Tuesday, September 22, 2009

Impulsive Behavior Linked to Poor Financial Decisions

Impulsive behavior such as infidelity, smoking, and obesity is found to be connected with poor financial choice. The study was conducted by Dr Stian Reimers of Department of Psychology, University College London and is published in upcoming December 2009 issue of Personality and Individual Differences http://dx.doi.org/10.1016/j.paid.2009.07.026.

More than 42,000 survey participants from U.K. were asked if they preferred £45 after three days or £70 after three months (i.e., 267% APR), and asked various question related to impulsive behavior as part of BBC survey http://www.bbc.co.uk/sexid . The analysis concluded that there was a strong preference for immediate lower financial gratification (£45) over long-term higher financial reward (£70) with self-reported impulsive behaviors. The immediate financial gratification at cost of higher financial reward can be interpreted as lower saving and/or tendency for high debt. There was also a clear preference for higher future payment with increase of income and age. Early sexual activity, infidelity, smoking, drug use, and higher BMI (obesity) also indicated preference for sooner financial gratification. These findings suggest that bad financial choices such as debt accumulation and lower savings are just another form of impulsive behavior.

The Adobe Acrobat reprint of article can be found at http://else.econ.ucl.ac.uk/papers/uploaded/344.pdf,

Photo. My very impulsive choice of dessert after a full meal. 


  1. I think the study may have been a bit flawed. I would prefer the 45 pounds today so I could better invest it and make more than 70 pounds at the end of 3 months.

  2. That is true only if you have exceptional and extraordinary investing skills that will nearly double your money in 3 months. Most people don't have or think in terms of it.

  3. I agree study is flawed. immediate payment is superior, if the agency is not trusted to deliver in 3 months