Older people are more influenced by others’ impulsive actions when making financial decisions, new study finds

Older people are more likely to be influenced by others’ impulsive financial preferences than their younger counterparts, a new study finds.

Research by psychologists from the University of Birmingham and the University of Oxford was published today in Psychology of communicationreveals that people aged 60 and over are more likely to be influenced by others when it comes to making impulsive financial decisions compared to younger adults aged 18 to 36.

The study aimed to investigate delayed gratification and how our willingness to wait and social influence change and differ over the course of our lives. To test the effect of age on these behaviors, a group of 76 young adults (aged 18 to 36) and 78 older adults (aged 60 to 80) were recruited.

These participants were carefully selected based on their gender, intelligence and education level. The older adults were aging in good health and were screened thoroughly to ensure they did not have dementia or other factors that could influence their decision-making, regardless of their age.

Lead author Professor Patricia Lockwood from the University of Birmingham said: “In an era of ageing populations and growing misinformation, it is essential to understand how ageing affects people’s susceptibility to influence.

“A key area where people can be influenced is their preference to receive money as early as possible. This knowledge is essential for developing interventions to ensure people make good financial choices throughout their lives.”

All participants completed a decision-making task in which they had to make a series of choices between two different options: an impulsive option that resulted in receiving a smaller amount of money immediately; or a more moderate option that meant receiving a larger amount of money after a certain delay.

Because one of these decisions resulted in a bonus payment at the end of the experiment, participants knew that their choices had real consequences, which motivated them to reveal their true financial preferences.

After their initial decision, participants then observed and studied the choices made by two “other people” who had previously performed the same (computer-generated) decision-making task. One set of decisions favored immediate, more impulsive options, while the other set leaned toward delayed, more moderate options, compared to the participants’ own decisions.

Participants were ultimately able to make these decisions themselves. This allowed the researchers to apply advanced mathematical modeling to precisely quantify participants’ financial preferences and assess how those preferences were influenced by others.

The results showed that older adults were more susceptible to social influence, especially from more impulsive people. After seeing someone who consistently chose the impulsive option, older adults were more likely to change their preference to make impulsive decisions themselves.

In contrast, younger adults were more resistant to such influence, tending to stick with their initial preference even after seeing someone repeatedly opt for the impulsive option.

The researchers also measured people’s self-reported emotional experiences to see if there were differences between people in their susceptibility to social influence.

Among older adults, those who reported higher levels of affective empathy (i.e., a greater ability to sense others’ emotions) and who reported being more emotionally motivated were more strongly affected by impulsive social influence.

Lead author Professor Patricia Lockwood said: “These findings highlight that there may be important differences in how older adults are influenced by others’ financial decisions compared to younger adults.

“If further research confirms this, these findings could inform evidence-based programs that help people make smart financial decisions throughout their lives and become aware of whether their own decisions might be negatively affected by those around them.”

Lead author Zhilin Su commented: “At a time when levels of misinformation on social media are high, it is crucial to understand the science behind social influence so that we can have a meaningful and positive impact on people’s lives.”