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Wesley Zeng

Allison Bocchino

Writing 2

8 June 2020

Tradeoffs between Spending and Saving:

Through the Eyes of Social Psychology and Business Economics

Bank accounts are being seen as more and more vital in today’s society. With many

factors such as inflation, robberies, and just forgetfulness, the bank insures a way for people to

safely keep their money, and even accumulate wealth in doing so. Despite the benefits, saving is

not always easy. When someone chooses to save, they are giving up the opportunity to use that

money instead to gain immediate gratification through purchasing something they wanted. Two

studies both evaluate the topic of saving through gathering data on people’s responses to saving

under different circumstances. However, the studies are in the scope of two different disciplines:

social psychology and business economics. Despite having many characteristics in common,

these disciplines contrast in what information from their studies is included in their paper, the

presentation of their findings, and their assumptions on how knowledgeable the readers are with

the discipline’s jargon.

Social psychology and business economics come from two different fields of study. The

branch of psychology that deals with how social interactions affect the individual. In contrast, the

discipline of business economics uses economic theory and quantitative methods to analyze

businesses and factors that attribute to firms and markets. Written by authors Fengyan Cai,

Zhiyong Yang, Robert S. Wyer Jr., and Alison Jing Xu, the article, “The interactive effects of
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bitter flavor and mood on the decision to spend or save money”1, introduce their main topic of

study: Does drinking a bitter beverage cause a happy person to save more and a sad person to

spend more? Organized by eight headings, the article is laid out to inform readers of previous

tests that have led to this one and its information, the pretests and experimental process, and its

analysis/discussion of the results. The article analyzes the human choice of savings but through

the approach of business economics. The main focus of the study investigates how participants

make decisions about time and money without other factors present and then with the factors in

mind2. Conversely, in the economic study, authors Subimal Chatterjee, Dipankar Rai, and

Timothy B. Heath introduce their idea from prior studies, and explain how they came to this

hypothesis using an economic theory. The article has six sections which include the introduction

to the theory and economic field of study, the pretests and tests, and the general discussion of the

results and further research. The study focuses on the participants responses after being given

more information about how their saving choices affect their lifestyle. As the study is economics

oriented, the results demonstrate how participants judge the opportunity costs presented to them.

Breaking it down to its foundation, economics is heavily data analysis, and so the study views

the results through charts and tables. Psychology uses behavior that is observed to create it’s

claims, and therefore explains their findings by elaborating on their results in the discussion

section.

Although economics and psychology are both social sciences that use prior research as

sources of information, the evidence, audience, and jargon show the differences between the two

1
Cai et al., “The Interactive Effects of Bitter Flavor and Mood on the Decision to Spend or Save Money”, ​Journal of
Experimental Social Psychology​, vol. 70, 2017, 1
2
Chatterjee et al. “Tradeoff between Time and Money: The Asymmetric Consideration of Opportunity Costs.”
Journal of Business Research,​ vol. 69, no. 7, July 2016, 1
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disciplines. In their discussion sections, the discipline of psychology often talks about other

factors that must be taken into consideration, as the authors write, “Other research provides

evidence that bodily sensations can influence judgments through their mediating impact on the

activation of semantic concepts that are metaphorically related to these sensations.”3 It explains

how these results may not always be true and cite previous research on this specific topic.

Business economics, however, elaborates on its results by applying their findings to real-world

incidents. The article’s discussion talks about the implications the research has committed to

rather than its limitations.4 Economics focuses on the one variable of study. Rather than having

the process in which savings is affected by outside factors in which psychology does, the

economic research brings information about saving to participants. The testing of psychology is

done on the basis of psychological reactions that cause a reaction while economics looks at the

decisions of individuals based on economic factors. Psychology and economics also differ in

their analysis of their results, as the discipline of social psychology focuses on the behavior of

the participants and if there is statistically significant evidence that could be used to better

understand humans. The decision of saving is shown through graphs created from the results,

with positive and negative relationships on saving. Economics uses charts to help with visual

interpretation, but instead of evaluating the relationships of its data, explains its findings through

cause and effect sentences, one leading to the next.

The two disciplines follow different processes on how to develop their arguments from

the results they obtained. Studies in the psychology discipline present evidence through its

explanation of each experiment along with graphs, using visual representation to show the effects

3
​Cai et al., “The Interactive Effects”, 2.
4
​ Chatterjee et al., “Tradeoff between time and money”, 6.
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the experiment had on people’s decision to save.5 With the charts, psychology focuses on the

statistical significance of the data, but explains the information using behavioral-emphasized

words as the article writes, “As we noted earlier, unhappy individuals are generally motivated to

engage in behavior that can decrease or eliminate their negative feelings they are experiencing.”6

Economics analyzes its data differently, as it looks to how the study may prove or disprove the

original theory being tested instead of having an emphasis on the reasoning behind the decisions.

