112 / Rotman Management Spring 2017
In terms of the environment, you have said that neither
behavioural or economic solutions in isolation are going
to save us. What will?
There are many different approaches to solutions underway,
and they all have to be applied in parallel. That includes cli-
mate science and knowing when and by how much we have
to reduce our C0 2 emissions; it includes advances in tech-
nology that create greater energy efficiency and/or different
non-carbon sources of energy; it includes carbon user fees
and encouraging lifestyles that use less energy. We can do
that with taxes and with mandates, so that brings econom-
ics and the government into the equation. The private sector
can play a role by addressing any of these areas; and Psychol-
ogy can play a role alongside Economics, by teaching us how
to present options in ways that make them more attractive to
people. There is no silver bullet, but in combination, these
approaches multiply their power, and they just might get
us there.In preparation for the coming ‘Gray Tsunami’ (where-
by the number of people aged 65 and older worldwide
will double by 2035), you have also studied older adults’
financial decision-making ability. What were your key
findings?
You are referring to a series of studies that Eric Johnson and
I conducted to explore the effects of aging on decision mak-
ing, as predicted by Query Theory. I explained earlier that in
Query Theory, inhibition plays a large role: when you think
about what is good about Option A — the first option that you
consider — you temporarily inhibit arguments for all other
options. And we know that as people grow older, they have a
harder time recovering from inhibition. So, we hypothesized
that as people get older, they might actually start to make
more inconsistent decisions as they consider different op-
tions first.
Our findings surprised us: It turns out that, as we get
older, we do not make more inconsistent or worse decisions.
We were puzzled as to how that could be. The reason people
get worse at recovering from inhibition has to do with some-
thing called ‘fluid intelligence’. This is the raw power of our
brains. As we get older, our neurons just don’t fire as quickly
and we have a harder time with things like following logic.
We tested our respondents for these things and found that,
yes, they were getting worse on fluid intelligence as they got
older, but their decisions didn’t look any worse. In some situ-Elke Weber is a Professor of Psychology and Public Affairs at Princeton
University, where she holds the Gerhard R. Andlinger Professorship in
Energy & the Environment. Previously, she was Co-Director of Colum-
bia University’s Earth Institute’s Centre for Research on Environmental
Decisions and its Centre for Decision Sciences. Her papers, “The Global
Climate Regime: Explaining Lagging Reform” and “Complementary
Cognitive Capabilities, Economic Decision-Making, and Aging” can be
downloaded online.ations, people were actually doing better, because they were
not as likely to discount future consequences.
When we delved further, we found that there is another
form of intelligence called crystallized intelligence, which
is the crystal-like residue of our past experiences. You can
think about it as the wisdom that comes with acquiring
knowledge about the world, and it is tested by things like
how well people do on crossword puzzles.
It turns out that crystallized intelligence increases
with age, up to a limit. Once you get into your 80s or 90s,
it also levels off; but up to a pretty high age, it can continue
to increase. And it seems to compensate for our ongoing de-
crease in fluid intelligence. We somehow manage to make
up for the decrease in raw processing power with our stores
of real-world knowledge.