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Teens are Rational in Economics But Need Practice

Teens are Rational in Economics But Need Practice

New research suggests teenagers should be given more credit for making rational decisions — especially when it comes to economics.

Duke researchers discovered adolescents ages 10 to 16 can be more analytical in their economic choices than many slightly older young adults.

Investigators believe the study suggests society should give adolescents more credit for rationality. Researchers, however, also found that parents should help children improve their cost-benefit analysis skills in making real-life decisions.

The study results have been published online in the journal Cognitive Development.

“The new results point to the idea that we should not think of adolescents as being irrational,” said corresponding author Dr. Scott Huettel, a professor of psychology and neuroscience at Duke. “What’s different about them is they don’t use simple rules as effectively.”

Such simple rules are the mental shortcuts people take in decision-making, often to their benefit, as they age and gain more experience. Most adults apply the “don’t drink and drive” rule, for example, to avoid getting in a car with someone who’s been drinking. In contrast, teens may more carefully weigh this decision.

“Adolescents are going to be more likely to use cost-benefit analysis than the (simple rules) that adults use. That can get these kids into a lot of trouble,” Huettel said.

In the new study, participants were presented with three scenarios (A, B, and C) and asked to pick the best one. Each scenario contained a set of outcomes that could lead to winning or losing different sums of money.

For example if the subjects picked scenario A, they had a one-third chance of winning, say six dollars, one-third chance of winning four dollars, and a one-third chance of losing four dollars. Scenarios B and C each came with their own chances to win or lose three different dollar amounts.

Investigators discovered young adults who were 22 years old, on average, used simple rules. As they completed more trials, they counted the number of wins and losses in each scenario and picked the one with the most wins, ignoring the dollar amount of each potential gain or loss.

Adolescents, on the other hand, accounted for the magnitude of the potential win or loss and chose scenarios to minimize loss.

“I was surprised by how consistent the effects were,” Huettel said. “Pretty much everywhere we looked, adolescents were the ones who looked more economically rational.”

Tracking the participants’ eyes as they completed the task gave clues about how they were processing the information. Adolescents consistently viewed almost all the possible outcomes of their choices throughout the experiment.

In contrast, young adults looked at almost everything initially, but as the experiment progressed they started to ignore information that wasn’t useful to them. They also spent less time than adolescents viewing each outcome, the study found.

The finding of positive innate characteristics among adolescents is not a total surprise. Other research has shown that adolescents are not necessarily more risk-seeking but that they are more sensitive to good outcomes compared with adults. Teens also place more value in social interactions and approval.

Huettel’s group is studying the role of peers in adolescent decision-making, while tracking eye movements and brain activity. This research, and the new study, may inform new ways of coaching adolescents to make smarter decisions, Huettel said.

Source: Duke University/EurekAlert
 
Teenager counting his money photo by shutterstock.

Teens are Rational in Economics But Need Practice

Rick Nauert PhD

Rick Nauert, PhDDr. Rick Nauert has over 25 years experience in clinical, administrative and academic healthcare. He is currently an associate professor for Rocky Mountain University of Health Professionals doctoral program in health promotion and wellness. Dr. Nauert began his career as a clinical physical therapist and served as a regional manager for a publicly traded multidisciplinary rehabilitation agency for 12 years. He has masters degrees in health-fitness management and healthcare administration and a doctoral degree from The University of Texas at Austin focused on health care informatics, health administration, health education and health policy. His research efforts included the area of telehealth with a specialty in disease management.

APA Reference
Nauert PhD, R. (2015). Teens are Rational in Economics But Need Practice. Psych Central. Retrieved on October 20, 2018, from https://psychcentral.com/news/2015/09/09/teens-are-rationale-in-economic-matters-but-need-practice/91996.html

 

Scientifically Reviewed
Last updated: 9 Sep 2015
Last reviewed: By John M. Grohol, Psy.D. on 9 Sep 2015
Published on PsychCentral.com. All rights reserved.