As We Get Older, We Overlook Past Slights

Imagine that you receive a Facebook message from a guy named Tim who claims that he has an investment opportunity for you. You send Tim some money, only to find out that there never was an investment opportunity at all. Tim is a con artist, and you have fallen victim to a scam. A few months later, Tim reaches out again. Do you respond?

The answer seems obvious: of course not! But in order to make this choice, you have to remember not just that you’ve encountered Tim before, but also that he was unfair to you. This type of memory for the details of single previous experiences is known as episodic memory, and scientists are only starting to understand how episodic memory impacts economic decisions. What is known from years of research, however, is that people’s episodic memory abilities decline as they age. How does that episodic memory decline influence decisions that require you to recall previous experiences? Does it make a difference if those decisions are about other people rather than about things? In a recent study that I conducted along with a team of researchers at the University of Pennsylvania, we set out to answer these questions.

Over 200 participants who ranged in age from 18 to 92 did a study in which they learned how much (out of $10) real previous participants had decided to share with an anonymous other person. (This decision about how to split $10 is known in behavioral economics as a “Dictator game” and it is considered to be a measure of generosity, or altruism). About half of these previous participants (let’s call them “Dictators”) shared the money evenly ($5 / $5), and about half decided to keep all $10 for themselves, sharing $0.

After viewing photographs of these “Dictators” along with how much they shared, our participants then had to make decisions about who they would play the Dictator Game with again. We wanted to see whether participants would choose to approach the people who were generous (i.e., who shared $5) and avoid those who were unfair. After they made those decisions, we assessed their memory for the Dictators and their offers.

As we expected, people generally made the right (i.e., money-maximizing) decisions if they recognized the Dictators and recalled how much those Dictators shared. Therefore, it was not surprising that the older adults in our study struggled to make the right choices, since even though they had no problem recognizing the photographs, they did have trouble recalling whether the Dictators were fair or unfair. There was an analogous non-social condition in which our participants looked at images of houses, each of which was randomly associated with either a $5 win or a $0 win; in that condition, too, older adults struggled to remember the values, so they didn’t always make the optimal choices.

But what was most interesting was how the social choices differed from the non-social ones. Young adults in our study (< 35 years old) were hyper-responsive to social unfairness. When they weren’t sure, they assumed that others would share $0, and they avoided unfair others at a high rate. Middle-aged adults showed no such bias, but in older adults (aged 60+) the bias completely flipped. Older adults gave others the benefit of the doubt, assuming that they were generous even when they were not. What was even more striking was that even when older adults confidently remembered that the person was unfair, they chose to interact with them anyway. It was as if they cared more about having the social “interaction” than about losing money. This finding is consistent with literature showing that older adults care more about maintaining social relationships than about financial gain.

Finally, we were interested in whether the physical appearance of the “Dictators” mattered for these memory-based choices. In theory, it shouldn’t matter if someone looks kind or attractive, since by the time you are making your choice about approaching them, you have already seen whether or not they are actually generous. But it did matter. All of our participants, regardless of their age, were more likely to approach people who looked trustworthy. That bias was exaggerated in the older participants, however, as if they were compensating for their poor memory by using their first impressions.

What do our results mean for the Tim-the-con-artist situation? They suggest that if an older adult sees Tim’s message that second time, they might actually respond, for a few reasons. First, they will have more difficulty remembering that Tim was the one who ripped them off. Second, even if they do remember, they may choose to reply anyway, to give him a second chance. That tendency will be even stronger if Tim happens to have a friendly face.

This study builds on previous research about how older adults tend to be more trusting than younger adults, but extends it to decisions that rely on episodic memory. These results have important implications for preventing financial fraud in older adults, who are frequent targets of it. When designing interventions to help people make the right financial decisions, we should consider that aging doesn’t just impact cognitive abilities like episodic memory; it also makes people more prosocial.