Thursday, June 28, 2012

Dealing with Money in Sadness

I have come across an article I found interesting yet might just state the obvious. Sometimes, it’s fun to know explanations.

Let me ask you a question, if you are sad, depressed or down, what will you do with money? Will you spend it all now if you have it? Will you keep it for a better use? Will you sacrifice a greater profit later for some cash right now? Will you do it the other way around? Will you become a big spender? Or, will become a great saver?

Honestly, I thought that I would tend to spend less if I am not okay. I mean I wouldn’t want to do anything. But, that’s just what I thought. I don’t know if this is what you thought as well. The reality remains, if you are sad, you would want to cheer yourself up, and what’s a better reward than gaining some cash now? It might be little but it’s still now. How about buying new clothes or a new gadget?

That’s what we do. We want to cheer ourselves up; even if we don’t actually know it.

Myopic Misery: The Financial Cost of Sadness by Wray Herbert was the article I was talking about earlier.

It highlighted an experiment made by a team of psychology scientists, Jennifer Lerner of Harvard and Ye Li and Elke Weber of Columbia. Basically, what they did was experiment whether a group of volunteers were going to accept little money now over more money in three months. It turns out, that sad volunteers would rather take $37 dollars now in contrast to happy volunteers who chose to wait for the three months to have an $85 payoff. In other words, sad people tend to spend more and accept losses in return for an immediate reward, whereas happy people tend to keep the balance.

If you come to think about it, that is just free money. How about if we are talking about taking real decisions that involves others, a family, a company or any other financial responsibility? Maybe it’s not the best decision to play with cash while we are sad, but do we know that?

Maybe we know, but do we really control it?

Image Credits to: Ambro

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