Don’t Sweat the Small Stuff
March 17, 2009
(Ivanhoe Newswire) – You can’t sweat the small stuff – unless the small stuff is money. In a recent study, researchers found participants sweated significantly more, dollar per dollar, when they lost money compared to when they gained it.
Additionally, researchers found the investment strategy of participants influenced their emotional reaction to financial gains and losses. Specifically, by taking a broader outlook at investment choices, like a professional stock trader would, subjects were able to reduce their emotional reaction to financial loss. Researchers say a simple change in investment strategy could ease the physiological toll that can arise during a turbulent economy.
When asked to make a financial investment decision presented as an isolated opportunity, as would an amateur investor, most subjects were loss adverse, meaning they were more concerned with avoiding a financial loss than they were about making a financial gain. However, when decisions were made from a larger pool of investment opportunities, as a professional investor would with a portfolio of investments, subjects were less loss adverse.
"These results highlight how a simple shift in perspective can influence both the emotional reaction to a financial decision, and the decision itself," Elizabeth Phelps, a professor of psychology and neural science at New York University and co-author of the study, was quoted as saying.
Peter Sokol-Hessner, the study's lead author, added, "Though on average we may dislike losses more than we like gains, both in our behavior and in our physiological responses to them, it seems we have the power to change that."
SOURCE: Published in the Proceedings of the National Academy of Sciences
Sign up for a free weekly e-mail on Medical Breakthroughs called First to Know by clicking here.
If this story or any other Ivanhoe story has impacted your life or prompted you or someone you know to seek or change treatments, please let us know by contacting Melissa Medalie at mmedalie@ivanhoe.com.