Featured Research

from universities, journals, and other organizations

Age-old Money Matters: Positivity In Older Adults Leads To Balanced Investments

Date:
July 12, 2008
Source:
Association for Psychological Science
Summary:
The economic and psychological term known as "sunk-cost fallacy" is a bias that leads someone to make a decision based solely on a previous financial investment. For example, a baseball fan might attend every game of the season only because he already purchased the tickets. So who is more likely to commit or avoid the sunk-cost fallacy and why?

The economic and psychological term known as “sunk-cost fallacy” is a bias that leads someone to make a decision based solely on a previous financial investment. For example, a baseball fan might attend every game of the season only because he already purchased the tickets. But not everyone would force themselves to brave the pouring rain for a single game in one season simply because they previously paid for the seats.

Related Articles


So who is more likely to commit or avoid the sunk-cost fallacy and why? In a recent study, psychologists JoNell Strough, Clare Mehta, Joseph McFall and Kelly Schuller from West Virginia University found that younger adults were more likely to commit to a situation if they had already invested money into it, and that older adults showed a more balanced fiscal perspective of the same situation.

To get to this conclusion, the researchers presented college students and senior citizens with two vignettes to test how likely each age group would be to watch a boring, paid-for movie versus a boring, free movie.

The first vignette specifically read, “You paid $10.95 to see a movie on pay TV. After five minutes, you are bored and the movie seems pretty bad”; the other vignette did not include a cost. Participants then selected from five options regarding their projected time commitment--stop watching entirely, watch for ten more minutes, watch for twenty more minutes, watch for thirty more minutes or watch until the end.

The results, which appear in the July issue of Psychological Science, a publication of the Association for Psychological Science, show the older adults spent the same amount of time watching the movie regardless of monetary investment. In contrast, the young adults chose to invest more time in the paid-for movie than the free movie in order to avoid wasting $10.95. The psychologists attribute the distinction between younger and older peoples’ decisions to differences in the way each group thinks about gains versus losses.

“Younger adults show a negativity bias,” Strough explained. “They weigh negative information, such as the lost investment, more heavily than positive information and so they try to ‘recover’ the lost investment by investing more time.”

On the other hand, older adults are more likely to view the positive side of situations; therefore, their decisions reflect a more balanced view of gains and losses. According to the psychologists, older adults’ more balanced view may help them recognize that, once made, this type of investment cannot be recovered simply by committing more time to the activity.


Story Source:

The above story is based on materials provided by Association for Psychological Science. Note: Materials may be edited for content and length.


Cite This Page:

Association for Psychological Science. "Age-old Money Matters: Positivity In Older Adults Leads To Balanced Investments." ScienceDaily. ScienceDaily, 12 July 2008. <www.sciencedaily.com/releases/2008/07/080710110745.htm>.
Association for Psychological Science. (2008, July 12). Age-old Money Matters: Positivity In Older Adults Leads To Balanced Investments. ScienceDaily. Retrieved December 19, 2014 from www.sciencedaily.com/releases/2008/07/080710110745.htm
Association for Psychological Science. "Age-old Money Matters: Positivity In Older Adults Leads To Balanced Investments." ScienceDaily. www.sciencedaily.com/releases/2008/07/080710110745.htm (accessed December 19, 2014).

Share This


More From ScienceDaily



More Mind & Brain News

Friday, December 19, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Prenatal Exposure To Pollution Might Increase Autism Risk

Prenatal Exposure To Pollution Might Increase Autism Risk

Newsy (Dec. 18, 2014) Harvard researchers found children whose mothers were exposed to high pollution levels in the third trimester were twice as likely to develop autism. Video provided by Newsy
Powered by NewsLook.com
Yoga Could Be As Beneficial For The Heart As Walking, Biking

Yoga Could Be As Beneficial For The Heart As Walking, Biking

Newsy (Dec. 17, 2014) Yoga can help your weight, blood pressure, cholesterol and heart just as much as biking and walking does, a new study suggests. Video provided by Newsy
Powered by NewsLook.com
1st Responders Trained for Autism Sensitivity

1st Responders Trained for Autism Sensitivity

AP (Dec. 16, 2014) More departments are ordering their first responders to sit in on training sessions that focus on how to more effectively interact with those with autism spectrum disorder (Dec. 16) Video provided by AP
Powered by NewsLook.com
Guys Are Idiots, According To Sarcastic Study

Guys Are Idiots, According To Sarcastic Study

Newsy (Dec. 12, 2014) A study out of Britain suggest men are more idiotic than women based on the rate of accidental deaths and other factors. Video provided by Newsy
Powered by NewsLook.com

Search ScienceDaily

Number of stories in archives: 140,361

Find with keyword(s):
Enter a keyword or phrase to search ScienceDaily for related topics and research stories.

Save/Print:
Share:

Breaking News:

Strange & Offbeat Stories


Health & Medicine

Mind & Brain

Living & Well

In Other News

... from NewsDaily.com

Science News

Health News

Environment News

Technology News



Save/Print:
Share:

Free Subscriptions


Get the latest science news with ScienceDaily's free email newsletters, updated daily and weekly. Or view hourly updated newsfeeds in your RSS reader:

Get Social & Mobile


Keep up to date with the latest news from ScienceDaily via social networks and mobile apps:

Have Feedback?


Tell us what you think of ScienceDaily -- we welcome both positive and negative comments. Have any problems using the site? Questions?
Mobile: iPhone Android Web
Follow: Facebook Twitter Google+
Subscribe: RSS Feeds Email Newsletters
Latest Headlines Health & Medicine Mind & Brain Space & Time Matter & Energy Computers & Math Plants & Animals Earth & Climate Fossils & Ruins