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Sound Credit Scores and Financial Decisions Despite Cognitive Aging

Overview
Journal Proc Natl Acad Sci U S A
Specialty Science
Date 2014 Dec 24
PMID 25535381
Citations 39
Authors
Ye Li
Jie Gao
A Zeynep Enkavi
Lisa Zaval
Elke U Weber
Eric J Johnson
Affiliations
Soon will be listed here.
Abstract

Age-related deterioration in cognitive ability may compromise the ability of older adults to make major financial decisions. We explore whether knowledge and expertise accumulated from past decisions can offset cognitive decline to maintain decision quality over the life span. Using a unique dataset that combines measures of cognitive ability (fluid intelligence) and of general and domain-specific knowledge (crystallized intelligence), credit report data, and other measures of decision quality, we show that domain-specific knowledge and expertise provide an alternative route for sound financial decisions. That is, cognitive aging does not spell doom for financial decision-making in domains where the decision maker has developed expertise. These results have important implications for public policy and for the design of effective interventions and decision aids.

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