Wired to look for chances to earn money

Monday, October 29th, 2018

Americans have a blind spot when it comes to saving:

Americans seem to excel at working. But saving? Not so much. As of last year, the median American household had only $1,100 saved for retirement, according to an analysis from the Federal Reserve Bank of St. Louis.

While many factors likely contribute to the poor U.S. savings rate, a recent Cornell University study published in the journal Nature Communications pointed to another factor that may be at least partially to blame: our brains. More specifically, the researchers found that our brains may be wired to look for chances to earn money — but fail to recognize chances to save, even when they are right in front of us.

The study measured something we can’t usually measure ourselves: how much attention we pay to earning and saving opportunities. First, participants had to identify colors shown quickly on a computer: one “earning” color that let them gain 30 cents, a neutral color that had no monetary effect and one “saving” color that let them avoid losing 30 cents.

When the “earning” color was shown, a staggering 87.5% of participants identified it more quickly and accurately than when the “saving” color was shown. Even in trials that framed “saving” as earnings that would come slightly later, participants were still better at immediate earning.

In the study’s second part, participants had to identify which color appeared first. Three out of four said they saw the “earning” color appear first — when in fact, the “saving” color did. This suggests our “earning” bias may even be strong enough to warp our perception of time.


  1. Wilson says:

    It’s government policy to discourage and even punish saving, a more enlightening study would measure if the brain favors stealing over earning, though I guess to the government stealing is just a faster way of earning

  2. Harry Jones says:

    I grew up poor, and was burdened with a risk averse, waste-not-want-not mentality. Eventually, I learned that trying to avoid obvious risks has many hidden risks. A lot of poor people are poor because they don’t understand this. It’s a scarcity mentality. Pessimistic. On a national level, declinist. You’re so busy looking for ways not to lose that you forget to look for ways to win.

    All that matters in the end is that your outlays not exceed your income. But expenses can never be reduced to zero. Living costs money. And so I’ve concluded that as long as you don’t spend profligately, it’s better to focus on possible ways to earn more than on ways to save money.

    I also had some stocks, and a bank account balance that exceeded FDIC protection. So when I lost my job I could coast for quite some time.

    And I would throw nothing away if I thought I might have a use for it some day. I knew I was on the wrong track when the stuff I kept around started to get in the way. I’d read stories about packrats dying when their heaped trash collapsed on them and thought: the only difference between them and me is a difference of degree. After that I went on a kick of throwing away stuff. I accidentally got rid of some stuff of value, but on the whole it was a good move.

    Earning money is really important. Have lots of options. Have a portfolio of skills and connections. A single source of income can up and die on you. Have multiple streams to manage the risk. Being an employee, even a highly paid one, can be trap. Layoffs happen. Companies go under.

    Saving is overrated. It’s a false sense of security.

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