Encyclopedia of Psychology and Law

How Do We Figure Out If a

Memory Is True or False?

In experimental settings, scientists know which events

are true and which are false. Thus, they can tell people

about their false memories at the end of the study. But

what do people do in real life to determine for them-

selves whether a memory is true or false? In one

study, people were asked if they had ever remembered

an event that they later found out really did not hap-

pen. If so, they were asked to describe the episode,

and the ways they tried to figure out if the event was

true or false. The two most popular strategies were to

consult another person about the event and to use cog-

nitive techniques, such as thinking about or imagining

it. These two approaches are not without risks. For

example, the consulted person may remember the

event partly or completely inaccurately. In addition, a

quick review of earlier sections in this entry will make

clear the perils of relying on imagination as a means

to determining the veracity of an experience.

There are also real-life consequences to real-life

false memories. In many countries, false memories

have landed innocent people in prison, divided fami-

lies, drained our health care resources, and clogged

our courts. It is these consequences that compel psy-

chological scientists to continue their work.

Eryn Newman and Maryanne Garry

See alsoEyewitness Memory; Reconstructive Memory;

Repressed and Recovered Memories

Further Readings

Garry, M., & Hayne, H. (Eds.). (2006). Do justice and let the

sky fall: Elizabeth F. Loftus and her contributions to

science, law and academic freedom.Mahwah, NJ:

Lawrence Erlbaum.

Loftus, E. F., & Davis, D. (2006). Recovered memories.

Annual Review of Clinical Psychology, 2,469–498.

McNally, R. J. (2003). Remembering trauma.Cambridge,

MA: Harvard University Press.

FINANCIALCAPACITY

Financial capacity(FC) is a medical-legal construct

that represents the ability to independently manage

one’s financial affairs in a manner consistent with per-

sonal self-interest. FC thus involves not only perfor-

mance skills (e.g., accurately counting coins/currency,

completing a check register, paying bills) but also the

judgment skills that optimize financial self-interest.

From a legal standpoint, FC represents the finan-

cial skills sufficient for handling one’s estate and

financial affairs and is the basis for determination of

conservatorship of the estate (or guardianship of the

estate, depending on the state legal jurisdiction).

Broadly construed, FC also encompasses more spe-

cific legal “financial capacities,” such as contractual

capacity, donative capacity, and testamentary capac-

ity. Thus, FC is a very important area of assessment in

the civil legal system.

From a clinical standpoint, FC is a highly cognitively

mediated capacity that is very vulnerable to neurologi-

cal, psychiatric, and medical conditions that affect cog-

nition (such as dementia, stroke, traumatic brain injury,

and schizophrenia). Financial experience and skills also

vary widely among cognitively normal individuals and

are associated with factors of education and socioeco-

nomic status. Clinicians are increasingly being asked by

families, physicians, attorneys, and judges to evaluate

and offer clinical opinions regarding FC.

With the recent development of conceptual models

of FC and associated assessment instruments, there is

an emerging body of empirical research on this impor-

tant civil capacity.

Importance of Financial Capacity

Impairment and loss of FC has important psychologi-

cal, economic, and legal consequences for patients

and family members. Similar to driving and mobility,

the power to control one’s finances is a fundamental

aspect of individual autonomy in our society. Loss of

financial control may result in psychological conse-

quences such as increased feelings of dependency and

depression. Declines in FC are also associated with

immediate and long-term economic consequences.

Failure to pay bills or difficulty in handling basic

financial tasks may result in disconnection of services,

property repossession, poor credit ratings, and even

homelessness. Impaired financial judgment may also

result in loss of assets intended for long-term care or

inclusion in a will or trust. From a legal perspective,

diminished FC is associated with increased risk of

financial exploitation in the form of consumer fraud

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