Study: With Age Comes Financial Wisdom

What's Hot


The Most Sinful City in the U.S. Is … (Hint: It’s Not Vegas)Family

How a Mexican Tariff Will Boost the Cost of 6 Common PurchasesFamily

This Free Software Brings Old Laptops Back to LifeMore

How to Protect Yourself From the ‘Can You Hear Me?’ Phone ScamFamily

Report: Walmart to Begin Selling CarsCars

Is Your TV Tracking You? Here’s How to Tell — and Prevent ItAround The House

Trump Scraps FHA Rate Cut — What Does It Mean for You?Borrow

Where to Sell Your Stuff for Top DollarAround The House

11 Staging Tips to Help You Get Top Dollar When Selling Your HomeAround The House

8 Tuition-Free U.S. CollegesCollege

10 Overlooked Expenses That Ruin Your BudgetFamily

4 Car Insurers That Might Raise Rates Even When the Accident Wasn’t Your FaultCars

How to Invest If Trump Kills the ‘Fiduciary Rule’Grow

20 Simple Hacks to Make Your Stuff Last LongerAround The House

12 Surprising Ways to Wreck Your Credit ScoreBorrow

New research suggests experience often trumps a quick mind.

Do we get wiser as we age, or do our mental abilities decline? The answer is probably both, new research says.

Researchers from the University of California, Riverside, and Columbia University tested the decision-making skills and intelligence of 336 participants for a study published in Psychology and Aging. There were 173 participants between ages 18 and 29, and 163 between 60 and 82.

They were tested on basic financial literacy, debt literacy, how much they considered future financial situations, and their tolerance for investment risk. (You can find the tests and questions used beginning on page 59 of the study, although you won’t be able to easily grade yourself.)

Despite the loss of mental sharpness that comes with age, the study found that older participants performed as well or better than younger ones in every area.

The theory behind the results is that intelligence can be categorized in two ways: fluid and crystallized. Fluid intelligence is “the ability to generate, transform and manipulate information,” the study says. In other words, it’s the ability to respond to something new. Crystallized intelligence, meanwhile, basically fits the textbook definition of wisdom — “experience and accumulated knowledge.”

As we age, the study says, we lose fluid intelligence but gain crystallized intelligence. The latter can offset — partially or in full — the former. Certain tasks are best suited to each form of intelligence.

“For decisions that rely heavily on processing new information, it is likely that the negative effects of aging will outweigh its positive effects relatively early in middle age,” the study concludes. “On the other hand, if the decision relies on recognizing previously learned patterns in a stable environment, age may be an advantage.” Providing analogies to familiar tasks can help older people manage new ones, it adds.

Stacy Johnson

It's not the usual blah, blah, blah

I know... every site you visit wants you to subscribe to their newsletter. But our news and advice is actually worth reading! For 25 years, I've been making people richer without making their eyes glaze over. You'll be glad you did. I guarantee it!

💰🗣📰

Read Next: 21 Restaurants Offering Free Food Right Now

Check Out Our Hottest Deals!

We're always adding new deals and coupons that'll save you big bucks. See the deals to the right and hundreds more in our Deals section.

Click here to explore 1,824 more deals!