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Transcription of interview with Jenny Olson on December 30, 2013.
Douglas Goldstein, CFP®, Financial Planner & Investment Advisor
Jenny Olson has done some fascinating research at the University of Michigan’s Ross School
of Business about an interesting side of business and how people date.
Douglas Goldstein, financial planner & investment advisor, interviewed Olson on Arutz Sheva
Radio.
Douglas Goldstein: You’ve looked at how people seem to prefer to date savers over
spenders.
What’s this all about?
Jenny Olson: We’re really interested in kind of this phenomenon in evolutionary psychology
that suggest that when we’re trying to attract romantic partners, we tend to spend money
in order to signal our resources and our value as a mate, but my adviser and colleagues,
we were thinking this kind of potentially perceived as being wasteful.
So we started this project and we were also more interested in kind of chronic general
spending tendencies as opposed to just specific instances of saving and spending in the form
of like a Porsche or a luxury watch.
We created a series of experiments and across that we generally find that savers indeed
are more attractive as romantic partners in the initial stages of relationship formation.
I think there is this general intuition that spending money is used to attract mates, however,
we were kind of interested in the opposite side of how are those kind of flashy spending
signals perceived by the recipient of the target.
There is this general idea that people think that’s attractive but there is some initial
studies that find that it works for men in short-term context but we were also more interested
in the more enduring longer term relationships and indeed saving really is more desirable
in the long run especially.
Douglas Goldstein: You’re saying that if you’re a young man looking to get a date
then the Porsche might help to make a short-term relationship but won’t necessarily help
over the long term?
Jenny Olson: That’s true and interestingly, it might attract attention but in our own
kind of studies, we find that spending in the short term doesn’t really have an advantage
over saving.
We find that people don’t necessarily distinguish or kind of show preference for savers or spenders
in the short term.
So I think this belief that spending a lot of money early on will kind of convert into
dates may not necessarily be the case.
It surely attracts attention but it may not lead to any kind of relationship.
Douglas Goldstein: How can people really see that because you can see if I wear a fancy
watch or a snazzy suit but you don’t really know how much money I have I my bank account.
Jenny Olson: We actually just run an experiment looking at that like if people are able to
infer kind of general spending and saving habits just from purely glancing at people
because as you rightly pointed out, it can be difficult to kind of sense someone’s
frugality being sort of kind of being a cheapskate because that’s also the opposite end of
being a saver, but we find that people indeed are better than chance at identifying savers
and spenders.
What we did is we brought people into the lab and we had them just basically look at
each other and without any kind of interaction or communication and they just made guesses
and this was an incentivized experiment.
We paid them $1 for every cracked guess they got.
They went around the room and indicated whether or not they thought someone was generally
more of a saver or a spender and at the end of the experiment, we had people revealed
to the group what their general tendencies were.
We found that people are better than chance at identifying and they used cues like physical
appearance, demeanor maybe just overall confidence in kind of telling whether or not people are
generally are saver or spender.
Our research also is not just about kind of the money you have in your bank account but
also the other positive qualities that saving conveys, things like self control.
Indeed, people are able to tell.
On our studies, we looked at saving and spending generally.
I would argue that cheapskates kind of on the far end of the continuum of being saver.
I would argue that saving is something that people enjoy to do and it’s not kind of
a painful thing.
However cheapskates, I would argue they have kind of a different self-control problem.
They are unable to overcome the urge not to spend and so they find it painful to save
because they know they should be spending more, similar to this [inaudible 0:05:43]
spender distinction.
So I would argue again that saving is something that people enjoy to do.
It’s more a sense of frugality as opposed to being a cheapskate.
Douglas Goldstein: It’s not the question of whether a person has saved a lot of money
but rather is he the type of person who saves which would seemed to suggest other character
traits that savers would have.
