A new study published in the Archives of Gerontology and Geriatrics suggests that the way the brain processes language and arithmetic facts may play an important role in how well middle-aged and older adults manage their money. The findings indicate that individuals with healthier brain tissue and stronger connections between specific brain regions tend to perform better on everyday financial tasks, which may offer some protection against scams and financial exploitation.
Financial scams targeting older adults are a widespread problem. These scams range from simple email phishing attempts to complex schemes designed to steal life savings. Because financial ability tends to decrease somewhat, starting in midlife, older individuals become more vulnerable to this kind of exploitation. Researchers are therefore interested in understanding how age-related changes in the brain might affect financial decision-making, to help protect people from fraud and to maintain their independence.
While prior research primarily investigated individuals with cognitive impairments, like mild cognitive impairment or Alzheimer’s disease, the new study aimed to examine the brain mechanisms of financial ability in individuals without these diagnoses.
“Two factors inspired my interest in this topic,” said study author Ian M. McDonough, an associate professor of psychology at Binghamton University and the director of the Memory, Aging, and Cognitive Control Research Laboratory.
“First, my dad was in the financial sector when I was growing up and so I was exposed to a lot of information about how to save, handle money, and invest in stock markets. These early life experiences created a consistent interest in financial management. Now that I’m older of course, my career took a different path towards the cognitive neuroscience of aging. One major concern in the field is the increased risks older adults have for financial exploitation because of numerous factors including their ability to successfully build up wealth but also their sometimes declining cognitive capacity to navigate an increasingly complex system of fraud and the move to digital finances.”
“Although some research has shown that declining brain regions can increase susceptibility to fraud and some brain regions that decline are associated with both financial capacity and Alzheimer’s disease, the underlying brain regions that differ with age that support financial abilities is a very underdeveloped field of research. I designed a study that could broadly characterize a neural footprint of the aging brain before the frank development of Alzheimer’s disease pathology or severe cognitive decline to better understand how the brain changes for various age- related risks like declining financial abilities.”
Sixty-seven middle-aged and older adults (ages 50-74) participated in the study. These participants had no prior diagnosis of a neurological condition and all had at least one risk factor for dementia, such as high blood pressure or a family history of Alzheimer’s disease. An additional group of 20 young adults (ages 20-30) was included for comparison of brain measures, though they did not complete the financial ability test.
All participants underwent a magnetic resonance imaging (MRI) scan, which provided detailed images of their brain structure and allowed researchers to measure the activity and connections between different brain regions while the participants were at rest. The brain areas of focus were chosen because prior work shows they are related to arithmetic. These include regions in the temporal lobes (middle and superior temporal gyri), believed to store arithmetic facts, and a region in the frontal lobe (inferior frontal gyrus), believed to help retrieve these facts. Other regions are related to performing calculations (the inferior and superior parietal lobules, and the middle frontal gyri).
In addition to the brain scans, participants completed several assessments. These included a screening test for dementia to make sure that only those without this diagnosis were included in the main analyses, and a test specifically designed to measure financial abilities. This test included tasks such as counting money, writing a check, and balancing a checkbook. Participants also completed a range of tests that evaluated various cognitive skills, such as memory, language, reasoning, and processing speed. Finally, they answered questions about their health, financial situation, and financial background, including factors like income, education, and their parents’ experience with finances.
The researchers found that individuals who performed better on financial tasks had larger tissue volume and surface area in parts of the brain associated with language and memory retrieval. In particular, the left inferior frontal region—a part of the brain that helps access language-based memories—showed a strong association with financial ability.
“I was surprised to see how much the measure of language we had in our study correlated with the brain and financial abilities,” McDonough told PsyPost. “These language measures assess one’s word pronunciation and ability to accurately complete sentences based on the contextual cues, and thus were not directly related to math or finances at all. It could be that people with higher language abilities also were more educated and had more experience dealing with complicated financial matters. The high association could also indicate that such language measures could quickly be used to identify those at risk for decline in the brain regions associated with financial abilities as a type of general screening tool.”
