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Researchers: Don't make financial decisions when sad

Real Estate Sellers

People who are sad are more likely to seek instant financial gratification, even though it means losing out on more money later if they had just waited.

That's according to researchers at Harvard and Columbia universities, and the University of California Riverside's School of Business Administration.

When sad, people have less patience and are more likely to seek immediate financial rewards. That's similar to when people go shopping to lift their spirits, something called retail therapy.

"Our work clearly shows that the desire for retail therapy is real," said Ye Li, an assistant professor of management at the California university."

The researchers note that the FTC permits a "cooling off" period, in which consumers have three days to back out of a financial transaction. But that doesn't apply to sale of real estate, securities and insurance, the researchers said, just the kind of moves someone would make if they lost a job or a loved one.

So, if you're feeling sad, hide your credit card and avoid selling any stock. Wait until you're in a happier place.

Copyright © 2014, The Baltimore Sun
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