The Daily Dinar

According to this fascinating research from Carnegie-Mellon, there are neurophysiological differences in the way people react to spending opportunities.

Consumers often behave differently than they would ideally like to behave. We propose that an anticipatory pain of paying drives “tightwads” to spend less than they would ideally like to spend. “Spendthrifts,” by contrast, experience too little pain of paying and typically spend more than they would ideally like to spend. This article introduces and validates the “Tightwad-Spendthrift” scale, a measure of individual differences in the pain of paying. Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying.

Reporting on this research, the New York Times wrote:

The good news, for behavioral science, was that the researchers saw telltale patterns, which they report in the Jan. 4 issue of the journal Neuron. “We were frankly shocked at how clear the results were,” said Brian Knutson, the Stanford psychologist who led the experiment. “It was amazing to be able to see brain activity seconds before a decision and predict whether the person would buy it or not.”

The bad news, for my son’s college funds, is that my responses to this experiment were not what could be called a happy medium, despite my best efforts at restraint. I passed up not just the Foreman grill but the sonic power toothbrush and the Bar Master electronic drink guide. But Dr. Knutson and his Stanford colleague, Elliott Wimmer, reported that “subject JT” chose to buy “50 percent of the items, approximately 2 standard deviations more than the average 30 percent buy rate.”