IDEAS home Printed from https://ideas.repec.org/p/hrv/hksfac/9642634.html
   My bibliography  Save this paper

The Financial Cost of Sadness

Author

Listed:
  • Lerner, Jennifer S.
  • Li, Ye
  • Weber, Elke

Abstract

This paper hypothesizes a phenomenon—myopic misery—in which sadness creates a myopic focus on obtaining money now versus later, increasing intertemporal discount rates and thereby producing substantial financial costs. Experiments 1-3 randomly assigned participants to a sad- or neutral-mood condition, and then offered intertemporal choices. Disgust served as a comparison condition in Experiments 1-2. Results revealed that sadness significantly increased impatience: Relative to median neutral-mood participants, median sad-mood participants accepted 13% to 34% less money today to avoid waiting three months for payment. Impatient thoughts mediated the effects. Disgusted participants were not more impatient than neutral participants, implying that the financial effects do not arise from all negative emotions. The paper concludes that myopic misery is a robust and potentially harmful phenomenon.

Suggested Citation

  • Lerner, Jennifer S. & Li, Ye & Weber, Elke, 2012. "The Financial Cost of Sadness," Scholarly Articles 9642634, Harvard Kennedy School of Government.
    • Handle: RePEc:hrv:hksfac:9642634
    as

    Download full text from publisher

    File URL: http://dash.harvard.edu/bitstream/handle/1/9642634/Financial%20Cost%20of%20Sadness%20PSYCH%20SCIENCE.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Thaler, Richard H & Shefrin, H M, 1981. "An Economic Theory of Self-Control," Journal of Political Economy, University of Chicago Press, vol. 89(2), pages 392-406, April.
    2. Cryder, Cynthia E. & Lerner, Jennifer & Gross, James J. & Dahl, Ronald E., 2008. "Misery Is Not Miserly," Scholarly Articles 37093805, Harvard Kennedy School of Government.
    3. John Ifcher & Homa Zarghamee, 2011. "Happiness and Time Preference: The Effect of Positive Affect in a Random-Assignment Experiment," American Economic Review, American Economic Association, vol. 101(7), pages 3109-3129, December.
    4. George Loewenstein & Drazen Prelec, 1992. "Anomalies in Intertemporal Choice: Evidence and an Interpretation," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 107(2), pages 573-597.
    5. David Laibson, 1997. "Golden Eggs and Hyperbolic Discounting," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(2), pages 443-478.
    6. Kovalchik, Stephanie & Camerer, Colin F. & Grether, David M. & Plott, Charles R. & Allman, John M., 2005. "Aging and decision making: a comparison between neurologically healthy elderly and young individuals," Journal of Economic Behavior & Organization, Elsevier, vol. 58(1), pages 79-94, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Pierre Cahuc & Stéphane Carcillo, 2012. "Les conséquences des allégements généraux de cotisations patronales sur les bas salaires," Revue française d'économie, Presses de Sciences-Po, vol. 0(2), pages 19-61.
    2. repec:hal:spmain:info:hdl:2441/6b7kf1issd8leb93o27ofdm8cu is not listed on IDEAS

