How Seniors Make Decisions

Numerous other studies conclude that working or short-term memory worsens as old age progresses.

And the so-called "socioemotional selectivity theory of aging" has proponents who say goals change as people realize death is nearing–that people shift from seeking knowledge to deriving meaning from life and ensuring good feelings. In this view, emotions become more important in processing information, and seniors use more emotional cues to enhance memory rather than factual details.

Significantly, in one 2005 study, seniors were less likely to remember whether the hot food was on the left or the right, or whether the car in the picture was red or blue, but they were just as likely as young adults to remember which food was rotten and which car was dangerous. In short, these seniors remembered what is important to them and ignored the rest. They focused on the value of the knowledge that could impact them rather than the minutiae.

(This could be why seniors sometimes do not remember specific annuity surrender charges. They have no intention of surrendering the annuity and so perceive these charges as irrelevant; therefore, the charges are forgotten.)

Findings like this suggest that the decision-making process does not necessarily become impaired with age. Instead, the process transforms into one that intentionally becomes more driven by a decision's emotional context rather than the simple facts. What is happening is not "impaired" decision-making but rather "appropriate" decision-making, based on the senior's needs and goals.

Another study, conducted in 2007, concluded that decision-making abilities do decline with age. It found that seniors tend to seek less information before making a decision than do younger people. The "however" is that often they obtain enough information to make a good decision. While young adults do better on cognitive tests, they do not perform better than seniors when confronted with real life problems, according to these researchers. For example, seniors were more accurate than young adults in giving the best answers for complex financial planning problems.

Many studies say seniors do process information more slowly than young adults; however, some argue that the loss of speed is traded for greater accuracy. Seniors use their lifetime experience and concentrate on the decision at hand (rather than trying to multitask) to reach decisions that are every bit as good as young adults.

An earlier study said that although senior responses take longer, the ultimate responses were as accurate as the responses of young adults, so it could be possible that as front brain neurons become impaired, other parts of the brain are used to compensate.

Other studies offer alternative explanations to the Iowa study conclusion. But I have not found data that would disprove the Iowa conclusions. It is likely that more seemingly "normal" seniors than young adults have impaired decision-making powers. Determining the extent of impairment, and whether it is treatable with drug therapy or perhaps with a type of decision-making training, will require a lot more research. In the meantime, it behooves professionals, including financial advisors, to use current understanding about seniors to guide their interactions with this important American demographic.

Jack Marrion is president of Advantage Compendium, a St. Louis research and consulting firm. His doctoral studies focused on cognitive bias in decision-making. His e-mail address is [email protected]