When an older adult’s emotions reach states of excitement or anger, they’re more likely than young people to show interest in fraudulent schemes, a new study suggests.
Those two feelings—known as “high arousal” emotions—can lead to risky decision-making compared with “low-arousal” emotions, such as feeling depressed, bored, or tired, researchers say.
Financial fraud costs range in the billions annually, and many victims are elderly. The Federal Trade Commission estimates that in 2011, 7.3 percent of adults between the ages of 65 and 74 and 6.5 percent of adults age 75 and older were the victim of financial fraud. The overall impact of fraud for all adults 18 and older is estimated to be $50 billion.
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Prior research has shown that older adults are particularly susceptible to the effects of high-arousal emotions on decision-making.
“When emotionally aroused, either excited or frustrated, older adults may be more susceptible to being victimized by scammers than are younger individuals,” says Ian H. Gotlib, professor of psychology and author of a new report from the Center on Longevity at Stanford University.
“In the present study, they were more likely to want to pay for an item advertised misleadingly, regardless of how credible they believed the advertisement was.”
Researchers examined whether inducing high-arousal positive and high-arousal negative emotions in the laboratory increases susceptibility to fraudulent purchases. Participants included 71 adults age 65 to 85 and 68 adults between 30 and 40 years of age.
Designed to simulate the real-world tactics of financial fraud perpetrators, the lab experiment involved inducing different types of emotional arousal in the participants and then assessing their responses to misleading advertisements. The researchers assigned each participant to one of three emotional arousal groups: excitement (high-arousal positive emotion); anger (high-arousal negative emotion); and neutral (low arousal).
Wait before saying ‘yes’
The findings show that inducing either high-arousal positive or high-arousal negative emotions in older adults increased their desire to purchase products after viewing misleading advertisements. This occurred even when the high-arousal groups didn’t find the advertisements to be more credible than did the low-arousal group.
The results suggest that a state of high emotional arousal, whether it is one of excitement or one of anger, may influence older adults’ susceptibility to fraud.
“When we examined younger adults separately, we did not find these same effects. Further, whereas in younger adults greater advertisement credulity was associated with greater intention to purchase the item, credulity and purchase intention were not significantly related in older adults,” the researchers write.
The study recommends that communicating such research findings to consumers and investors, especially older adults, may help them avoid becoming victims of fraud.
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Advance warning can help older adults recognize the tactics used by fraudsters—creating excitement about the proposition, putting time pressure on the decision, or invoking the names of other “trusted sources” who have reportedly bought in to the endeavor—says Martha Deevy, director of the Financial Security Division at the Center on Longevity.
“Individuals can protect themselves by pausing or waiting a few days before saying ‘yes,’ and by following the adage, ‘If it sounds too good to be true, it probably is,'” she says.
Everyone, can avoid fraud by never giving personal information to strangers who call on the phone, by asking to see credentials or to speak to supervisors, and by doing background research on charities, vendors, and financial advisers to make sure that they are legitimate.
“Many financial institutions are also playing a role in helping to identify instances of potential fraud by being watchful for changes in behavior or transaction habits with their older clients,” Deevy says.
Other researchers from Stanford and from the AARP and the Financial Industry Regulatory Authority contributed to the study.
Source: Stanford University