Economic Experts ONLY

Age Differences in Risk Tolerance and Economic Decisions

<Brief outline of a paper>

It is well-founded that economic behaviors vary with age, and findings that show an increased saving as people grow older attests to this. However, factors that influence the economic decision of older adults are yet to be confirmed even though increased monthly claims, reduced risk tolerance, and increased levels of wisdom have been suggested. The current study specifically aims at exploring whether risk attitudes that associate with age have a direct impact on the economic decisions.

Age differences in economic decisions will be explored regarding factors such as risks, change in responsibility, and differences in earnings. For example, Figure 1 shows a scenario where the old tend to save. Meanwhile, Figure 2 was used to discern the general trend in claim cost by age to indicate that such expenses increase steadily as people grow older

Nonetheless, the hypothesis that age associates with reduced risk-tolerance will be evaluated as the effects of risk attitude on financial decisions are yet to be discerned. Even so, Figure 3 indicates a scenario where age did not influence the level of nonsocial economic choices. Results of Ultimatum games in section A and B of Figure 2 indicate a scenario where older adults were prone to rejecting inequitable sharing of money in a financial social-bargaining game. They also had a higher (*p < .05; #p < .10) tendency to make an equitable distribution of money in the social-giving game than younger individuals. Same findings show that older adults, were fairer but less greedy than younger ones (*p < .05).

It is well-founded that economic behaviors vary with age, and findings that show an increased saving as people grow older attests to this. However, factors that influence the economic decision of older adults are yet to be confirmed even though increased monthly claims, reduced risk tolerance, and increased levels of wisdom have been suggested. The current study specifically aims at exploring whether risk attitudes that associate with age have a direct impact on the economic decisions.

Age differences in economic decisions will be explored in terms of factors such as risks, change in responsibility, and differences in earnings. For example, Figure 1 shows a scenario where the old tend to save . Meanwhile, Figure 2 was used to discern the general trend in claim cost by age to indicate that the such expenses increase steadily as people grow older

Nonetheless, the hypothesis that age associates with reduced risk-tolerance will be evaluated as the effects of risk attitude on financial decisions are yet to be discerned . Even so, Figure 3 indicates a scenario where age did not influence the level of nonsocial economic choices. Results of Ultimatum games in section A and B of Figure 2 indicate a scenario where older adults were prone to rejecting inequitable sharing of money in a financial social-bargaining game. They also had a higher (*p < .05; #p < .10) tendency to make equitable distribution of money in social-giving game than younger individuals. Same findings show that older adults, were more fair but less greedy than younger ones (*p < .05).

Study activities will possibly include: testing other functional forms, and 2. Evaluate other correlations that seem to relate to this study (I for example, presume that earnings increase with age)

Figure 1: Household Consumption, Income, and Saving

Figure 2: Age Difference in Monthly Claim Expenses

Figure 3: Responses in Dictator and Ultimatus Games

� People are more likely to save than invest, and the scenario seems to e identical for men and women.

� Older people are less risk-tolerant than younger adults.