The Financial Cost of Sadness

Abstract

This paper hypothesizes a phenomenon—myopic misery—in which sadness creates a myopic focus on obtaining money now versus later, increasing intertemporal discount rates and thereby producing substantial financial costs. Experiments 1-3 randomly assigned participants to a sad- or neutral-mood condition, and then offered intertemporal choices. Disgust served as a comparison condition in Experiments 1-2. Results revealed that sadness significantly increased impatience: Relative to median neutral-mood participants, median sad-mood participants accepted 13% to 34% less money today to avoid waiting three months for payment. Impatient thoughts mediated the effects. Disgusted participants were not more impatient than neutral participants, implying that the financial effects do not arise from all negative emotions. The paper concludes that myopic misery is a robust and potentially harmful phenomenon.