It is each generation's hope that the next will do better. But a new study claims that your financial status while growing up affects you for life — which explains why some people make impulsive purchases even when the economy is bad.
As Randy Stein writes for Scientific American, a recession usually encourages (or forces) people to spend less. But according to a new study by Vladas Griskevecius from the University of Minnesota and Joshua Ackerman from the Massachusetts Institute of Technology, "people raised in an environment low in economic resources make riskier and less conservative choices when reminded of recessions, regardless of their current economic status."
Basically, the researchers did experiments in which participants had to make financial decisions (for instance, would you rather have $30 now or $41 in 33 days?), and found that those who grew up struggling made more inappropriate choices than those who were more well-off or stable. Stein explains:
These findings are striking because they suggest that childhood conditions loom over us into adulthood — even being more important than current conditions. Not only that, but since childhood conditions only shaped decisions when people were initially reminded of the recession, these findings also suggest that when times are tough childhood conditions can cause us to make the exact wrong decisions.
Incidentally, there was a post on the New York Times Motherlode blog yesterday called "The Poorest Kid in a Rich Town," in which journalist Ron Lieber asks:
One of my Twitter followers asked me to put the following to all of you: He and his spouse are worried about moving to a place where they will have less money than nearly everyone else in the community. They worry that the kids won’t grasp the trade-offs the parents have made (reaching for a better school district) and will only see the things they lack. I wonder if the opposite is true, and whether kids turn out better somehow if they have a bit less (but maybe not a lot less) than everyone else.
It's an interesting question, especially when you consider the study in Scientific American. Does being the poorest kid in a rich town count as being "raised in an environment poor in economic resources"? As far as I'm concerned, I was neither rich nor poor growing up, yet I spent a couple of years in public school where my family — we had a car and took vacations — was among the most wealthy in the class, and a couple of years in private school where we — without butlers, boats or country houses — were definitely considered on the have-not side. Some really weird ostracizing happened when I was the poorest kid in a rich class. I wonder how this would factor into experiments posed by Griskevecius and Ackerman.
Image via Getty.