The way you manage your money could be affected by your ability to find a partner.
A new study published by the Association for Psychological Science (ASP) found a connection between being in a situation where it’s difficult to find a heterosexual partner – an environment with an “unfavorable sex ratio” – and making riskier investments.
“Environmental cues indicating that one will have a relatively difficult time finding a mate can drive people to concentrate their investment choices into a few high-risk, high-return options,” write authors Joshua Ackerman from the University of Michigan, Jon K. Maner from Northwestern University, and Stephanie M. Carpenter from the University of Wisconsin-Madison.
Going into their study, the authors hypothesized that that diversification of assets, a commonly recommended investing strategy meant to mitigate risk, isn’t the best choice when success (in this case, distinguishing yourself from the crowd and finding a romantic partner of the opposite sex) “depends on passing above a certain threshold when it comes to resources, status, or attractiveness.”
To test this idea, they designed and conducted a handful of studies.
In one study, 93 participants – 40 females and 53 males with a mean age of 32 – were shown an array of photos where the participant’s own sex was always more prevalent. After seeing the photos, the participants had to choose either one $10 lottery ticket for a $10,000 prize (high-risk) or ten $1 lottery tickets for a $1,000 prize each (low-risk). This study found that the seeing a lower amount of opposite-sex people led participants to choose high-risk, high-reward option more often.
In another, 105 participants – 41 females and 64 males with a mean age of 30 – were shown a news article about current demographic trends, revealing an adverse ratio of males to females in the US. After reading the article, participants had to imagine taking part in a stock market investment pool where they chose from five different packages: They could choose to invest 800 shares in one company (high-risk) or invest in fewer shares of more companies (low-risk). The study found that when participants saw a scarcity of the opposite sex in the articles they’d read, there was less diversification in their investments, choosing high-risk once again.
Ackerman, lead author of the study, says in a press release that this way of investing is “the opposite pattern of an economically ‘rational’ decision strategy.”
The researchers posit that one of the reasons for this pattern could be to stand out amongst others – by taking more risks, people make themselves more visible in a competitive field. They point out that the findings could have implications beyond investing, as they may show that sexual competition spurs people to compete in ways directly unrelated to finding a partner.
All this isn’t to imply that making riskier investing decisions will better help you find a partner. Decades-old investing wisdom nearly always advises diversification, or spreading out your assets to keep your proverbial eggs out of a single basket. Risk has its place (after all, simply investing at all is taking some degree of risk) but it’s up to you and your financial adviser to decide how much is appropriate for you – and if you’re operating on your own, a good place to start is a risk tolerance quiz, like this one from Vanguard.
Ultimately, it’s impossible to predict the future when it comes to romance or investing.