Tightwads outnumber spendthrifts

We all have a friend who can’t seem to save, constantly splurging on new shoes or the latest gadgets. But, contrary to persistent media coverage of overspending and under-saving, a recent international survey of more than 13,000 shoppers suggests that chronic under-spending is far more widespread than originally thought. In fact, the study reveals that tightwads outnumber spendthrifts by a 3 to 2 ratio.

Appearing in the April 2008 issue of the Journal of Consumer Research, the study by Scott Rick (University of Pennsylvania), Cynthia Cryder, and George Loewenstein (Carnegie Mellon University) reveals that tightwads save, not because they care more about the future than spendthrifts, but because forking out the money is too painful of an emotional experience.

Therefore, those who experience the pain of spending money more intensely tend to spend less than they would ideally like to spend. On the other end of the 'Spendthrift-Tightwad' scale, spendthrifts typically experience minimal pain when spending money and tend to spend more than they would ideally like to spend.

“Spending differences between tightwads and spendthrifts are greatest in situations that amplify the pain of paying and smallest in situations that diminish the pain of paying,” the researchers explain. “The evidence suggests that frugality is driven by a pleasure of saving, as compared with tightwaddism, which is driven by a pain of paying.”

The researchers also found that tightwads and spendthrifts differ demographically:

• Females are no more likely to be tightwads than spendthrifts, but males are nearly three times more likely to be tightwads than spendthrifts.
  
  
• Respondents under the age of 30 were only slightly more likely to be tightwads than spendthrifts, but respondents over 70 were five times more likely to be tightwads than spendthrifts.