1. Systematic research investigates effects of money on thinking, behavior

    July 21, 2017 by Ashley

    From the Association for Psychological Science press release:

    Numerous studies have shown that being prompted to think about money can predispose people to engage in self-sufficient thinking and behavior — but some findings suggest that demographic characteristics may moderate this type of effect. In a new research article, scientists present results from three experiments that systematically explore these money-priming effects, finding inconsistent evidence for the effect of money primes on various measures of self-sufficient thinking and behavior.

    The research is published in Psychological Science, a journal of the Association for Psychological Science.

    Psychology researcher Eugene M. Caruso (University of Chicago Booth School of Business) and co-authors Oren Shapira (Stony Brook University) and Justin Landy (also Chicago Booth) were motivated to carry out this systematic exploration after conducting a set of studies in which they observed varied findings that were inconsistent with their predictions.

    In their initial studies, Caruso and his collaborators found that the effects of money reminders on participants’ thinking often seemed to depend on certain demographic characteristics, a result they were not expecting. In discussing these results, they discovered that colleagues had also observed unpredicted interaction effects in their research in this area.

    Importantly, the kinds of interaction effects observed seemed to vary across different studies that used different techniques for activating the concept of money.

    “These inconsistent results led us to step back to try to gain a better understanding of whether different money primes lead to similar effects, and whether they interact with sociodemographic characteristics in a reliable, and potentially theoretically meaningful, manner,” Caruso explains.

    To do this, Caruso, Shapira, and Landy decided to systematically evaluate the effects of various money-priming manipulations on a predetermined set of outcomes while accounting for the potential influence of certain sociodemographic factors, within a single experiment that sampled a diverse group of participants.

    In their first experiment, the researchers recruited a total of 2,167 participants for an online study, randomly assigning participants to receive specific primes. For example, some saw a faint image of $100 bills in the background of the instructions screen, others were asked to select the best sizes and shapes for new paper currency, some completed phrases that included money-related terms, while others were asked to imagine having ample access to money. Some participants saw a clear image of $100 bills and were explicitly asked to describe what money meant to them, while others were asked to recall a time when they felt powerful.

    The results showed that four of the five money primes did activate the concept of money. Participants exposed to these primes were more likely to complete word stems to create money-related words compared with participants who received a neutral prime or no prime — only those exposed to the background image of money showed no difference in the word completion task relative to their peers.

    But the primes seemed to have weak and inconsistent effects on participants’ feelings of wealth and self-sufficiency. Only participants who imagined an abundant life reported differences in self-sufficiency, and they actually reported lower self-sufficiency compared with those who received a neutral prime, an unexpected finding.

    Additionally, there was little evidence to suggest that the effects of the primes on various outcomes were moderated by any of the demographic characteristics measured, including gender, socioeconomic status, and political ideology.

    The researchers observed similar results in a second online experiment with 2,150 participants that omitted the money-activation measure.

    In a third experiment, Caruso, Shapira, and Landy conducted a lab-based study with 332 members of the university community. To examine the effects of money primes on self-sufficient behavior, the researchers measured how long participants spent working on a puzzle that was actually unsolvable before they asked for help.

    The results echoed those of the previous online studies: The three money primes tested had weak and inconsistent effects across the different outcome measures. Only those participants who unscrambled phrases including money-related terms reported greater feelings of self-sufficiency relative to the comparison group.

    “Contrary to what we expected based on the published literature, we did not find that any manipulation consistently affected any dependent measure across our three studies, nor did we find reliable evidence for statistical moderation by sociodemographic characteristics,” says Caruso.

    The researchers urged caution in interpreting the findings relative to specific published studies, given that the three experiments were not designed to be exact replications of any one study. Rather, this series of experiments can be seen as offering a rigorous and systematic examination of a particular effect.

    “Beyond the implications for money-priming research, we hope that our methodological approach — comparing multiple manipulations of a construct and assessing multiple individual-difference moderators within the same heterogeneous sample — can make a broader contribution by supplementing the emerging toolkit of methodologies for establishing the reliability of individual effects and the validity of the theories that attempt to explain them,” Caruso concludes.


