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Feeling Left Out Can Lead to Risky Financial Decisions

Feeling Left Out Can Lead to Risky Financial Decisions   People who feel isolated are more inclined to make riskier financial decisions, according to new research presented at the American Psychological Association’s 121st Annual Convention.

This can lead the most vulnerable people — divorcees, widows and the elderly — to be easy prey for unscrupulous marketers, according to Rod Duclos, Ph.D., an assistant professor of marketing at the Hong Kong University of Science and Technology.

In his presentation at the conference, “Effects of Social Exclusion on Financial Risk-Taking,” Duclos described several experiments and a field survey that found that the more often people felt excluded, the more they chose the longer odds for bigger lottery payoffs and took greater risks with their finances. They also bet on horse races and gambled in casinos more often.

“In the absence of social support, forlorn consumers apparently place more value on the power of money to secure what they want socially,” he said.

In one experiment, 59 students played an online ball-tossing game designed to make them feel socially included or excluded. In a separate task, they had to choose between two hypothetical bets with very different odds, according to Duclos. What he found was that the socially excluded participants favored the riskier option more strongly than those who felt included.

A second experiment used writing essays to make 168 students feel either excluded or included, he continued. This experiment found that the socially excluded participants were twice as likely to gamble as the students who felt included, he said.

Another experiment with 35 students ruled out lower self-esteem as a trigger for risk-taking, through essay writing and a choice of lotteries, he said.

In a fourth experiment with 128 students, researchers found those who felt isolated did not take more risks than others if they were told that having more money would no longer result in social benefits, Duclos noted.

For a real-world demonstration, a team of research assistants interviewed people at malls, parks and subway stations. They asked them to choose between two lotteries: One that offered an 80 percent chance to win $200 and a 20 percent chance to win nothing and another that offered a 20 percent chance to win $800 and an 80 percent chance to win nothing.

The researchers then asked participants what proportion of their disposable income they had in low- versus high-risk investments, how often they bet on horse racing, and how often they gambled in casinos. Lastly, they asked how often on a scale of 1-4 — 1 being never, 4 being often — they felt socially excluded.

The researchers found that there were clear relationships between the degree to which participants felt socially excluded and how much risk they took, Duclos said.

“Some marketers with questionable ethics may target demographic groups likely to suffer from social exclusion, such as the elderly, divorcees, and widows or widowers,” Duclos said. “Others may be tempted to isolate, physically or psychologically, prospective clients during financial negotiations since doing so may result in larger commissions. By illustrating how common experiences such as feeling rejected or accepted can affect consumers’ financial decisions, our research can help people make more informed decisions.”

Source: American Psychological Association

Feeling Left Out Can Lead to Risky Financial Decisions

Janice Wood

Janice Wood is a long-time writer and editor who began working at a daily newspaper before graduating from college. She has worked at a variety of newspapers, magazines and websites, covering everything from aviation to finance to healthcare.

APA Reference
Wood, J. (2018). Feeling Left Out Can Lead to Risky Financial Decisions. Psych Central. Retrieved on September 27, 2020, from
Scientifically Reviewed
Last updated: 8 Aug 2018 (Originally: 1 Aug 2013)
Last reviewed: By a member of our scientific advisory board on 8 Aug 2018
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