4/29/07 – Older adults react more calmly to the prospect of financial loss

Brain scan study by Stanford researchers may help explain why adults over 65 feel more comfortable in their financial decision-making than younger people. And why they may be vulnerable to scams.

STANFORD — In a finding that could have important implications for understanding how older adults process and make financial decisions – and why they may be vulnerable to scams — Stanford University psychologist Gregory Samanez Larkin and colleagues have shown that older people respond far more calmly to the prospect of losing money than young people do.

The study appears in the June issue of Nature Neuroscience. The authors used a brain scanning technology called functional magnetic resonance imaging (or fMRI), which allows for real-time study of a subject’s brain activity as he or she is focused on a specific mental task. The study compared the responses of a group of adults aged 19-27, with those of another group comprised of adults over 65, to a simple challenge in which they were repeatedly told that their performance would result in them winning or losing small amounts of money. Both groups performed equally well in the challenges, and they both showed identical levels of positive arousal and excitement at the prospect of winning money. However, Samanez Larkin was intrigued to find that both the older subject’s self-reported reactions and their brain scans showed that older adults were significantly less fearful and nervous about the prospect of losing money than their younger counterparts.

Samanez Larkin believes that this difference in our emotional attitudes toward risk and the threat of loss as we age could have both positive and negative implications. It could, for example, help explain why older people are more commonly the victims of financial scams. They are positively aroused at the prospect of making money, while emotions and brain activity that might make a younger person more circumspect and concerned about the risk of losing money, are dampened. On the bright side, however, Samanez Larkin notes that it may be the older adults’ maturity and experience that explain their calmer posture toward the prospect of losing money. Having survived to an age in which they’ve likely won and lost money many times over the course of their lifetimes, they may be less likely to overreact or fear a given risk, thus calmly weighing options and feeling more comfortable about making decisions that cause considerable anxiety in younger people.

The specific regions of the brain studied were the ventral striatum, medial caudate, and anterior insula. There were no differences among the two groups studied when the subjects anticipated making money from the challenge; however, the younger group showed increased activity in the medial caudate and insula regions when they faced the prospect of losing money. The study participants’ own reports of their emotions mirrored the scan data, with younger people becoming uneasy and more agitated at the prospect of a loss than their older counterparts.

Co-authors on the paper include Sasha E. B. Gibbs, Kabir Khanna, Laura L. Carstensen (Director of the Stanford Center on Longevity), and Brian Knutson from Stanford, and Lisbeth Nielsen of the National Institute on Aging and National Institutes of Health.

The findings of this paper in Nature Neuroscience are consistent with previous research by Carstensen et al, showing that older adults pay more attention to and remember positive information than negative information. “This study not only improves our scientific understanding of the brain regions involved in choice, but it has practical implications,” says Carstensen. “Society is grappling with keeping an increasing number of older adults financially secure. A deep understanding of what influences the decision process of older people, particularly in the area of personal finance, can support a larger goal of helping older adults avoid scams and benefit from solid investments.”

The Stanford Center on Longevity is a non-traditional enterprise whose mission is to solve problems associated with long life. It does so by stimulating interdisciplinary research and initiating public conversations about transforming the culture so that life is improved for all ages.