11/5/2023 0 Comments I make poor decisionsFor some, planning for tomorrow seems so overwhelming that it’s easier to focus on today. Low take-home pay and vanishing company pensions are part of the problem, but researchers say it’s also partly because people can’t relate to their future selves - so they don’t save money. Nearly half of American adults haven’t started saving for it, even those whose age and experience puts them at their mental peak. Take the major financial life decisions that surround retirement. It’s against that backdrop that people face some of their most challenging questions. So we may have more information to work with as we get older, but the mental motor that processes that information slows down. At the same time, the knowledge gained from life experience increases over time until it plateaus late in life, Burke says. Humans’ raw cognitive horsepower declines with age. The factors behind our ability-or inability- to make better decisions move in opposite directions as we age, say Kapteyn and Jeremy Burke, a senior economist who runs CESR’s satellite office in Washington, D.C. “In one way or another, we all need help.” TODAY VERSUS TOMORROW “For most people, decisions happen largely by accident,” Kapteyn says. But for Kapteyn, as for the rest of us, putting knowledge into action is another story. He has devoted most of his professional life to researching why it’s so tough to get people to make important financial decisions - and the impact such indecision has on society and public policy. By most measures, Kapteyn, CESR’s director, is an expert in making informed choices. “I’ve not planned my life out yet,” says economist Arie Kapteyn, 72, with a laugh. If you’ve procrastinated on life-changing plans and choices - like how much money to save or whether to undergo a major medical procedure - you’re not alone. Turns out, humans are poor at weighing options and making big decisions. To do that, the researchers tap the latest technology to make sense of large volumes of data. The economists, psychologists, behavioral scientists and demographers at CESR figure out how people make the decisions they make - and how they can make better, more-informed ones. That’s because the 70 or so researchers at the center in Dauterive Hall specialize in the science of making decisions. Generations have thought of questions to ask and then shaken the spheres for answers, getting such responses as “It is certain,” “Outlook not so good” or “Concentrate and ask again.”īut at the center dubbed CESR (pronounced like the Roman politician and general), the Magic 8-Ball feels more tongue-in-cheek than nostalgic. Anywhere else, it might elicit childhood memories. The iconic ’50s toy sits on an office desk at USC’s Center for Economic and Social Research. It’s an unexpected home for a Magic 8-Ball.
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