Hunger’s Link to Impulsive Money Choices and the Uneven Leniency of Credit Card Companies

Beyond the Headlines: Personal finance news and research you may have missed

Beyond The Headlines

The financial news over the last week gave us a glimpse into how people are using what in some cases was thousands of dollars from the federal government, no strings attached.

You probably read (or witnessed, if you went to a store) that as soon as the latest wave of stimulus checks hit bank accounts, the shopping spree began. Indeed, it looks like all those people who told pollsters they were feeling good about the economy and ready to spend are now letting their credit cards do the talking. And of course, the checks also helped a good many people pay for necessities like rent and utility bills. 

Maybe too, you saw that new unemployment claims hit a pandemic low, and that the optimism about the economy is driving up interest rates on mortgages after what had seemed like a new normal of easy money for homebuyers. That’s causing some unpredictable effects on a residential real estate market that has thrived during the pandemic downturn. 

But while we were all pondering just where the country is in its reopening, here’s what might have flown under your radar: Did you know that making money decisions while hungry could be just as bad as going grocery shopping on an empty stomach? Or that women are less likely than men to catch a break if they ask their credit card company to waive a late fee? 

To reach beyond the biggest headlines, we scoured the latest research, surveys, studies, and commentary to bring you the most interesting and relevant personal finance news you may have missed.

Think Twice Before Investing While Hungry

If you were thinking of investing your stimulus check, you may want to eat your fill first: it turns out that being hungry may encourage people to make shortsighted decisions about money.

The culprit, say researchers who presented their findings at a recent meeting of the Endocrine Society, is ghrelin. No, not those fuzzy little guys who you’re not supposed to feed after midnight, but the “hunger hormone” familiar to those well-versed in the human body’s endocrine system, a new study has found.

Researchers had a group of 98 young women and girls—64 of whom had eating disorders— participate in an experiment that involved fasting, eating a meal, and taking a quiz about hypothetical financial decisions. The questions tested their preference for bigger, longer-term rewards over smaller, short-term ones: for instance, picking between getting $20 today or $80 in two weeks. 

The subjects without an eating disorder, who had higher levels of ghrelin—a hormone that signals the brain of the need to eat, and which may control reward processing—were more likely to pick the smaller, quicker payoffs. The ghrelin levels had no impact on the decisions of eating-disordered subjects, who were shown to be resistant to its effects in past research.

“Our results indicate that ghrelin might play a broader role than previously acknowledged in human reward-related behavior and decision making, such as monetary choices,” Franziska Plessow, an assistant professor of medicine at Massachusetts General Hospital and Harvard Medical School, said in a press release.

Yet Another Gender Gap: Credit Card Breaks

If you’re struggling financially, don’t forget it never hurts to ask your credit card company for a break on things like fees or interest rates. 

In fact, a recent survey commissioned by the online loan marketplace LendingTree found that for most types of requests, at least half of respondents—overwhelming majorities in several instances—were able to get fees waived or rates reduced, and the likelihood was even a tad higher a year into the pandemic. (LendingTree compared results to a similar survey it conducted in April 2020, shortly after the COVID-19 outbreak began.)

But interestingly, women are at a disadvantage. Not only do men ask credit card companies to cut them a break more often, they’re more likely to be successful. When men asked for lower interest rates, for instance, they got them 89% of the time, versus just 74% for women, according to the survey. The same pattern was true for requests to waive late fees, waive annual fees, and increase credit limits

Also, while women were more likely to get most of the breaks they asked for this year than in the 2020 survey, the gender gap only narrowed in one of four categories where gender was analyzed: getting their APR lowered. For other types of requests, men’s chances of success this year improved more than women’s, actually widening the gender gap.   

LendingTree’s report on the survey didn’t offer a theory about the gender gap, but it’s possible that a tendency for men to have higher income plays a role in the divide, especially when it comes to requests for higher credit limits, said Matt Schulz, a credit card expert at LendingTree.

The Fast-Paced Real Estate Market Is All We Hear About 

Homes may be selling ridiculously quickly from the point of view of sellers these days, but the flip side of that trend is that for buyers, the process is actually becoming more drawn out. The competitive nature of the market, both because of the high demand and the severe shortage of homes for sale, means buyers are sometimes being repeatedly outbid. 

Prospective buyers toured an average of 14 homes in the six-month period from September through February, compared to 13 during the same six months a year earlier, according to an analysis of data by real estate firm Redfin. (And frequently homes go under contract before other interested buyers even have an opportunity to tour, agents say.)

The entire home buying process took a median 96 days, versus 91 days during the same period the year before. 

Of course, a huge part of the equation is price. Redfin points out that despite surging prices, falling interest rates had a countering effect, shielding house hunters from higher monthly payments in most cases. But down payments—based on a percentage of the sale price—are another story. Those ballooned to $40,987 from September through February, up from $32,262 the previous year.

COVID-19 Weakens Link Between Money and Happiness

The latest round of stimulus checks may be providing much-needed relief for some households, and extra pocket money for others. But how happy does cash make us? The COVID-19 pandemic changed many things in the last year, but interestingly, the power of money to spark joy has dissipated a bit, an annual worldwide survey has found.

Overall, we’ve been surprisingly resilient, maintaining our sense of well-being despite the pandemic, according to the 2021 World Happiness Report, an annual report based on a Gallup World Poll drawn from surveys of around 1,000 people in each of dozens of countries. 

But there were at least a few discernible changes, the survey showed. While the factors that the researchers used to measure well-being—income, health, someone to count on, freedom, generosity, and trust—continued to support happiness in much the same way as they did in 2017-2019, income didn’t affect life satisfaction last year quite as much as it did before, and the benefits of being in a couple and being charitable had a greater impact on happiness.