Emotions Increase Susceptibility to Fraud in Older Adults: Research from Stanford, FINRA Foundation and AARP

WASHINGTON — Financial fraudsters often attempt to evoke strong emotions in their victims to convince them to hand over money, and seniors may be particularly vulnerable to the effects of heightened emotions on decision making. With funding and research participation from the AARP Fraud Watch Network and the FINRA Investor Education Foundation, psychologists at Stanford University found that inducing emotions in older adults increased their intention to buy falsely advertised items.

The research team – Ian Gotlib, Ph.D., Katharina Kircanski, Ph.D. and Nanna Notthoff, Ph.D. – examined whether inducing excitement and anger increases susceptibility to fraud in older adults (ages 65-85) and younger adults (ages 30-40). The team used a laboratory task to induce participants to exhibit excitement or anger; a control group was not induced to exhibit any particular emotion. Participants then viewed eight different advertisements that had been designated by the Federal Trade Commission as misleading. For each one, participants were asked to rate the believability of the content and the likelihood that they would purchase it if cost were not a consideration.

In older adults, both excitement and anger increased intention to purchase the items compared to no emotional arousal. In younger adults, however, there were no significant differences in intention to purchase, suggesting that heightened emotion did not have an effect on younger adults' susceptibility. Further, whereas in younger adults greater advertisement believability was associated with greater intention to purchase, believability and purchase intention were not significantly related in older adults. The findings suggest that older adults' intention to purchase was not based on perceived credibility, but rather on the emotional states they were experiencing. Another insight is that the direction of the emotional state – positive or negative – didn't matter, an indication that both emotional states have a broad influence on older adults' susceptibility to fraud. An issue brief on the research, coauthored with Doug Shadel, Ph.D. of AARP Washington and Gary Mottola,Ph.D. of the FINRA Foundation, is available at the Stanford Center on Longevity.

"This research is a major advance in our understanding of how fraud works. Recognizing the mechanisms of scams helps investors to protect themselves," said Gerri Walsh, President of the FINRA Investor Education Foundation. "Money is emotional, and managing your emotions around financial decisions is critical to avoiding fraud."

"Whether the con artist tries to get you caught up in the excitement of potential riches or angry at the thought of past and future losses, the research shows their central tactic is the same and just as effective," said Dr. Shadel, Research Lead for AARP's Fraud Watch Network. "Cons are skilled at getting their victims in to a heightened emotional state where you suspend rational thinking and willingly hand over your hard earned money to a crook."

About AARP
AARP is a nonprofit, nonpartisan organization, with a membership of nearly 38 million that helps people turn their goals and dreams into 'Real Possibilities' by changing the way America defines aging. With staffed offices in all 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, AARP works to strengthen communities and promote the issues that matter most to families such as healthcare security, financial security and personal fulfillment. AARP also advocates for individuals in the marketplace by selecting products and services of high quality and value to carry the AARP name. As a trusted source for news and information, AARP produces the world's largest circulation magazine, AARP The Magazine and AARP Bulletin. AARP does not endorse candidates for public office or make contributions to political campaigns or candidates. To learn more, visit www.aarp.org or follow @aarp and our CEO @JoAnn_Jenkins on Twitter.

About the FINRA Investor Education Foundation
The FINRA Investor Education Foundation provides underserved Americans with the knowledge, skills and tools necessary for financial success throughout life. Established in 2003, the foundation supports innovative research and educational projects aimed at segments of the investing public that could benefit from additional resources. For more information, please visit www.SaveAndInvest.org.