Consumer decision making and aging: Current knowledge and future directions

We review existing knowledge about older consumers and decisionmaking.We develop a conceptual framework that incorporates the notion of fit between individual characteristics, task demands and the contextual environment. When the fit is high, older consumers use their considerable knowledge and experience to compensate for the impact of any age-related changes in abilities and resources. When the fit is relatively low, older consumers feel increased need to adapt their decision making processes. We discuss these consumer adaptations and propose a number of research questions related to the processes underlying them in order to contribute to a better understanding of how they can lead to more effective consumer decision making for older adults. We further consider some pragmatic implications of the adaptations for marketing management and public policy. © 2008 Society for Consumer Psychology. Published by Elsevier Inc. All rights reserved. Until recently, most businesses and marketing researchers have virtually ignored the older consumers in the marketplace. Increasingly, businesses, governmental agencies and researchers are recognizing that older consumers comprise a segment that is generally substantial, identifiable and accessible — key requirements for selecting target segments. The number of Americans aged 65 and over is expected to increase from 35 million in 2000 to 40 million in 2010. By 2030, there will be over 70 million older persons, with one out of every five Americans being 65 or older (Department of Health and Human Services, 2007). Because of increasing life expectancies and decreasing birth rates, the proportions of the U.S. adult population in each of the four different age groups (under 20, 20–44, 45–64, over 65) is becoming more evenly distributed. The past decade has seen an improvement in the economic status of Americans aged 50 and over, where status is measured as median inflation-adjusted income and household financial assets (AARP, 2005). Despite thegrowingsizeof theelderlypopulationin theU.S.and their share of personal wealth, there are still relatively few reviews published inmajormarketing journals about the effects of an aging population on consumer decision making, public policy and marketing practice (for notable exceptions, see Goldstein, 1968, Phillips andSternthal, 1977, andRoedder John andCole, 1986). In this article, we seek to bridge the gap between academic research and the everyday practice of marketers and public policy makers by considering extant findings about how aging affects consumer decisionmaking.Weadopt a broaddefinitionof consumerdecision making that includes the processes and outcomes related to everyday problem solving in consumer domains. The present paper proposes a general framework and reviews the literature to generate a better understanding of the role of aging in consumer decision making. In particular, we explore the conditions under which older adults need to adapt their consumer decision making in order to enhance the likelihood that they generate decisions with satisfactory outcomes. We also identify areas in which further research is needed and suggest specific questions aimed at providing insights and tools to address the needs of older consumers. Conceptual framework Our framework adopts the perspective that in order to understand the multidimensional and multidirectional effects of aging on decision making, we need to understand how individual, task, and contextual characteristics influence the fit between a person and task. This person–context fit falls along a Available online at www.sciencedirect.com Journal of Consumer Psychology 19 (2009) 2–16 ⁎ Corresponding author. Fax: +1 734 936 8716. E-mail addresses: [email protected] (C. Yoon), [email protected] (C.A. Cole), [email protected] (M.P. Lee). 1 Fax: +1 319 335 3690. 2 Fax: +65 6822 0777. 1057-7408/$ see front matter © 2008 Society for Consumer Psychology. Published by Elsevier Inc. All rights reserved. doi:10.1016/j.jcps.2008.12.002 Author's personal copy continuum from low to high (Finucane, Mertz, Slovic, and Schmidt, 2005; National Research Council, 2000; Hess, 2005), and is expected to be high to the extent that requirements imposed by the task and context do not exceed an individual's decision making resources and abilities (e.g., working memory capacity). In these high fit consumer situations, the likelihood of effective decision making is relatively greater, in that the elderly do not feel compelled to adapt their decision processes, and special accommodations by marketers or regulatory bodies are not necessary. By contrast, when task and contextual demands exceed the resources available, fit decreases and older consumers may feel the need to adapt their decision making processes. In some instances, they might do so by drawing on their knowledge and experience, allowing them to successfully compensate for decrements in resources. In other situations where this is not possible, it would be of practical importance for marketers to provide tools to accommodate decision making — e.g., they could adjust the context of the decision by presenting the product information in a more meaningful or user-friendly way. Government agencies may further address low fit situations via interventions that buttress individual resources through consumer education and/or regulate deceptive marketing practices. In the absence of sufficient consumer adaptations, marketer accommodations, or government interventions, the quality of decision making may be so low that elderly individuals fail to obtain satisfaction from their choices, or worse yet, they may become the victims of scams that exploit their reduced resource capacity. For instance, the AARP (1996) estimates that more than half of telemarketing fraud victims are over the age of 50 and the National Center on Elder Abuse reported over 20,000 substantiated cases in 1998 of financial or material exploitation of elderly persons (Johnson, 2004). Common tactics employed by these perpetrators have been said to involve emotional manipulation or overwhelming elderly with complex information, particularly in the case of financial transactions. While the elderly are direct victims of such incidents of fraud, relatives, caregivers and society at large oftentimes also have to deal with the undesirable consequences of their decisions. (See Fig. 1 for the framework). Several points are worth noting. First, although the framework can be generalized to consumers of all ages, it is particularly useful for studying older consumers, many of whom continue to maintain high levels of performance on decision making tasks despite declines in some cognitive abilities. Second, unlike prior research on aging and decision making that focuses on information processing and seeks to discover links between cognition and decision making, the current model emphasizes how individuals can adapt their decision making to different contexts and tasks. In so doing, we do not attempt to address the issue of what constitutes good or Fig. 1. A person–context fit framework of consumer decision making. 3 C. Yoon et al. / Journal of Consumer Psychology 19 (2009) 2–16 Author's personal copy poor decision outcomes in an absolute sense. Rather, our discussion is organized around elucidating how the congruence between the individual and decision environment can be a source of more or less desirable decisions, and how the framework, in the latter case, can be used to identify ways to achieve greater levels of fit. We take the position that, in general, improvements along the fit continuum increase the likelihood of effective decision making and more satisfactory outcomes for consumers. We first briefly review the relevant findings with respect to individual characteristics. Next, we provide a discussion of task and contextual environment, and focus on how these factors, along with individual characteristics, can jointly influence the degree of person–context fit. Space does not allow us to be exhaustive in our discussion of the interplay; thus we explore a limited set of situations and potential interactions representing varying levels of fit. We then consider the consequences of fit (or the lack thereof) for older consumers. Individual characteristics Individual characteristics interact with the decision making context and task to affect the person–context fit. We consider the following individual characteristics: age, cohort, health, goals, memory and general knowledge.