With support from the National Science Foundation, a University of Chicago study that found that bilingual people and those thinking in a different language make better economic and financial decisions.
“We know from previous research that because people are naturally loss-averse, they often forgo attractive opportunities,” said University of Chicago psychologist Boaz Keysar, a leading expert on communication. “Our new findings demonstrate that such aversion to losses is much reduced when people make decisions in their non-native language.”
“A foreign language provides a distancing mechanism that moves people from the immediate intuitive system to a more deliberate mode of thinking,” wrote Keysar, professor of psychology at the University of Chicago, in the paper, “The Foreign Language Effect: Thinking in a Foreign Tongue Reduces Decision Biases.” The paper appears in the current issue of Psychological Science.
The authors of the study, University of Chicago graduate students Sayuri Hayakawa and Sun Gyu An, found that when presented financial decisions in a foreign language, study participants were less likely to take risks and more closely consider their gains and losses.