The relative roles of drive and empathy in self- and other-focused financial decision making

Abstract

Can poor financial decisions be traced back to individual differences, and will individuals risk their own resources in the same manner as others’ resources? To help answer these questions, we assessed the relationship between other-focused financial risk, self-focused financial risk, and individual difference variables. 952 participants at a large university in the southeast U.S. completed questionnaires on the Behavioral Activation System Drive subscale (i.e., Drive) and dispositional Empathy. They were then presented with eight financial risk scenarios in a two-by-four within-subjects design. We found that individuals’ Drive – which is associated with facets of impulsivity – predicted increased likelihood of other-focused risk investment in scenarios with higher levels of risk and reward, above the effect of empathy. There was also some evidence that dispositional empathy also increased other-focused risk investment in scenarios with lower levels of risk and reward. We concluded that there is some evidence that empathy is an important factor for other-focused behavior in low-risk scenarios, but that drive is more important in higher-risk other-focused scenarios. Additionally, other-focused risk could be seen as more aversive than an equivalent amount of self-focused risk.