Your emotions can certainly impact your decisions, but you might be surprised by the extent to which your emotions affect your pocketbook. New research from psychological scientist Jennifer Lerner of the Harvard Kennedy School of Government and colleagues Yi Le and Elke U. Weber of Columbia University explores how impatience brought on by sadness can in turn produce substantial financial loss.
The study is published in Psychological Science, a journal of the Association for Psychological Science.
Using data collected at the Harvard Decision Science Laboratory and the Center for Decision Sciences at Columbia, the authors found that subjects randomly assigned to view a video that induced sadness exhibited impatience and myopia, which were manifested in financial decisions that elicited higher gains in the short term, but lesser gains over the longer term. Thus, subjects in the sadness condition earned significantly less money than subjects in the neutral condition. They showed what is known as “present bias,” wherein decision makers want immediate gratification and so they ignore greater gains associated with waiting.
Photos courtesy of and copyright PhotoPin, http://photopin.com/Beedie Savage – President of Quantum Units Education