Why old people struggle to make financial decisions

January 27th, 2010 - 3:17 pm ICT by ANI  

London, Jan 27 (ANI): Older people find it hard to make financial decisions, owing to “noise” in an area of the brain critical for predicting pay-offs, according to a study.

Gregory Samanez-Larkin and Brian Knutson of Stanford University in California, conducted the study, in which people played an investment game in a brain scanner.

The researchers scanned the brains of 110 men and women aged 19 to 85 with functional MRI as they played 100 rounds of a game in which they had to choose one of three possible investments.

One was in a safe bond that always delivers 1 dollar, another was a stock twice as likely to pay off 10 dollars than to lose 10 dollars. The third was a highly risky stock with those odds flipped.

“What we’re doing is trying to get closer and closer to real investing,” New Scientist quoted Samanez-Larkin as saying.

Shrewd investors will keep picking bonds until they figure out which is the profitable stock.

The researchers found that volunteers between 67 and 85 took longer to figure this out than their younger counterparts.

“When older adults are choosing risky assets they make more errors,” said Samanez-Larkin.

They found that the activity in the striatum, a region critical to sensing reward, was more sporadic in these older volunteers - this area only lit up strongly in some rounds, whereas in younger volunteers activation was consistent.

The researchers suggested that the fluctuating activity could act like noise, clouding someone’s ability to work out the best investment.

“This part of the brain seem to be very important for learning from past history about whether something that happens is good or bad,” said Scott Huettel, a neuroscientist at Duke University in Durham, North Carolina.

When Samanez-Larkin repeated the game but this time told elderly volunteers what the stakes were, this prompted them to invest just like younger players.

The study has been published in The Journal of Neuroscience. (ANI)

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