Differences in risk aversion between young and older adults

Abstract

Research on decision-making strategies among younger and older adults suggests that older adults may be more risk averse than younger people in the case of potential losses. These results mostly come from experimental studies involving gambling paradigms. Since these paradigms involve substantial demands on memory and learning, differences in risk aversion or other features of decision-making attributed to age may in fact reflect age-related declines in cognitive abilities. In the current study, older and younger adults completed a simpler, paired lottery choice task used in the experimental economics literature to elicit risk aversion. A similar approach was used to elicit participants' discount rates. The older adult group was more risk averse than younger adults (p < .05) and also had a higher discount rate (15.6-21.0% vs. 10.3-15.5%, p < .01), indicating lower expected utility from future income. Risk aversion and implied discount rates were weakly correlated. It may be valuable to investigate developmental changes in neural correlates of decision-making across the lifespan.