decision-making in the participants: loss aversion, risk-aversion asymmetry, and risk preferences.

Dr Yu explained that this difference in financial decision-making between older and younger adults could be due to different motivational goals. While young adults may treat the finances of others as less important as their own, older adults are less concerned about materialistic gains and care more about social harmony and togetherness.

Read the article here: http://psycnet.apa.org/record/2018-43927-001

Read about the report in NUS News: https://news.nus.edu.sg/press-releases/welfare-in-financial-decision-making?fbclid=IwAR0GMbFrZ9zywtEQDVhvnAb-ahgA4icV8vRuyPPGzLK3JPcTfUmVaLlZeNU