Ostrich effect
Avoiding financial information that might be bad: not opening statements, not logging in when markets fall, not checking the balance before payday. The person knows the information exists and chooses not to look.
What drives it
Not looking protects mood for now and keeps alive a hope that the number is better than feared. For identification it marks the point where worry has turned into a habit of evasion, which tends to make the eventual news worse.
How it shows
Work
Unopened payslips, a pension statement in the drawer since spring, a company card statement never reconciled. In a small business, avoiding the cash-flow report when trade is slow.
Relationships
Letters stacked unopened on the side, a partner discovering an overdraft or rent arrears months late, ‘I didn’t want to worry you’ as the explanation.
Self
Notice the apps you don’t open, the email folders you skip, and whether you check eagerly on good weeks and stay away on bad ones.
What tells it apart
Denial: Denial refuses to accept a fact once it is known. The ostrich effect avoids learning the fact in the first place, and the person often admits they are afraid of what they will find.
Experiential avoidance: Experiential avoidance is the wider habit of avoiding unwanted feelings in any area. The ostrich effect is its money form, visible in unopened post and unchecked accounts.
Money avoidance: Money avoidance (Klontz) is a belief that money is bad or undeserved. The ostrich effect can occur with no such belief, out of fear of one bad number.
A test
Ask when the person last opened a statement or checked a balance, and whether they check more often in good months than bad. Checking that rises with good news and drops with bad is more likely the ostrich pattern.
Questions to carry
- Which envelope or app has the person not opened, and since when?
- What number am I afraid I will see if I look today?
How strong the research is
mixed. Karlsson, Loewenstein and Seppi (2009), and Sicherman, Loewenstein, Seppi and Utkus (2016) using login records from over a million Vanguard investors, found people looked at their accounts less after market falls. A study of 617 UK private investors (Gherzi and colleagues, 2014) found more checking after losses, which they called a meerkat effect, so the pattern depends on who is investing and how it is measured.
Where it comes from
Dan Galai and Orly Sade, 2006 (term, Journal of Business). Niklas Karlsson, George Loewenstein and Duane Seppi, 2009 (The ostrich effect: selective attention to information)