Power and CFC Interact in Predicting Fiscal Behavior

Running head: POWER AND THE CONSIDERATION OF FUTURE CONSEQUENCES INTERACT IN PREDICTING FISCAL BEHAVIOR

1

Power and the consideration of future consequences interact in

predicting fiscal behavior

Daniel E. Atwood

Yeshiva College

POWER AND THE CONSIDERATION OF FUTURE CONSEQUENCES INTERACT IN PREDICTING FISCAL BEHAVIOR 2

Abstract

Power has been associated with a number of factors that affect

goal pursuit. The powerful are able to maintain focus on their

primary goals, shield out irrelevant information, exhibit better

executive functioning, and are able to see the big picture. The

powerless, however, focus more on peripheral situational factors,

exhibit impairment in executive functioning, and exhibit more

concrete construal, losing sight of the big picture. The

consideration of future consequence (CFC) refers to the ability

to project the future consequences of behaviors and events. Like

power, CFC is also closely related to executive function,

construal level, and maintaining focus on an overriding goal over

irrelevant information. Considering the theoretical similarities

between these two concepts, it is proposed that on a task

measuring financial responsibility that they will interact with

each other in such a way that high CFC and high power will

predict fiscally responsible behavior, while low CFC and low

power will predict fiscally irresponsible behavior. Some


theoretical and practical implications from these findings are

discussed.

Keywords: Power, Consideration of Future Consequences,

Construal Level, Executive Functioning


Power and the consideration of future consequence interact in

predicting fiscal behavior

A construct in social psychology that has recently been

investigated extensively is social power. Though there is no

universally agreed upon definition of power, power can be defined

as: an individual’s relative capacity to modify others’ states by

providing or withholding resources or administering punishments

(Keltner, Gruenfeld, & Anderson, 2003). A similar iteration of

the definition of power includes: the ability to control one’s

own and others’ resources without interference from others

(Galinsky, Gruenfeld, & Magee, 2003).

Someone can be consistently lower or higher in power (power

as a personality trait) in addition to the fact that power can

vary across situations. A CEO is high in power when at work but

low in power when being pulled over by the police for speeding.

The secretary is low in power at the office but high in power

when interacting with his or her children.

Power gives its holders greater freedom from situational

constraints and control over their outcomes. They are more


attentive to their internal states and thus more trait-consistent

in their behavior, not being constrained by situational factors

(Keltner et al., 2003; Smith & Galinsky, 2010). Compared to the

powerless, the powerful are guided more by their overriding,

primary goals and not distracted by incidental, nonessential

concerns (Smith & Trope, 2006). Those high in power become more

sensitive towards rewards in their environments as their

behavioral approach system is activated (Keltner et al., 2003),

and thus they are also more likely to take action (Galinsky et

al., 2003). It is proposed that power holders both do not notice

irrelevant situational cues and are less effected by them

(Galinsky, Magee, Gruenfeld, Whitson, & Liljenquist, 2008).

Finally, power holders think in an abstract, big-picture manner,

as their thinking is less deliberate and more heuristic or top-

down (Smith & Trope, 2006).

Interestingly, though power usually decreases attunement to

situational cues, power increases attunement to the situational

cues that are goal relevant (Galinsky, Magee, Gruenfeld, Whitson,

& Liljenquist, 2008). Power holders are able to maintain


attention on the current goal without losing focus and are able

to focus more on goal relevant cues in their environments

(Willis, Rodríguez-Bailón, & Lupiáñez, 2011). Thus power

facilitates focus on goal pursuit and the executive functions

necessary for attaining goals (such as inhibiting).

Those who lack power, however, struggle in attaining their

goals. Low power impairs inhibiting, updating, and planning,

three major executive functions necessary for goal pursuit

(Smith, Jostmann, Galinsky, & van Dijk, 2008). Those who lack

power often attend to multiple cues in their environment at once

which leads to delays in action (Willis & Guinote, 2011). They

have been described as being in an “endogenously vigilant state”

(Willis et al., 2011), as they are especially attune to threats

and punishments and do not have the resources to control their

environments (Keltner et al., 2003). They exhibit more concrete

thinking and are often unable to see the bigger picture in

comparison to those with high power (Smith & Trope, 2006).

When we are concerned with a current goal, our cognitive

processes, such as attention, recall, and thought content, become


biased towards information associated with one’s current concerns

(Klinger & Cox, 2011). These effects have been show to occur even

at a subconscious level. After being reminded to attend a

lecture, students who used bicycles to get to the lectures

responded faster to bicycling cues than when not reminded of this

goal (Aarts & Dijksterhuis, 2000); and participants that were

supposed to subsequently execute a certain script showed greater

accessibility of words in a lexical decision task related to that

script than participants who were just supposed to observe that

script (Goschke & Kuhl, 1993). Given that high power facilitates

attention to cues in an environment that facilitates goal pursuit

and minimizes attention to distraction, power should promote this

cognitive bias towards goal relevant information. Accordingly,

individuals manipulated into having high power showed greater

accessibility in a lexical decision task of words related to an

active goal than those manipulated to lower power (Slabu &

Guinote, 2010).

