This project aims to better understand the role of identity-protective cognition in financial decisions as social media becomes one of the main sources of financial knowledge in the digital era. Identity-protective cognition refers to the psychological tendency where individuals process information in a way that aligns with and protects their pre-existing beliefs and psychological and social identity. This often leads to the avoidance or misinterpretation of information that feels emotionally difficult. People become Financial Homo Ignorans and base their financial decisions on emotions.
The project encompasses four studies: 1) a national survey examining the correlation between social media usage for information collection and financial decisions and well-being, 2) a field study in which polarizing financial discussions on social media and their effects are analyzed using machine learning, 3) behavioral experiment to establish a causal link between identity-protective cognition and financial behavior, and 4) an intervention study where targeted social media content to foster improved financial decisions and financial well-being is tested.
The results will generate insights about vulnerable groups and preventive measures to eliminate the negative effects of social media and identity-protecting cognition on the individual's financial well-being. In addition, the project explores and promotes positive aspects of the impact of social media on financial behavior.