Black Friday: The Science of Tightwads and Spendthrifts

Nov. 24, 2010 — -- Black Friday is just around the corner, marking the beginning of holiday shopping, and chances are most folks already feel a tingling sensation in their wallets. Even if it truly is better to give than to receive, giving inflicts a certain amount of pain, dividing shoppers into three categories:

Tightwads, who feel the pain of paying intensely this time of the year, and who will most likely reach for a credit card to delay the pain as long as possible. A tightwad will probably wish later that a better gift had been chosen, at least one that didn't break as it was being unwrapped.

Spendthrifts, who feel less pain when they part with a few bucks, so they will reach for the top shelf and later wish they hadn't spent quite so much.

And the "unconflicted middle," whoever they are, who apparently bear the pain with little remorse.

At least that's the way Scott Rick sees it. Rick is a marketing professor at the University of Michigan. He and his colleagues have used brain scans to document how the human brain processes pain when spending money. And here's a little Christmas cheer: there was little difference between tightwads and spendthrifts when buying something for someone else. But tightwads tend to spend less if using cash because the pain is immediate.

Rick has been particularly interested in how tightwads and spendthrifts co-exist, and a few years ago he came up with evidence that they tend to intermarry.

People generally choose mates who are more like themselves, according to other research, but when it comes to tightwads and spendthrifts, opposites do attract. And that, of course, leads to all sorts of problems, because one spouse likes to spend, and the other doesn't, and financial quarrels are among the most toxic family disagreements.

Holiday Spending: All in the Genes?

But never mind that now. It's the holiday season, and Rick is more interested in consumerism than marital bliss, at least in his role of marketing expert.

"Some consumers chronically spend more than they would like, and some consumers chronically spend less than they would like," Rick said in a webcast from the National Science Foundation, which has sponsored much of his research. The difference, of course, is whether the consumer is a spendthrift or a tightwad. And that, according to other research, may not be entirely a matter of choice.

New research suggests that we may not have as much control over our spending as we think. Aner Sela of the University of Florida and Itamar Simonson of Stanford University say there is a genetic component to our consumer habits. The two marketing professors believe theirs is the first study to show that how we spend our money is determined partly by our ancestors.

They surveyed 110 identical twins and 70 same-sex fraternal twins to see whether they would spend $100 on necessary groceries or a pampering massage.

"Similar choices were more common in identical twins, whose genetic coding is identical, than among fraternal twins, who share the same household environment but only half their DNA," they said in releasing their study, which is to be published next April in the Journal of Consumer Research. The fact that there is a significant difference between identical twins and fraternal twins shows that genetics is at work, they said.

The researchers, who describe their findings as tentative, note that if some consumer preferences are determined by genetics, that may explain why our purchases are sometimes irrational. You can't necessarily blame genetics for that new car you bought right after taking a cut in pay. However, it may explain why you bought a family van instead of a snazzy two-seater.

"Specifically, we found large heritable effects on the tendency to choose the compromise (or middle) option and avoid the extremes, select sure gains over gambles, prefer an easy but non-rewarding task over an enjoyable but challenging one, look for the best option available and not do with what is just good enough," their study concludes.

Black Friday Spending: Hidden in Your Genes?

So genes act in a general way. Your genes may lead you toward buying a hybrid car, the researchers say, but "people are not born with a Prius gene." And your genes probably have nothing to do with your passion for cilantro.

It seems probable, however, that genes are a huge factor in whether a person is a spendthrift, a tightwad, or unconflicted. And according to some research, income has nothing to do with whether someone is cheap or generous. You are what you are.

But come on. It's nearly Christmas, or so the marketing experts tell us. So how can you make a tightwad loosen up? Rick offers a few suggestions.

Use a credit card, thus at least delaying the pain of handing over cash. Think about the person you are buying the gift for, and how cheap you will feel if the crummy watch doesn't keep good time. Shop when you're depressed, because that's when people are more likely to spend themselves into poverty.

And if none of this works? Blame it on your genes.