Consideration of future consequences. The consideration of future

consequences (CFC) refers to the extent to which individuals


consider the potential distant outcomes of their current

behaviors and the extent to which they are influenced by these

potential outcomes (Strathman, Gleicher, Boninger, & Edwards,

1994). Those high on CFC consider the future implications of

their behavior and use those considerations as a way of guiding

their current behavior. On the other hand, those low on CFC focus

more on their immediate needs and concerns, and act primarily to

fulfill their current needs (Strathman et al., 1994). CFC is

conceptualized as a continuum, and is measured by a valid and

reliable scale created by Strathman et al. (1994).

CFC and power have many theoretical similarities that may

suggest that a relationship exists between these two concepts.

Like those high in power, those high in CFC thinking also

tend to focus more on the big picture and overarching goals as

opposed to subordinate goals and immediate concerns, whereas low

CFC leads to a more concrete, present focus, like low power. For

example, in one experiment (Boninger, Gleicher, & Strathman,

1993) subjects had to imagine that they were athletes who

suffered an injury and had to choose between two pain killer


medications, one of which they knew would produce side-effects

that would cause them to lose a race and another whose side-

effects were unknown. Subjects who lost the race and were

subsequently told that the other drug had no side effects (the

experimental condition) expressed regret and blamed themselves

more for their loss than subjects who were told that the other

drug had comparable side-effects to the drug they took.

Importantly, this effect was reduced in subjects who scored high

in CFC. Subjects high in CFC in the experimental condition felt

that they had learned something useful for the future—which drug

was better to take. Low CFC subjects, however, did not report any

possible benefits for the future from losing the race. The

ability of being able to project into the future is considered a

form of abstract thinking (Strathman et al., 1994). CFC is

positively related to construal level, like power.

Similarly, greater CFC thinking is associated with more

environmentally conscious behavior, more health conscious

behavior, and less alcohol and cigarette use (Strathman et al.,

1994), all factors that require one to maintain focus on a


primary, big-picture goal (remaining healthy) over an immediate

goal (smoking a cigarette). Maintaining focus on a primary goal

over a subordinate goal is also a function facilitated by high

power and mitigated by low power.

Finally, like power, CFC is also conceived of as affecting

executive functioning. Subjects low on CFC were found to be more

affected by the myopia inducing effects of alcohol than subjects

high on CFC, suggesting that both processes affect executive

functioning. Neroimaging studies show that CFC and alcohol both

have similar correlates in the prefrontal cortex of the brain

(Bushman, Giancola, Parrott, & Roth, 2012).

One very salient example of where the differences in CFC

thinking play out is fiscal responsibility. People high on CFC

engage in behavior that is more fiscally responsible and future

focused, while people low on CFC tend to spend more money on

fulfilling immediate goals (such as taking a vacation) over long-

term goals (paying credit debt). Those low on CFC acted even more

fiscally irresponsible when they were already facing substantial

debt (Joireman, Sprott, & Spagenberg, 2005).


Power may play a role in these findings. People who are in

debt live in a low power social situation (with low power being

both a cause and an effect of debt). This low power leads to

impairment in executive functioning, more concrete construal,

bottom-up processing, and a propensity to lose focus on long-term

goals and attune more to irrelevant information, which would lead

to more fiscally irresponsible behavior. On the other hand,

people in stable financial situations have control over their

resources (as both a cause and an effect of power) and are thus

high power (in this regard). They will have greater executive

functioning abilities, higher level construal, and will remain

focused on overarching, long-term goals while shielding out

irrelevant goals and information, which would lead to more

fiscally responsible behavior. Thus the proposed relationship

between power and CFC is theoretically well grounded and can have

many important practical ramifications.

The present research seeks to identify the relation between

CFC and social power. Considering the strong theoretical

relationship between power and CFC, it is quite likely that power


plays a role in Joireman et al.’s findings. I predict that in a

laboratory tasking measuring fiscal behavior power will moderate

the relationship between CFC and fiscal behavior.

Figure 1. Power will moderate the relationship between CFC and

fiscal behavior. High power will strengthen the relationship

between high CFC and fiscally responsible behavior, while low

power will weaken this relationship.

CFC Fiscal behavior

Power


Method

Participants

I propose to test this on a random sample of university

students, participating for class credit.

Design, procedure, and materials

Participants will first take the 12 item CFC scale

(Strathman et al., 1994). The scale has been shown to be both

reliable and valid in measuring CFC (Strathman et al., 1994).

After measuring CFC, power will be manipulated. Many common

power manipulations involve assigning two participants to two

roles, leader and subordinate, and having the leader evaluate the

subordinate, control the subordinate’s resources, or provide the

subordinate with task directions (Anderson & Berdahl, 2002).

