This chapter explores the interplay between fluid intelligence declines and higher levels of crystallized intelligence of older adults as they affect everyday decision-making ability. Specifically, we explore the hypothesis that accumulated knowledge and expertise may help compensate for age-related declines in fluid cognitive function. The complementary capabilities framework suggests that although age-related declines are inevitable, these declines may be at least partially attenuated on tasks and in domains that are more familiar and practiced. Crystallized intelligence may thereby represent a kind of intellectual capital that circumvents reduced capabilities caused by diminished levels of fluid intelligence. We explore the role of domain-specific knowledge and expertise in context-specific tasks and everyday problem solving, and discuss the practical implications of this research for public policy and for the design of effective decision interventions that can aid decision making among older adults.

Age-related deterioration in cognitive ability may compromise the ability of older adults to make major financial decisions. We explore whether knowledge and expertise accumulated from past decisions can offset cognitive decline to maintain decision quality over the life span. Using a unique dataset that combines measures of cognitive ability (fluid intelligence) and of general and domain-specific knowledge (crystallized intelligence), credit report data, and other measures of decision quality, we show that domain-specific knowledge and expertise provide an alternative route for sound financial decisions. That is, cognitive aging does not spell doom for financial decision-making in domains where the decision maker has developed expertise. These results have important implications for public policy and for the design of effective interventions and decision aids.