Risk-taking Decision-making

Another issue dominating current events rests, at least in part, on evaluating elderly capacity to assess risks and make sound decisions about financial

investments. For example, much controversy surrounds the American Government’s latest proposal to privatize Social Security and allow retirees to invest funds

privately. Some opponents suggest that many elderly individuals are anything but savvy investors, who may lose their pensions as a result of imprudent investment decisions. Others argue that elderly investors should be able to assess risk as effectively as younger investors (Eggert, 2003;Walker, 2002). In addition,

controversy exists among healthcare professionals about how much information to provide older patients about treatment options. Some argue that it is best for doctors to make a treatment decision for older patients. However, it could also be argued that it is best to give older patients information about the various risks involved in potential treatment options, and allowing them to make the ultimate decision.

2.4.1 Decision-making in Old Age

The differences in opinions about older adults’ risk-evaluating skills may be due to the larger research question about the deterioration of cognitive abilities in old age. Some researchers have suggested that aging degrades information processing to a similar degree in all cognitive domains (Birren et al., 1980; Cerella, 1991; Cerella et al., 1980; Myerson et al., 1990; Salthouse, 1985, 1996; Salthouse & Somberg, 1982). Others have found that some specific aspects of cognition seem to be

preserved in old age. For example, Wingfield et al. (1994) found evidence that aging does not degrade certain mechanisms used in linguistic processing. Similarly,

Pennebaker and Stone (2003) reported cognitive complexity, as measured by linguistic markers, does not decline with age.

2.4.2 Pragmatics vs. Mechanics

Paul Baltes and colleagues have proposed a way to predict the types of cognition that will be relatively preserved and not decline in old age (e.g., Baltes & Staudinger, 1993). They suggest that cognition may be interpreted in terms of mechanics versus pragmatics. Mechanics comprise of basic processes of sensory input, visual and motor memory, discrimination, categorization, and coordination. As these rely primarily on biological systems, declines in such domains inevitably take place with aging. In contrast, pragmatics are deeply rooted in culture and experience and include complex reasoning and accumulated knowledge. These skills are more likely to be preserved in old age. Since risk-taking skills draw on pragmatic skills there is reason to predict that they would be preserved (Baltes & Baltes, 1990; Baltes & Staudinger, 1993; Dror et al., 1998).

A growing number of studies suggest that risk-taking skills may be an area of cognition that is preserved in old age. For example, Dror et al. (1998) examined the ability of the elderly to make risk-taking decisions by using a laboratory experiment that isolated the internal cognitive mechanisms involved in risk-taking. In the experiment, elderly and young participants were asked to decide whether or not to take additional cards in a computer-simulated Blackjack card game task. No interaction was found between age and risk levels. That is, both the elderly and younger participants made similar decisions and took comparable risks. Furthermore, response time interactions did not differ significantly between the two age groups. Dror et al. (1998) concluded that the internal cognitive mechanisms involved in risk-

taking decisions remain intact in old age. Further support is offered by Walker, Fain, Fisk, & McGuire (1997) who, by using a driving route selection task, found that elderly and young participants made similar decisions and used the same information for reaching those decisions. Similarly, Johnson (1990) used a car buying decision- making task and found that elderly and young participants made identical decisions and overall, did so at equal speed.

Although these studies all point to risk-taking abilities being preserved in old age, none of these studies have examined whether influences that are external to the individual, such as age stereotypes (culturally based beliefs about old people) modify these processes. Some studies suggest that older adults are more likely to be

influenced by age stereotypes than younger adults, as these stereotypes are more salient to them (e.g., Levy, 1996). It is possible that the effect of preserved risk- taking ability may predominantly exist in the laboratory, but is degraded in a

situation that is likely to activate age stereotypes. That is not to say there are no age stereotype effects in laboratory settings (e.g. merely being surrounded by young people may activate such stereotypes). However, outside the laboratory it is likely that there are more opportunities for such stereotypes to be activated. For example, when a driver tries to decide which road to take, his/her internal cognitive

mechanisms generate alternatives and calculate the risks associated with them relative to their potential benefits (i.e., getting stuck in a traffic jam). Thus, in a laboratory these may appear similar to participants of all ages. But in everyday driving, perhaps age stereotypes are sometimes activated due to continuous exposure and reinforcement of stereotypes by such external sources as the media (Donlon et al., 2005). Thus, an older driver may refrain from choosing the faster road or lane due to the internalized stereotype that older people are slow drivers. Therefore, it

would be necessary to experimentally expose individuals to the stereotypes in the laboratory and activate them so as to investigate their effects on the performance of various tasks.