8th October 2019

Study reveals Brits’ stress reaction to financial and investment lingo

Financial terminology such as ‘stockbroker’, ‘pension’ and ‘FTSE’ causes a stress reaction in humans, a new scientific study from Barclays has found. The experiment, led by i2 media research at Goldsmiths University of London, combined psychometric tests with a bespoke adaptation of the Emotional Stroop Test.

The test assessed people’s emotional association with words by presenting participants with 100 colour-word combinations and comparing the response times and error rates of both neutral and financial terms.

And the effects don’t seem to stop with emotions, as 17 per cent of participants reported that they broke out in a sweat in response to the experiment, whilst 44 per cent reported an increased heart rate and 23 per cent reported experiencing muscle twitches.

The results of the experiment were backed up by further research from Barclays into people’s perceptions of investing. The supporting research revealed that almost three-quarters of Brits did not feel confident enough to invest their cash on the stock market, with 25 per cent feeling as worried by the thought of investing as skydiving.

In fact, investing in the stock market was revealed as one of the most difficult skills to learn, with Brits thinking it was harder than mastering computer coding (44 per cent), ballroom dancing (29 per cent), running a marathon (24 per cent) and changing a car tyre (19 per cent).

When probed further on why such a fear existed, 86 per cent of Brits claimed they were baffled by financial and investment jargon. One in ten mistook a ‘blue-chip stock’ for a poker move and almost a third believed a ‘bull market’ – a market in which share prices are rising – was a place in Birmingham.

Men in the study were found to experience stronger adverse reactions than women, taking an average of 4 per cent longer to process investment terms. Despite this, the supporting research found that it’s women who have the least confidence when it comes to their finances, with 34 per cent feeling they have no understanding of finance and investments compared to just 19 per cent of men.

And the differences may not stop at gender, as surprisingly, the cohort of participants aged 18 – 26 showed the faster response times in the experiment when compared with their older peers of 27+. This suggests that younger people had a reduced stress reaction and are therefore less fear-struck by financial and investment lingo.

Reacting to the experiment results, Ross Dalzell, Head of Barclays Smart Investor said: “This fear of investing could have a real impact on people’s future financial health as, whilst you could lose money, investing offers the potential of higher returns than traditional cash savings over the longer term.

“Our experiment has proved once again how the language we use has real impact on people’s confidence in investing. It’s clear that the industry needs to rethink the way we talk about investing and, off the back of this experiment, we’ve committed to a review of our platform to simplify the language that we use and start to break down some of the known barriers”.