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Old heads are cool heads

81171742Study finds the aged are better at making rational decisions about money.

Older people are less likely to be clouded by emotion when making financial decisions, according to new research from the University of Western Sydney.

The research, published in the Journals of Gerontology, found older adults were more likely than younger ones to make rational financial decisions.

Study participants took part in the Ultimatum Game, an experiment where an individual divides an amount of money to share with someone else, who then decides to accept or reject the offer.

Two groups were involved – one group of people with a median age of 21 and another group with a median age of 74.

“This is the first time this popular economic experiment has taken place where researchers have measured the responses of young and older adults while they interact with each other,” said Dr Phoebe Bailey from UWS.

She said that whilst it’s well known young adults respond negatively to unfair offers, the ground-breaking results from this study show that older adults also report becoming angry at unfair monetary offers but do not act on this anger as often or to the same extent as young adults.

“What this study suggests is that older adults are better at controlling their anger and negative reactions, and as a result end up with more money in this financial situation,” Bailey said. “It may be that older adults are being more generous because they know that accepted offers benefit not just themselves but also their negotiation partner.

“This would be consistent with socio-emotional selectivity theory, which holds that as people age they become more motivated to achieve emotionally fulfilling social goals.”

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