Health Economics Research Network presents
Postdoctoral Research Fellow, Centre for the Business and Economics of Health (CBEH), The University of Queensland
Population ageing is discussed a societal challenge and conjectured to put strain on retirement and health care systems, but in practice ageing has meant the increase of life expectancy and life years in good health. Hence, individuals live more years in a condition in which they do not require assistance from others. However, ageing may still have consequences for older people as economic decision makers, for example due to very mild age-related decrease in subjective well-being or cognitive decline. This paper uses an economic experiment to study how age, physical and mental health, and cognitive functioning influence the decisions of older adults to trust others. It also investigates how greater complexity in trust influences decision-making. Trust and complexity in trust are important for many economic decisions of older adults, from (dis)investments of retirement funds to following medical advice when medical practitioners may have financial incentives for particular treatment pathways. Preliminary results show that trust does not depend on age, but trust with complexity does, as older adults do not adapt complexity as expected given their preferences. Cognitive decline, but not subjective health appears to be the driver.