Man throwing money and hundred dollar bills into the air

A man throwing money (© deagreez -

NOTRE DAME, Ind. — As the old saying goes, a fool and his money may be easily parted, but researchers from the University of Notre Dame suggest we’re all a little more wary of risking our cash if we worked especially hard for that money. The new study found that on an individual level, the harder a person works, the less willing they are to risk those earnings on investments or other purchases.

Several earlier studies have shown that consumers believe people who work hard for their money have higher incomes, tend to be more financially literate, and are more comfortable engaging in prudent financial risks. Meanwhile, national survey data used by policymakers to assess the relationship between effortful earning and financial risk-taking tells a similar story — finding a positive connection between those two factors. So, there’s a sizable amount of research suggesting that those who are careful with their money are more likely to prosper.

In light of their new findings, however, study authors say a different relationship appears to be at play on the individual level. When we compare two different people, the person who works harder will likely be more tolerant of risk. But, when we assess an individual, that singular person will be less tolerant of risk when they work hard and more tolerant of risk when they don’t work hard.

“Consumers feel greater psychological ownership over their earnings when they work hard for them, which makes them value these earnings more and be more averse to losing them,” says lead author Christopher Bechler, an assistant professor of marketing in Notre Dame’s Mendoza College of Business, in a university release. “So, they choose less risky investments and invest less.”

woman paying bills money
(Credit: Tima Miroshnichenko from Pexels)

Researchers conducted four experiments and one supplemental study employing a unique, incentive-aligned paradigm to reveal the causal effect of effortful earning on risk aversion.

Participants exerted effort to acquire money over a span of three to six months within a microcosmic financial cycle. More specifically, tasks participants completed to earn money included pressing the “s” key on their keyboard tens or hundreds of times and transcribing Dutch poems. After each period, these people had a chance to risk their earnings, usually on some type of investment opportunity.

“We show that when controlling for the individual, more effortful earning actually leads consumers to take on less risk, despite their riskier options having greater expected returns,” Prof. Bechler notes.

The negative effort-risk relationship discovered by researchers could one day become incredibly influential. Prof. Bechler notes that while people have always worked hard for their money, these findings feel especially timely considering the COVID-19 pandemic, persistent high inflation, low wage growth, and other factors.

“The temporal gap between effortful earning and spending/investing decisions has always been short in some industries,” Prof. Bechler explains. “Individuals working for tips often receive daily compensation and technological advancements are further reducing this gap, helping more workers get paid immediately after work — for example, Walmart employees can be paid daily — and allowing earnings to be immediately spent or invested. The shorter the gap between earning and investing, the more influential our effect will be.”

All in all, study authors support the notion of interventions that automate the accumulation of assets by moving income directly into an investment plan.

“This could keep consumers’ hard work from undermining their investment decisions,” Prof. Bechler concludes.

The study is published in the Journal of Consumer Psychology.

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About John Anderer

Born blue in the face, John has been writing professionally for over a decade and covering the latest scientific research for StudyFinds since 2019. His work has been featured by Business Insider, Eat This Not That!, MSN, Ladders, and Yahoo!

Studies and abstracts can be confusing and awkwardly worded. He prides himself on making such content easy to read, understand, and apply to one’s everyday life.

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