Stories | June 24, 2014

His or hers? Who’s in charge when couples make money decisions

If you’re in a romantic relationship, does it change the way you make decisions? Those with experience of making choices as a couple will no doubt say “yes”.

Research supports the claim that, for better or for worse, much of our consumer behaviour is influenced by those we love. Academics have dug a little deeper in to the “what” and “how” of joint decision making, examining the process and revealing dynamics at play. It could pay to take note given that even routine decisions, such as where to dine out, can have financial implications.

What’s your’s is mine and what’s mine is mine
A 2012 paper in the Journal of Consumer Psychology examined joint decision making in a new way and showed the influence of a partner within a romantic relationship. It appears that our decision making is far more interdependent on others than previously assumed.

Previously, much of the research on consumer behaviour held that people decide what to buy based essentially only on their own preferences. For a household the “unitary model” applied, with income pooled and one person in the lead. Even back in 2009, academics were describing this model as incomplete at best.

Meet John and Mary
To illustrate, the 2012 article penned by Jeffry Simpson and colleagues from the University of Minnesota created a fictional couple “John and Mary”. The pair must choose a restaurant to dine at together from two available options.

The authors find three main ways a romantic partner can influence the decision as a couple. Firstly, one party’s attitudes and beliefs about the two different options might affect the other’s preference (for example, if Mary believes there is a good-value set menu at the Italian restaurant, John might prefer to go to the Italian).

Secondly, one party’s preference might influence the other’s ultimate choice (for example if Mary prefers the Italian restaurant but John prefers the other, he may still choose Italian because he wants her to be happy). Thirdly, over time, the two partners in a relationship may start to synchronise their attitudes and beliefs, developing a norm around a particular type of decision.

Choosing between spending and saving
This decision making research covers different spending options, such as where to eat. It could perhaps be extended to other financial choices, such as spending, investing and saving.

An earlier eZonomics poll showed that over three-quarters of people would prefer to get into a romantic relationship with a saver rather than a spender. Interestingly, research finds that spenders and savers are generally attracted to each other – in an “opposites attract” type of way – and spenders and savers tend to marry each other.

But if we apply what we have learned about the way couples’ preferences merge over time, it might be the case that although opposites attract initially, over time the spender’s and the saver’s attitudes and beliefs may both be influenced by the other and eventually become more moderate. Just as happily married couples’ facial features tend to grow similar over time, so too might their financial attitudes.

If you’re out, I still won’t do exactly what I want
Yale University academics Margarita Gorlin and Ravi Dhar waded into the discussion as well. They write that influence appears to vary depending on whether the decision or consumption (or both) are done jointly. Specifically, in a joint-decision, joint-consumption event, a possibility is compromising on an option that neither strictly prefers.

Alternatively, they might take turns or “balance” the decision by choosing one partner’s preferred restaurant but ordering the other’s favourite food. What if John is choosing alone but the couple will dine together? The authors write that John will likely take what he thinks is Mary’s preference into consideration, but will often overestimate the similarity of her preference to his (inadvertently exerting a lot of influence over the decision).

And even if John is dining solo, he might take Mary’s ultimate preferences into consideration (for example to eat at an inexpensive restaurant) but the specific restaurant selected will reflect what he wants.

He said, she said? It’s power that matters
eZonomics examined couples’ decision making relating to retirement planning in the article He said, she said and in a poll question  asking if men or women make more financial decisions in a household. An analysis issued in 2013 using the European Union Survey on Income and Living Conditions found that couples divide and conquer the tasks, as joint decision making about money is less frequent when one half of a couple stays at home.

Likewise, the model developed in the 2012 paper suggests gender is not the top criteria, rather the power dynamic, perceptions of relationship norms, and whether the relationship is of a “exchange” (when people keep track and try to “repay” benefits) or “communal” (when people do not keep track) nature matter more in decision making.

Interestingly, they write that “low-power” partners – those who are more dependent or anxiously attached – may have more accurate perceptions of their partner’s beliefs and attitudes, perhaps because they pay close attention given the influence the “high-power” partner generally has on the decision outcomes.

Darling, I’m too tired to care
There is another dynamic highlighted by the Yale University academics. They write that when people are mentally tired, they may not have the cognitive resources available to take their partner’s preferences into consideration.

The effect of mental exhaustion on decision making has been examined in previous eZonomics articles here and here. In this case, it may be easier to simply follow their own preference or to relinquish the decision-making responsibility altogether.

Nathalie Spencer
Nathalie Spencer

Behavioural scientist at ING