  2. Ill-gotten gains are worth less in the brain

    May 7, 2017 by Ashley

    From the University College London press release:

    The brain responds less to money gained from immoral actions than money earned decently, reveals a new UCL-led study.

    The research, published in Nature Neuroscience and funded by Wellcome, helps explain why most people are reluctant to seek illicit gains by identifying a neural process that dampens the appeal of profiting at other people’s expense.

    “When we make decisions, a network of brain regions calculates how valuable our options are,” explained lead author Dr Molly Crockett of the University of Oxford, who carried out the research while based at the UCL Wellcome Centre for Neuroimaging. “Ill-gotten gains evoke weaker responses in this network, which may explain why most people would rather not profit from harming others. Our results suggest the money just isn’t as appealing.”

    The research team scanned volunteers’ brains as they decided whether to anonymously inflict pain on themselves or strangers in exchange for money. The study builds on previous research by the same team that showed people dislike harming others more than harming themselves. This behaviour was seen again in this study, with most people more willing to harm themselves than others for profit.

    The study involved 28 pairs of participants who were anonymously paired and randomly assigned to be either the ‘decider’ or the ‘receiver’. Deciders picked between different amounts of money for different numbers of electric shocks. Half the decisions related to shocks for themselves and half to shocks for the receiver, but in all cases the deciders would get the money. The shocks were matched to each recipient’s pain threshold to be mildly painful but tolerable. The deciders were in an fMRI brain scanner.

    As they made their decisions, a brain network including the striatum was activated, as it has been shown in previous studies to be key to value computation. As they decided between more profitable options or those with fewer shocks, this brain network signalled how beneficial each option was. The network responded less to money gained from shocking others, compared with money gained from shocking oneself — but only in those people who behaved morally.

    Meanwhile, the lateral prefrontal cortex (LPFC), a brain region involved in making moral judgments, was most active in trials where inflicting pain yielded minimal profit. In a follow-up study, participants made moral judgements about decisions to harm others for profit, and considered those same trials to be the most blameworthy. Taken together, the findings suggest the LPFC was assessing blame. When people refused to profit from harming others, this region was communicating with the striatum, suggesting that neural representations of moral rules might disrupt the value of ill-gotten gains encoded in the striatum.

    “Our findings suggest the brain internalizes the moral judgments of others, simulating how much others might blame us for potential wrongdoing, even when we know our actions are anonymous,” Dr Crockett said.

    Senior author Professor Ray Dolan (UCL Max Planck Centre for Computational Psychiatry and Ageing Research) said: “What we have shown here is how values that guide our decisions respond flexibly to moral consequences. An important goal for future research is understanding when and how this circuitry is disturbed in contexts such as antisocial behaviour.”


  3. Staking self-worth on the pursuit of money has negative psychological consequences

    April 30, 2017 by Ashley

    From the University at Buffalo press release:

    Although people living in consumer-based cultures such as the U.S. often believe that they will be happier if they acquire more money, the findings of a newly published paper by a University at Buffalo research team suggest that there may be downsides to this pursuit.

    The pursuit of money in and of itself is not bad, but there are risks to consider when it is fueled by a desire to boost self-esteem. When people tie their self-worth to the pursuit of financial success, they are more vulnerable to negative psychological consequences, according to Lora Park, an associate professor of psychology at UB and the study’s lead author.

    Specifically, basing self-esteem on financial success predicted making more financially-based social comparisons with others, feeling less autonomy and control over one’s life, and experiencing more financial hassles, stress and anxiety. These findings were evident even after accounting for other variables, such as financial status, materialistic values and importance of financial goals.

    “People don’t often think of the possible down sides of wrapping their identity and self-worth around financial pursuits, because our society values wealth as a model of how one should be in the world,” says Park. “It’s important to realize these costs because people are gravitating toward this domain as a source of self-esteem without realizing that it has these unintended consequences.”

    Park’s paper, with UB graduate student Deborah Ward and UB assistant professor of psychology Kristin Naragon-Gainey, appears in the latest issue of the journal Personality and Social Psychology Bulletin.

