Gain and Loss Learning Differentially Contribute to Life Financial Outcomes

PLOS ONE, Vol. 6, No. 9, September 2011

30 Pages Posted: 17 Sep 2011

See all articles by Brian Knutson

Brian Knutson

Stanford University - Psychology

Gregory R. Samanez-Larkin

Duke University - Department of Psychology and Neuroscience; Duke University - Center for Cognitive Neuroscience

Camelia M. Kuhnen

University of North Carolina Kenan-Flagler Business School & NBER

Date Written: September 1, 2011

Abstract

Emerging findings imply that distinct neurobehavioral systems process gains and losses. This study investigated whether individual differences in gain learning and loss learning might contribute to different life financial outcomes (i.e., assets versus debt). In a community sample of healthy adults (n=75), rapid learners had smaller debt-to-asset ratios overall. More specific analyses, however, revealed that those who learned rapidly about gains had more assets, while those who learned rapidly about losses had less debt. These distinct associations remained strong even after controlling for potential cognitive (e.g., intelligence, memory, and risk preferences) and socioeconomic (e.g., age, sex, ethnicity, income, education) confounds. Self-reported measures of assets and debt were additionally validated with credit report data in a subset of subjects. These findings support the notion that different gain and loss learning systems may exert a cumulative influence on distinct life financial outcomes.

Keywords: neuroeconomics, neurofinance, financial decision making, learning, gain, loss

JEL Classification: C91, D83, G11

Suggested Citation

Knutson, Brian and Samanez-Larkin, Gregory R. and Kuhnen, Camelia M., Gain and Loss Learning Differentially Contribute to Life Financial Outcomes (September 1, 2011). PLOS ONE, Vol. 6, No. 9, September 2011, Available at SSRN: https://ssrn.com/abstract=1928088

Brian Knutson (Contact Author)

Stanford University - Psychology ( email )

Stanford, CA 94305
United States
650 723 7431 (Phone)
650 725 5699 (Fax)

HOME PAGE: http://psychology.stanford.edu/~knutson

Gregory R. Samanez-Larkin

Duke University - Department of Psychology and Neuroscience ( email )

Durham, NC 27708
United States

Duke University - Center for Cognitive Neuroscience ( email )

100 Fuqua Drive
Durham, NC 27708-0204
United States

Camelia M. Kuhnen

University of North Carolina Kenan-Flagler Business School & NBER ( email )

Kenan-Flagler Business School
Chapel Hill, NC 27599-3490
United States
(919) 9623284 (Phone)

HOME PAGE: http://public.kenan-flagler.unc.edu/faculty/kuhnenc/

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