Magical thinking and insurance: Taking out cover makes us feel that misfortune is less likely to occur

By Matthew Warren We’re all prone to a bit of magical thinking now and then. Maybe you try not to step on cracks in case it brings bad luck, or avoid talking about a good situation in case you “jinx” it — even though in reality there’s no way your actions would have any effect on the world. When it comes to decisions about finances and risk, though, you’d probably claim to be a much more rational thinker. However, a new study in Personality and Social Psychology Bulletin finds that we’re even susceptible to magical thinking when taking out insurance. The team finds that insuring against the loss or damage of a valued possession has what they call a “talisman effect”, making us feel that the misfortune is actually less likely to occur in the first place. In the first study, Robert Schindler from Rutgers University and colleagues asked participants to think about an object they had bought for around $100 and that held sentimental value. They imagined taking a holiday for two weeks and renting out the object. Some participants were told they were guaranteed full compensation for loss or damage, while the other participants were given no additional information. Finally, all participants rated the likelihood that their possession would be lost or damaged. Participants who read about the guarantee thought it less likely that their special object would be damaged (they also thought it was less likely to be lost, though this effect didn’t reach st...
Source: BPS RESEARCH DIGEST - Category: Psychiatry & Psychology Authors: Tags: Money Thought Source Type: blogs