If you had to name the top three emotions that cause people to make bad financial decisions, you’d probably say anger, guilt and fear. While these are true, there are two more emotions to add to the list—sadness and impatience.
Psychological scientists from Harvard Kennedy School of Government and Columbia University recently published a report on November 13 that show a correlation between sadness, impatience, and poor financial decision-making.
The researchers asked participants questions with both short- and long-term financial implications. Before answering, however, half of the participants had to watch a sad video.
The study found that these two emotions could be quite costly.
Participants subject to “sadness conditions” earned significantly less money than the participants who did not view the video. They valued future rewards on average 13% to 34% less than their “neutral state” counterparts.
The researchers concluded that sadness triggered impatience – another emotion that produces poor financial results. When sad, people craved immediate gratification. Sadness triggers impatience; impatience causes people to forgo future gains in exchange for instant gratification.