    Working with samples of 349 college students and a nationally representative group of 389 participants, the researchers first developed a scale to measure Financial Contingency of Self-Worth (CSW), or the degree to which people base their self-esteem on financial success, and then conducted a series of experiments to examine the effects of threatening people’s sense of financial security.

    When we asked people to write about a financial stressor, they experienced a drop in their feelings of autonomy,” says Park. “They also showed more disengagement from their financial problems — they gave up searching for solutions. We didn’t find this in people who didn’t tie their self-esteem to financial success or among those who were asked to write about an academic stressor.”

    In those essays, the researchers also coded the type of language participants used to describe their financial problems.

    “We found that people who highly based their self-worth on financial success used more negative emotion-related words, like sadness and anger,” says Park. “This demonstrates that just thinking about a financial problem generates a lot of stress and negative emotions for these individuals.”

    But Park says this effect is eliminated if you get people to self-affirm by giving them an opportunity to think about their personal strengths.

    “This suggests that self-esteem concerns emerge when people are thinking about financial problems, but if you can repair their self-esteem by having them think about their strengths, then there is no reduction in feelings of autonomy.”

    A final study found that people who based their self-esteem on financial success — and were led to believe that they would experience financial instability in their future — became more cautious when it came to extravagant spending decisions. This could be interpreted as a desire of these individuals to protect their self-esteem following this financial threat, suggests Park.

    This research also has implications beyond finances and self-esteem and has many possible future directions, such as the effects of financially contingent self-worth on close relationships, group dynamics and organizational settings.


  4. Study suggests understanding money may reduce worry about old age

    April 26, 2017 by Ashley

    From the Hiroshima University press release:

    People who possess a greater understanding of finance are less likely to fret about life in their twilight years.

    It seems financial literacy — the ability to understand how money works, enables people to accumulate more assets and income during their lifetime, and so increases confidence for the years ahead.

    Additionally, financial literacy seemingly engenders a greater perception for risk and enables those who have it to face off later-life’s dilemmas with ease.

    These findings, from Associate Professor Yoshihiko Kadoya of Hiroshima University and Mostafa Saidur Rahim Khan of Nagoya University, stem from a study which asked people from across Japan to answer questions assessing their calculation skills, understanding of pricing behavior, and financial securities such as bonds and stocks.

    Respondents were also asked about their accumulated wealth, assets, and lifestyle — and to rate the level of anxiety they felt about life beyond 65.

    As the first study to investigate financial literacy as a contributing factor to anxiety about old age, it should prove useful to policy makers in Japan and other developed countries where population aging is a growing concern.

    The study has thrown up several intriguing findings for economic gurus to mull over. It suggests that financial literacy is not particularly high throughout Japanese society, and that men, and those with a higher level of education are more financially clued-in than women, and those with less education respectively.

    The overriding thrust is that the more financially literate earn and accumulate more during their lifetime — and thus worry less about growing old.

    It also appears that financial literacy helps shape people’s perception towards risk and uncertainty — making them more capable and confident in tackling whatever problems life throws at them.

    Professor Kadoya says that financial literacy increases our awareness about financial products, builds a capacity to compare all available financial options, and changes our financial behavior — all which bodes well for our perceptions of, and actual experiences during our seniority.

    While financial literacy taken alone was seen to reduce anxiety — its affect was further heightened by other factors.

    Married respondents had even lower levels of anxiety about growing old than financially literate singletons. This could be down to married couples together planning more-effectively for the future due to familial responsibilities.

    Age also plays a significant role, with anxiety levels peaking around 40. The researchers suggest that people at this age have the most home and workplace responsibilities, but with less money and time to support them, increasing anxiety about the here and now — and the journey ahead.

    Interestingly as people get older their anxiety levels drop off on gaining access to social security, government funded health care and pensions — all taking the sting out of the post-retirement blues.

    Having dependent children on the other hand increased anxiety levels — presumably due to respondent’s worry for their children’s wellbeing — as well as their own.

