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The holidays are over. The gifts and gift cards have been opened, and the bills will soon come due. Still feeling some holiday cheer, or has all that giving and receiving produced one big holiday hangover? It's time to turn to two financial philosophers for some timeless advice on money and moods.
Your money moods
"When the going gets tough, the tough go shopping." Forgettable bumper-sticker wisdom that presents a larger question: How do our moods influence our buying decisions? It's a question that we put to Jennifer Lerner, an assistant professor of social and decision sciences and co-author of the study Heart Strings and Purse Strings: Carry-over effects of emotions on economic transactions. Lerner's study involved two groups. One group watched a sad scene from the movie The Champ and then wrote about how they might feel if they were in a similar situation. The second group watched a disgusting scene from the movie Trainspotting and then wrote about how they might feel in a similar situation. Lerner notes the relationship between sadness, disgust, and consumer behavior:
"What disgust does is reduce both selling and buying prices relative to neutral emotions. What we think is happening there is that you want to get rid of things when you're disgusted. Another thing that happens when you're disgusted is that you want to avoid taking anything in. And that corresponds in our study to a lower buying price as well. You see reduction of both buying and selling. Sadness does something quite different. Sadness triggers an implicit goal to change your circumstances -- it's out with the old, in with the new. So sad people are getting rid of what they have -- thus setting a lower selling price. But they're trying to get new things; thus they're willing to pay quite a bit more to get them. ... So an important message to take from this is that not all negative emotions are the same. Sadness and disgust are both negative emotions, but they have opposite effects on buying prices. Disgust lowers your valuation of the commodity. Sadness increases your valuation of the commodity."
This study gauged mood and spending habits, but it could also be applied to giving habits. When we're made sad by world events, we tend to want to give to change circumstances and make things better. That's why in a year of unprecedented disaster like 2005, charitable donations were at a record high.
And when we hear about things such as nonprofit scandals, or people scamming FEMA to get hurricane assistance when many victims who lost everything are having a very difficult time getting their insurance settlements, we tend to feel disgust and recoil from giving because we feel that whatever we do won't make a difference. It's when we want to recoil that we have to keep our eye on the big picture and remember that there are still many good organizations out there doing great work.
Mr. Rogers and money
Mr. Stingy or Mr. Spendthrift? Ms. Generosity or Ms. Give-Nothing-Away? What shapes our attitudes about money? The Motley Fool Radio Show had the opportunity to talk money with television's Mr. Rogers back in 2002. He gave his two cents on our financial feelings:
"I think most of us who grew up in the Depression are quite conscious of being careful with money and other things. I recycle everything I possibly can find. I'll stop my car and pick up a plastic bottle on the street and take it home to recycle. When the tenor of the whole country is such that everything is limited, that sticks with you. I was only 2, 3, 4 years old at that time. Yet you get those attitudes from the people that you live with, those who are closest to you. ... Feelings about money -- you know, saving and spending, holding back and letting go -- start very early in our lives. Stingy people have often been forced to give when they were very young, when they weren't ready. Generous people have often been really appreciated when they were very young. You know, I think it is so important to remember that everyone has something to give."
It's hard to disagree with the very agreeable Mr. Rogers, and I'm not just saying that because I watched his show as a kid and still have a soft spot for Queen Sara. And for the record, the Mr. Rogers we interviewed seemed eerily similar to the Mr. Rogers that many of us had come to know on television. He was calm, kind, and thoughtful, but he also admitted to getting angry. And when asked what made him angry, Mr. Rogers responded with an answer that would seem unbelievable coming from most anyone else -- injustice.
So what can we learn from Ms. Lerner and Mr. Rogers? I think the takeaway is that it's important to keep a positive attitude about spending and giving, to rein in our impulses in the wake of emotional events, and to teach our children to be generous at an early age.
If you'd like to learn more about giving and about this year's Foolanthropy charities, or to make a donation, please visit www.foolanthropy.com. This season's drive ends Jan. 7, but our efforts to educate on wise charitable giving last year-round.
Mac Greer saw The Champ in the theatre and remembers crying -- but not in that "Brian's Song" sort of way. He considers his booking of the Mr. Rogers interview to be one of his signature accomplishments.