Researchers examine emotional role in financial fraud

May 15, 2016, 10:52 p.m.

Researchers at the Stanford Center on Longevity have found in a new report that the ways in which elderly people process high-arousal emotions, such as anger and excitement, is in part responsible for their heightened susceptibility to fraud.

“There’s evidence that [the elderly] are targeted, but to me that’s sort of like [wondering] why criminals rob banks,” said Laura Carstensen, professor of psychology and founding director of the Stanford Center on Longevity. “That’s where the money is.”

The study took advantage of the fact that emotion can be measured using two qualities: positivity and arousal. Positivity measures the distinction between happy and sad, while arousal measures how relaxed the person is. Arousal is often accompanied by increased heart and breathing rates.

The research focused on emotional arousal, splitting participants into three groups: high-arousal positive (excitement), high-arousal negative (anger) and low-arousal (neutral).

Participants would begin the experiment by playing a computer game during which they won and lost money based on predetermined experimental groupings. This game would be customized depending on which of the three groups the participants were placed. The excited group began the game by losing a lot of money but gradually gained money as the game continued. The angry group began by winning money but lost much of it throughout the game. The neutral group won and lost small amounts of money consistently throughout the game.

The participants then reported their degree of positivity and arousal. They were then shown a series of eight advertisements and asked to rank how much they believed the advertisement and their likelihood to purchase the associated product.

The study found that high-arousal emotion increased the intent to purchase in older, but not younger, adults. According to Carstensen, this was a surprising result.

“Originally, our hypothesis was that high-arousal positive states would make people more likely to buy something, and we’d see positive states in older people more than in younger people,” Carstensen said. “But we didn’t. We saw [that] both negative and positive states made older people more likely to be interested in the products that we presented to them.”

The research also found that, with younger adults but not older adults, the advertisements’ reported believability being could be used to predict likelihood of purchase. This trend carried through all three of the emotional groups and suggests that other factors are overshadowing perceived credibility for the elderly group in determining whether or not to purchase the product.

The researchers hope that these findings, along with a more comprehensive study of the factors contributing to fraud susceptibility, can help people make wise decisions when faced with financial fraud.

“I think we’d want to see if we can induce [susceptibility to fraud] and then override it,” said Ian H. Gotlib, the David Starr Jordan Professor of Psychology and chair of Stanford’s psychology department.

According to Gotlib, the next steps will be to look for procedural interventions that could calm down potential targets for fraud and reduce their anger.

Even though emotional arousal was not reported to affect purchase intention in younger adults, Carstensen highlighted the importance of keeping such factors in mind when faced with financial decisions.

“Don’t make financial decisions when you’re excited or you’re really afraid of something,” Carstensen said. “It’s always better when someones trying to sell you something to wait a day, sleep on it.”


Contact Aulden Foltz at afoltz ‘at’

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