“Spend or Save?” Decisions Made by Teens’ on Behalf of Self or Others

Abstract

People make financial decisions for themselves and are often asked to make financial recommendations for others. These decisions may involve a time horizon where people must decide how much money to spend immediately and how much to save for the future. Since personal decisions tend to be private while recommendations made to others are necessarily public, “self-enhancement” suggests that people would be more likely to take a longer term perspective when making recommendations to others than when deciding how to spend their own money since they would want to seem like they are advising others to act in a “responsible” manner. This was tested on 70 high school students. Half of the students were given a hypothetical scenario in which they were given a gift of $1000 and were asked how much they would immediately spend and how much they would save. The other half were given a hypothetical scenario in which a friend was given a gift of $1000 and were asked how much they would recommend that their friends save or spend. Results confirmed the hypothesis as students recommended, on average, that their friends save twice the amount that they themselves would save.

DOI: 10.5901/mjss.2016.v7n4p274