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Occupational pensions are a relatively recent innovation, but their history is well documented. We begin the book with the issue of why occupational pension systems came into being, what their current purpose is, and whether they meet the (relatively modest) goals as set out in many governments’ policy manifestos. This forms the backdrop for our critical examination of financial decision-making, and in particular saving for retirement. We emphasize the importance of risk, uncertainty, and scale in navigating financial markets awash with information. Individuals vary in their level of sophistication of financial knowledge and risk decision-making, and use a range of techniques from financial calculation to reliance on peers to intuition. How individual choice is exercised through financial decision-making in the context of culture and emotion is not very well understood. Given the significance of financial information and knowledge for well-being and the absence or thorough investigation in the literature, we introduce a considerable research program which investigates the core questions that underpin individual decision-making. In particular, we use econometric methods to demonstrate the significance of the socio-demographic attributes of people in risk-related decision-making.

As the world becomes more financially integrated and complex, average individuals and their families are increasingly faced with making highly sophisticated and all-too-often irreversible financial decisions. Nowhere is this more evident than with regard to retirement decision-making. Indeed, the global financial crisis suggests that poor financial decision-making can have substantial costs not only for individuals but also society at large. This volume focuses on key lessons for financial decision-making in the wake of that crisis, exploring how financial literacy can enhance peoples' skills and abilities to make more informed economic choices.

The book’s last chapter provides a more systematic presentation of the call for a sociology of decision-making in three interrelated ways. First, it formulates and schematically articulates how the main analytic components featured in the earlier, empirical chapters become entangled during the process of decision-making. Second, it theoretically elaborates this proposed conceptual framework of the decision-making process along three analytically distinct dimensions: practice, temporality, and risk. And third, by drawing on the extant literature on medical decision-making and financial decision-making respectively, it provides some external validity for the proposed framework and extends it along two additional analytic dimensions: intervention and performativity.

Increased longevity has brought about financial challenges for which many seniors and their families are unprepared. This chapter describes recent research findings on financial decision making at older ages enabled by the Rush Memory and Aging Project, a large cohort study of aging. Although financial experience increases with age, financial decision making capabilities tend to diminish due to declines in cognitive ability. Declines in cognition coincide with diminished financial literacy and declining self-confidence. Older adults who experience cognitive decline often have difficulties managing their money and are more likely to get help with their financial decisions. Older adults are frequently targeted by scammers. Declining cognition is a significant risk factor for becoming a victim of financial fraud. Seniors who are over-confident in their financial knowledge are more likely to be victimized.

By the end of the next decade, the number of older Americans will have grown rapidly, but half if not more of the elderly will suffer from cognitive deficits after the age of 80. This volume explores how financial decision making changes at older ages, how and when financial advice can be useful for the older population, and what solutions and opportunities are needed to resolve the likely problems that will arise.

This chapter summarizes recent findings in neuroeconomics suggesting that emotion (specifically, “anticipatory affect”) can influence financial decisions. It then discusses how individual differences in anticipatory affect may promote proneness to consumer debt. Thanks to improvements in spatial and temporal resolution, functional magnetic resonance imaging experiments have begun to suggest that activation of a brain region associated with anticipating gains (i.e., the nucleus accumbens or NAcc) precedes an increased tendency to seek financial gains, whereas activation of another region associated with anticipating losses (i.e., the anterior insula) precedes an increased tendency to avoid financial losses. By extension, individual differences in increased gain anticipation, decreased loss anticipation, or some combination of the two might promote proneness to debt. Ultimately, neuroeconomic advances may help individuals to optimize their investment strategies, as well as empower institutions to minimize consumer debt.

The chapter explores how our understanding of financial decision-making in the Roman world might be expanded by an exploration of the linguistic and accounting frameworks which landowners employed. By analysing some of the key terms used in the agricultural treatises of Cato, Varro and Columella, which were written at different points in the Roman era, it traces progressions in the use of the terms used to describe income, expenditure, labour, and profit, and suggests that these might demonstrate changes in how investments in the supplementary income streams offered by the pastio villatica were viewed as against the returns available from the core crops of grain oil and wine. The agronomists’ understanding of distinctions between investment and consumption is illustrated by examples of their use of sumptus and impensae, whilst a discussion of fructus quaestus and reditus illuminates shifts in how income and profit were conceptualized. Labour was a key factor of production and it is argued that, whether provided by hired hands or slaves, the use of the opera as a unit of measurement may mean that it was seen as a store of value to be allocated as part of the investment evaluation process. Finally, an analysis of the employment of utilis and expedit suggests that different value-systems might have been applied to core crops and supplementary products, possibly providing a cognitive impediment to the efficient allocation of investment resources.