Dorien Bangma

GENERAL INTRODUCTION | 15 Financial decision-making (FDM) capability refers to the ability to manage or direct one’s finances (Appelbaum et al., 2016). It is a complex construct, that not only involves the ability to count coins, pay bills or buy products (e.g., buying a bread in the local supermarket), but also more complex decisions such as investment decisions, buying or selling property and taking out health insurances. An adequate FDM capability is essential for adults to live independently. Problems within the context of FDM can have serious and tremendous consequences, such as debts, bankruptcy, poverty or financial abuse. The evaluation of the capability to make financial decisions is, therefore, of utmost importance to protect and assist individuals. Furthermore, adequate assessment can assist (clinical) decision-making about the necessity for support or empowerment when making financial decisions. This is especially important since in our current society independent living is expected and encouraged for as long as possible, also for vulnerable groups such as older individuals. Combined with the sensitivity of this topic and the complexity of the construct, the assessment of FDM should be conducted carefully and comprehensively. The assessment of FDM There are several methods available that can be used to assess behavioral constructs such as FDM, which can roughly be divided in direct and indirect assessments of behavior. Indirect assessment refers to the evaluation of information without the behavior of interest occurring during evaluation, such as reviewing financial reports, self-evaluation using self-report questionnaires or interviewing an informant who is able to make an evaluation of a person’s financial capability (e.g., relatives or care practitioners) using proxy-report questionnaires (Appelbaum et al., 2016; Cone, 1978). Proxy-report questionnaires are the most frequently used tool when measuring activities of daily living including FDM (Loewenstein & Acevodo, 2010). Self- and proxy-report questionnaires are in general valid instruments to evaluate functional capability and are easy to administer and cost effective. Proxy-report questionnaires rely, however, on a reliable and independent informant who has a good insight in the capability of the participant (Sikkes & de Rotrou, 2014). Factors such as depression or caregiver burden can have a negative impact on the objectivity of the informant (Pfeifer et al., 2013; Schulz et al., 2013). Self-report questionnaires, on the other hand, rely on a person’s self-evaluation of his or her financial capability. Self-reported cognitive decline tends to precede decline observed by an informant (Caselli et al., 2014). Self-report questionnaires require, however, an adequate self-insight, which can be affected because of various reasons which may lead to over- or underestimation of one’s own capability (Demetriou et al., 2015; Graham et al., 2005; Howorth & Saper, 2003). In the context of the assessment of FDM, both self- and proxy report evaluations were found to lead to over- as well as underestimation of financial abilities in patients with Alzheimer’s Diseases (AD) (Wadley et al., 2003), which underscores the necessity of an alternative approach for the assessment of the capability to make financial decisions. Direct assessment refers to the direct observation and evaluation of the behavior of interest (Cone, 1978) and, in contrast to indirect assessment, results in a more objective estimation of someone’s FDM capability. Ideally, the skills and manners of an individual are evaluated within a real-life setting. This way of assessment is, however, inefficient and time