Children’s Emotional Reactions to Money Form Early
How much change is in your child’s piggy bank? The answer may say more about their future relationship to money than previously realized.
New research from the University of Michigan Center for Human Growth and Development (CHGD) suggests that children as young as five may have already formed distinct emotional reactions to spending and saving money.
The study indicates that these reactions translate into real-life behaviors. They also suggest that these emotional reactions and spending behaviors weren’t modeled after their parents.
According to CHGD research investigator and study lead author Craig Smith, Ph.D., the Spendthrift-Tightwad Scale has long been used to measure adults’ emotional reactions to spending. Tightwads experience emotional pain connected to spending, where spendthrifts lack that emotional brake system.
Smith and his colleagues created a Spendthrift-Tightwad Scale for Children and asked 225 children about their emotional response to saving and spending. The researchers oriented children along the scale based on their responses. At the end of the study, researchers gave the children a dollar to spend on toys or save.
“We showed that, in five- to 10-year-olds, one’s emotional response to spending and saving is a useful predictor of what you do with your money, and that these emotional responses predicted actual behavior even after controlling for how much children liked the store items,” Smith says.
In other words, even if spendthrift-leaning children didn’t love an item, they were still more likely to buy it.
“This is similar to adults, in that beyond how much they like the item, their emotional orientation toward spending and saving uniquely predicted if they spent or saved,” Smith says.
Four times as many children were classified as tightwads than spendthrifts, which is also true for adults.
Smith says he and his colleagues were surprised that children so young could report their emotional responses accurately.
“We did not necessarily expect this in very young children, and it raises all kind of developmental questions,” Smith says. “How do these orientations develop? Are they connected to temperament, naturally occurring, or are they learned from modeled behavior?”
Parents completed the adult version of the scale, and researchers didn’t find any significant relationship between a parent and their child’s placement on the scale. A study is now underway to test this connection more carefully.
The findings were published in December 2017 in the Journal of Behavioral Decision Making.
Abby Heverin
Abby Heverin is the Communications and Awards Manager for ICF, where her responsibilities include managing public relations, overseeing content strategy and development, assisting in the development and production of ICF industry research, and managing the Association's portfolio of awards programs.
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