Feeling left out can lead to risky financial decisions, research finds

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 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 , 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' , 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.

More information: Presentation: "Effects of Social Exclusion on Financial Risk-Taking," session 2121, Thursday, Aug. 1, 10 - 10:50 a.m. HST, Hawai'i Convention Center, room 326A.

add to favorites email to friend print save as pdf

Related Stories

Brain stimulation may buffer feelings of social pain

Dec 04, 2012

Accumulating evidence suggests that certain brain areas involved in processing physical pain may also underlie feelings of social pain. But can altering brain activity in these areas actually change how people experience ...

Nostalgia could be linked to feeling left out

Nov 10, 2010

Sometimes you just want to watch a rerun of your favorite old TV show or eat a favorite childhood treat. Well, a new study led by two researchers from the W. P. Carey School of Business at Arizona State University shows that ...

Recommended for you

Discovery hints at why stress is more devastating for some

1 hour ago

Some people take stress in stride; others are done in by it. New research at Rockefeller University has identified the molecular mechanisms of this so-called stress gap in mice with very similar genetic backgrounds—a ...

Family dinners reduce effects of cyberbullying in adolescents

13 hours ago

Sharing regular family meals with children may help protect them from the effects of cyberbullying, according to a study by McGill professor Frank Elgar, Institute for Health and Social Policy. Because family meal times represent ...

The Edwardians were also fans of brain training

19 hours ago

Brain-training programmes are all the rage. They are part of a growing digital brain-health industry that earned more than US$1 billion in revenue in 2012 and is estimated to reach US$6 billion by 2020. The extent to which they actually improve brain function re ...

Report advocates improved police training

Aug 29, 2014

A new report released yesterday by the Mental Health Commission of Canada identifies ways to improve the mental health training and education that police personnel receive.

User comments