Saving money is hard. It might even require retraining your brain: To get around the natural human tendency to chase short-term rewards at the expense of long-term wealth, for example, people try all kinds of tactics, from automating savings account deposits to using apps that shame you for your latest splurge.
You’ve probably heard some of these tips before, but have you ever tried simply turning down the lights?
While we wouldn’t go so far as to suggest a darker room is a silver bullet for solving your financial problems, the amount of light we’re exposed to is one of many surprising factors that could influence our financial decision-making. That’s according to a recent paper from researchers at New York University and the University of Sydney in Australia.
As strange as it all sounds, this and other research has found surprising factors that can change people’s spending habits. Here are three insights from studies that, though perhaps silly on the surface, show how our relationship with money can be affected by unconscious tendencies.
1. Avoid bright light while making money choices
But luminance, or the amount of sunlight that hits the Earth’s surface, might be a bit more of a mixed blessing than previously thought. Indeed, on days when there’s more light intensity, people are more risk-averse — to a fault. The effect is not large, said Paul Glimcher, a professor at New York University and one of the paper’s authors, but it is statistically significant and appears reliably. “This is one of those effects that is really robust but small,” he said in a phone interview.
This is a problem, Glimcher said, because people tend to be a little too risk-averse already.
That study looked at decision-making data from 2,500 people that they gathered from kiosks at an exhibit at the National Academy of Science Museum in Washington D.C.. They then cross-referenced that data with information from a weather center nearby (the study was actually conceived, Glimcher said, because the two facilities with uniquely reliable data just happened to be close to one another). All the decisions involved choosing between $5, a lottery option where they might receive nothing or an amount of cash between $5 and $125.
On high light-intensity days, people were more likely to be risk-averse, perhaps to a fault, and more tolerant of ambiguity, a contradiction that Glimcher says suggests ambiguity and risk are evaluated by two distinct regions of the brains. Neither is good from an investing standpoint — tolerating ambiguity, for example, means you’re theoretically more likely to roll the dice whether your odds of success are 1% or 20%. Risk aversion is also a common problem for most retail investors, particularly younger ones.
Does this mean you should wait for a cloudy, overcast day to finally set up that IRA? Definitely not, if it means putting it off any longer than you already have. But Glimcher also said it’s not the craziest idea for choices you can make whenever. “People tend to be too risk averse in their financial decision-making,” he said. “If you were running the New York Stock Exchange, it might not be a terrible idea to dial [the lights] down.”
2. Need to pee? Hold it for just a moment ...
If you tend toward impulsive decisions about money that you later regret, you might want to try chugging some water next time you’ve got a choice to make. That’s according to one 2011 paper from researchers in Norway and the Netherlands, which found that people were better at delaying gratification when they had to pee.
More specifically, when researchers asked test subjects to choose between a smaller short-term reward and a larger long-term reward — for example, receiving $16 the next day or $30 after 35 days — people were more likely to take the $30 when they really had to go.
The reason, the authors wrote, has to do with a psychological effect called “inhibitory spillover,” where one heightened inhibition spills over into our other, potentially unrelated inhibitions. In other words, when we have our guard up against not peeing all over ourselves, we also have our guard up against other things — like taking a bad deal.
An important caveat? While you may be a little better at suppressing your impulsiveness when nature calls, you’re not necessarily better at everything. A separate, albeit smaller, study found that people who need to go have slower reaction times: the same, for example, as someone who has pulled an all-nighter or even someone who’s a little drunk.
That’s a bit counterintuitive at first pass, but as writer Elizabeth Preston put it in Discover, these two studies are actually measuring slightly different abilities. Together, they actually suggest that being in a state of bathroom urgency is a bad time to drive a car — but potentially a good time to shop for one.
3. Crumpled or crisp bills? It might actually matter.
Going cash-only can be an excellent savings strategy: At least one study suggests that people actually spend about 12% to 18% more money when they’re swiping plastic as opposed to paying with cash. An MIT study found the effect is starker when it comes to certain kinds of leisure spending. In that paper, people were willing to spend twice as much on baseball or basketball tickets when they were using a credit card instead of cash.
Some research suggests that this effect is because when you’re parting with physical dollar bills, spending money creates a greater sensation of “pain” for the consumer than simply swiping a credit card.
But there’s another wrinkle in the research! If you want to try going cash-only, other studies suggest the appearance of the cash is significant as well, and carrying crisp new bills (instead of crumpled ones) might also help you save.
To test that theory out, researchers in Canada had University of Winnipeg undergraduates complete a series of anagram puzzles for a prize. If they scored between 80% and 90% correct on the test, they got a $10 prize; however, if they got more than 90% correct, they would get $20. But two of the questions were impossible to solve, so — unbeknownst to the subjects — the highest score one could actually get was 87%, which means no winners got $20.
All participants who did win the $10 were awarded the cash and then given a choice: They could walk away with their winnings or gamble the $10 for a chance to win $20 — which subjects got to peek at in an envelope — by solving one more problem.
What the subjects may not have realized, though, is that the researchers had planted bills in different conditions. Some $10 or $20 bills were old, faded, worn out and “tattered” — while others were crisp and brand new.
The results? When people won a worn-out $10 bill and were enticed to try to win a crisp $20 one, they were more likely to take the gamble — 68% of the time — than those who were awarded a crisp bill but enticed with a worn bill, who rolled the dice only about 30% of the time.
One reason, the authors theorize, is actually pretty simple: Money is gross, and when a dollar bill is worn-out, we’re more likely to associate it with “contamination from others.” Conversely, we are also primed to hoard pristine currency because we associate it with being able to display social value.
But there is a big caveat here: In a follow-up study, the researchers found that when subjects were told they’d be video-recorded and judged by their peers, their behavior changed. Those who got a crisp $10 bill were more likely to gamble it than those who got a worn bill.
The authors write that this shows how people may act differently with their money in public and private, and that many will “exercise a source of pride to extract social utility,” aka show off their nice, crisp bills.
So, perhaps, if you really want to curb your spending, you might want to carry crisp dollar bills for your solo grocery and drugstore errands or shopping sprees — and save your crumpled ones for that group night out at the club.
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