Jenny Olson: I think that saving conveys a lot of different benefits and this general
concept of self-control is really powerful because it’s a general tendency to be able
to inhibit impulses and that can translate into being less likely to cheat, less likely
to say hurtful things and also just eat healthy.
One of our studies was really interesting.
We gave people an identical picture of someone they label down saver or spender and people
rated the saver as physically more attractive.
That ability to kind of be able to eat healthy and exercise regularly and the self control
also translate a physical attraction which is really interesting.
Douglas Goldstein: If you were to guess what are these that would make someone think that
person looks better, what do you think
that is?
Jenny Olson: It was interesting because I think people kind of perceived that label
of saver as it kind of triggers other associations that our mind thinks like responsible maybe
cautious, again that self control aspect and I think that creates this halo effect in terms
of maybe savers are perceived as more favorable in all dimensions and physical attraction
happens to be one of them, but unfortunately savers do suffer from a lack of excitement.
Douglas Goldstein: Are savers are just not as fun?
Jenny Olson: We find that savers are overwhelmingly found to be less exciting than spenders.
However, they are still rated as more attractive so despite that maybe perceived deficit in
fun, they are still generally more desirable as romantic partners.
Douglas Goldstein: Do you think that at different age groups people would find that more fun
for example in high school or college, someone doesn’t care about a saver who is boring
even if stable would rather date the more fun Porsche owning, fancy watch guy?
Jenny Olson: Our studies, we focused on ages 18 to 35 so even this young college population
find saving desirable, if anything I would think that these tendencies would get stronger
over time as people head to retirements and maybe saving for their children’s college
funds but it’s fascinating that we find this preference even
in 18-years-olds.
We haven’t looked at people that are already married and kind of entering their second
marriage.
We actually have another project we’re starting now.
It’s a skilled experiment where we’re looking at people who are entering their first
marriage and how they manage money in terms of joint accounts versus separate accounts
and kind of looking at what financial structure is more favorable for not only psychological
well-being but kind of marital happiness and economic well being.
I would argue that saving and spending tendencies, they would probably become magnified as people
enter marriage and then subsequent marriages and then it gets more complicated with her
money, we might have children from previous marriages and that can really kind of introduce
more new ones to the equation.
We will hopefully explore that in future studies.
Douglas Goldstein: Aren’t there studies that showed that couples that have joint bank
accounts are much more likely to succeed in their marriage than those who don’t?
Jenny Olson: There is co-relational work in sociology that does suggest that that people
who have joint accounts tend to be happier but it is co-relational.
We’re not sure whether or not people that are already happy just tend to get joint accounts
or joint accounts makes people happy and so that’s why we’re actually going to be
doing an experiment looking at what leads to greater success.
Douglas Goldstein: I thought that it was something to the effect of if you look at couples who
have joint accounts then you can know that they are less likely to get divorce.
Jenny Olson: They tend to be happier but again we’re not sure because they weren’t randomly
assigned to have joint accounts.
They open joint accounts on their own accord so there might be something unique about the
couples that open joint accounts that make them happier because they already have this
other pre-existing qualities but if you randomly assign people to open joint versus separate
account, you may be able to kind of disentangle the causal effects of which one is kind of
better for different people.
Douglas Goldstein: Do you think that a saver and a spender make a good match because opposites
attract or is that just a formula for failure?
Jenny Olson: There’s a lot of debater on that.
I’m not sure.
I would say that for some people it does work because they tend to rely on our partner.
So for instance, a spender might rely on a saver to help them achieve self-control goals
and people that have higher self control tend to be more accommodating for their partners.
I think that those parings can be successful just like the two high self-control but the
two low self-control, they might have a little more trouble because it might be fun and exciting
in the beginning but it could lead to some trouble down the road.
Douglas Goldstein: What’s the best way for people to keep track of what you’re doing?
Jenny Olson: You can check out my website www.jennyginnolson.com.
Douglas Goldstein, CFP®, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel.
Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA,
SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
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