Market pundits have long lamented the devastating impact that impatience has on your wealth.
Whether it's chasing the performance of last year's hot funds, overspending on credit cards, or simply going for the immediate gratification that comes from spending today what you should have saved for tomorrow, literally hundreds of academic research papers say the same thing. The impatient individual costs himself a fortune.
On the other hand, investors who have the personal discipline to start saving young and leave their investments alone, end up rich.
But what makes one investor patient and another impatient? The old school answer was willpower. But researchers were flummoxed when trying to explain why one investor had it and another didn't. Now, new research from a team of academics at Northeastern University, Harvard and the University of California at Riverside, says it has found the key: Gratitude.
Grateful investors were willing to wait for rewards. Those who were merely happy or neutral were more likely to live for today, according to the paper. Researchers came to this conclusion by asking 75 individuals to write about a personal experience before being presented with an economic choice. One group wrote about a happy experience; one group wrote about experiences that were emotionally neutral; and the third group wrote about and experience likely to generate emotions of gratitude.
Participants were then presented with 27 economic choices which boiled down to receiving $11 to $80 immediately, or getting a larger amount at some point in the future. Where the happy and neutral individuals favored getting the payment today, the grateful investors were willing to wait longer to get more.
The implications: If you have trouble with economic willpower, whether it's an inability to pass up the shoe sale at the mall or the compulsion to chase last-week's hot stock, you might want to meditate on something that makes you grateful before you act. It just might provide the necessary strength.
"Showing that emotion can foster self-control and discovering a way to reduce impatience with a simple gratitude exercise opens up tremendous possibilities for reducing a wide range of social ills, from impulse buying and insufficient savings to obesity and smoking," says Ye Li, assistant professor at the University of California, Riverside, and one of the co-authors of the study.