Take a 5-minute survey to see where you fall on the Tightwad-Spendthrift Scale.
How do you feel about spending money? Does it give you a thrill or fill you with anxiety? My guest, Dr. Scott Rick, an Associate Professor at University of Michigan’s Ross School of Business, has dedicated his research to understanding the emotional causes and consequences of these feelings.
After observing evidence that a pain center in the brain of “tightwads” was activated by the thought of spending money, Dr. Rick and George Loewenstein, his graduate school advisor, created the Tightwad-Spendthrift Scale. This survey tool measures where people fall on this spectrum. Recently, the scale was adapted for children.
In this episode, Dr. Rick shares what it means to be a tightwad or a spendthrift. Who’s happiest? We discuss where our feelings about spending come from and how/when they are developed. Dr. Rick shares research he recently conducted to see where children ages 5-10 fall on the Tightwad-Spendthrift Scale and provides some tips for parents.
We also discuss how these dynamics work (or don’t) in partner/spousal relationships (see his writing on Fatal Fiscal Attraction) and he gives a preview of his upcoming research exploring the successful bank account structures of married couples.
Follow Dr. Rick on Twitter.
Topics discussed in this episode:
- How the Tightwad-Spendthrift Scale came to be (2:56)
- Couples and “fatal fiscal attraction” (9:00)
- The Tightwad-Spendthrift Scale for children (14:15)
- How can parents use this information? (17:04)
- Does your place on the Scale translate to other areas of life? (22:20)
- The emotional component of your place on the Scale (22:34)
- Gift giving and receiving for Tightwads vs. Spendthrifts (25:15)
- Final advice for parents (27:56)
- Who’s the happiest—Tightwads or Spendthrifts? (31:25)
- Dr. Rick’s resources (32:30)
- What’s next? (33:26)
- Bonus questions (35:07)
- The wrap up (41:55)
Guest Bio:
Scott Rick is an Associate Professor of Marketing at the University of Michigan’s Ross School of Business. Rick received his Ph.D. in Behavioral Decision Research from Carnegie Mellon in 2007, and he then spent two years as a post-doctoral fellow at Wharton. Rick’s research focuses on understanding the emotional causes and consequences of consumer financial decision-making, with a particular interest in the behavior of tightwads and spendthrifts. The overarching goal of his work is to understand when and why consumers behave differently than they should behave (defined by an economically rational benchmark, a happiness-maximizing benchmark, or by how people think they should behave), and to develop marketing and policy interventions to improve consumers’ decision making and well-being.
Notable & Quotable:
Through a fMRI, we found neuro evidence of the pain of paying. —Dr. Scott Rick #successfulgenerations
Tightwads don’t love saving; that’s called frugality. Instead, they experience so much anxiety and distress that they can’t spend and they don’t like it. —Dr. Scott Rick #successfulgenerations
Whether you are a tightwad or a spendthrift, the extremes of the scale are unhappy. —Dr. Scott Rick #successfulgenerations
Research suggests that feelings about spending money develop early. Genetics, role modeling of parents, and socialization all play a role in this. —Dr. Scott Rick #successfulgenerations
Spendthrifts can look at opportunity costs—if I spend now, what am I giving up later? —Dr. Scott Rick #successfulgenerations
What kind of spending are you modeling for your children? —Dr. Scott Rick #successfulgenerations
Resources mentioned in this episode:
- Tightwad-Spendthrift Scale
- More about Dr. Scott Rick
- Collection of Articles Written by Dr. Rick
- Dr. Scott Rick on Twitter @scottianrick
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