Lonely People Who Play For Higher Stakes

DUCLOS, Rod | JIANG, Yuwei | WAN, Echo Wen

People who feel socially excluded are more willing to pursue riskier but potentially more profitable financial opportunities, whether they be in stocks, lotteries or financial products.

That is the finding of Rod Duclos, Echo Wen Wan and Yuwei Jiang, who were able to connect that behavior to a higher perception of the instrumentality of money among those who experienced social exclusion.

“In a social system,” they write, “people obtain what they want via two primary means, popularity and money. Because money and group membership can help one to acquire similar benefits, consumers likely turn to money as a substitute for popularity when their efforts to seek and/or maintain social connections are thwarted.

“Our prediction was that in the absence of social support, forlorn consumers require significantly more money to secure what they need out of the social system. As such, experiencing social rejection heightens the instrumentality of money for obtaining benefits from the world. The ensuing quest for money fosters riskier but potentially more lucrative financial decision-making.” 

Four laboratory experiments and one real-world survey provided solid evidence in support of that argument.

The experiments manipulated circumstances so that some participants were made to feel excluded or recalled times when they felt excluded.  Those in the excluded condition repeatedly opted for riskier behavior when it came to financial gain, such as selecting to bet on a lottery with lesser odds but seemingly bigger rewards. One of the experiments found they were twice as likely to play for higher (but uncertain) stakes than accept a lesser but sure cash payment.

Tests ruled out other drivers for this behavior, including negative affect, in particular sadness, and self-esteem. They also showed that the likely reason why social exclusion was linked to riskier behavior was because of participants’ views on money. “Excluded consumers perceived money as more helpful to obtain what they want out of the world,” the authors said.

However, this belief could also be manipulated. When participants read a seemingly unrelated article that argued money did not afford greater freedom or control in life, risk-taking was eliminated among the socially-excluded group.

A real-life survey of 586 people, while not definitive, also provided support for the authors’ argument. Those who reported feeling chronically excluded were found to have riskier financial portfolios and engaged more frequently in betting on horse races and gambling in casinos.

The findings have broad implications, particularly as the number of people living alone is on the rise in places like the U.S., putting them at risk of greater loneliness.

The study’s findings could benefit consumers, for instance by cautioning them to delay important financial decisions following a break-up or a fallout with friends. 

Government agencies and consumer advocates might also want to draw on the findings to investigate and regulate sales practices in financial industries.

“Given the consequences of social exclusion for risk-taking, some marketers with questionable ethics may be tempted to isolate, either physically or psychologically, potential clients during the negotiation process since doing so may result in larger commissions. Others may target demographic groups likely to suffer from social exclusion, such as the elderly, divorcees and the widowed. As such, consumers would benefit from being aware of the tricks available to unscrupulous financial services providers,” the authors said.



Adjunct Assistant Professor