Neither a Tightwad Nor a Spendthrift Be

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The difference between a spendthrift and a tightwad comes down to emotional pain, and it's not good to be either type of shopper, says University of Michigan marketing professor Scott Rick, who participated last week in a National Science Foundation webcast.

It all comes down to what Rick calls the "pain of paying," and this distress registers in fMRI studies of brain activity. Tightwads feel a lot of that pain and end up spending less than they might want, buying lesser quality items or passing up on indulging themselves. Spendthrifts, however, don't feel enough distress and end up spending more than they had intended, and sometimes more than they should.

"Both are kind of bad news," says Rick. They're unhappy with their spending habits and unhappier than what he calls "unconflicted consumers," the majority of us who fall in the middle of the spendthrift/tightwad scale. (Tightwads, though, tend to be the most healthy financially.) Rick says that it's better to be a frugal person and cultivate saving.

Come Black Friday, spendthrifts and tightwads will behave a bit differently—spendthrifts are more likely to line up for those crazy 3 A.M. sales—but spending money on gifts tends to take away some of a tightwad's reluctance to spend. "The necessities of buying gifts and maintaining relationships almost makes these feelings, this pain of paying, moot," Rick says. If Grandma wants it, it goes in the cart, he says.

And though there is little evidence that a spendthrift or tightwad can change their ways—Rick, a spendthrift, says that even all his research hasn't much affected his spending habits—there are a few things that these individuals can do by harnessing the way our brains think about money and spending. Since people tend to be reluctant to break up large bills, tightwads should carry small ones and spendthrifts hundred-dollar bills. And because we spend more when it's on credit, tightwads should use their cards more often while spendthrifts should leave them at home.

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