The effect of job loss on risky financial decision-making.

Job loss is a common and disruptive life event. It is known to have numerous long-term negative effects on financial, health, and social outcomes. While the negative effects of becoming unemployed on health and well-being are well understood, the influence of job loss on financial decisions has received little attention.

The latent scope bias: Robust and replicable.

People appear to prefer explanations that minimize unobserved effects, a pattern known as the latent scope bias in explanatory reasoning. A recent set of studies published in Cognition argues that the bias can be elicited only in certain narrow conditions and with certain tasks, such as a forced-choice task (Stephan, 2023). This commentary assesses the robustness of the bias in two ways: it weighs the most recent discoveries against previous research, and it presents two new studies using the most general possible elicitation task, i.

Financial constraint and perceptions of COVID-19.

In early March 2020, two crises emerged: the COVID-19 public health crisis and a corresponding economic crisis resulting from business closures and skyrocketing job losses. While the link between socioeconomic status and infectious disease is well-documented, the psychological relationships among economic considerations, such as financial constraint and economic anxiety, and health considerations, such as perceptions of disease spread and preventative actions, is not well understood. Despite past research illustrating the strong link between financial fragility and a wide range of behaviors, surprisingly little research has examined the psychological relationship between the economic crisis and beliefs and behaviors related to the co-occurring health crisis.

Communicating amounts in terms of commonly used budgeting periods increases intentions to claim government benefits.

Millions of eligible families did not claim their 2021 expanded child tax credit (CTC), collectively forgoing billions of dollars. To address this problem, many policymakers focused on increasing awareness of the CTC by highlighting that families could receive up to $3,600 a year per child. However, people rarely budget on a yearly basis.

When a gain becomes a loss: The effect of wealth predictions on financial decisions.

When people make financial decisions, they need not only think about their current financial situation, but also about changes in future wealth. This work investigates people's beliefs about their future wealth and how these beliefs impact financial decisions. Using a joint experimental and computational cognitive modeling approach, we show that people's future beliefs serve as reference points when making investment decisions.

The effect of effects on effectiveness: A boon-bane asymmetry.

Beliefs about how effective a cause will be at achieving possible outcomes are critical inputs into a range of decisions, from how to treat an illness to which products to purchase. We identify scope-the number of distinct outcomes a cause is known to achieve-as an important input into judgments of efficacy. We compare causes that lead to worse outcomes (i.

Valence in context: Asymmetric reactions to realized gains and losses.

The current research documents a novel pattern of preferences across nominally equivalent outcomes. When evaluating the outcome of completed experiences, people are sensitive to the magnitude of component (i.e.

Leveraging Psychological Insights to Encourage the Responsible Use of Consumer Debt.

U.S. consumers currently hold $880 billion in revolving debt, with a mean household credit card balance of approximately $6,000.

Framing charitable donations as exceptional expenses increases giving.

Many articles have examined the psychological drivers of charitable giving, but little is known about how people mentally budget for charitable gifts. The present research aims to address this gap by investigating how perceptions of donations as exceptional (uncommon and infrequent) rather than ordinary (common and frequent) expenses might affect budgeting for and giving to charity. We provide the first demonstration that exceptional framing of an identical item can directly influence mental budgeting processes, and yield societal benefits.

Many behavioral tendencies associated with right-leaning (conservative) political ideologies are malleable and unrelated to negativity.

Recent research has identified several judgment and decision making tendencies associated with right-leaning political ideologies that are difficult (if not impossible) to explain in terms of stable, negative affective appraisals because they (1) are uncorrelated with the negativity of the stimuli being considered, (2) do not reflect divergent affective evaluations, and (3) can be eliminated by superficial manipulations and interventions.

On assets and debt in the psychology of perceived wealth.

We studied the perception of wealth as a function of varying levels of assets and debt. We found that with total wealth held constant, people with positive net worth feel and are seen as wealthier when they have lower debt (despite having fewer assets). In contrast, people with equal but negative net worth feel and are considered wealthier when they have greater assets (despite having larger debt).

Harry Potter and the sorcerer's scope: latent scope biases in explanatory reasoning.

What makes a good explanation? We examine the function of latent scope, i.e., the number of unobserved phenomena that an explanation can account for.