Conceptual and Empirical Approaches to Financial Decision-making by Older Adults: Results from a Financial Decision-making Rating Scale

Abstract

Objectives The objectives of this study were threefold: (1) to empirically test the conceptual model proposed by the Lichtenberg Financial Decision Rating Scale (LFDRS); (2) to examine the psychometric properties of the LFDRS contextual factors in financial decision-making by investigating both the reliability and convergent validity of the subscales and total scale, and (3) extending previous work on the scale through the collection of normative data on financial decision-making. Methods A convenience sample of 200 independent function and community dwelling older adults underwent cognitive and financial management testing and were interviewed using the LFDRS. Confirmatory factor analysis, internal consistency measures, and hierarchical regression were used in a sample of 200 community-dwelling older adults, all of whom were making or had recently made a significant financial decision. Results Results confirmed the scale’s reliability and supported the conceptual model. Convergent validity analyses indicate that as hypothesized, cognition is a significant predictor of risk scores. Financial management scores, however, were not predictive of decision-making risk scores. Conclusions The psychometric properties of the LFDRS support the scale’s use as it was proposed in Lichtenberg et al., 2015. Clinical Implications The LFDRS instructions and scale are provided for clinicians to use in financial capacity assessments.

A Short Form of the Lichtenberg Financial Decision Rating Scale

“…This research expands clinical application of the Lichtenberg Financial Decision Rating Scale by providing a short form. The short form was derived almost exclusively from items that formed the basis of the subscales derived from a confirmatory factor analysis on the full 68-item LFDRS (Lichtenberg et al, 2017a). Evidence was found for good convergent validity and clinical utility.…”

Providing Assistance for Older Adult Financial Exploitation Victims: Implications for Clinical Gerontologists

“…The control group consisted of 21 community-dwelling urban older adults with no history of FE who had participated in the Lichtenberg Financial Decision Making Rating Scale (LFDRS) validation study (see Lichtenberg et al, 2017). The 21 members of the control group were consecutively recruited individuals and were recruited during the same period as the SAFE participants.…”

“…Lichtenberg financial decision making rating scale (LFDRS)-This scale quantifies financial decision-making risk in older adults (Lichtenberg et al, 2015(Lichtenberg et al, , 2017Lichtenberg, Gross $ Ficker, 2018). The scale examines informed decision-making abilities for actual significant financial decisions the individual has already made or is considering.…”

“…The 68-item scale and instructions can be found in Lichtenberg et al (2017). In addition to the total risk score for the instrument, the LFDRS contains four sub-scales: Financial Situational Awareness, Psychological Vulnerability, Susceptibility to Undue Influence, and Intellectual Factors; all of which were collected and utilized.…”

Introductory to Issue 41(1): Navigating Thorny Aspects of Dementia Care: Sex, Money, Cars and More

“…Peter Lichtenberg's lab has advanced our conceptual models of a related concept, financial decisionmaking and financial exploitation. In the latest contribution from their group (Lichtenberg et al, 2017) they too use factor analysis to provide a conceptual model of financial decision-making using a robust sample of community-dwelling adults (N = 200). Their model considers cognitive elements but also identifies the role of psychological vulnerability and susceptibility.…”