New Research: Two FINRA Foundation Studies Explore Links among Financial Knowledge, Cognitive Health, and Financial Decision Making in Older Americans
WASHINGTON, D.C. – The FINRA Investor Education Foundation, in collaboration with researchers from Rush University Medical Center, released two studies today examining links among financial and health knowledge, cognitive health and financial and health decision making among older persons.
The research, released in recognition of World Alzheimer's Day, demonstrates the importance of maintaining financial and health literacy as people age.
The first study, Confidence in Financial Literacy and Cognitive Health in Older Persons, found that confidence in financial knowledge is associated with a decreased risk of Alzheimer's dementia among older persons. Further, older persons who are underconfident have greater risk of developing Alzheimer's dementia and experience faster cognitive decline.
"While it is not completely clear why this relationship exists, it could be that confident people are more motivated to engage with the world and actively seek to acquire new information," said FINRA Foundation President Gerri Walsh. "This research does suggest that education and outreach programs aimed at increasing financial and health literacy are important to preserve cognitive health among older adults. And targeting soft psychological factors, such as confidence, could benefit cognitive health and well-being."
Importantly, the study did not see a similar association between cognitive decline and confidence in general.
The second study, Adverse Impacts of Declining Financial and Health Literacy in Old Age, tracked responses from annual literacy assessments administered over a 10-year period to participants in the Rush Memory and Aging Project and found that, over time, a majority of these adults showed an overall decline in financial and health literacy, which is the ability to acquire, process and utilize information necessary to make sound financial and health decisions --- a key determinant of independence and well-being. Importantly, faster decline in financial and health literacy was associated with three different outcomes—that is, poorer decision making, higher susceptibility to scams, and lower psychological well-being.
"Declining financial and health literacy may represent a novel harbinger of adverse outcomes, and regular monitoring of financial and health literacy could serve as a useful tool to identify individuals at risk of impending degradations in their decision-making ability," said Walsh. "These findings suggest that efforts to mitigate declining financial and health literacy may promote independence and well-being in old age."
The research used data from nearly 1,000 older persons participating in the Rush Memory and Aging Project, which is a 10-year longitudinal study of common chronic conditions of aging with an emphasis on decline in cognitive and motor function and risk of Alzheimer's disease.
The research was funded by the FINRA Foundation and the National Institute on Aging and was conducted with assistance from the Rush Memory and Aging Project and the Rush Alzheimer's Disease Center (RADC). The study was authored by Associate Professor Lei Yu and Professor Patricia Boyle, Rush University Medical Center; and FINRA Foundation Research Director Gary Mottola.
About the FINRA Investor Education Foundation
The FINRA Investor Education Foundation supports innovative research and educational projects that give underserved Americans the knowledge, skills and tools to make sound financial decisions throughout life. For more information about FINRA Foundation initiatives, visit www.finrafoundation.org.
FINRA is a not-for-profit organization dedicated to investor protection and market integrity. It regulates one critical part of the securities industry—brokerage firms doing business with the public in the United States. FINRA, overseen by the SEC, writes rules, examines for and enforces compliance with FINRA rules and federal securities laws, registers broker-dealer personnel and offers them education and training, and informs the investing public. In addition, FINRA provides surveillance and other regulatory services for equities and options markets, as well as trade reporting and other industry utilities. FINRA also administers a dispute resolution forum for investors and brokerage firms and their registered employees. For more information, visit www.finra.org.