    The findings should have implications for Japan and other countries where retirees account for a large and rapidly growing share of the population.

    Although Japan has a universal pension system, its benefits depend on an individual’s ability to pay throughout their working life. As in much of the developed world, it is increasingly perceived that a pension is insufficient for daily expenses without a backup pool of savings and assets — putting the financially literate at a distinct advantage.

    But should we be worrying about our finances in old age at all? Professor Kadoya doesn’t think so and says governments need to develop strategies to stem an anxiety pandemic:

    “People shouldn’t spend time worrying about the future. That is why governments provide pensions, housing, and medical plans. If the perception is that these are not fulfilling their purpose then governments and providers need to look at making them more accessible — if people are still worried then we need to look at educating people about these services that are supplied for their needs.”


  5. Are market bubbles caused by traders’ testosterone levels?

    March 19, 2017 by Ashley

    From the American Associates, Ben-Gurion University of the Negev press release:

    Research conducted at Ben-Gurion University of the Negev (BGU) has determined that psychological momentum significantly affects performance among men but not among women, which may account for exaggerated risk-taking in financial and business endeavors among males.

    Psychological momentum is defined as a state-of-mind where an individual or a team feels things are going unstoppably their way and is known to be caused, among other factors, by shifts in testosterone levels. The study, “Psychological Momentum and Gender,” is published in the March volume of the Journal of Economic Behavior & Organization.

    According to Dr. Danny Cohen-Zada, a lecturer in the BGU Department of Economics, “The purpose of our study was twofold: to estimate the causal effect of psychological momentum on performance in real tournament settings, and to examine whether there are any gender differences in the corresponding response.”

    The researchers analyzed two different samples of men’s and women’s judo competitions from 2009 to 2013. In the first, they looked at the bronze medal fights of each tournament. While competitors in this fight won the same number of total bouts, some had won their most recent bout while others did not. Those who reached the bronze medal fight following a win have a potential momentum advantage.

    The authors examined this unique setting to determine whether the contestants with the momentum advantage had a higher probability to win the fight.

    “Our results showed that based on a cross-section analysis of 106 men’s and 111 women’s fights from eight major annual judo events, having a psychological momentum advantage significantly increases the winning probability in men’s contests but not in women’s,” says Dr. Alex Krumer of the Swiss Institute for Empirical Economic Research (SEW), University of St. Gallen, Switzerland.

    In the second part of the study, based on the head-to-head history of the pairs from the first sample and analyzing 225 men’s and 231 women’s fights, the researchers obtained similar results by analyzing how the performance of the same pair of judokas (judo experts) is affected by varied momentum statuses in different tournaments. As expected, the results of these specifications indicate that the psychological momentum effect exists among men, but not among women.

    The researchers believe that their findings have implications for business. “We can connect our findings to the effect of psychological momentum in financial markets of which 90 percent are men,” says Dr. Ze’ev Shtudiner from the Department of Economics and Business Administration, Ariel University, Israel. Drs. Krumer and Shtudiner earned their doctoral degrees in economics from BGU.

    “Such an effect may lead male traders, driven by an increase in testosterone due to a successful investment, to take exaggerated risks, which, in turn, create price bubbles,” says Dr. Shtudiner. “By increasing the number of women in financial markets, it may be possible to stabilize these markets since women have less dramatic shifts in testosterone levels, which can make them less prone to the momentum effect. This argument is consistent with our results that momentum effects are generated only among men, since it is only among them that testosterone levels increase after success.”

    According to Dr. Krumer, “An increased frequency of positive feedback from managers after successful actions may turn into a positive psychological momentum and thus increase productivity. Similarly, managers should exert efforts to reduce the influence of unsuccessful actions of their workers to avoid productivity losses.”

    Given these findings, Dr. Cohen-Zada believes additional research would be beneficial focusing on the role of psychological effects on performance in male-dominated positions, such as stockbrokers, high-profile managers, politicians, and military commanders.


