Do Fast Food Restaurants Cause Poor Financial Decision-Making?
June 23, 2013 Leave a comment
Occasionally I think about doing a recurring item called “New research the media will overhype so much the academic community will have to initiate pushback.” (The name was always a work in progress.) I never follow through, but if I did, the series might include this latest paper from the University of Toronto’s Sanford DeVoe, Julian House, and Chen-Bo Zong on the connection between fast food and financial decisions.
Zong and DeVoe initially made a splash with their 2010 Psychological Science paper titled, “You are what you eat: Fast Food and Impatience.” The paper described three experiments that linked exposure to fast food symbols with impatience. The final experiment demonstrated that people exposed to fast food symbols were more likely to prefer an immediate smaller sum of money rather than a larger sum of money a week later.
In their new paper DeVoe, House, and Zong lay out five studies which offer additional evidence that fast food restaurants encourage financial impatience. The first three studies focused on “socioecological” evidence of this relationship. The initial study examined the household savings rates and the number of McDonalds restaurants in 30 OECD countries from 1978-2008. The second study used data from the Panel Study of Income Dynamics to examine household savings and the change in fast food restaurant concentration within American neighborhoods between 1999 and 2007. The third study compared fast-food restaurant concentration with preferences about forgoing an immediate payment for a larger future payment.
All three studies found that an increase in fast food restaurants was associated with financial impatience. In the first two studies, after controlling for factors such as income, household preferences, and the overall concentration of restaurants, the researchers found that an increase in fast food restaurants was associated with less household saving. In the third study, the concentration of fast food restaurants was negatively correlated with the preference for delaying earnings to a future date. That is, people who lived near more fast food restaurants needed larger future payments to forgo an immediate $1000.
The researchers are quick to point out that it’s still difficult to determine the direction of causality because financial impatience or anticipated financial impatience could be causing more fast food restaurant to open rather than the other way around. I also think it’s possible that a third factor is causing both an increase in fast food restaurants and a decrease in savings. For example, an increase in fast food restaurants could be part of a broader wave of new commercial development, and an increase in the quantity or quality of ways to spend money might cause you to shift consumption from the future to the present. If you think about the findings in terms of “more stores” rather than “more fast food restaurants,” the fact that saving goes down doesn’t seem all that out of the ordinary.
The final two studies attempted to establish more of a causal connection between fast food and financial impatience. The fourth study largely extended the results of the 2010 paper by finding that being asked to recall a fast-food dining experience rather than a conventional dining experience led people to place a steeper discount on future earnings. In the fifth and final study, the researchers went out into the field and surveyed participants in front of either a fast food restaurant or a conventional chain restaurant. As expected, participants surveyed in front of the fast food restaurant were more likely to prefer a smaller immediate cash prize rather than a larger prize on a later date.
One additional question is whether the findings could be part of a larger set of consequences that result from our advertising industrial complex and consumer driven society. Think of how many times a day you’re told that buying something will make you happy. Everything from a subway ad for a new movie, to a TV commercial for Bud Light, to the a banner ad for a resort on a Caribbean island you’ve never heard of. Perhaps being bombarded with messages about the joys of immediate spending increases financial impatience, and fast food restaurants merely lead to a powerful manifestation of this broader effect. The question then is whether there would also be a connection between financial impatience and the emergence of other consumer-driven businesses. For example, would the concentration of Verizon or Old Navy stores be correlated with an aversion to saving money?
Either way, while I would still hold off on the sensationalistic “McDonalds Is Destroying the Economy” headlines, these new findings make for a strong follow up to the 2010 study. At the very least fast food symbols do seem to have an immediate priming effect, and though the case for a stronger, long-lasting causal connection between fast food restaurants and financial impatience is less airtight, I assume this won’t be the researchers’ last foray into uncovering new evidence.
DeVoe, S., House, J., & Zhong, C. (2013). Fast Food and Financial Impatience: A Socioecological Approach. Journal of Personality and Social Psychology DOI: 10.1037/a0033484