Financial analytics and economic experts have long known about the connection between culture and our finance, especially the decisions we take based on cultural factors. For most, this is not a surprise because we can often see how we ourselves make decisions based on culture all the time.
However, the concept gets even more clear as soon as you start comparing different cultures and how people in different parts around the act in regards to money and wealth.
In order to produce this post, we took help from the trading experts at BullMarketz.com that provide everything from trading guides to recommendations for the best trading apps. We’ve also used several studies (linked below) as the foundation for most of our claims.
Dates and Superstition
One of the easiest ways to analyze this concept has to do with superstition and especially superstition connected with dates. In the Western world, Friday 13th is associated with bad luck and trauma. Some people believe so strongly in this that they get depressed and even have panic attacks leading up to the day.
Moreover, there is a clear correlation between this date and the American stock market which historically underperforms whenever the 13th day of the month lands on a Friday.
And while we in the Western world are worried about the number 13, especially on Fridays, Asian cultures have their own version. You see, even though most Asians can’t understand our obsession with 13, they tend to avoid anything related to the number 4. The reason is that the number 4 is pronounced very similar to the word “death” in several Chinese and other Asian languages and dialects.
The result is similar to US and European commodities often experiencing lower market returns on the fourth of every month. In addition, Samsung refuses to sell cell phones with the number four in the model name.
Too Good to Be True?
One experiment conducted as a collaboration between New York University and Princeton found another interesting difference between Western and Eastern cultures and their ways of investing.
The two researchers asked people living in NYC and in Shanghai to invest $1,000 across nine hand-picked stocks that were all different from each other. Some of the stocks had stagnated, others had been declining in value, and some were increasing in value.
The experiment clearly showed that Americans were much more willing to allocate most of the money to the stock that had been increasing the most as of late, while the Chinese people were more sceptical to stock that performed so well and spread their funds out more evenly.
The Volatility of Life
Similar to the experiment above, there is research that shows that Asian investors are more open to and accepting of the fact that they might lose all their money at some point. They are more connected with the idea that everything in life can get much better but also much worse.
Americans and Western Europeans, on the other hand, are less sceptical and often only plan for life to get better.
Naturally, this often leads to Asian investors taking less-risky and more well-planned financial decisions than their American counterparts.
Final Words
This was only three rather simple examples of how or cultures affect the way we make decisions regarding our finances and other aspects of life.
And even though there are certain clear differences between how people from different parts of the world make financial decisions, it’s also obvious that we are all affected by our cultures, regardless of where we live.
By now, we assume that you can think of at least one way that you allow your decision-making to be affected by culture instead of your common sense or knowledge.