Sadness Can Lead To Deepening Debt

Anxious, sadBy Michael Estrin

Published April 23, 2013

We may not see the connection between our mental health and our wallets, but a new study suggests that sad people make poorer financial decisions compared to their happier counterparts.

The reason, according to Jennifer Lerner of the Harvard Kennedy School of Government and colleagues Ye Li and Elke Weber of Columbia University who published their study in the Psychological Science journal last year, is that sad people exhibit what’s known as “present bias,” meaning they tend to value the present over the future, choosing immediate gratification and ignoring the greater gains associated with waiting. The researchers say their findings could help us better understand how people get into trouble with credit card debt and to craft better public policy down the road. In the meantime, those who work closely with people in debt say the findings aren’t all that surprising.  Read more…

Copyright 2013, Bankrate Inc.

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