New grant to investigate decision of older adults

21 Jan 2019

CBEH research fellow Dr Jonas Fooken has been awarded a competitive UQ Early Career Researcher Grant to study Economic preferences and decision of older adults. In this grant, Jonas will use economic experiments to understand how the health of older adults affects the choices older adults take. In particular, the project investigates the preferences of older people over money and time, as well as elements of social preferences that let older adults share with family, friends and strangers.

In the context of the study, Jonas will lead a small team of research assistants and reach out to older adults as research participants in various living conditions and stages of life.

The grant will commence in and continue throughout 2019.

Economic preferences and decision of older adults

A better understanding of the effect of ageing on decision making is important due to the changing demography of our societies. That is, ageing societies do not only mean that we observe more retirees relative to younger adults, a higher burden of disease and a larger number of individuals with dementia. Rather, population ageing means that in societies of today we are facing a representative decision maker who is older than in the past.

While the representative decision maker is becoming older, economic research on decision making and preferences has largely used insights from observing decisions of younger adults, often university students. As a consequence, our representative decision maker is modelled on an individual in her early to mid-twenties. However, most Western societies, including Australia, are ageing, meaning increasing average population age. Furthermore, older adults tend to become older than in the past, with life expectancy at the age of 65 having risen to 84.2 (87.1) years for men (women), an increase of about 30% over the last 50 years (the numbers being 77.5 [80.7] for men [women] in the early 1960s; see http://www.aihw.gov.au/deaths/life-expectancy).

While understanding the decisions and preferences of younger adults remains important, collecting data on older adults is therefore warranted. This accounts for all fields of economic decisions, but for decisions in the health domain in particular, as population ageing is a driver of changing healthcare needs, which requires funding to meet these needs within the health care system. Furthermore, our health may also influence how we evaluate choice options and the preferences we have.

The aim of the project is to study decisions of older adults and how these can be understood based on their economic preferences and their health, focussing on time and social preferences.

Preferences over time and social allocations impact how individuals make decisions in various ways. Examples are long term planning, such as saving for or spending retirement money; when making health prevention and health care utilization choices; when choosing a certain lifestyle; when helping within the family or a neighbour; or when contributing to the local community by offering a helping hand and by making financial donations.

Importantly, many of these decisions have an economic component, either because they imply immediate or later monetary payments, or because they have significant opportunity costs.

As we make decisions over the full life span, understanding role of ageing for decision-making is important for modern societies. To address these issues, the proposed project will investigate time and social preferences of older adults using economic experiments. Participants will include older adults in various living conditions, from those enjoying very active lives to those who may be limited in their living environment, but still active decision makers and therefore part of who we should considered as our representative decision maker.

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