The Financial Costs of Sadness

9 Pages Posted: 10 Jul 2013  

Jennifer Lerner

Harvard University - Harvard Kennedy School (HKS)

Ye Li

University of California, Riverside (UCR) - Department of Management and Marketing; Center for Decision Sciences, Columbia University

Elke U. Weber

Columbia Business School - Management & Psychology

Date Written: January 11, 2013

Abstract

We hypothesized a phenomenon that we term myopic misery. According to our hypothesis, sadness increases impatience and creates a myopic focus on obtaining money immediately instead of later. This focus, in turn, increases intertemporal discount rates and thereby produces substantial financial costs. In three experiments, we randomly assigned participants to sad- and neutral-state conditions, and then offered intertemporal choices. Disgust served as a comparison condition in Experiments 1 and 2. Sadness significantly increased impatience: Relative to median neutral-state participants, median sad state participants accepted 13% to 34% less money immediately to avoid waiting 3 months for payment. In Experiment 2, impatient thoughts mediated the effects. Experiment 3 revealed that sadness made people more present biased (i.e., wanting something immediately), but not globally more impatient. Disgusted participants were not more impatient than neutral participants, and that lack of difference implies that the same financial effects do not arise from all negative emotions. These results show that myopic misery is a robust and potentially harmful phenomenon.

Keywords: Decision making, emotion, judgment, myopic misery, sadness, intertemporal choice, present bias

Suggested Citation

Lerner, Jennifer and Li, Ye and Weber, Elke U., The Financial Costs of Sadness (January 11, 2013). Psychological Science, Vol. 23, No. 1, 72-79; Columbia Business School Research Paper No. 13-51. Available at SSRN: https://ssrn.com/abstract=2291030

Jennifer Lerner (Contact Author)

Harvard University - Harvard Kennedy School (HKS) ( email )

79 John F. Kennedy Street
Cambridge, MA 02138
United States
617-495-9962 (Phone)

Ye Li

University of California, Riverside (UCR) - Department of Management and Marketing ( email )

United States

Center for Decision Sciences, Columbia University

New York, NY
United States

Elke U. Weber

Columbia Business School - Management & Psychology ( email )

3022 Broadway
New York, NY 10027
United States

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