Assessment of financial decision making: an informant scale

Older adults with cognitive impairment are a population at great risk for financial exploitation. At-risk older adults often have difficulty reporting on their own financial abilities. Collecting information from trusted others is vital for professionals investigating the financial exploitation older adults. There are few reliable, valid, and standardized informant-report measures of financial capacity, and none that assess decisional abilities for an ongoing, real-world financial transaction. The present study sought to examine the psychometric properties of a new informant-report scale of financial decisional abilities in older adults. One hundred fifty participants were recruited to complete the Family and Friends and Interview regarding a known older adult’s financial decisional abilities. A factor analysis identified two subscales. The full scale had adequate sensitivity and specificity to detect an informant’s current concerns regarding financial exploitation. The Family and Friends Scale is a useful tool for collecting informant-report regarding an older adult’s ability to make financial transactions.     

Item response theory analysis of the Lichtenberg Financial Decision Screening Scale

The focus of these analyses was to examine the psychometric properties of the Lichtenberg Financial Decision Screening Scale (LFDSS). The purpose of the screen was to evaluate the decisional abilities and vulnerability to exploitation of older adults. Adults aged 60 and over were interviewed by social, legal, financial, or health services professionals who underwent in-person training on the administration and scoring of the scale. Professionals provided a rating of the decision-making abilities of the older adult. The analytic sample included 213 individuals with an average age of 76.9 (SD = 10.1). The majority (57%) were female. Data were analyzed using item response theory (IRT) methodology. The results supported the unidimensionality of the item set. Several IRT models were tested. Ten ordinal and binary items evidenced a slightly higher reliability estimate (0.85) than other versions and better coverage in terms of the range of reliable measurement across the continuum of financial incapacity.     

Financial Exploitation of Older Persons

Abstract

Financial exploitation is a recognized social problem of unknown, though likely increasing, magnitude. It can occur through numerous methods, including the misuse of powers of attorney and guardianship, illegal transfers of property, and outright fraud and theft. Financial crimes against older persons are difficult to address because they often go unreported. This paper provides a summary of findings from a study of financial exploitation of older persons. We review what is known about the nature and scope of financial exploitation of older persons and describe barriers to addressing the problem. We also identify gaps in knowledge, discuss current methods for addressing financial exploitation, and provide recommendations and suggested policy approaches for prevention and remediation.     

The Lichtenberg Financial Decision Screening Scale (LFDSS): A new tool for assessing financial decision making and preventing financial exploitation

ABSTRACT

One of the challenges in preventing the financial exploitation of older adults is that neither criminal justice nor noncriminal justice professionals are equipped to detect capacity deficits. Because decision-making capacity is a cornerstone assessment in cases of financial exploitation, effective instruments for measuring this capacity are essential. We introduce a new screening scale for financial decision making that can be administered to older adults. To explore the scale’s implementation and assess construct validity, we conducted a pilot study of 29 older adults seen by APS (Adult Protective Services) workers and 79 seen by other professionals. Case examples are included.     

Ethnic Differences in Financial Outcomes Among Low-Income Older Asian Immigrants: A Financial Capability Perspective

ABSTRACT

This exploratory study examined ethnic differences in financial outcomes among low-income older Asian immigrants from a financial capability perspective. We used survey data collected from a convenience sample of Chinese, Korean, and “Other Asian” ethnic participants in a subsidized employment program (n = 159). We ran logit regressions of dichotomous financial outcomes. Regression analysis showed significant ethnic differences in some financial outcomes after controlling for financial capability and other factors. Findings did not support our hypothesis that financial capability explains ethnic differences in financial outcomes. Findings suggest the need to develop culturally suitable financial capability measures for future research.     

Cognitive,social, and neural determinants of diminished decision-making and financial exploitation risk in aging and dementia: A review and new model

ABSTRACT

In this article we will briefly review how changes in brain and in cognitive and social functioning, across the spectrum from normal to pathological aging, can lead to decision-making impairments that increase abuse risk in many life domains (e.g., health care, social engagement, financial management). The review will specifically focus on emerging research identifying neural, cognitive, and social markers of declining financial decision-making capacity in older adults. We will highlight how these findings are opening avenues for early detection and new interventions to reduce exploitation risk.     

Assessing Knowledge of Elder Financial Abuse: A First Step in Enhancing Prosecutions

Financial exploitation by a family member is the most common form of elder mistreatment; yet, it is a difficult crime to detect and prosecute. Psychologists have traditionally assisted prosecutors by assessing decisional capacity and opining in court whether an alleged victim was able to consent to the contested transactions. This article proposes and evaluates a novel form of psychological expertise in financial abuse trials—social framework testimony to reeducate jurors who are misinformed about aspects of this largely hidden crime. Findings suggest that, as in cases of child and spousal abuse, social framework testimony on the general dispositional and situational factors inherent in elder financial abuse may enhance prosecutions.     

