SUSIE GHARIB: Is our saving and investing behavior learned or inherited? Researchers have been delving into that question and have made some surprising findings by looking at the behavior of twins. That’s tonight’s “Your Mind and Money” interview with Professor Stephan Spiegel of the University of Washington. I talked with him earlier today and began by asking what determines whether a person is a spender or a saver.
STEPHAN SIEGEL, UNIV. OF WASHINGTON FOSTER SCHOOL OF BUS.: Well, about 30 percent of that question is determined by the genes that somebody is born with. And most of the rest is determined by individual experiences that somebody makes as he or she goes through their life. Very little is determined by the influence that the parents have on someone.
GHARIB: So you’re saying that 30 percent of someone’s tendency to save or to spend is determined by genes. So what is the other 70 percent coming from?
SIEGEL: The other 70 percent comes from mainly individual experiences that we can’t really specify. We can just say that these are experiences that are not a function of the genes. And most surprisingly they are not a function of something that people were taught by their parents or by the environment that they grew up in. So it can be anything from their professional career choices, educational choices and other chance events that they have throughout their life that ultimately affects their savings behavior.
GHARIB: Professor Siegel, a lot of parents will be surprised by that, because they like to think they are teaching their children about how to save and how to spend. You’re saying that that is not the case.
SIEGEL: That doesn’t seem to be the case. In our data we don’t find a big impact that parents have on the financial behavior of their children. That is correct.
GHARIB: All right, now there is an ongoing debate about what determines most a person’s behavior. Now when it comes to investing, on this whole debate of nature versus nurture, which is the most important when it comes to investing?
SIEGEL: Out of the two, it seems the nature component is much more important than the nurture component. Nurture doesn’t hardly show up in our data with respect to saving and investment decisions.
GHARIB: So when someone says that I am a born gambler, I can’t help myself, that I’m taking all these big risks, could there be some truth to that?
SIEGEL: It could be. Why we don’t look at gambling behavior, what we find for savings and investment choices, there is a strong genetic component and that could also be there in gambling.
GHARIB: If we accept the point that your investing behavior is determined by genetics and if you have some bad tendencies when it comes to investing, is there any point to try to control this behavior or try to reform yourself?
SIEGEL: Oh, sure there is, right. We don’t say that or we don’t find that all of the behavior is genetically determined. It is about 30 percent that is genetically determined and 70 percent are a reflection of peoples’ individual experiences and therefore also, of course, choices that people make. So the more than half of the behavior is determined by things that are not controlled by someone’s genes.
GHARIB: So you are saying that there is some hope then that you can reform your investment behavior; is that correct?
SIEGEL: That is certainly correct.
GHARIB: All right, we’ll leave it there. Thank you so much for coming on the program, some fascinating information on your research.
SIEGEL: Thank you so much for having me.