Processing speed and memory mediate age-related differences in decision making

Abstract

Decision making under risk changes with age. Increases in risk aversion with age have been most commonly characterized, although older adults may be risk seeking in some decision contexts. An important, and unanswered, question is whether these changes in decision making reflect a direct effect of aging or, alternatively, an indirect effect caused by age-related changes in specific cognitive processes. In the current study, older adults (M = 71 years) and younger adults (M = 24 years) completed a battery of tests of cognitive capacities and decision-making preferences. The results indicated systematic effects of age upon decision quality-with both increased risk seeking and increased risk aversion observed in different tasks-consistent with prior studies. Path analyses, however, revealed that age-related effects were mediated by individual differences in processing speed and memory. When those variables were included in the model, age was no longer a significant predictor of decision quality. The authors conclude that the reduction in decision quality and associated changes in risk preferences commonly ascribed to aging are instead mediated by age-related changes in underlying cognitive capacities.

Figure 1

Hypothesized model for the predictive relationships among age, cognitive domains, and decision making tasks.

Figure 2

Final model indicating significant associations between model variables. Straight lines indicate significant paths, as identified both by model fitting and bootstrapping analysis, and curved paths indicate components of the model with significantly shared residual variance. Values on each path indicate its standardized coefficient; values above each box indicate proportion of variance explained by its predictors.