In addition, the study revealed that stronger connections between the left inferior parietal region and parts of the frontal region were linked to better financial performance. These connections appear to support the automatic retrieval of arithmetic facts from memory.
On the other hand, participants with lower financial ability showed stronger connections between calculation-related areas. The findings suggest that older adults who lean too heavily on brain systems that support real-time calculation rather than on memory-based retrieval may be at a disadvantage when it comes to managing finances.
But the researchers did not find that the relationship between brain measures and financial ability was significantly related to the participants’ age or by their overall risk of developing dementia.
“I was also surprised that our dementia risk score was not associated with financial ability or the brain regions underlying math abilities,” McDonough said. “Other research has shown a link between declining financial abilities in early stages of Alzheimer’s disease and with Alzheimer’s disease pathology. It could be the case that financial ability declines associated with dementia come in later stages and what we are sensitive to in this study is ‘normal aging’ rather than dementia-related aging. It also could be the case that there is a link between dementia risk and financial ability, but not in the brain regions we chose to investigate that were related to math processing.”
Finally, the researchers found that protective factors like a higher household income and a greater understanding of financial concepts (financial literacy) were related to the same brain connections that predicted financial ability.
“With advanced aging comes natural declines in being able to quickly and efficiently process information, including real-time calculation of financial information,” McDonough told PsyPost. “However, brain processes that rely on automatic retrieval of information seem to be intact with aging. Thus, as people age, if one can become fluent with how to manage their finances so they store knowledge that can automatically be retrieved, they will be able to more accurate at managing their finances and hopefully become less at risk for financial fraud.”
“As people become older, they may also recognize that the changing financial landscape necessitates a little bit of help. This help could come from friends or family that are more familiar with current financial tools or alerts to be set up on their own phone (and/or family’s phone) when an abnormality is detected in their finances.”
“We also identified key brain regions that support both automatic retrieval of information related to finances and regions that are used for in-the-moment financial calculation,” McDonough continued. “Strengthening these brain regions throughout life via physical exercise and practicing with financial information (i.e., increasing one’s financial literacy) will likely help maintain those abilities into old age. We showed that more “youthlike” brains were associated with better maintenance of financial abilities.”
Like any study, this research has its limitations. The brain imaging was conducted while participants were at rest rather than while they were engaged in an active financial task. This approach means that the imaging data provide a snapshot of the brain’s typical connectivity patterns rather than how the brain operates during real-life financial decisions.
In addition, the study focused on a relatively narrow age range and involved a modest number of participants. “Ideally, I would want to have a sample of 100 or more participants to ensure greater robustness,” McDonough said.
“Our study also was cross-sectional, which means there is a large possibility that the findings are related to financial experiences and/or math abilities stemming from childhood or young adulthood that last throughout the lifespan rather than due to longitudinal declines in brain structure and function with age.”
Future research could expand the range of participants and include brain imaging during active problem-solving tasks related to finances. Moreover, further studies might examine other financial skills and explore how different aspects of numerical processing contribute to financial management over time. Longitudinal studies that follow individuals over several years would be valuable to understand how these brain-financial ability relationships evolve as people age.
“In the long-term, we want to continue bridging the underlying components of math/arithmetic processing to the aging brain,” McDonough explained. “We also want to link these differences in financial abilities with experiences with financial scams and generalize these findings to financial management in the digital age.”
“One important point is that even though financial management is likely to decline with advanced aging, one should not simply take away financial responsibilities from older adults. Handling finances is oddly integrated with one’s work or household identity because we all have to manage some level of finances month to month. If a person is at risk for declines in their financial ability, they should work with their family to support them and provide some level of autonomy in a sensitive way and make sure the person has input into all future actions with their finances.”
The study, “Separating neurocognitive mechanisms of maintenance and compensation to support financial ability in middle-aged and older adults: The role of language and the inferior frontal gyrus,” was authored by Macarena Suárez-Pellicioni and Ian M. McDonough.
