Participants in an experiment were quicker to react when presented with chances to earn than to save
When it comes to money, people are usually more excited about getting it than saving it. And according to new findings, this could be at least partly caused by biology — specifically, our brains.
Researchers in a Cornell University study recently published in the journal Nature Communications have found that our brains may be wired to look for opportunities to earn money, as opposed to saving it. As reported in the Wall Street Journal, this tendency may lead people to miss chances to avoid losing money, even if those chances appear right in front of them.
In the first part of the study, participants were asked to identify colors that were flashed on a computer screen. One “earning” color meant they would gain 30 cents, a neutral color represented no monetary effect, and a “saving” color meant they would avoid losing 30 cents.
Among all the participants, 87.5% were able to identify the “earning” color more quickly and accurately than the “saving” color. Even when “saving” was reframed as earnings that would come slightly later, subjects were still better at recognizing immediate “earning” opportunities.
The second part of the study involved participants identifying which color appeared first in a sequence. Three out of four incorrectly said the “earning” colour appeared first when in reality, the “saving” colour did.
“It’s such a powerful bias that it literally distorts the lens with which you see things,” said Adam Anderson, an associate professor and co-director of Cornell’s Affect and Cognition Lab, who’s a co-author of the study. “It’s not like people don’t care about savings. We’re kind of blind when those opportunities are presented.”
Anderson assumes that the bias, whose effect appears strong enough to interfere even with the well-documented tendency toward loss aversion, is more likely learned than innate. “There are likely large cultural differences that prioritize saving more, lessening the bias, and thus making people more attuned to saving opportunities,” he told the Journal.
That implies it’s possible for people to become better savers. As Anderson explained, working every day in a job or business lets people exercise their earning habits; saving, on the other hand, isn’t practiced nearly as much. Consistently putting money in a savings account, even just a dollar a day, may help people become more aware of opportunities to not lose money.
“The big picture is that we prioritize money over everything, and we greatly prioritize earning over saving, in terms of our recognition of those concepts,” said Skidmore College psychology professor Flip Phillips. “Understanding this might help us prime people to think about savings differently.”