Most people are much better at giving advice than taking it. When it comes to spending our money, we like to think we know best what will make us happy.
What does the guy next door or a colleague at work know about how we should spend our money? Well, a lot more, it turns out, than we might think.
Imagine you are going on a 5 minute speed date with a stranger. Before you meet them, I’ll let you have only one of these two pieces of information about them:
- Either: a photograph of them with an autobiography.
- Or: the rating of a previous speed dater (who is a stranger to you).
Which one do you think will better predict how much you’ll enjoy the speed date? You or the stranger?
If you are like most of the participants in an experiment by Gilbert et al. (2010) then you’ll go for number 1. The reason is probably that you prefer to make your own judgement rather than rely on someone else.
We’re all different, right? So, one person’s perfect partner is another person’s slow, painful descent into hell.
In the experiment, though, the ratings of a previous speed dater were the best predictor of how much people enjoyed their speed date. Gilbert and colleagues call this the surprising power of neighbourly advice.
Ask the audience
Here’s one that’s even weirder.
First of all, let’s give you a couple of options to choose from. Imagine now that I give you a chocolate chip cookie to taste. Which do you think would better predict how much you will enjoy it:
- You imagine yourself eating it.
- Someone else guesses from watching your facial expression as you first see the cookie.
Perhaps you’re a bit more wary now? If so, you’d be right.
When McConnell et al. (2011) carried out this experiment they found that observers were better at predicting participants’ pleasure than they were themselves.
This suggests three things:
- We aren’t that good at predicting what we’re going to enjoy (one reason is the impact bias).
- Our unconscious knows better what we’re going to enjoy than our conscious mind (at least in some circumstances).
- Other people can pick up on this just by watching our faces.
I don’t think we can argue from this that other people can make all our monetary decisions for us, that’s going too far. But we can say that people who are somewhat similar to us are likely to be better than we might imagine at predicting what we will like.
We have a tendency to ignore other people’s advice about how to spend, thinking we are better off making our own judgements. On the contrary, this research suggests we should pay more heed to other people’s advice as it can be better than our own judgements.
So when spending our money, we are better off to ask, and heed, the advice of others as they may well have a better insight into what we’ll enjoy than we do ourselves, especially if they’ve already experienced it themselves.
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How to Spend Wisely
→ This post is part of a series on how to spend wisely: