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Sadness can cost people financially
Sadness can cost people from a financial perspective, new research has shown. Published in the Association for Psychological Science's journal Psychological Science, the study found impatience brought on by such feelings can hit a person hard in the pocket.
Investigators from the Harvard Kennedy School of Government and Columbia University discovered individuals who were sad exhibited myopia and impatience, which led to them making financial decisions that brought them more winnings in the short-term but lesser gains further down the line.
According to the findings, people who are feeling down tend to want immediate gratification and therefore do not consider the benefits to be gained through waiting.
The authors noted: "These experiments, combining methods from psychology and economics, revealed that the sadder person is not necessarily the wiser person when it comes to financial choices."
They added it is sadness - and not just any negative emotion - that serves to make people more myopic.
Chartered Psychologist Professor Alexander Maule explained: "This research adds to the growing number of studies showing that emotional states can influence how people make decisions and that different negative emotions such as sadness and disgust can have very different effects. The findings demonstrated ‘present bias’ in sad people - a stronger preference for immediate rather than delayed financial reward. This bias may adversely affect important financial decision taken by individuals who are sad after the death of a family member or after losing their jobs. The bias may lead them to use their funds for immediate consumption at the expense of more prudent investments that may serve their interests better by providing medium and long term security."
"These findings have important implications for counselling the bereaved or those being made redundant: we may need to help these people take account of medium and long term factors as well short term ones when making important decisions. However, several important issues remain unexplained. For example, the findings are based on simple manipulations likely to induce mild and transient emotional states. It is unclear whether similar findings occur in more extreme or chronic situations. Also, emotions often occur in mixtures such as sadness about the loss of a loved one and anxiety about the future without their financial support. Most research focuses on the effects of a single emotion. We need a better understanding of these complex interactions and how they affect decision making behaviour."
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