A lot of researchers on ageing look for possible declines in cognitive ability. They do this to try and understand changes in decision making. Do we lose our ability to think with numbers, words, or abstract shapes? Longitudinal studies show that people maintain most abilities at least into their mid 80’s. One thing that does change is numerical reasoning. This peaks in our thirties and declines slowly. At the same time older people have broader experiences. They know more, they have higher expertise . Older people seem to see patterns on a broader canvas. They can maintain their emotional stability in stressful situations. They have wisdom (Newsletter #088 “A Wise Society”). Does any of this change decision making competence? (Newsletter #21 “Old People Make Decisions Smarter”)

What does it take to make a good decision?

Psychologists have been working on this since the 1950’s. They have articulated seven key abilities:

1. Resistance to Framing. The ability to see past the way a question is framed. If a condom is said to 95% successful it is the same as saying it has a 5% failure rate. But which would we buy?

2. Recognizing Social Norms. Can we understand acceptable and unacceptable behaviours?

3. Under/Over Confidence. Are we self-aware enough to understand when we are “absolutely sure” about an answer to a question or were we just guessing?

4. Applying Decision Rules. Can we follow the rules? We are told to select a product for different people each with a different set of rules. Lisa might want to buy the product that has the highest average ratings across all features. John might prioritize those features. He might first rule out any product that does not have the most important one. He might then do that with his second most important feature. He would continue to the “last man standing” product. Could we follow their different rules?

5. Consistent Risk Perception. Does our assessment of risk make sense. We can say how likely are the chances of our dying in the next five years. We are then asked specific questions on “being killed in a terrorist attack”, “dying in a car crash” etc. Are the answers consistent? Logically the odds of a specific event cannot be higher than the overall “chance of dying”.

6. Path Independence. A difficult one. We are offered two bets and must choose which to take. In the first we flip a coin. If it is heads and only heads, we can flip again. If it turns out to be heads, we win 100. If tails, we lose. In the second bet we toss two coins at the same time. If they are both heads, we win 100. It is the same bet with two ways of getting there! Do we realize this?

7. Resistance to sunk costs. When deciding we should ignore any loss that has already been incurred. We are buying something for £200. We have paid a deposit of £100 already. We then discover the same product in a different outlet for £90. Do we make the second payment of £100 or buy from the new shop?

Studies have shown that these different abilities are related. There is a common thread. But they do tap into different dimensions of decision making. They also seem to be related to socio-economic status. People of lower socio-economic status tend to do worse on all dimensions. The reason is unclear. Is it related to cognitive ability or to different experiences with decision making?

The Impact of Age

To understand this, we need a longitudinal study. We need to follow the same people as they age and measure their decision-making ability. The alternative would be a cross-sectional sample. This takes people of different ages and measures their results. It then assesses the “impact of ageing” by looking at the differences between the different age groups. There is a huge difference when measuring cognitive ability these different ways. Using cross sectional studies, declines start before 60 in many abilities. Using a longitudinal approach those differences nearly all disappeared.

The difference is due to the assumption in cross sectional studies that the underlying curves are constant. They assume that when the “ forty-year-old group ” reaches 70 they will behave like the 70 year olds in the study. There is lots of evidence that cognitive ability is improving in each generation. The onset of any decline in ability is being pushed backwards. The different cohorts behave differently. If decision making is related to cognitive ability it would obviously improve by generation. However, on top of that are the impacts of expertise and wisdom.

A recent study showed that there is little or no decline in decision making competence. They studied people up to the age of 85. They looked at them with data collected 5 years apart. They found minimal decline in three key decision-making capabilities. There was a very small decline in “Resistance to Framing”. Even in the very oldest age group there was only 5% drop. There was no difference at all in capability on “Using Decision Rules” and “Resistance to Sunk Costs”. It seems that we maintain our ability to make good decisions well into our eighties.

Individuals Have Different Abilities

What they did find was that the best predictor of my performance after five years was my performance today. Our expertise at making decisions grows from our experience throughout life. We build up a “decision-making reserve”. That reserve carries us through older age. We maintain what we have. Different people have different reserves. Their “life course” has been different (Newsletter #115 “Models of Life”). There is no common decline in decision making ability with age. That is just the stereotype distorting our perceptions.

Other studies have shown how this works. We can counteract any decline in cognitive ability with the experiences we hold and the scripts we have learned. When we are young, we are more dependent on our “raw” intelligence. Later in life we learned alternative ways to solve even complex problems. Researchers have demonstrated that we use our expertise.

Some people need help with complex decisions. With pension plans or health treatment choices. There are old and young people who can make good decisions. There are others of all ages who need help. This is not an ageing problem.