title: Sound credit scores and financial decisions despite cognitive aging.
abstract: Age-related deterioration in cognitive ability may compromise the ability of older adults to make major financial decisions. We explore whether knowledge and expertise accumulated from past decisions can offset cognitive decline to maintain decision quality over the life span. Using a unique dataset that combines measures of cognitive ability (fluid intelligence) and of general and domain-specific knowledge (crystallized intelligence), credit report data, and other measures of decision quality, we show that domain-specific knowledge and expertise provide an alternative route for sound financial decisions. That is, cognitive aging does not spell doom for financial decision-making in domains where the decision maker has developed expertise. These results have important implications for public policy and for the design of effective interventions and decision aids.
authors.affiliation: School of Business Administration, University of California, Riverside, CA 92521; ye.li@ucr.edu.
authors.forename: Ye
authors.initials: Y
authors.lastname: Li
authors.affiliation: Center for Decision Sciences, Graduate School of Business, Columbia University, New York, NY 10027; and.
authors.forename: Jie
authors.initials: J
authors.lastname: Gao
authors.affiliation: Center for Decision Sciences, Graduate School of Business, Columbia University, New York, NY 10027; and.
authors.forename: A Zeynep
authors.initials: AZ
authors.lastname: Enkavi
authors.affiliation: Center for Decision Sciences, Graduate School of Business, Columbia University, New York, NY 10027; and Department of Psychology, Columbia University, New York, NY 10027.
authors.forename: Lisa
authors.initials: L
authors.lastname: Zaval
authors.affiliation: Center for Decision Sciences, Graduate School of Business, Columbia University, New York, NY 10027; and Department of Psychology, Columbia University, New York, NY 10027.
authors.forename: Elke U
authors.initials: EU
authors.lastname: Weber
authors.affiliation: Center for Decision Sciences, Graduate School of Business, Columbia University, New York, NY 10027; and.
authors.forename: Eric J
authors.initials: EJ
authors.lastname: Johnson
mesh_terms: D000368:Aged; D000375:Aging; D003071:Cognition; D003657:Decision Making; D004467:Economics; D005191:Family Characteristics; D006801:Humans; D007449:Investments; D014481:United States
keywords: aging; cognitive ability; consumer finance; credit score; decision-making