Why older adults are more prone to impulsive financial influence

A new study reveals that people aged 60 and older tend to be more vulnerable to the influence of impulsive financial decisions made by others, compared to younger adults.

The research, conducted by psychologists at the Universities of Birmingham and Oxford, published in the journal Communications Psychology, shows that Older adults more easily modify their financial preferences when they observe others making impulsive decisionsa phenomenon that is more present in those with high levels of emotional empathy.

The experiment included 154 participants, of which 76 were young adults (18 to 36 years old) and 78 were older adults (60 to 80 years old). These individuals were selected based on specific criteria including their intelligence level, years of education, and cognitive health.

Prior to participating, the older adults underwent testing to rule out the presence of dementia or other conditions that could affect their decision-making ability.

During the study, participants were asked to make financial decisions that involved choosing between receiving a smaller amount of money immediately or a larger amount after a delay.

The task was designed to measure the ability to delay gratification, a key aspect of long-term financial decision-making. To ensure the seriousness of the choices, they were informed that one of the selected decisions would result in a real payout at the end of the experiment.

Participants then observed the choices of two “individuals” who had already completed the same task, although in reality these decisions were generated by a computer. A set of decisions reflected impulsive behavior, favoring the option of receiving money immediately, while the other represented a more moderate and thoughtful approach, choosing to delay the benefit. Participants were then asked to make their decisions again, this time after being exposed to these other people’s behaviors.

Researchers used advanced mathematical models to analyze how participants’ financial preferences were affected by social influence. The results showed that older adults were more likely to change their initial decisions towards more impulsive options after observing others make impulsive choices.

Resistance to social influence

This effect was most pronounced among older adults who reported having high levels of emotional empathy, that is, those who were more sensitive to the emotions of others.

Young adults, on the other hand, showed greater resistance to social influence. They mostly stuck to their original financial decisions even after observing impulsive behavior in others. This resistance to influence reflects greater independence in decision-making, which could be indicative of greater emotional stability or less susceptibility to social pressure.

Professor Patricia Lockwood, lead author of the study, stressed the importance of understanding how ageing affects financial decision-making, especially in a context of increasing misinformation on social media and other outlets.

According to Lockwood, older people may be more vulnerable to outside influences, which could lead them to make impulsive decisions that don’t necessarily reflect their best long-term financial interests. In his view, these findings may be useful in developing interventions to help older adults make more informed and thoughtful decisions.

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