The Hindu Business Line : Do you splurge when you are sad?

Some time back, when I was reviewing the payments I made during 2007-08, I found a rather large amount that I had spent on books. I was feeling low last October and had decided to splurge then. As I reviewed the transaction, I realised that I splurge on books every time I feel low. Why?

Psychologists call it “Misery is not miserly” effect. Take my friend. He heads to the nearest bar and gets sloshed when he is feeling low. He otherwise stays away from alcohol. His wife, on the other hand, goes on a shopping binge when she is depressed.

Researchers have conducted studies to capture this behaviour. In one such study, some participants were shown a sad movie while another group was shown a non-emotional movie. After the movie, the participants were asked to buy some ordinary commodity such as water at various prices.

When you are sad and self-focused…

Participants who watched the sad movie offered three times more money to buy a product than the participants who watched the non-emotional movie. Two interesting observations came out of this study. One, participants who were sad and more self-focused paid more than their counterparts who were sad but not so much self-focused. And, two, all the participants who watched the sad movie insisted that emotions did not drive their purchasing decisions. Psychologists term this behaviour “Misery is not miserly” effect to show that even the most miserly spend money (on themselves) when they are sad!

Indulging in material goods

Why do we engage in such purchasing decisions? Psychologists contend that we become self-focused when we are sad. Such self-focus leads us to undervalue our current possessions. So, we indulge in acquiring more material goods to enhance the sense of self.

If psychologists are right, the last place you should be heading to when you are sad is your stock broker’s office! Otherwise, your sadness will translate into overtrading. And that could lead to large losses on your portfolio. Books are a lot better to splurge on. You can at least read them whenever you want to.

(The author is an investment strategist.)

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