When it comes to making financial decisions, the prevailing wisdom has long emphasised keeping emotions in check. However, a groundbreaking research from the University of Essex has upended traditional assumptions about gender and decision-making, revealing that men may be more prone than women to letting emotions shape their financial choices.
This fascinating study, led by Dr Nikhil Masters, explored the “emotional carryover effect”—how emotions from one situation can influence decisions in entirely unrelated contexts. The findings shed light on gender differences in how emotions impact risk-taking, offering fresh insights into how we navigate high-stakes choices.
Do emotions really influence financial choices?
The research involved 186 university students who were divided into three groups and shown videos designed to evoke different emotional responses. One group watched a calming nature documentary, another saw a suspenseful scene from the horror classic ‘The Shining’, and the third viewed real news footage from the 1990s about the “mad cow disease” (BSE) crisis.
Afterwards, the participants made financial decisions in scenarios that involved either clear odds (risky choices) or ambiguous outcomes (uncertain odds). Here’s where it got interesting: men who watched the emotionally charged videos (horror or news) were more cautious in their financial choices than those who viewed the neutral nature video.
This cautious behaviour was particularly pronounced in men exposed to the BSE news footage and in scenarios with ambiguous odds. On the other hand, women’s financial decisions remained steady regardless of the video they watched, even though they reported experiencing similar emotions.
The gender divide in emotional decision-making
Why were men more affected by their emotional states than women? Dr Masters suggested that differences in emotional intelligence may play a role and explained, “Women generally score higher on emotional intelligence tests, which could explain why they’re better at managing emotions in decision-making.”
Interestingly, the study also found that it was not fear itself driving men’s cautious choices. Instead, a drop in positive emotions after watching the emotional videos seemed to influence their risk aversion.
Real-life implications for financial decision-making
These findings carry profound implications for how emotions affect financial markets and personal choices. For instance:
- News Events and Financial Behaviour: Emotionally charged news stories might disproportionately influence male investors, potentially affecting market trends.
- Cooling-Off Periods: Introducing mandatory pauses for high-stakes decisions, such as large investments or real estate purchases, could help mitigate the impact of emotional carryover effects.
“We don’t make choices in a vacuum,” Dr Masters emphasised. “Understanding how emotions influence our decisions is critical, especially when it comes to life-changing financial commitments.”
Challenging gender stereotypes
The study challenges the stereotype that women are the more emotional gender when it comes to decision-making and highlights that men may be equally if not more, influenced by emotional experiences—particularly in high-pressure situations. While these findings are rooted in controlled experiments, they raise important questions about how emotions shape our everyday lives.
Study reference
Published in the Journal of Behavioral and Experimental Economics (Volume 114, 2025, Article 102312), this study was a collaboration between researchers at the Universities of Essex, Bournemouth and Nottingham. It was titled “Do Emotional Carryover Effects Carry Over?” and was authored by Dr Nikhil Masters from the University of Essex, Tim Lloyd from Bournemouth University and Chris Starmer from the University of Nottingham.