Beliefs about Social Status Malleability and Financial Decision Making

Project: Research project

Project Details

Description

As a social psychology of socioeconomic status (SES) emerges (e.g., Kraus & Stephens, 2012), it is increasingly important to understand how people conceptualize the nature of inequality and socioeconomic status, itself. Specifically, we leverage the lay theories model (e.g., Chiu, Hong, & Dweck, 1997) to propose that people tend to endorse varying lay theories of social status and thereby conceptualize socioeconomic status as either fixed or malleable in nature. According to this framework, a low SES individual with a fixed mindset towards status is less likely to believe that they can ascend the social ladder, while a low SES individual with a growth mindset towards status is more likely to believe that they can gain higher socioeconomic standing in life. Such beliefs hold particular significance within the current American socioeconomic context, as people regularly encounter conflicting information and values that sometimes emphasize rising rates of inequality (e.g., The Pew Charitable Trusts, 2012) and other times emphasize “The American Dream” and opportunities for social mobility (e.g., Baum, Ma, & Payea, 2013). The present proposal seeks to examine the implications of these varying beliefs for a topic critical to our understanding of SES and continued economic inequality: financial decision making.
Prior research has highlighted the critical role that one’s subjective position in the socioeconomic distribution plays in their financial decisions. For example, studies have found that participants led to believe that they were near the bottom of the SES distribution were more likely to make shortsighted financial decisions that are unlikely to be beneficial in the long-term (e.g., entering risky and improbable lotteries) compared with those who believed they were higher in the distribution (Haisley, Mostafa, & Loewenstein, 2008; Kuziemko, Buell, Reich, & Norton, 2014). Given the importance of long-term financial decision making in one’s ability to handle important life milestones (e.g., homeownership, having a stable retirement), identifying psychological factors that can improve long-term financial decision making among lower-SES individuals is critical for promoting financial stability and thereby addressing issues of economic inequality.
We propose that people’s beliefs about the fixedness or malleability of social status are one critical factor. Specifically, our initial work within this framework—consisting of 2 correlational, 1 longitudinal, and 3 experimental studies (N = 1,296)—has demonstrated that a growth mindset towards status leads to increased academic motivation and better school outcomes for students from low-SES backgrounds during adolescence and college (Browman & Destin, 2016). And critically, given the positive relationship between higher education and social mobility, we find that these effects are driven by enhanced expectations for future success among those with growth (versus fixed) mindsets towards status. In other words, believing that their social status can change leads lower-SES individuals to engage in more future-focused behaviors (i.e., increased academic efforts).
Extending this line of research, the current proposal seeks to evaluate whether beliefs about the malleability of status have similar implications for the domain of financial decision making. Specifically, a belief that status change is possible may help sustain low-SES individuals’ motivation to build a life for oneself and one’s family despite structural and economic challenges, and may therefore be fundamental to encouraging individ
StatusFinished
Effective start/end date5/1/168/31/16

Funding

  • Tobin Project, Inc. (Agmt 3/28/16)

Fingerprint

Explore the research topics touched on by this project. These labels are generated based on the underlying awards/grants. Together they form a unique fingerprint.