From the December 2013 issue of Investment Advisor • Subscribe!

Aging and Decision Making

Sidebar to "Too Many Choices"

While exploring issues connected with today’s abundance of choices, we wondered whether there are generational differences in how easily we deal with a great number of options. As the brain ages, does our competence to choose from multiple alternatives diminish?

“Older people typically don’t go for a lot of choice because it’s cognitively harder for them to [decide] when there’s too much choice,” said Dr. Sheena Iyengar, a professor at Columbia Business School. “They get more overwhelmed by complexity.”

Dr. Dan Ariely, professor of psychology and behavioral economics at Duke University, had a contrarian take on age and decision-making. “We don’t have any evidence for differences in the brain,” he asserted. “The most interesting age difference in dealing with choices is that young people pay attention to both positive and negative information, but older people pay particular attention to the positive information and less to the negative information.”

In an experiment, researchers showed younger and older subjects a variety of images chosen to be either beautiful or disgusting. Brain imaging showed the younger people reacting strongly to both beautiful and disgusting images, while the older people reacted strongly to the beautiful ones but weakly to the disgusting ones. Ariely speculated that older people may be more predisposed to “think positive” and are therefore more easily conned. A tendency to focus on the positive might also lead them to take on more investment risk.

But younger generations need to watch out, too. Thomas Frey, executive director and senior futurist at The DaVinci Institute, offered a caution to those who pride themselves on juggling information with ease: “We’re moving to a society where people are always connected, so there’s less and less downtime. Every vacation becomes a working vacation. This will take a toll as we age. In the future, the decision-making [ability] will decline over time as our always-on generation begins to wear out.”

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