Though this paradigm is appealing due to its external validity, a

number of confounds with this paradigm have been identified. Low-

power participants may be preoccupied with their impeding

evaluation (Smith et al., 2008). Participants may engage in role

prescriptive behavior (acting the way that they should). High

power participants will have a higher cognitive load as they know


that they will later have to perform an evaluation, which may

lead to less deliberative behavior and skew results (Galinsky et

al., 2003). Therefore power will be manipulated using a priming

manipulation paradigm established by Galinsky et al. (2003).

Participants will engage in a writing task that primes the

experience of power. Participants randomly assigned to the low

power condition will write about a time when someone had control

over them, while participants randomly assigned to the high power

condition will write about a time when they had control over

other people. Control condition participants will write about

what they had done the day before (Smith et al., 2008).

Participants will be given a sheet of paper with 19 lines to

write about the incident that they choose. Participants will then

be given a single-item mood measure to rule out power’s affects

on mood (Keltner et al., 2003) and proceed to Joireman et al.

(2005)’s fiscal responsibility task.

Participants will be instructed to imagine that they had

received a $900 gift from a distant relative, which they could

allocate in any manner they choose among four options: (a) paying


down their credit card balance, (b) putting money in savings to

cover college expenses, (c) purchasing a product they want from

the internet, and (d) going on a trip with friends. The first two

options are considered fiscally responsible choices, while the

latter two are considered fiscally irresponsible. Embedded within

the instructions is a manipulation of current debt level.

Participants are randomly assigned to one of two debt level

conditions, wherein they are asked to assume they are carrying a

debt balance of either $1,200 or $10,400 on a credit card.

I will then perform a power manipulation check, probe for

suspicion, and debrief the participants.

Results

I predict that the manipulation check will show that the

power manipulation is effective. The three power conditions also

will not differ on affect.

Participants will then be labeled as being either high CFC

or low CFC on the basis of a median split of the distribution of

CFC scores (Strathman et al., 1994). I will then conduct a 3

(power: low power, control, high power) x 2 (CFC: low or high) x


2 (debt level: $1200 or $10,400) x 4 (option: credit card,

savings, purchase, trip) ANOVA with repeated measures on the last

factor. I predict a significant main effect for option (with the

most funds being allocated to credit card, then savings, trip,

and purchase), a significant CFC x option interaction (high CFCs

will allocate more to the 2 responsible options), a significant

debt level x option interaction (those in greater debt will be

more irresponsible), and a significant CFC, debt level, and

option interaction (low CFCs in greater debt will be more

irresponsible), all in accordance with Joireman et al., (2005)’s

findings.

Furthermore, I predict that there will be a significant

power x option interaction, a significant power x option x CFC

interaction, and a significant power, CFC, debt level, and option

interaction. Those high in power will allocate more funds to the

credit card and savings than to the purchase and trip compared to

both control and low power. Additionally, I predict that the

latter two conditions will also significantly differ, with the

low power condition allocating significantly more to the purchase


and trip than control. Those high in both power and CFC will

allocate the most to the responsible options, whereas those low

on both power and CFC will allocate the most to the irresponsible

options. In terms of the four-way interaction, I predict that

those with low CFC and low power with greater debt will be the

most irresponsible. These predictions are all in accordance with

Joireman et al. (2005)’s findings, with the additional factor of

power added as a moderator.

Discussion

Holding social power has been shown to improve goal pursuit.

The powerful exhibit better executive functioning, inhibit

distractions, maintain focus on their goals, think in more

abstract, big-picture ways, and demonstrate increased

accessibility of cues related to goals. Many of these attributes

are also related to the consideration of future consequences.

Thus it is proposed that in a financial planning task, which has

been shown to be significantly influenced by CFC, power will

interact with CFC in predicting financial behavior. It is

predicted that the results will support my hypothesis.


Limitations and future directions. The greatest limitation to this

study is the artificial nature of the financial planning task.

The real-world generalizability of these findings is

questionable. Also, it is possible that there are more confounds

that affect financial decisions besides CFC, power, and

preexisting debt level. Future research should try to find more

organic paradigms that rule out as many confounds as possible.

This study is critical in that it provides a mechanism for

some of the processes described in the power literature. Many of

the characteristics associated with power cited earlier may be a

result of power’s interaction with CFC. Future research should

examine how power and CFC interact in other cases beyond

financial responsibility.

These findings can have many important real-world

consequences. Deficits in CFC are likely to lead to being in a

low power situation. In that sense, people in debt, disadvantaged

socio-economic situations, minorities, students, or low level

employees (all low power situations) are often caught in a

vicious cycle of being unable to project into the future, facing


all the cognitive deficits that result from being in a low power

situation. On other hand, those who are high in CFC will quickly

gain power, and enter a cycle of higher CFC and higher power,

which will lead to more success. In other words, the rich will

get richer and the poor will get poorer as power and CFC build on

themselves. Fortunately, being aware of the cognitive mechanisms

that differentiate the powerful from the powerless can help us

find new ways of improving the situation of the powerless. Future

research should continue to examine the cognitive mechanisms that

underlie the individual difference of power.


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Power and CFC Interact in Predicting Fiscal Behavior

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