Title: Age differences in the effects of metacognition on financial decision-making
Authors: Chiara Scarampi - University of Bath (United Kingdom) [presenting]
Richard Fairchild - University of Bath (United Kingdom)
Alberto Palermo - EBS University (Germany)
Neal Hinvest - Bath University (United Kingdom)
Abstract: Due to a decline in cognitive function, decision-making abilities can be compromised with advancing age. This is a significant issue given the increasing pressure to take control over financial and personal well-being in old age. A large body of literature has explored the relationship between age and financial choices and the underlying emotional and cognitive processes. However, there are still some gaps in discerning other variables such as metacognition which interact with cognitive and emotional processes when making decisions. The age-related effects that metacognition may have on financial choice behaviour are investigated. The main findings show that young adults have significantly higher cognitive ability, whereas older individuals provide more accurate metacognitive judgements. Furthermore, it emerges from the analysis that some metacognitive components buffer individuals against cognitive decline, providing an alternative route to sound financial decisions. Together, these findings emphasise the importance of studying metacognition in the context of financial decision-making. High metacognitive abilities can enable individuals, and particularly older adults, to reflect on their abilities, on task requirements and on the most appropriate strategies to solve the situation at hand, enhancing in turn competences in making appropriate decisions.