It seems that thinking and speaking in a foreign language changes the way we make decisions. In an experiment conducted by professor of psychology Boaz Kaysar, participants were given $20 for 20 rounds. In each round, the participants have a choice of either keeping the money or risking it by putting $1 on the table to bet heads or tails. By putting the dollar on the table, the participants risk losing the dollar but the reward of winning is $2.50 for each head. In this experiment, there is a positive expected value—you are more likely to make money than lose money since the probability of the participants is 50% every flip but the amount of money you are able to win is $2.50 with every flip, a return that is more than 50%.
Logically, one would expect the participants to bet the $1 every time because of the positive expected value. But that is not what happened. What the study found was that when the instructions were in English, students were more reserved in their betting, opting to keep the $1 instead of betting it. However, when the instructions were in a foreign language (Spanish), the participants were willing to take more risks 20% of the time.
[wp_ad_camp_2] The experiment also tested asymmetry in decision-making, which happens when the choice is framed as either a win or a loss. In general, the participants were more risk adverse when the question is framed as a gain. But when a the choice is framed as a loss, participants were willing to take more risks.
However, this asymmetry is gone when the choice is framed in a foreign language. The participants had the same level of risk whether the question was framed as a loss or a gain. The participants were able to largely ignore the way the question is framed and evaluated the choice based on expected value. Therefore, the participants chose to risk the $1 every time because of the positive expected value.
Other experiments have confirmed the same type of risk aversion seen in this study. Students were willing to take more calculated risks when speaking/listening to a foreign language.
What’s the reason for the risk aversion when speaking in our mother language and the increased risk-taking when speaking in another language? Researcher think this is because there is greater cognitive and emotional distancing when speaking, listening, and reading in a foreign language—the words in a foreign language do not equate to the same emotional meaning as they do in our mother language. So this greater emotional distancing in a foreign language is a good thing as it can provide us the ability to make more economically rational decisions.
This study gives insight into how people around the world makes their business decisions in foreign languages. Those who routinely make decisions in a foreign language are probably not as prone to biases regarding their personal finances.
Bottom line: Thinking in a foreign language reduces decision bias so that we make decisions based more on rationality and less on emotions.
Post last updated: June 2, 2016