Love and Money: When Tightwads Meet Spendthrifts

Sometimes shopping can be a pain in the brain, says behavioral decision researcher Scott Rick, Ph.D.

Or not. And the degree to which you anticipate the “pain of paying” is basically what determines whether you are a tightwad or a spendthrift.

“People differ in the extent to which they have this distress reaction to spending situations,” says Rick, assistant professor of marketing at the University of Michigan’s Ross School of Business. “People who experience a lot of distress, we call them tightwads; people who don’t experience enough distress, we call them spendthrifts.”

In honor of Valentine’s Day, let’s consider what happens when the two pair up in a relationship. Humans have known for centuries that, in affairs of the heart, opposites usually attract. That’s great romantically and socially, but it can be disastrous financially.

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As a graduate student at Carnegie Mellon University, Rick and a team of researchers from the University of Michigan, Northwestern University, and the Wharton School at the University of Pennsylvania performed a study that surveyed 1,000 adults who had been married 16 years on average about their attitudes toward money. The results indicate that, when it comes to spending money, opposites do attract. Thus, if at all possible, spendthrifts and tightwads should be cautious when marrying one another.

“There are all kinds of important financial decisions to be made in a marriage,” Rick says. “So when those conflicting spending differences raise their ugly heads, that doesn’t tend to work out well.”

Their findings also indicated that spendthrifts who marry spendthrifts will have more debt and save less than spendthrifts who marry tightwads. However, if they want to avoid marital discord, Rick explains, spendthrifts should marry a spendthrift to have a marriage with less conflict in it.

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“They will be happier because they’ll argue about money less and, if they go into debt, they can share the blame,” he says.

On the flip side, when tightwads marry, they are more likely to limit their spending enough to interfere with their ability to have fun. Nevertheless, they may also enjoy better financial outcomes combined with greater marital contentment because they don’t argue over money.

The Science Behind it All »

Image: Verdance, via Flickr.com

The Science Behind it All

Rick and several colleagues developed a “Spendthrift-Tightwad” scale to measure differences in the level of pain that comes from spending decisions. Later, they were able to observe the expected patterns of pain in the brains of tightwads and spendthrifts via functional Magnetic Resonance Imaging (fMRI) experiments involving shopping tasks.

The fMRI shows what portions of the brain are activated during specific physical activities. In Rick’s study, they slid the subject into the MRI’s brain scanning magnetic field. Above them, they could see a screen displaying different items and their prices. There was one button they could push to buy the item and one button not to buy it. To ensure their continued focus, the subjects were informed that one of their purchases would be real.

Rick and his team most closely observed the anterior insula part of the brain, which is responsible for anticipating pain. For the study’s shoppers, when they anticipated having to pay for an item, especially when they thought the price was more than they were willing to pay, the anterior insula was clearly activated in the MRI images.

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“We found that the more activity in this brain region that’s known for being active during distress episodes, the less likely people were to buy,” Rick says. “We interpret that as some initial, physical evidence for this pain of paying.”

The difference in our two classes of shoppers is how much their brain responds to shopping pain. Rick explains that there are other related characteristics. For example, spendthrifts tend to be more sensation-seeking than tightwads. If you’re personality is such that you’re not prone to experiencing anxiety, he adds, you’re going to struggle to become a tightwad. If you are typically more anxious and vigilant, however, it will be tough to become a spendthrift.

The unfortunate news is that neither group is happy. Each is frustrated with what they perceive as a weakness in how they spend money, Rick explains. He compares spendthrifts to people driving a car without brakes, while tightwads can’t stop pumping the brake pedal. The first group wishes they had a stronger anxiety response, and the second wishes theirs wasn’t as powerful.

Bottom line…

The primary lesson in relationships then, according to the researchers, is prior to making a lifelong commitment, couples should engage in discussions of their financial tendencies. Couples should also monitor how they feel when their partner spends significantly more or less than they would.

Ultimately, the researchers believe, Cupid can still win out. A strong, loving relationship will absorb occasional confrontations over money without leading to divorce court.

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