Socially isolated people more likely to make risky financial decisions

Social isolation may make some people more susceptible to unfair marketing practices and can lead them to make risky financial decisions, a new research has revealed.

The research by Rod Duclos, PhD, assistant professor of marketing at the Hong Kong University of Science and Technology, described several experiments and a field survey that found the more often people felt excluded, the more they chose the longer odds for bigger lottery payoffs, took greater risks with their finances, bet on horse races and gambled in casinos.

In one experiment, 59 students played an online ball-tossing game designed to make them feel socially included or excluded. In a separate setting, they chose between two hypothetical gambles with very different odds, Duclos said.

It was found that the socially excluded participants favoured the riskier option more strongly than their included counterparts.

A second experiment used essay writing to make 168 students feel either excluded or included and found that the socially excluded participants were twice as likely to gamble as the students who felt included, he said.

Another experiment with 35 students ruled out lower self-esteem as a trigger for risk-taking, through essay writing and a choice of lotteries, while in a fourth one with 128 students, researchers found those who felt isolated did not take more risks than others if they were told that having more money would no longer result in social benefits.

For a real-world demonstration, they asked participants to choose between two lotteries.

The study found a clear positive relationships between the degree to which participants felt socially excluded and how much risk they took, Duclos said.

The study was presented at the American Psychological Association's 121st Annual Convention.