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Cultivating Financial Mindfulness: A Dual-Process Theory

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Consumer Knowledge and Financial Decisions

Part of the book series: International Series on Consumer Science ((ISCS))

Abstract

This chapter considers the cultivation of financial mindfulness in relation to a dual-process mental model, i.e., reflexive and reflective, of influences on financial attitudes and behaviors. In the proposed dual-process model, the reflexive system is energizing, passionate, impulsive, and automatic; in excess, it produces selfish, materialistic financial behaviors. The reflective system is thoughtful and deliberate; in excess, it produces financial inaction and indecision. A functional money relation obtains with moderate levels of, and balanced (λ), reflexive and reflective influences. Although sparse, evidence suggests that cultivating mindfulness strengthens a witnessing self that aids in balancing and integrating the reflexive and reflective systems. Eastern and Western paths to cultivating financial mindfulness have similarities and differences. Eastern, i.e., Buddhist, paths emphasize meditation; Western paths, largely based on psychotherapy, emphasize counseling and therapy that are sometimes combined with mindfulness exercises. Although largely unexplored, the relation of financial knowledge to mindfulness is a potentially fertile and important topic for future exploration.

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Notes

  1. 1.

     In Freudian terms, the reflexive system bears similarity to the Id; for Jungians, it would seem to share properties with “the shadow self” (Jung, Read, Fordham, & Adler, 1953).

  2. 2.

     There is also a growing literature that argues the virtue of mindfulness to business management (Barton & Sutcliffe, 2009; Butler & Gray, 2006; Kasser & Sheldon, 2009; Kernochan, McCormick, & White, 2007; Weick, Sutcliffe, & Obstfeld, 1999) and to training organizational and financial executives (Krieger, 2005; Levinthal & Rerup, 2006; Thomas, 2006; Ucok, 2006).

  3. 3.

     Participant’s self-selection of an extended mindfulness retreat may be evidence of a “floor,” i.e., very low values, of financial desire discrepancy at pre-test; hence, insufficient variability in financial desire may explain the marginal results.

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Acknowledgments

Thanks to the Institute of Management Accountants (IMA), the Gatton College of Business, and the Von Allmen School of Accountancy for financial support related to the work described herein. Thanks also to an anonymous reviewer, Tim Kasser (Knox College), Tim Miller (University of Kentucky), Jason Bergner (University of Kentucky), Candace Witherspoon (University of Kentucky), and Doug Lamdin (Editor) for thoughtful comments on previous drafts.

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  1. Von Allmen School of Accountancy , Gatton College of Business and Economics, University of Kentucky, Lexington, KY, 40506, USA

    Dan Stone

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Correspondence to Dan Stone .

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  1. Dept. Economics, University of Maryland, Baltimore County, Hilltop Circle 1000, Baltimore, 21250, Maryland, USA

    Douglas J. Lamdin

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Stone, D. (2011). Cultivating Financial Mindfulness: A Dual-Process Theory. In: Lamdin, D. (eds) Consumer Knowledge and Financial Decisions. International Series on Consumer Science. Springer, New York, NY. https://doi.org/10.1007/978-1-4614-0475-0_2

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