Tightwads outnumber spendthrifts

Whether one is a spendthrift or a tightwad also predicts a wide range of spending behavior, the researchers found. Spendthrifts are no more likely than tightwads to use credit cards, but spendthrifts who use credit cards are three times more likely to carry debt than tightwads who use credit cards.

Annual income differs little between tightwads and spendthrifts, suggesting that the observed differences in debt are largely driven by differences in spending habits.

Interestingly, the researchers also found that tightwads are also most sensitive to marketing ploys designed to reduce the pain of paying. In one experiment, participants were asked whether they would be willing to pay $5 to have DVDs shipped overnight. The cost was either framed as a “$5 fee” or a “small $5 fee.” Spendthrifts were completely insensitive to the manipulation, but tightwads were 20 percent more likely to pay the fee when it was less painfully presented as “small.”

“The research provides a new perspective on spending and saving money. Whereas traditional economic theory assumes that the propensity to spend or save is largely determined by the degree to which one cares about the future, this research suggests that spending and saving are driven, at least in part, by more immediate emotional concerns,” the researchers write.

The researchers administered the scale to more than 13,327 people, including 10,000 readers of The New York Times.

Scott I. Rick, Cynthia E. Cryder, and George Loewenstein. “Tightwads and Spendthrifts” Journal of Consumer Research: April 2008.