  6. Looking for happiness in all the wrong places

    January 6, 2016 by Ashley

    From the Taylor & Francis media release:

    Depression frustrationEveryone knows that money can’t buy happiness — but what might make rich people happier is revealed in the current issue of The Journal of Positive Psychology.

    James A. Roberts of Baylor University and his two colleagues set out to explore the relationship between materialism — making acquisition of material possessions a central focus of one’s life — and life satisfaction.

    Numerous studies have already shown that people who are more materialistic are generally less satisfied with their standards of living, their relationships and their lives as a whole. With that being the case, the researchers wondered if anything could moderate that relationship and in effect make materialistic people more satisfied with their lot.

    They write: “Given the negative relationship that materialism has with positive affect, it stands to reason that positive affect and related constructs such as gratitude might be important moderators in the association between materialism and life satisfaction. In contrast to materialism, gratitude is a positive emotion that is experienced when someone perceives that another person has intentionally given him or her a valued benefit.”

    To test their theory, the trio analyzed the results of a specially designed questionnaire sent to 249 university students. The main results were as expected. “People who pursue happiness through material gain tend to feel worse, and this is related to negative appraisals of their satisfaction with life,” they confirmed.

    However, their results also demonstrated that gratitude, and to a lesser extent, positive affect, both ‘buffer’ the negative effects of materialism, in effect making more grateful individuals more satisfied with their lives.

    The team observed: “Individuals high in gratitude showed less of a relationship between materialism and negative affect. Additionally, individuals high in materialism showed decreased life satisfaction when either gratitude or positive affect was low.”

    The trio conclude that negative affect, positive affect and gratitude seem to be ‘key pieces to the puzzle of the relationship between materialism and dissatisfaction with life.‘ They suggest that the ‘pro-social, other-focused nature of gratitude’ might help to reduce the ‘self-focus’ inherent in materialism.

    “Specifically, individuals who are able to appreciate what they have even while engaging in materialistic pursuits might be able to be maintain high levels of life satisfaction.”

    In other words, being rich isn’t enough to make you happy; you also need to be grateful as well.


  7. Study: 25 percent of children who are homeless need mental health services

    February 19, 2015 by Ashley

    From the NORTH CAROLINA STATE UNIVERSITY media release:

    child sullen poutingA pilot study in Wake County, North Carolina, finds that 25 percent of children who are homeless are in need of mental health services.

    The study, conducted by researchers at North Carolina State University and Community Action Targeting Children who are Homeless (CATCH), highlights the need for more screening and support for the millions of homeless children in the United States.

    These children have often been exposed to domestic or neighborhood violence, chronic poverty, inadequate healthcare and other circumstances that place any child at risk of mental health problems,” says Dr. Mary Haskett, a professor of psychology at NC State and lead author of a paper on the research.

    “As a result of their exposure to those difficult life circumstances – combined with living in a shelter – homeless children are at a much greater risk of developmental delays, social and emotional problems, and problems at school,” says Jenna Armstrong, a Ph.D. student at NC State and co-author of the paper. “And the scale of the problem is huge.” A 2014 report from the National Center on Family Homelessness found that 2.5 million children are homeless each year in the U.S.

    “Our research was aimed at defining the scope of the problem and determining whether screening children at homeless shelters could be a valuable tool for connecting families with resources to help meet a child’s mental health needs,” Armstrong says.

    The researchers drew on data from CATCH, a Salvation Army-funded project that works with homeless families at 11 shelters in Wake County to address the mental health needs of children. The CATCH project screens children who enter the shelters, assessing each child’s development and social-emotional functioning.

    Haskett and Armstrong evaluated screening data on 328 children, who were between two months and six years old.

    “We found that 25 percent of the children in shelters needed mental health services, based on their social-emotional functioning,” Armstrong says. “This rate is certainly much, much higher than in the general population.” For purposes of comparison, Columbia University’s National Center for Children in Poverty reports that social and emotional problems impair 10 to 14 percent of U.S. children from birth to age five.

    The researchers also found that school-age children, between five and six years old, also performed well below average on language and academic skills. This affected both boys and girls, though boys performed significantly worse than girls in both areas of functioning.

