Explaining Adult Age Differences in Decision-making Competence WA ¨ NDI BRUINE DE BRUIN 1,2 * , ANDREW M. PARKER 3 and BARUCH FISCHHOFF 1,2 1 Department of Social and Decision Sciences, Carnegie Mellon University, Pittsburgh, PA, USA 2 Department of Engineering and Public Policy, Carnegie Mellon University, Pittsburgh, PA, USA 3 RAND Corporation, Pittsburgh, PA, USA ABSTRACT Studies on aging-related changes in decision making report mixed results. Some decision-making skills decline with age, while others remain unchanged or improve. Because fluid cognitive ability (e.g., reasoning, problem solving) deteriorates with age, older adults should perform worse on decision-making tasks that tap fluid cognitive ability. However, performance on some decision-making tasks may require experience, which increases with age. On those tasks, older adults should perform at least as well as younger adults. These two patterns emerged in correlations between age and component tasks of Adult Decision-Making Competence (A-DMC), controlling for demographic variables. First, we found negative relationships between age and performance on two tasks (Resistance to Framing, Applying Decision Rules), which were mediated by fluid cognitive ability. Second, performance on other tasks did not decrease with age (Consistency in Risk Perception, Recognizing Age-group Social Norms) or improved (Under/Overconfidence, Resistance to Sunk Costs). In multivariate analyses, performance on these tasks showed independent positive relationships to both age and fluid cognitive ability. Because, after controlling for fluid cognitive ability, age becomes a proxy for experience, these results suggest that experience plays no role in performing the first set of tasks, and some role in performing the second set of tasks. Although not all decision-making tasks showed age-related declines in performance, older adults perceived themselves as worse decision makers. Self-ratings of decision-making competence were related to fluid cognitive ability and to decision-making skills that decreased with age — but not to decision-making skills that increased with age. Copyright # John Wiley & Sons, Ltd. key words decision-making competence; fluid cognitive ability; aging; experience As the US population grows older (Day, 1996), under- standing the challenges of aging is essential to helping older adults remain self-reliant. Across the life span, decision- making skills are related to obtaining good decision outcomes (Bruine de Bruin, Parker, & Fischhoff, 2007a; Parker & Fischhoff, 2005). Those skills may be particularly critical to the often-difficult decisions that older adults face regarding their health, finances, and living situations. Aging-related changes in decision-making skills have received relatively little attention in judgment and decision- making research, with the few studies that have been conducted revealing mixed results (for recent reviews, see Hanoch, Wood, & Rice, 2007; Peters & Bruine de Bruin, in press; Peters, Hess, Va ¨stfja ¨ll, & Auman, 2007). Some decision-making skills appear to decrease with adult age. For example, older adults are more likely than younger adults to use non-compensatory choice strategies, which require fewer comparisons—thereby reducing cognitive load but also decreasing the chances of identifying the best available option (Johnson, 1990). Older adults are also more likely to choose suboptimal options as the number of alternatives increases (Besedes, Deck, Sarangi, & Shor, 2009), and to make mistakes when applying decision rules (Bruine de Bruin et al., 2007a). Some studies have found that older adults’ judgments and decisions are more strongly influenced by how problems are framed (Bruine de Bruin et al., 2007a; Finucane, Mertz, Slovic, & Schmidt, 2005; Finucane, Slovic, Hibbard, Peters, Mertz, & Macgregor, 2002), while others have not (Mayhorn, Fisk, & Whittle, 2002; Ro ¨nnlund, Karlsson, Laggna ¨s, Larsson, & Lindstro ¨m, 2005; Weller, Levin, & Denburg, in press). Age-related increases in framing errors seem to be more common in studies using within-subjects tasks (LeBoeuf & Shafir, 2003; Stanovich & West, 2008), possibly because it is harder for older participants to remember previously presented frames. Other decision-making skills seem to improve with adult age. Older adults are more likely than younger adults to discontinue investments that are no longer paying off, thus avoiding the sunk cost bias (Bruine de Bruin et al., 2007a; Strough, Mehta, McFall, & Schuller, 2008). Older adults are better at resisting the influence of irrelevant options on choices (Kim & Hasher, 2005; Tentori, Osherson, Hasher, & May, 2001). Older adults’ confidence is sometimes more appropriate than that of younger adults, in terms of reflecting their actual knowledge (Kovalchik, Camerer, Grether, Plott, & Allman, 2005), sometimes less appropriate (Crawford & Stankov, 1996; Parker, Yoong, Bruine de Bruin, & Willis, 2009), and sometimes the same (Bruine de Bruin et al., 2007a; Hansson, Ro ¨nnlund, Juslin, & Nilsson, 2008). The relationship between age and the degree to which confidence is appropriate appears to depend, in part, on how cognitively demanding the task is. That is, older adults are more overconfident than younger adults on the demanding task of generating credible intervals for the populations of different countries (i.e., the range between ____ and ____ million for which you are 80% certain that it includes the correct estimate for Burma’s population) but perform as well as younger adults on the less demanding task of assessing the * Correspondence to: Wa ¨ndi Bruine de Bruin, Department of Social and Decision Sciences, Carnegie Mellon University, 5000 Forbes Ave, Pitts- burgh, PA 15213, USA. E-mail: wandi@cmu.edu Copyright # John Wiley & Sons, Ltd. 2010 2010 Journal of Behavioral Decision Making, J. Behav. Dec. Making, 25: 352– Published online 20 July 2010 in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/bdm.712 360 (2012)