Are consumers with fewer friends more likely to take financial risks?

Jan 15, 2013

Feeling socially isolated causes consumers to pursue riskier but potentially more profitable financial opportunities, according to a new study in the Journal of Consumer Research.

"Seeking social acceptance and maintaining are among the most fundamental and universal human needs. Consumers are often willing to invest or sacrifice important resources to secure . 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," write authors Rod Duclos (Hong Kong University of Science and Technology), Echo Wen Wan (University of Hong Kong), and Yuwei Jiang (Hong Kong Polytechnic University).

Feeling alone or rejected is a common experience. end, people are ignored at parties or in office conversations, and offers of friendship are frequently rebuffed. In the absence of social support, do consumers seek and value money as an alternative means to get what they want out of the social system? And does this lead to greater -taking?

In one study, consumers were asked 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 rejected fostered riskier decisions. However, this effect was mediated by the perceived instrumentality of money. 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.

"Given the necessity of balancing between risk and financial reward in many important financial decisions (saving for college or retirement, deciding how to pay for health care and insurance, investing in the stock market), understanding how consumers trade risk for reward could help them make more informed decisions. For example, consumers might choose to delay important following a breakup or a falling out with friends, colleagues, or family," the authors conclude.

Explore further: World population likely to peak by 2070

More information: Rod Duclos, Echo Wen Wan, and Yuwei Jiang. "Show Me the Honey! Effects of Social Exclusion on Financial Risk-Taking." Journal of Consumer Research: June 2013.

add to favorites email to friend print save as pdf

Related Stories

Eating or spending too much? Blame it on Facebook

Dec 11, 2012

Participating in online social networks can have a detrimental effect on consumer well-being by lowering self-control among certain users, according to a new study in the Journal of Consumer Research.

Recommended for you

World population likely to peak by 2070

Oct 23, 2014

World population will likely peak at around 9.4 billion around 2070 and then decline to around 9 billion by 2100, according to new population projections from IIASA researchers, published in a new book, World Population and ...

Bullying in schools is still prevalent, national report says

Oct 23, 2014

Despite a dramatic increase in public awareness and anti-bullying legislation nationwide, the prevalence of bullying is still one of the most pressing issues facing our nation's youth, according to a report by researchers ...

Study examines effects of credentialing, personalization

Oct 23, 2014

Chris Gamrat, a doctoral student in learning, design and technology, recently had his study—completed alongside Heather Zimmerman, associate professor of education; Jaclyn Dudek, a doctoral student studying learning, design ...

Data indicate there is no immigration crisis

Oct 22, 2014

Is there an "immigration crisis" on the U.S.-Mexico border? Not according to an examination of historical immigration data, according to a new paper from Rice University's Baker Institute for Public Policy.

User comments : 0