Building Financial Knowledge Is Not Enough: Financial Self-Efficacy as a Mediator in the Financial Capability of Low-Income Families

ABSTRACT

Policymakers in many countries have taken an interest in population-level financial capability. Limited empirical work has examined how constructs that makeup financial capability relate and how they function for individuals with low incomes. Using a national sample of low-income Canadians, we investigate relationships between financial knowledge, financial self-efficacy, and savings outcomes. Overall, we find that financial self-efficacy fully mediated the relationship between objective financial knowledge and postsecondary-education saving. The association between objective financial knowledge and retirement saving and emergency saving passed through financial self-efficacy. Efforts to promote financial capability need to focus on more than objective financial knowledge.     

Conceptual Model and Map of Financial Exploitation of Older Adults

This article describes the processes and outcomes of three-dimensional concept mapping to conceptualize financial exploitation of older adults. Statements were generated from a literature review and by local and national panels consisting of 16 experts in the field of financial exploitation. These statements were sorted and rated using Concept Systems software, which grouped the statements into clusters and depicted them as a map. Statements were grouped into six clusters, and ranked by the experts as follows in descending severity: (a) theft and scams, (b) financial victimization, (c) financial entitlement, (d) coercion, (e) signs of possible financial exploitation, and (f) money management difficulties. The hierarchical model can be used to identify elder financial exploitation and differentiate it from related but distinct areas of victimization. The severity hierarchy may be used to develop measures that will enable more precise screening for triage of clients into appropriate interventions.     

Financial Knowledge and Behaviors of Chinese Migrant Workers: An International Perspective on a Financially Vulnerable Population

ABSTRACT

Making informed financial decisions is crucial to the wellbeing of Chinese migrant workers. Using interview survey data (N = 329), this study examined financial knowledge and behaviors of migrant workers in China. Results showed that participants demonstrated low levels of financial knowledge (51.4%) and beneficial financial behaviors (51.0%). Multivariate results indicated that a modest proportion of the variance in financial behaviors was explained by financial knowledge, attitudes, and socio-demographic characteristics (e.g., marital status and income). Findings underscore the importance of disseminating culturally-relevant educational interventions to financially at-risk, low-paid migrant workers in China.     

Toward Culturally Sensitive Financial Education Interventions with Latinos

ABSTACT

To expand the financial capability of Latinos, culturally sensitive interventions are needed. A literature search was conducted to examine how financial education interventions have been used to improve financial outcomes for Latinos. Just 7 peer-reviewed intervention studies were identified, suggesting a substantial gap in knowledge in this area. Although conclusions about the effectiveness of financial education interventions with Latinos are limited, each study finds positive changes in financial attitudes or behaviors. Using Resnicow’s (1999) cultural sensitivity framework, surface and deep structure methods of tailoring financial education were identified. Implications for designing and testing culturally sensitive financial education interventions are discussed.     

Neuropsychological Profiles of Victims of Financial Elder Exploitation at the Los Angeles County Elder Abuse Forensic Center

The current article examines neuropsychological correlates of financial elder exploitation in a sample of older adults who have been documented victims of financial elder exploitation. The purpose of this exploratory study was twofold. First, a subsample of the referrals at the Los Angeles County Elder Abuse Forensic Center (LACEAFC) was compared to community dwelling adults in terms of the specific cognitive domains linked to financial capacity including memory, calculation, and executive functioning. Next, the correlation between presence of neuropsychological data and the likelihood of filing a case with the LA County’s District Attorney office was examined. Twenty-seven LACEAFC cases and 32 controls were assessed. Overall, the forensic center group performed worse than a community-based age-matched control group on the MMSE, calculation, and executive functioning (ps < .01). The presence of neuropsychological data was significantly correlated to an increased likelihood of a case being filed.     

Developing Financial Management Training in Low-Income Communities

Abstract

As welfare policy contractions and declines in real wages have placed severe financial pressures on low-income families, programs to improve financial management practices and to help the poor accumulate assets have grown. This article examines the need for such programs and the implications associated with implementing two prominent training strategies-one that focuses solely on financial management training and another that combines such training with savings incentives.

Based on data from a large financial management training program, we find that knowledge deficits about basic financial issues are substantial, and that the type of financial training program offered has important implications with respect to the subgroups of low-income people likely to be served within a community. We discuss program issues critical to the implementation of such programs in low-income communities, with a focus upon more carefully attending to their participant empowerment and community development potential.     

A Telephone Counseling Program for Elder Abuse in Japan

ABSTRACT

In the 21st century, one-fourth of the Japanese population will be 65 years and older. Not only is the duty to report elder abuse not defined by the law but there is no special organization with clinical facilities to respond to incidents of elder abuse. A report in 1994 by the Society for the Study of Elder Abuse (SSEA) showed the need for definitive social measures to prevent elder abuse. Based on that research, SSEA organized the Japan Elder Abuse Prevention Center and initiated a volunteer telephone counseling service “Help Line” that was available for several hours on Mondays. Within an 18 month period, 209 cases were handled of which 150 concerned abuse, neglect, and financial exploitation. Callers were more often the elder or the daughter than other relatives or outsiders. Sons were the more prevalent perpetrators, and financial abuse the most common type of mistreatment reported. Recommendations include new laws and social welfare policies that adapt to the changes in an aging society.     

