Influence of age and gender on estimates of long-term financial growth functions

Abstract

A number of studies have shown that when estimating the growth rate of exponentially increasing numerical functions, individuals tend to make linear projections which are substantial underestimates of actual growth rates. the present study was designed to determine whether there are age and gender differences in subjects' ability to accurately estimate exponentially increasing trends. Males and females age 20-79 were asked to estimate the future value of four different savings accounts at six different points in time. Analyses revealed age and gender differences in the shape of subjects' estimated future value functions (i.e., the extent to which they were linear or exponential), and gender differences in the accuracy of those estimates. No age differences in the quality of estimation performance were found. the discussion focuses on how different computational strategies could have led to the observed findings, and how differential levels of basic processing abilities and knowledge of the task may have influenced subjects' performance.