Social isolation leads to riskier financial decisions

Do we seek solace in money when we feel rejected socially?

Roulette Wheel

As Aristotle says, “Man is by nature a social animal”. We love to be part of the “inner” circle. We love to have friends and a social status. But what happens when our social endeavours fail? When a romantic relationship ends, an offer of friendship is declined or you are sidelined or outcast from social conversations?Rod Duclos [Hong Kong University of Science and Technology], Echo Wen Wan [University of Hong Kong), and Yuwei Jiang [Hong Kong Polytechnic University] tried to study the association between financial decisions we make and the absence of social support.

“Seeking social acceptance and maintaining close relationships are among the most fundamental and universal human needs. Consumers are often willing to invest or sacrifice important resources to secure social bonds. In the absence of social support, consumers seek significantly more money to secure what they want out of the social system surrounding them. Feeling socially rejected triggers riskier financial decision-making,” they write.

In their study, consumers were requested to recall a social situation that left them feeling either included or excluded. They were then asked to choose between a set of high-odds/low-reward and low-odds/high-reward gambling options. Feeling socially rejected fostered riskier decisions. That is, in the absence of social support, excluded consumers started to seek and value money as an alternative means to secure what they want out of the social system.

This can help us make more informed decisions. “For example, consumers might choose to delay important financial decisions following a breakup or a falling out with friends, colleagues, or family,” the authors conclude.



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