Cognitive abilities,self-efficacy,and financial behavior

This paper investigates the effect of cognitive abilities on financial behavior among older adults. Using the U.S. Health and Retirement Study, I find that cognitive abilities significantly affect financial behavior through two channels: ability and self-efficacy. People with higher cognition scores achieve better financial outcomes. This positive association is especially strong in tasks having high demand of cognitive abilities, which confirms the ability channel of the cognitive ability effect. In addition, there is evidence for the self-efficacy channel as a secondary source of cognitive influence. Lower cognitive abilities decrease people’s sense of self-efficacy, which, in turn, significantly decreases financial management efficiency. The findings have important policy implications, specifically that more effort is needed to assist the growing older population through the cognitive aging process and that noncognitive skills, as a secondary source of influence, also warrant attention.     

Financial Exploitation of Older Adults in Rural Settings: A Family Perspective

Federal agencies responsible for funding protective services to older adults are increasingly concerned with the growing incidence of financial exploitation in rural areas. The Wall Street Journal recently has reported an increasing trend of unemployed adult children migrating from urban centers to smaller rural towns and countrysides to live with their parents since 2008. This current study explores the attitudes of family caregivers regarding management of financial matters for their elderly care recipients. The major findings of the study include that adult children often (1) overestimate their parents' ability to manage their finances; (2) prefer to manage their parents' finances informally, as opposed to using legal options like power of attorney; and (3) tend to think of their parents' assets as “almost theirs.” The study concludes with recommendations on the critical need for information to help families make important decisions about helping elderly parents with their finances. This information would not only promote the use of safeguards against abuse, but could potentially provide caregivers with greater confidence and protection.     

Financial Exploitation of Elders: Analysis of Risk Factors Based on County Adult Protective Services Data

ABSTRACT

While all types of elder abuse and neglect are serious problems affecting thousands of vulnerable elders, financial exploitation has especially serious implications for the victims’ economic well-being and quality of life, because it may deprive the victims of their life savings and assets and thus their economic foundation for independence. In this study, data from the case files of a county adult protective services program were analyzed to identify risk factors associated with financial exploitation of and mismanagement by elders. The elders who were financially exploited were, on average, in their late seventies and tended to be cognitively impaired. We also found that owner-occupant elders were especially vulnerable to exploitation and that financial mismanagement and exploitation often occurred together. Approximately 60% of the perpetrators were relatives of the elderly victims, mostly their adult children, and the rest of the perpetrators were not related to the victims. Implications for interventions include case management for frail, cognitively impaired elders; preventive educational programs; and ongoing collaboration among adult protective services, financial institutions, and law enforcement agencies.     

Affordable Financial Services and Credit for the Poor

Abstract

The financial services and sources of credit available to poor families affect the rate at which families can be financially empowered through building assets. This paper provides background information on financial services, including credit sources, which are available for low-income people and communities. Also discussed are policies affecting financial markets and promising innovations in delivering affordable financial services to low-income families. Implications for social work education, practice and advocacy are discussed.     

Financial Abuse of Elders and Dependent Adults: The FAST (Financial Abuse Specialist Team) Approach

ABSTRACT

The Financial Abuse Specialist Team, a partnership of professionals from diverse disciplines, volunteer their time to review cases of financial elder abuse and facilitate comprehensive service delivery. The team also advocates for legislative reform, educates the community about the problem, and trains professionals in how to recognize, prevent, and resolve financial elder abuse.     

Financial crises: a culture of complacency

Abstract

The aim of this article is to consider the role of complacency in financial crises over the last two decades, with a closer look at the ongoing subprime mortgage financial crisis. The theme of complacency and the concept of financial crisis are both explored. Financial crises are better understood by explaining their economic drivers and the fundamental role of complacency in the various transmission mechanisms involved. These drivers are then illustrated by means of recent selected financial crises including the crash of 1987, the East Asian financial crisis of 1997, the long-term capital management crisis of 1998, the dot-com crash of 2000 and the current subprime mortgage financial crisis. The article concludes that complacency has not only underlain but also played a pivotal role in the recent financial crises. Complacency increases during periods of economic stability, leading to some departure from rational investment decisions, an effect which is then compounded by herding behaviour. Further, with regard to the governance of markets, complacency is both institutional and institutionalized. Finally, adding to this culture of complacency is the irrational belief that crises are unique and therefore cannot be spotted in advance or even in their early stages. To address this culture of complacency, remedies lie in the re-education of key players and the provision of better financial information, a rethink of market governance structures and some recognition that the transmission mechanisms are both recurring and predictable.