Featured Research

from universities, journals, and other organizations

How the connection to the future self impacts financial decision-making

Date:
July 12, 2011
Source:
Columbia Business School
Summary:
A new study reveals how consumers feeling or not feeling connected to their future selves impacts their spending and savings decisions. Researchers conducted a series of experiments, manipulating the degree to which subjects felt connected to their future selves.

The June 2011 edition of the Journal of Consumer Researchfeatures research from Professor Daniel Bartels, marketing professor at Columbia Business School, and Oleg Urminsky, marketing professor at The University of Chicago Booth School of Business, that depicts how consumers feeling or not feeling connected to their future selves impacts their spending and savings decisions. The researchers conducted a series of experiments, manipulating the degree to which subjects felt connected to their future selves.

When discontinuity with the future self is anticipated, people behave more impatiently -- speeding up the consumption of utility (in this case, gift cards) -- than when connectedness to the future self is expected. The research which examines how people weigh smaller, immediate rewards against larger, long-term rewards, is part of a growing area of study in psychology on intertemporal trade-offs.

In the first study, the researchers asked a group of college seniors -- three weeks before graduation -- to read a passage that described college graduation either as an event that would prompt a major change in their identities or as an event that would prompt only a relatively trivial change. Compared to students who read the passage describing graduation as a small change, those who read a description of the event as a major change were much more likely to make more impatient choices, choosing to receive a gift certificate worth $120 in the next week rather than wait a year for up to $240.

In a subsequent study, the authors asked people to evaluate their sense of connectedness and similarity to their future selves. Three weeks later, they were asked them to choose between smaller gift cards they could use right away or larger gift cards that would require waiting. "Those who had felt more connected to their future selves then made more patient choices and were more willing to wait for a higher-valued gift card," Professor Urminsky explained.

Professor Bartels discussed the significance of the study. "Our work suggests that you can motivate people to hold onto their money, or make other, more prudent decisions by increasing their sense of connectedness to their future selves. Rather than trying to guilt ourselves into making prudent financial choices or creating complicated incentive schemes, we can instead look for simple, straightforward ways to foster our sense that what matters most will be preserved in our future selves, so that we can achieve goals that are important."


Story Source:

The above story is based on materials provided by Columbia Business School. Note: Materials may be edited for content and length.


Cite This Page:

Columbia Business School. "How the connection to the future self impacts financial decision-making." ScienceDaily. ScienceDaily, 12 July 2011. <www.sciencedaily.com/releases/2011/07/110712143004.htm>.
Columbia Business School. (2011, July 12). How the connection to the future self impacts financial decision-making. ScienceDaily. Retrieved October 2, 2014 from www.sciencedaily.com/releases/2011/07/110712143004.htm
Columbia Business School. "How the connection to the future self impacts financial decision-making." ScienceDaily. www.sciencedaily.com/releases/2011/07/110712143004.htm (accessed October 2, 2014).

Share This



More Science & Society News

Thursday, October 2, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Japan Looks To Faster Future As Bullet Train Turns 50

Japan Looks To Faster Future As Bullet Train Turns 50

Newsy (Oct. 1, 2014) Japan's bullet train turns 50 Wednesday. Here's a look at how it's changed over half a century — and the changes it's inspired globally. Video provided by Newsy
Powered by NewsLook.com
US Police Put Body Cameras to the Test

US Police Put Body Cameras to the Test

AFP (Oct. 1, 2014) Police body cameras are gradually being rolled out across the US, with interest surging after the fatal police shooting in August of an unarmed black teenager. Duration: 02:18 Video provided by AFP
Powered by NewsLook.com
Ebola Cases Keep Coming for Monrovia's Island Hospital

Ebola Cases Keep Coming for Monrovia's Island Hospital

AFP (Oct. 1, 2014) A look inside Monrovia's Island Hospital, a key treatment centre in the fight against Ebola in Liberia's capital city. Duration: 00:34 Video provided by AFP
Powered by NewsLook.com
WH: We Can Stop Spread of Ebola in Its Tracks

WH: We Can Stop Spread of Ebola in Its Tracks

AP (Oct. 1, 2014) White House Press Secretary Josh Earnest reaffirmed the administration's confidence in the CDC's ability to keep the Ebola virus from spreading. (Oct. 1) Video provided by AP
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


Science & Society

Business & Industry

Education & Learning

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