Featured Research

from universities, journals, and other organizations

Feeling left out can lead to risky financial decisions

Date:
August 1, 2013
Source:
American Psychological Association (APA)
Summary:
People who feel isolated are more inclined to make risker financial decisions for bigger payoffs, according to new research.

People who feel isolated are more inclined to make risker financial decisions for bigger payoffs, according to new research presented at the American Psychological Association's 121st Annual Convention.

In a presentation entitled "Effects of Social Exclusion on Financial Risk-Taking," Rod Duclos, PhD, assistant professor of marketing at the Hong Kong University of Science and Technology, described several experiments and a field survey that found the more often people felt excluded, the more they chose the longer odds for bigger lottery payoffs, took greater risks with their finances, bet on horse races and gambled in casinos.

"In the absence of social support, forlorn consumers apparently place more value on the power of money to secure what they want socially," he said.

In one experiment, 59 students played an online ball-tossing game designed to make them feel socially included or excluded. In a separate setting, they chose between two hypothetical gambles with very different odds, Duclos said. The socially excluded participants favored the riskier option more strongly than their included counterparts.

A second experiment used essay writing to make 168 students feel either excluded or included and found that the socially excluded participants were twice as likely to gamble as the students who felt included, he said. Another experiment with 35 students ruled out lower self-esteem as a trigger for risk-taking, through essay writing and a choice of lotteries. In a fourth experiment with 128 students, researchers found those who felt isolated did not take more risks than others if they were told that having more money would no longer result in social benefits.

For a real-world demonstration, a team of trained research assistants interviewed individuals at malls, parks and subway stations, according to Duclos. They asked participants to choose between two lotteries, one that offered an 80 percent chance to win $200 and a 20 percent chance to win nothing and another that offered a 20 percent chance to win $800 and an 80 percent chance to win nothing. The research assistants then asked participants what proportion of their disposable income they had in low versus high-risk investments, how often they bet on horse racing, how often they gambled in casinos, and how often on a scale of 1-4 (1 = never, 4 = often) they felt socially excluded. There were clear positive relationships between the degree to which participants felt socially excluded and how much risk they took, Duclos said.

"Some marketers with questionable ethics may target demographic groups likely to suffer from social exclusion, such as the elderly, divorcees, and widows or widowers," Duclos said. "Others may be tempted to isolate, physically or psychologically, prospective clients during financial negotiations since doing so may result in larger commissions. By illustrating how common experiences such as feeling rejected or accepted can affect consumers' financial decisions, our research can help people make more informed decisions."

The presentation was based on research described in an article entitled, "Show Me the Honey! Effects of Social Exclusion on Financial Risk-Taking" by Duclos and co-authors Echo Wen Wan, PhD, and Yuwei Jiang, PhD, accepted for publication by the Journal of Consumer Research.


Story Source:

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


Cite This Page:

American Psychological Association (APA). "Feeling left out can lead to risky financial decisions." ScienceDaily. ScienceDaily, 1 August 2013. <www.sciencedaily.com/releases/2013/08/130801180300.htm>.
American Psychological Association (APA). (2013, August 1). Feeling left out can lead to risky financial decisions. ScienceDaily. Retrieved October 22, 2014 from www.sciencedaily.com/releases/2013/08/130801180300.htm
American Psychological Association (APA). "Feeling left out can lead to risky financial decisions." ScienceDaily. www.sciencedaily.com/releases/2013/08/130801180300.htm (accessed October 22, 2014).

Share This



More Mind & Brain News

Wednesday, October 22, 2014

Featured Research

from universities, journals, and other organizations


Featured Videos

from AP, Reuters, AFP, and other news services

Working Mother Getaway: Beaches Turks & Caicos

Working Mother Getaway: Beaches Turks & Caicos

Working Mother (Oct. 22, 2014) Feast your eyes on this gorgeous family-friendly resort. Video provided by Working Mother
Powered by NewsLook.com
First-Of-Its-Kind Treatment Gives Man Ability To Walk Again

First-Of-Its-Kind Treatment Gives Man Ability To Walk Again

Newsy (Oct. 21, 2014) A medical team has for the first time given a man the ability to walk again after transplanting cells from his brain onto his severed spinal cord. Video provided by Newsy
Powered by NewsLook.com
Portable Breathalyzer Gets You Home Safely

Portable Breathalyzer Gets You Home Safely

Buzz60 (Oct. 21, 2014) Breeze, a portable breathalyzer, gets you home safely by instantly showing your blood alcohol content, and with one tap, lets you call an Uber, a cab or a friend from your contact list to pick you up. Sean Dowling (@SeanDowlingTV) has the details. Video provided by Buzz60
Powered by NewsLook.com
Your Birth Season Might Determine Your Temperament

Your Birth Season Might Determine Your Temperament

Newsy (Oct. 20, 2014) A new study says the season you're born in can determine your temperament — and one season has a surprising outcome. 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