    “Children in shelters are often overlooked – they’re basically invisible,” Armstrong says. “But these findings highlight the importance of providing resources to meet the needs of these children. Twenty-five percent of 2.5 million is 625,000. So, we’re talking about 625,000 children who need mental health support every year in the United States. We, as a society, can’t afford to let these kids down.”

    The paper, “Developmental Status and Social-Emotional Functioning of Young Children Experiencing Homelessness,” is published online in the Early Childhood Education Journal. The paper was co-authored by Jennifer Tisdale of CATCH. The work was supported by the Salvation Army, Wake County Smart Start and the John Rex Endowment.


  8. Consumer preferences and the power of scarcity

    February 9, 2015 by Ashley

    From the University of Maryland media release:

    Shopping for electronicsWhen something is rare, it’s alluring–true whether you’re talking about precious gemstones or a pristine edition of the first issue of Action Comics (which introduced Superman). And psychologists have long known that if you can make a consumer good more desirable by making it appear rare.

    But how does scarcity, or the appearance of scarcity, affect choice when several consumer products are presented at once? That’s the question Rebecca Ratner, professor of marketing at the University of Maryland’s Robert H. Smith School of Business, and Meng Zhu, of Johns Hopkins University, attack in a new paper. They found a clear pattern: Scarcity polarizes preferences.

    When people perceive a bunch of items to be scarce, they choose relatively more of their favorite item,” Ratner says. “They become less exploratory. They focus on their leading option.”

    On the other hand, in situations of abundance–lots of each possible option–they spread out their selections. These findings have implications for anyone trying to “nudge” people toward certain options.

    Ratner and Zhu conducted several experiments in which they asked people to choose among an array of goods–typically in online surveys accompanied by photographs. The choices they faced included different flavors of yogurt, different vegetables, different small candies, and different gift certificates. In each case, there was the same pattern: When the items were presented as scarce, customers took more of their favorites, and they subjectively rated their favorite items higher.

    The effect emerged whether the scarcity was “real” or merely apparent. In one experiment, the same number of vegetables were placed in 8 oz. clear-plastic containers, making the containers look full-to-the-brim, or in 32 oz. containers, making the vegetables look scant. When they looked scant, the polarized reaction kicked in.

    The authors theorized that scarcity induces mild psychological arousal in consumers, and they found evidence of this in self-reports. And Ratner and Zhu were also able to change people’s decision making by inducing arousal: When surveys had bright background colors (which increase arousal), the polarizing effect increased.

    The researchers could even introduce the scarcity effect by exposing the test subjects to words related to rarity.

    The research has obvious implications for retailers. If you have one popular high-margin product that you’d like to steer customers to, one course of action would be to make that the only product on display. But customers view stores with small sections negatively, so a better alternative would be to present only a few of each product the store offers, thereby increasing desire for the most-popular item.

    On the other hand, if you wanted to encourage students in a cafeteria to put together a well-balanced meal–protein, fiber, greens–the study implies you should present many of each choice.

    The study has implications, too, for how policymakers and communicators should frame the messages they send about rare and endangered natural resources. “If you say that national parks are a scarce resource for the country, the implications of our finding are that that message might lead people to go to the national park that is most appealing to them,” Ratner says. “The additional traffic could potentially degrade that resource.”

    In short, saying “This is scarce” can backfire.

    “Scarcity Polarizes Preferences: The Impact on Choice Among Multiple Items in a Product Class,” by Meng Zhu and Rebecca K. Ratner, appears in the February issue of the Journal of Marketing Research http://journals.ama.org/doi/abs/10.1509/jmr.13.0451


  9. A life well spent: Consume now (in case you die early)

    June 10, 2014 by Ashley

    From the Princeton University media release:

    computer gaming seniorsYou only live once. Carpe diem. You can’t take it with you.

    As often as we hear these clichés, they might include some real economic wisdom for some, according to research led by Princeton University’s Woodrow Wilson School. The researchers argue in the Journal of Mathematical Economics that some people might want to spend more and work less — just in case their time runs out.

