Do You Have Cheap Genes?

Some kids couldn't wait and ate the treat. Others were able to summon a sort of inner reserve of patience in order to reap the bigger reward. Over the following decades, Mischel followed those children as they grew, and what he learned was illuminating: that the early indicators from the now-famous "marshmallow test" seemed to predict vastly different outcomes. The kids who delayed gratification generally ended up with better marriages, better health and better jobs. The more impulsive kids—not so much. The less impulsive savers, brain activity was constant whether they were promised the money today, tomorrow or next year.

These traits or preferences endure over time. "When we've studied people who were more impulsive as kids, they stayed impulsive relative to their peers," says Glimcher.

Larry and Murray Suid can attest to that. And so can some of the "marshmallow kids," now adults. A few years ago, researchers armed with sophisticated fMRI technology instead of treats gathered a group of them to see if their brain patterns exhibited differences as well. Indeed, those who were able to delay gratification as children had more activity in the rational, pre-frontal cortex, even as adults. Poor delayers had more activity in the limbic system, which is linked to the "I want it now" reflex.

From this experiment, researchers could extrapolate that impulsivity is a predictor of whether you are an impulsive spender. How impulsive you are is not only an innate trait—governed by distinct brain mechanisms that persist over time—but also a driver of how you spend and save.

Paul Glimcher, a professor of neural science, economics and psychology at New York University, has used modern brain imaging to further explore the relationship between impulsivity and spending behavior. In one of his studies, researchers offered subjects $100 either today or sometime in the future, then gauged their responses using fMRI (functional magnetic resonance imaging). For all subjects, brain areas associated with gratification were active with the offer of an immediate $100. But for some, the notion of waiting for the payoff sparked less brain activity the longer the payment was deferred. In other words, these were the spenders. For the less impulsive savers, brain activity was constant whether they were promised the money today, tomorrow or next year.

These traits or preferences endure over time. “When we’ve studied people who were more impulsive as kids, they stayed impulsive relative to their peers,” Glimcher says. 

Money Habits Persist

But does impulsivity influence people's real-life money habits? Scott Rick, a behavioral  economist  and professor at the University of Michigan, sees a strong link between them. He is known for a test called the spend- thrift-tightwad scale: Based on a short survey about your money habits, you rank as either a tightwad, a spend-thrift or somewhere in between. About a dozen years ago, Rick and his colleagues surveyed more than 13,000 people using this measure and analyzed it for behavior toward spending, saving, income, debt and so on. Interestingly, he found that tightwads outnumber spendy types by about 37 percent and that men are three times more likely to be cheap than extravagant, while women were split more evenly.

And being wired too much of one way or the other can be disastrous. The dangers of overspending are obvious. But extreme savers can get into financial trouble, too. After a lifetime of building a nest egg, retirees who are tightwads can experience pain watching their holdings shrink, as they spend their money down during their nonworking years. So they begin reaching for higher returns by investing in riskier investments. When those investments go south, the nest egg goes with them.

If you determine you are too cheap, or too spendy, there is hope: Both behaviors can be modified with a little determination.

Building relationships with people whose money styles are different from yours may offer you (and maybe your brain) a chance to consider an alternate comfort level. "It's not that people get married and become different," says Rick, who coauthored a paper called "Fatal (Fiscal) Attraction." "What we see over time," he says, "is couples moving a little closer together. Maybe they're fixing each other."

Murray Suid, for example, feels that his wife, Roberta, has pulled him free of the tightwad mindset he carries from his youth. He recalls a trip they took some years ago, when he was leading a writing workshop in a village outside Paris. "They put us up in a pretty junky hotel," he confesses. It never occurred to him to do anything about it. Not so Roberta. "When I got back after the first day of meetings, she had checked us out and moved us into a nicer, more expensive hotel."

That's one example in a 49-year marriage, but Murray sees a cumulative effect: "I've lived better than I would have because of her sense of living an affordable, comfortable life."