A new study finds that adolescents are actually more rational than young adults when it comes to financial decisions.
Teens have a bad rep for being completely and utterly irrational. While pubescent youngsters can undoubtedly make some pretty stupid decisions, a new study at Duke University finds that they’re actually more economically rational than young adults.
Published online in the journal Cognitive Development, the study found that adolescents ages 10 to 16 spent more time analyzing the possible outcomes of economical questions than did the average 22-year-old young adult. Study participants were presented with questions that had three possible scenarios (A, B, and C) and asked to pick the best of the three. The outcomes of each scenario would lead to either winning or losing money.
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In a press release, the study was further described: “For example if the subjects picked scenario A, they had a one-third chance of winning, say $6, one-third chance of winning $4, and a one-third chance of losing $4. Scenarios B and C each came with their own chances to win or lose three different dollar amounts.”
The study found that young adults were more likely than adolescents to use mental shortcuts in the decision-making process. For instance, most adults would deduce from the “don’t drink and drive rule” to not get in the car with someone who’s been drinking. Teens, on the other hand, may take more time to carefully weigh the decision.
The researchers noticed that, as the young adults completed more trials, they would pick the scenario that included the most chances at winning instead of taking note of the actual dollar amount of each possible gain or loss — the mental shortcut method. Surprisingly, adolescents calculated the potential gain or loss of every option, choosing the scenarios that would minimize their losses.
“The new results point to the idea that we should not think of adolescents as being irrational,” said Scott Huettel, co-author of the study and professor of psychology and neuroscience at Duke. “I was surprised how consistent the effects were. Pretty much everywhere we looked, adolescents were the ones who looked more economically rational.”
Interestingly, the researchers also tracked the eye movements of the study participants. They found that, as they completed the task, the young adults began to ignore information they deemed as unuseful to them. They also spent noticeably less time weighing the possible outcomes of each scenario than the teens.
Huettel hopes that the research will highlight that adolescents may deserve a bit more credit for being rational than they currently receive. He also says the study may generate newer and better ways of coaching adolescents to make smarter decisions. Clearly, there is an significant level of existing rationality in teens, but it’s often overshadowed by social pressures. With the right approach, irrational juveniles may start exercising better judgment.