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Shi Yingnan & Xinghao Li, 2017. "The Time Preference of Chinese Tend to be Less Affected by Positive Emotions: As Proved by an Experimental Study," Journal of Economics and Behavioral Studies, AMH International, vol. 9(4), pages 201-216.
    2. Schreiber, Philipp & Weber, Martin, 2016. "Time inconsistent preferences and the annuitization decision," Journal of Economic Behavior & Organization, Elsevier, vol. 129(C), pages 37-55.
    3. Lillemo, Shuling Chen, 2014. "Measuring the effect of procrastination and environmental awareness on households' energy-saving behaviours: An empirical approach," Energy Policy, Elsevier, vol. 66(C), pages 249-256.
    4. Marieka M. Klawitter & C. Leigh Anderson & Mary Kay Gugerty, 2013. "Savings And Personal Discount Rates In A Matched Savings Program For Low-Income Families," Contemporary Economic Policy, Western Economic Association International, vol. 31(3), pages 468-485, July.
    5. Stefano DellaVigna, 2009. "Psychology and Economics: Evidence from the Field," Journal of Economic Literature, American Economic Association, vol. 47(2), pages 315-372, June.
    6. Annamaria Lusardi, 2000. "Explaining Why So Many Households Do Not Save," Working Papers 0001, Harris School of Public Policy Studies, University of Chicago.
    7. Bart Cockx & Corinna Ghirelli & Bruno Van der Linden, 2013. "Monitoring Job Search Effort with Hyperbolic Time Preferences and Non-Compliance: A Welfare Analysis," CESifo Working Paper Series 4187, CESifo.
    8. Mannberg, Andréa, 2012. "Risk and rationalization—The role of affect and cognitive dissonance for sexual risk taking," European Economic Review, Elsevier, vol. 56(6), pages 1325-1337.
    9. Tomáš Želinský, 2015. "Nekonzistentnosť časových preferencií ľudí z arginalizovaných rómskych komunít [On inconsistency of time preferences of people from the marginalised roma communities]," Politická ekonomie, Prague University of Economics and Business, vol. 2015(2), pages 204-222.
    10. Bach Dong Xuan & Philippe Bich & Bertrand Wigniolle, 2022. "On multiple discount rates and present bias," Working Papers halshs-03884664, HAL.
    11. Manzini Paola & Mariotti Marco, 2006. "A Vague Theory of Choice over Time," The B.E. Journal of Theoretical Economics, De Gruyter, vol. 6(1), pages 1-27, October.
    12. Dorian Jullien, 2018. "Under Risk, Over Time, Regarding Other People: Language and Rationality within Three Dimensions," Research in the History of Economic Thought and Methodology, in: Including a Symposium on Latin American Monetary Thought: Two Centuries in Search of Originality, volume 36, pages 119-155, Emerald Group Publishing Limited.
    13. Gervas Huxley & Mike W. Peacey, 2016. "Self-control at College," Bristol Economics Discussion Papers 16/675, School of Economics, University of Bristol, UK.
    14. Stefan A Lipman & Arthur E Attema, 2020. "Good things come to those who wait—Decreasing impatience for health gains and losses," PLOS ONE, Public Library of Science, vol. 15(3), pages 1-15, March.
    15. Fernando S. Machado & Rajiv K. Sinha, 2007. "Smoking Cessation: A Model of Planned vs. Actual Behavior for Time-Inconsistent Consumers," Marketing Science, INFORMS, vol. 26(6), pages 834-850, 11-12.
    16. Thomas Mayer & Thomas Russell, 2005. "Income Smoothing and Self-Control: The Case of Schoolteachers," Economic Inquiry, Western Economic Association International, vol. 43(4), pages 823-830, October.
    17. Krekel, Christian & MacKerron, George, 2023. "Back to Edgeworth? Estimating the Value of Time Using Hedonic Experiences," IZA Discussion Papers 16308, Institute of Labor Economics (IZA).
    18. Caillaud, Bernard & Jullien, Bruno, 2000. "Modelling time-inconsistent preferences," European Economic Review, Elsevier, vol. 44(4-6), pages 1116-1124, May.
    19. Liu, Fen, 2021. "Rationality and Emotions: A Model of Inner Games and Ego Identity," MPRA Paper 105704, University Library of Munich, Germany.
    20. George-Marios Angeletos, 2001. "The Hyberbolic Consumption Model: Calibration, Simulation, and Empirical Evaluation," Journal of Economic Perspectives, American Economic Association, vol. 15(3), pages 47-68, Summer.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hrv:hksfac:9642634. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Office for Scholarly Communication (email available below). General contact details of provider: https://edirc.repec.org/data/ksharus.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.