Client won't save? It's how their brain is wired

Client won't save? It's how their brain is wired

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Some people seem to instinctively save while others just can’t but why?

Science believes it has the answer.

A new study by Cornell University looked at Federal Reserve data and found that the average American couple has just $5,000 in retirement savings, while 43% have nothing saved at all.

But while everyday expenses have a large impact on how much we save, the research found that our brains are geared towards earning but the unconscious bias makes saving less natural.

"Fundamentally it comes down to this: saving is less valuable to our brains, which devote less attentional resources to it," said study co-author Adam Anderson, associate professor of human development. "It's more than a financial problem of making ends meet. Our brains find saving more difficult to attend to."

How the study was done
In the study, the researchers created their own experiment in which individuals could earn or save money by responding to how different colors signified these opportunities. They also gave study participants a timing perception task with these same colors, measuring how quickly they processed colors as an implicit index of the potency of earning and saving for the brain.

Among those who earned more than they saved, over time, three quarters believed they were shown earning colours first when in fact they were savings colours.

The warped time perception may or may not be a mechanism for the cognitive bias to earn more than save, Anderson said. "At a minimum, it's an indication of how strong this bias is, that it can even warp our perception of time," he said. "Imagine what it could do to our bank accounts."

The full study called "Differential temporal salience of earning and saving," was published July 20 in Nature Communications.

 


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