    Marc Fleurbaey, the Robert E. Kuenne Professor in Economics and Humanistic Studies and professor of public affairs, and his collaborators — Marie-Louise Leroux from the University of Quebec and Gregory Ponthiere from the Paris School of Economics — examined an inequality that is not often under the spotlight: those who live long, fruitful lives and those who die early.

    The researchers argue that a premature exit from life is a serious loss that should imply compensation beyond just relatives but also to the deceased person. But how — when the person is dead?

    To evaluate compensation, the researchers first determined the economic losses associated with living too short of a life. They constructed a mathematical model that measured the loss of an early death in terms of an equivalent loss in income or consumption. By analyzing these measures, the researchers could compare the usual economic inequalities to the inequalities due to premature deaths.

    To test their model, the researchers used data on income and longevity and France to examine four socio-professional groups: executives, professionals, blue-collar workers and clerks from age 20 to 100. Under the assumption that each individual lived the same amount of time, the researchers found that, unsurprisingly, those with the lowest income (clerks) are the worst off in terms of financial losses — for instance, their income is 30 percent lower than the professionals. But, across the four groups, those who die at age 55 lose, on average, the equivalent of 40 percent of income compared to those who live until age 85. In sum, short lives result in big losses, comparable to the gaps between socio-economic groups.

    The only way in which inequalities between short- and long-lived can be attenuated is by having everyone spend a little more and work a little less early in life,” said Fleurbaey. “That way, for those who are unlucky and die prematurely, their life is not as bad economically as it would be if they had planned to enjoy more consumption and leisure later.”

    While the authors do not argue that savings should be curbed — savings are famously low in the United States — they claim that the usual concern about under-saving may be partly assuaged by considering the problems that come with an early death. Decades ago, programs like Social Security and public pensions came about so that a person’s declining years were not spent in grinding poverty, which, in the 18th and 19th century was an issue; people literally landed in the poorhouse. Now, thanks to growing affluence, there is an opposite risk: not living long enough to enjoy all that money squirreled away.

    “Through economics and psychology, we’ve learned that people are not rational when it comes to money, leading people to save too little. But saving a little less may be good for some, as it curbs the inequality that exists between the short- and long-lived,” said Fleurbaey. “Likewise, the tradition of encouraging savings, which comes from an era of scarcity but remains strong today, appears somewhat ill-adapted in the context of affluence. Suppose you spend your whole life saving and saving for retirement, but you die the year before you retire. On an individual level, you might have been better off if you consumed more, earlier in life.

    The paper, “Compensating the dead,” was published in the March 2014 issue of The Journal of Mathematical Economics.


  10. Good diet boosts health but not wealth

    April 2, 2014 by Ashley

    From the Monash University media release:

    Shopping2The idea that a good diet means a healthy population with lower health costs only holds true when it comes to emergency care, a study shows.

    Researchers from Monash University, the National Defense Medical Centre, Taiwan, and the National Health Research Institutes, Taiwan, found that although men and women aged over 65 years who ate healthily had shorter stays in hospital, they were strong users of other medical services. In fact, they tended to make greater use of outpatient services, preventive care and dental care than those who did not follow a healthy eating regime.

    Emeritus Professor Mark Wahlqvist from Monash University’s Department of Epidemiology and Preventive Medicine and the Monash Asia Institute said individuals with a higher socioeconomic status usually followed a healthier diet and took better care of their health needs, while those on lower incomes were more likely to cut back on basic needs like food and medication.

    “A diverse diet can be quite costly, which can lead to food insecurity for low socioeconomic groups who cannot afford it,” Professor Wahlqvist said.

    “This may partly explain the greater expenditure on acute care that they incur.”

    Professor Walhlqvist said that economic factors played an inescapable role in the development of health policies, but the medical costs of diet-related and nutritionally related diseases were rarely given attention.

    The findings have important implications for nutrition-related health service policy given that most countries are facing increased medical expenditure as their population ages.

    “Such a policy should pay close attention to socially disadvantaged groups with poorer dietary quality,” Professor Wahlqvist said.