Tag Archives: financial decision making

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Charles Brainerd to receive G. Stanley Hall Award

Charles Brainerd, professor of human development and human neuroscience, will receive the American Psychological Association’s G. Stanley Hall award for distinguished contributions to developmental science at the APA’s August 2019 meeting in San Francisco.

Assisted-living is better when family and staff communicate

Karl Pillemer, the Hazel E. Reed Professor in Human Development and senior associate dean for research and outreach in the College of Human Ecology, has developed the Partners in Caregiving in Assisted Living Program (PICAL)  to reduce staff-family conflict in assisted living facilities.

Institute for the Social Sciences grant awarded to bethany ojalheto

The Institute for the Social Sciences (ISS) grants awards to faculty to develop new research or seek external funding. bethany ojalehto received funding for her project, "Cognitive Drivers of Environmental Decision Making: Mobilizing Indigenous Ecocentric Conceptual Perspectives in Diverse Contexts."

Our brains are wired to earn money, but not save it

Adam Anderson and Eve De Rosa recently studied why it is hard for people to save money. They found that when people were given the choice, over 90% of the time they chose earning money to saving it. They discuss how our brains may be hard-wired for earning and that saving requires more conscious effort.

Teens old for their grade more likely to enroll in college

Felix Thoemmes uses math models to better understand why high school students who are old for their grade are more likely to enroll in college than students who are young. The article discusses how the age at which one starts school has implications for each student as well as for the class as a whole.

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Robert Sternberg and the Triangular Theory of Love

Robert Sternberg was interviewed on October 9, 2018 for the podcast, What Makes Us Human?from Cornell University's College of Arts & Sciences. This is the podcast's third season, "What Do We Know About Love?" and Dr. Sternberg discusses his "Triangular Theory of Love."

 

Reprinted from cnbc.com, "Why you'll still have a hard time saving money, even if you get a raise" by Darla Mercado.

Adam Anderson and Eve De Rosa

If you were hoping a raise would help you pad your emergency fund, prepare to be disappointed.

That's because your brain has learned to prioritize earning more money over saving it, according to a recent study from a team of neuroscientists at Cornell University.

"There's this implicit blame that people aren't working hard enough and that the lack of savings is a reflection of work ethic," said Adam K. Anderson, associate professor at Cornell University's College of Human Ecology and co-author of the report. "But the data suggest that while people work a lot and work hard, saving is a problem," he said. Indeed, roughly 55 million people have nothing saved for an emergency, according to Bankrate.com. That's no surprise considering that wage growth has been tepid. Further, workers are grappling with an array of competing priorities, including repaying their student loans and saving for retirement.

Here's how your brain is also keeping you from putting money away.

Monetary reward

The neuroscientists studied 78 men with a mean age of 21 and were told to associate one color with "earning," which would have them gain 30 cents, and another color with "saving," avoiding the loss of 30 cents. Participants were given a timing perception task, which would measure how quickly they responded to the colors and chose to either save or earn. In one experiment, nearly 90 percent of the participants earned more than they saved. Three out of four also reported that they saw the color associated with earning on the screen first, when in reality they were seeing the color that corresponded with saving. "You're performing the same job, and you're earning or saving for an equal amount of work," said Anderson of Cornell. "But at the end of that, it seemed easier to perform the task associated with earning," he said. "They responded more quickly and made more money."

Changing your mentality

The scientists surmised that the preference for earning money over saving is a learned behavior. "It's rational from the brain's perspective: You must earn before you can save," said Anderson. "It could partly be cultural," he said. "We brag about work ethic and earnings, but we don't talk about coming up with a cool savings plan." In order to change up your behavior, practice being mindful of squirreling away cash.

1. Acknowledge the problem: It's no secret that a variety of priorities and expenses are competing for your hard-earned dollars, but be aware that merely making more money won't necessarily solve your problems. That's especially the case if you're blowing your raise instead of pocketing it. "For the majority of people, if you make more money, the savings won't match it," said Anderson.

2. Make the choice to save: Having a slice of your paycheck automatically go toward an emergency savings account can help you build your cash reserves without thinking about it. But if you want to change your mentality on saving versus earning, you should also make the active choice to put away a dollar a day, said Eve De Rosa, associate professor at Cornell University's College of Human Ecology, and co-author of the report. "Saving a dollar a day isn't going to accumulate into a fantastic abundance of savings, but this daily practice of attending to saving makes you mindful," said De Rosa.

3. Think ahead: We prioritize the present and attach less importance to the future, which may factor into why people prefer to earn instead of save. "It helps to think about the future us and what we can do for that person," said Anderson. "You can imagine that people default to 'I should earn more,' but the idea is that you want to save for that person in the future," he said.