10 Updates

Feeling Grateful Makes You A Better Saver And Investor, Study Shows

Apr 1 2014, 5:03pm CDT | by

How were you feeling the day you had to turn in the form telling your benefits department what percent of your salary you wanted to set aside for your 401K? Or the time you were deciding to rack up...

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16 weeks ago

Feeling Grateful Makes You A Better Saver And Investor, Study Shows

Apr 1 2014, 5:03pm CDT | by

How were you feeling the day you had to turn in the form telling your benefits department what percent of your salary you wanted to set aside for your 401K? Or the time you were deciding to rack up $5,000 in credit card debt so you and your spouse could take a two-week cycling vacation in the south of France? What mood were you in when you got that $10,000 check from your late aunt’s estate and were debating whether to invest it all in your Vanguard index fund or spend$1,500 on that leather jacket you’d been coveting?

A new paper by professors at Northeastern, Harvard, and University of California at Riverside says that if you were feeling a sense of gratitude when making those decisions, you would likely have put the maximum in your 401K, foregone the cycling trip and invested all $10,000 in your index fund. According to the paper, “Gratitude: A Tool for Reducing Economic Impatience,” to be published in the journal Psychological Science, most of us fight an impulse for immediate gratification when we make financial decisions, especially if we’re feeling sad or even just neutral about our state of affairs.  According to the conventional social science wisdom, we make the best financial decisions when we take emotions out of our decision-making completely.  But David DeSteno, a psychology professor at Northeastern University and one of the paper’s lead authors, says he and his colleagues have empirically proven that gratitude produces superior financial decisions.

For their experiment, the authors ran a lab test on 75 participants who got both course credit for participating and a cash award based on their decisions about whether to take home a small sum of money immediately or a larger sum at some point in the future. In the experiment, the time frame ran from just one week to six months and the sums ranged from a low of $11 to a cash award of $85.

To test their hypothesis about gratitude, the researchers had the participants do what the paper calls an “emotional-induction procedure.” They were instructed to recall an event that made them feel grateful, something that made them feel happy or a day where nothing much of consequence happened and they felt neutral. They wrote about those events in detail for five minutes and then they were asked to describe their emotional state (sad, angry, grateful, happy) and rank it on a 5-point scale. Most of the study participants were in their 20s and when describing situations where they felt grateful, many of them wrote about getting help with a boyfriend or girlfriend, or receiving letters of recommendation from a superior.

Next they made 27 choices about getting cash immediately or receiving larger sums if they were willing to let time elapse. What DeSteno and his colleagues found: the mean grateful participant wanted $63 immediately to be willing to pass up $85 in three months. That contrasted with the neutral or happy participant who only needed $55 to be willing to forgo the $85 in the future.

Why does gratitude make us more patient? “If someone helps me and I don’t help them back or someone gives me a gift and I don’t gift them back, then long term, that’s a problem for the relationship,” posits DeSteno. “We need an emotional state to solve that problem.” In other words, we need to feel gratitude in order to want to be generous to our friends, which in turn, furthers the friendship. “When it comes to financial investing, when you feel grateful it makes you not devalue the future reward.”

DeSteno, 46, has done other studies on gratitude. In 2010 he broke ground with a paper showing that financial partners who were experiencing feelings of gratitude were more likely to behave ethically and  divvy up profits equally than to try to hoard the money.  For that study, DeSteno and his fellow researchers set participants up with computers and asked them to answer long, complex logic problems. They rigged the computers up to crash but they also had people in the lab who volunteered to fix the broken machines. The study participants whose computers had broken down and then gotten fixed, were eager to divide proceeds equally with their partners.

The takeaway from these studies: If you can summon up a feeling of gratitude before you make an investment decision, you will be more likely to make the right choice. “When we ask ourselves, should I blow my money right now and enjoy it, or is it more wise for me to put it away and enjoy it later, it takes most of us a lot of effort to decide to save the money,” says DeSteno. “But if you allow yourself to feel grateful, it will take you less effort to do the right thing.”

Source: Forbes Business

 
Update
10

7 weeks ago

RM47mil KWSG contributions still unclaimed

Jun 9 2014 7:54am CDT | Source: Business Times Malaysia

KUALA LUMPUR: About RM47 million of contributions in the Teachers Provident Fund (KWSG) still remain unclaimed, the ...
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Update
9

7 weeks ago

Gold shop lost almost RM1mil

Jun 9 2014 3:50am CDT | Source: Business Times Malaysia

KANGAR: A gold shop owner lost almost RM1 million after after the safe on in his shop was broken ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
8

7 weeks ago

Motion to debate MAS losses in Dewan Rakyat rejected

Jun 9 2014 3:39am CDT | Source: Business Times Malaysia

KUALA LUMPUR: AN emergency motion to debate the losses incurred by Malaysia Airlines last year, amounting to RM1.2 billion was rejected by the Dewan R ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
7

7 weeks ago

MH370 Tragedy: Hisham: RM27.6 mil spent on 1st phase of SAR

Jun 9 2014 2:11am CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia spent some RM27.6 million in its first phase of the search operations for missing Malaysia Airline flight MH370, said Acting Transport Minister, Datuk Seri Hishammuddin ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
6

7 weeks ago

9.1m litres of diesel seized in a month

Jun 8 2014 1:11am CDT | Source: Business Times Malaysia

PUTRAJAYA: The Domestic Trade, Cooperatives, and Consumerism ministry has seized some 9.1 million litres of diesel and property worth RM58 million since mounting ‘Operasi Diesel Selatan’ in the southern states last mo ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
5

7 weeks ago

Girl, 9, awarded RM2.78m compensation for medical negligence

Jun 6 2014 4:56am CDT | Source: Business Times Malaysia

KUALA LUMPUR: A nine-year-old girl who suffered brain damage during her birth at a government hospital was awarded over RM2 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
4

7 weeks ago

Malaysia's total trade in April up 12pc

Jun 5 2014 11:52pm CDT | Source: Business Times Malaysia

KUALA LUMPUR: Malaysia's total trade in April 2014 rose by 12 per cent from a year ago to RM123.86 billion due to growing trading activities, International Trade and Industry Minister Datuk ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
3

7 weeks ago

Works Ministry to spend RM20m for upgrading works at 50 accident black spots

Jun 4 2014 11:35pm CDT | Source: Business Times Malaysia

JOHOR BARU: The Works Ministry will implement upgrading works at 50 accident prone locations in the country that have been identified this year involving ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
2

7 weeks ago

Najib launches loan scheme for Ramadan traders

Jun 4 2014 10:24pm CDT | Source: Business Times Malaysia

PUTRAJAYA: Prime Minister Datuk Seri Najib Razak today launches RM45 million Ramadan Bazaar Scheme 2014 ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 
Update
1

7 weeks ago

Residents bring up objection against Kidex to Suhakam

Jun 4 2014 4:49am CDT | Source: Business Times Malaysia

PETALING JAYA: A group of 20 Petaling Jaya residents held a meeting with the Human Rights Commission of Malaysia (Suhakam) over their objection against the proposed RM2.2 billion Kinrara Damansara Skyway ...
Source: Business Times Malaysia   Full article at: Business Times Malaysia
 

 

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