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How who you know affects who you are

Your friends can not only make you fat, they can make the social barriers to breaking a mortgage contract come crumbling down.

By Karen Datko Jun 21, 2010 7:36AM

This guest post comes from Pop at Pop Economics.

 

Your friends can make you fat. And I don't mean by baking you stuff.

 

A few years ago, scientists released the results of a 32-year obesity study in the New England Journal of Medicine. Pardon the description if you're already familiar with it.

 

Scientists followed about 12,000 people over a 32-year time period, many of whom ran in the same social circles, and tried to assess what common factors led to many of them becoming obese. It turned out that who those studied became friends with was incredibly important. In fact, if someone's friend became obese, he or she became 57% more likely to become obese. If someone's brother or sister became obese, his or her chances increased by 40%. And if it was a spouse, the chances rose 37%.

 

The study caused a pretty big stir. Obesity, the scientists concluded, was a social contagion -- not only was it a disease, as some psychologists had said for years, but it was a communicable disease. Seeing someone close catch it could lead to you catching it. In short, your friends can make you fat.

The social contagion phenomenon -- sometimes I wonder if I should just call it "peer pressure," but let's stick with the fancy words -- appears in other areas of consumption too. If your mom's friend's cousin is a heavy drinker, to paraphrase a story in Time magazine, you're 15% more likely to be a heavy drinker too. But as you can imagine, your social network can lead to all sorts of influence, including in your finances.

 

If your friends default on a mortgage …

In the middle of last year, economists Luigi Guiso, Paola Sapienza and Luigi Zingales released a study showing what made homeowners more or less apt to strategically default on their mortgages. To the uninitiated, a strategic default is one in which a homeowner decides to turn the keys over to his mortgage company even though he can still afford the monthly payment, something that's become increasingly common as more homeowners find they owe 10% to 20% more than their homes are worth.

The reseachers concluded that about 26% of the defaults they studied were strategic and found that a homeowner's moral views on a default played strongly into their likelihood to do so. More pertinent to this discussion, however, was how people's social networks affected their decision. People who knew someone else who defaulted were 82% more likely to declare their intention to default than people who didn't know a nonpayer, even after you control for moral qualms.

 

In other words, your friends not only make you fat, they can make the social barriers to breaking a mortgage contract come crumbling down.

 

If your friends are generous …

James Fowler and Nicholas Christakis recruited volunteers to play games in which they had the chance to contribute money to each other to build good will. The volunteers interacted with each individual only once. So their resulting behavior couldn't come from becoming friends over the course of the games or any quid pro quo.

 

What did they find? If one volunteer was generous, the object of his or her generosity was more likely to be generous himself as the games went on. In the end, the effect of the first person's gift was multiplied up to three times as the targets of his giving gave of themselves.

 

Not to bring this happy trend down a peg, but if the subjects of the games started to encounter not-so-generous participants, their likelihood to be generous to the next guy also decreased as the games went on. Scrooge-ism is apparently as contagious as good will.

 

If your friends are happy …

You know that Liberty Mutual ad where a chain of people do little good deeds for each other? (You can find it here.)

One of the more depressing bits I remember gathering from that commercial is how truly shocked several of the actors look that someone would do such an incredibly small favor for a stranger.

 

But I digress. It turns out, there might be a little science behind that phenomenon. The same guys who did the obesity and generosity studies, Fowler and Christakis, have done a lot of other work looking at social contagion. One of their other focuses of research homed in on one of my favorite areas of study: what makes us happy.

 

You could have seen this punchline coming from a mile away. If your friends are happy, you're happier. According to surveys designed to figure out how happy you are, if your friend is happy, you're 15% more likely to be happy too. If your friend's friend is happy, you're 10% more likely to be happy -- I'm sure that has something to do with the second-degree friend making your own friend happy. And if your friend twice-removed is happy, you're almost 6% more likely to be happy.

 

I've yet to see a scientist try to put some of their work to use. If someone gets rid of his fat, unhappy, and selfish friends, is he more likely to be thin, happy, and generous? Is there any way to avoid social contagion? Or, on the other hand, if we try to create artificial connections with people better than us, can we force ourselves to "catch" their good habits? After all, it seems like making friends with someone who's good with money is a lot easier to do than simply giving yourself the goal of improving your money habits.

 

Just food for thought: If you're interested in reading more about social networks and their effects on our behavior, check out Fowler and Christakis’s book, "Connected: The Surprising Power of Our Social Networks and How They Shape Our Lives."

 

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