Furthermore, economics applies mathematical jargon in this analysis, but with an emphasis on its

statistical terms. This is well represented while the authors talk about the third study they

conducted which reads, “In Study 3, we introduce a new product (an iPhone)... with the

expectation that a reminder to consider money's opportunity would increase the salience of the

phone's material features… ”7 The description of the evidence given by the economics study

shows the specific words used to describe how the data was gathered. These differences further

contrast not only how they analyze the evidence, but the different styles of word choice used

between the two disciplines.

The different style of testing, discussion, and display of evidence in savings is followed

by the two disciplines’ distinct use of jargon in their fields of study. Understanding that much

discussion of psychology and economics is on the basis of research, both use similar word choice

when comparing studies written by each discipline. However, psychology uses behavioral word

choice when explaining how people think about saving. This is prevalent when the article states,

“Suppose individuals who are contemplating whether to spend or save money consider the

possibility that they might encounter a misfortune. In this case, happy individuals may perceive

5
​Cai et al., “The Interactive Effects”, 7.
6
​Cai et al., “The Interactive Effects”, 1.
7
​Chatterjee et al., “Tradeoff between time and money”, 4.
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the adversity...”8 The writers use the words contemplating, misfortune, perceive, and adversity,

which when broken down are all aspects of describing behavior. There is not much use of

specific psychological phrases as the decision to save or spend has no immediate connection to

groupthink, inhibition, or ambience. The discipline covers the topic of savings conversationally,

though it does include scientific terms to discuss how it can be studied and how people can

change their thoughts on saving money or spending it. As it is a study, the authors have other

peers in mind when writing this article, and, therefore, the most noticeable diction is the use of

descriptive phrases and words. Economics uses more jargon that is not as common in daily use.

Key words the article mentions include opportunity costs, salience, time and money, experiences,

and material possessions.9 This contrasts the types of words highlighted in the psychological

research, which often included words such as mood, saving, and precautious motivation.10 In the

economics research, the targeted audience are other researchers who could use this study as

evidence for their own. Because of this, the economics study uses more advanced jargon, as it

assumes the audience understands the term peanuts in, “the reverse effect of sensitizing

consumers to the opportunity costs of money may have arisen from a pittance or ‘peanuts’

effect.”11 The term was never stated in the footnotes or offered a definition as the authors have an

intended audience in mind. Both the psychology and economic study intended on the research to

be read by fellow peers, resulting in a lack of basic word usage. Instead, they include

terminology that is generally understood by the public such as “effect”, “behavior”, and “mood”,

but use these terms very implicitly. It is not used as a way to point out their jargon, but

8
​Cai et al., “The Interactive Effects”, 7.
9
​Chatterjee et al., “Tradeoff between time and money”, 1.
10
​Cai et al., “The Interactive Effects”, 1.
11
​Chatterjee et al., “Tradeoff between time and money”, 6.
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subconsciously as people who have been in this field of discipline and naturally think in this type

of diction.

As social psychology and business economics are both social sciences, the two

disciplines have many characteristics in common, such as how they organize their studies and the

types of studies produced. Regardless, the two disciplines have many differences in the way they

present their findings, the focus on what information is discussed, and the implied knowledge

readers are supposed to have to understand the jargon showcased within the two disciplines. As

the studies were conducted to present new knowledge for other researchers, the implied audience

are other researchers in their field of study. Psychology emphasizes the behavior and responses

of people while considering saving while economics focuses on the tipping point between saving

and spending. In a broader scope, psychology focuses on the why while economics focuses on

the what.
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Works Cited

Cai, Fengyan, et al. “The Interactive Effects of Bitter Flavor and Mood on the Decision to
Spend or Save Money.” ​Journal of Experimental Social Psychology​, vol. 70, May 2017,
pp. 48–58., doi:10.1016/j.jesp.2016.12.010.

Chatterjee, Subimal, et al. “Tradeoff between Time and Money: The Asymmetric
Consideration of Opportunity Costs.” ​Journal of Business Research,​ vol. 69, no.
7, July 2016, pp. 2560–2566., doi:10.1016/j.jbusres.2015.10.136.