Older but Not Wiser?

From Scientific American:

The invitations come in the mail, covered in large print: “Investment Workshop—Free Gourmet Lunch!” “Avoid the Biggest Financial Mistakes Seniors Make!” “Protect Your Financial Security!” At the lunch, the salmon is accompanied by an investment pitch, with reminders that “there's a high rate of return,” and “only a few opportunities are left.” Many of these free lunch seminars are scams aimed at retirees. Nearly six million seniors have attended such seminars in the past three years, the senior advocacy group AARP estimates—although conventional wisdom says that there's no such thing as a free lunch.

Despite their years of experience, however, older people are more likely to err in their financial decisions by overemphasizing potential benefits and downplaying potential risks. Now insights from psychology, economics and neuroscience may help us understand why and how those errors occur. Older adults aren't as upset by possible financial losses as young people are, psychological research has shown, and Stanford University researchers found in a recent brain-imaging study that seniors' brains don't anticipate a loss as much as younger ones do. That might be leading them to make less rational—and therefore less profitable—choices. But the news isn't all bad; a better understanding of why these mistakes happen may make it easier to prevent them.

More here.