The role of emotion in financial fraud

Posted on May 18, 2016

“There’s evidence that [the elderly] are targeted, but to me that’s sort of like [wondering] why criminals rob banks,” said Laura Carstensen, professor of psychology and founding director of the Stanford Center on Longevity. “That’s where the money is.”

The study took advantage of the fact that emotion can be measured using two qualities: positivity and arousal. Positivity measures the distinction between happy and sad, while arousal measures how relaxed the person is and is often accompanied by increased heart and breathing rates. The research focused on emotional arousal, splitting participants into three groups: high-arousal positive (excitement), high-arousal negative (anger) and low-arousal (neutral).

Participants would begin the experiment by playing a computer game during which they won and lost money based on predetermined experimental groupings. This game would be customized depending on which of the three groups the participants were placed. The excited group began the game by losing a lot of money but gradually gained money as the game continued. The angry group began by winning money but lost much of it throughout the game. The neutral group won and lost small amounts of money consistently throughout the game.

The study found that high-arousal emotion increased the intent to purchase in older, but not younger, adults.

“Originally, our hypothesis was that high-arousal positive states would make people more likely to buy something, and we’d see positive states in older people more than in younger people,” Carstensen said. “But we didn’t. We saw [that] both negative and positive states made older people more likely to be interested in the products that we presented to them.”

The researchers hope that these findings, along with a more comprehensive study of the factors contributing to fraud susceptibility, can help people make wise decisions when faced with financial fraud. “Don’t make financial decisions when you’re excited or you’re really afraid of something,” Carstensen said. “It’s always better when someones trying to sell you something to wait a day, sleep on it.”

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Source material from Standford Daily