Updated on 05.08.09

The Stroop Effect and Your Wallet

Trent Hamm

Let’s try a little psychology experiment. In the image below, read out all of the colors, not the words themselves. You can say them out loud, or in your head.

stroop easy

Now, try the same for this batch of colored words. Remember, say the color, not the word itself.

stroop hard

It’s at least a bit harder, isn’t it? This effect is called the Stroop effect – it’s a classic psychological tool that demonstrates the power of selective attention. In other words, it demonstrates that it can actually be quite difficult to look at a complex situation (the miscolored words), throw out some of the information presented to you (the actual words), and evaluate only what remains (the color of the words).

Here’s the interesting thing, though. Many aspects of personal finance actually rely on a person’s selective attention.

Take grocery shopping. You’re walking down a grocery aisle, looking for a particular item. All around this item are colorful variations on the same thing, all clamoring for your attention – you have to be selective. When you do finally find the item, the selective attention is still important, as there are varying sizes of that item.

Take investing. You flip on CNBC in order to find out how your stocks are doing, and you’re inundated with lots of talking heads touting particular stocks, breathlessly covering market news, and perhaps yelling a lot and throwing chairs.

It’s easy to see selective attention at work in many of our personal finance choices. Buying a car. Choosing a bank or a credit card. Shopping online.

This leads to an obvious question: how can we improve our selective attention (or at least use our own nature to our advantage), especially when it comes to personal finance choices? Here are three strategies that work well for me.

Use a shopping list. A shopping list changes the focus of your attention from the items on the shelf to the list in your hand. Instead of wandering down an aisle with lots of distractions, your focus can be on the list. What’s next on the list? Where can I find this specific item? The subtle shift of focus makes it much harder to be distracted by the items on the shelf because, simply, you’re only looking for a very specific item and the rest doesn’t matter. On the other hand, if you walk the aisles without a specific mission, you’re much more open to having your attention pulled away from the task at hand – and that results in a lot of unnecessary stuff in the cart.

Use the ten second rule. If you’re about to make a purchase, stop for ten seconds. Breathe in deeply, breathe out deeply, and focus on nothing but the item. Think about whether or not that item fits in what you’re doing with your money and ask yourself if it’s really necessary. To put it simply, you’re actively focusing your attention on this one specific purchase, not on the next thing you need to get, the next shiny thing in the store, or any other distraction.

Filter your news and information. Instead of being blasted with the fire hose of color and activity and information one might find on CNBC, consider instead using other tools to just get the data you want. Instead of hitting CNBC to catch the numbers on your stocks, set up Google Finance to just watch the stocks you’re interested in. Instead of just hearing what CNN wants you to hear, use Google News and focus only on the specific stories that matter to you.

In short, much of personal finance success comes from the ability to focus your attention properly, and the most effective and simple way to do that is to recognize distractions and find ways to block them out. Do that regularly and you’ll find your finances getting into better shape.

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  1. Baker @ ManVsDebt says:

    In the example given, it’s much harder for me to say the actual colors in the second picture. I can feel myself hesitate for a half-second every line.

    I’m not sure if that’s the same effect or not. Either way, this was a very interesting concept to read about. I have to admit I hadn’t heard of the Stroop effect, but this certainly makes me wonder what other things like this are out there!

  2. Andrew says:

    Isn’t the Stroop effect where you’re supposed to say the COLORS of the second set, not the words? As any DS-phile like yourself, you should know this from the first Brain age game :)

  3. Ken says:

    I actually had no issue with it at all. But I don’t think I realized that the letters were the same color as the word they spelled out in the first example. I’m sure it doesn’t mean I’m immune to the effect. Maybe if you don’t put the warning (“ignoring the color of the words”) it would work better.

  4. JorgenMan says:

    Yeah, you’re supposed to say the colors of the second set, not the words.

  5. Bill in Houston says:

    I can’t see the images. Oh well.

  6. Megan says:

    I agree with the above posters – I believe that the exercise should read try saying the *colors* not the words. The difficulty is ignoring the text and focusing on the color.

  7. Michael says:

    Yeah, you had it backwards. It’s easy to say the words.

    Good example, though!

  8. When grocery shopping I find myself “lost” in the spaghetti sauce aisle (I may have to just decide to make my own). It is impossible for me to ever find what I am looking for. I definately need to have focused attention here…

    Thanks for the post, I’ve seen this sort of thing before. Isn’t psychology fun!?

  9. J says:

    saying the colour, not the word is harder.

  10. Ryan says:

    Agree with the above posters, but it’s ok, we knew what you meant. :)

  11. DollarDream$ says:

    You mean say the COLORS Trent?

  12. MLR says:

    You guys are unforgiving :)

    Good points about the grocery store!

  13. Jimbo says:

    I suggest proofreading before publishing. Just a thought. This is much more than a missing period or extra comma.

  14. Bill in NC says:

    Make up a price book for grocery shopping.

  15. Trent Hamm Trent says:

    I edited the explanatory text about the color words. Today has been a crazy day, with the free PDF book needing updated download links almost constantly and my sick daughter throwing up all over me multiple times, and I didn’t get a chance to give this a final proofreading.

  16. c says:

    just so you know, now the text above the images is right, but below it reads

    “…throw out some of the information presented to you (the actual color of the words), and evaluate only what remains (the words themselves).”

    when it should read

    “…throw out some of the information presented to you (the words themselves), and evaluate only what remains (the actual color of the words).”

    ‘sokay, I think we’ve all had days like that… hope your daughter feels better!

  17. Spaceknarf says:

    About the Ten Second Rule: I read in a paper last week (sorry, no link) that people make better decisions when they _don’t_ think about the item for a few minutes. But this applies more to a this/that situation than a buy/don’t buy situation.

  18. Rob Bennett says:

    I think that the point being made here is an important one. Humans don’t generally think through the use of logic chains. We use shortcuts. That’s not bad. Shortcuts usually help. But they can get us into lots of trouble too.

    The big problem is that we are not aware of the shortcuts we are employing. It’s good advice to watch out for this. But it’s a tough business trying to become aware of the circumstances in which we believe we have thought something through but in which we really have not done so.


  19. Jenny says:

    Trent’s comment sums up why he will always lag Get Rich Slowly. While JD would have apologized for his mistake and thanked the readers for pointing it out, Trent merely justifies making the mistake. No sir, this is not how it’s done.

  20. Shelly says:

    Just wanted to let you know that the paragraph below the experiment still says “throw out some of the information presented to you (the actual color of the words), and evaluate only what remains (the words themselves).”

  21. Aww… I hope she feels better soon and the rest of you don’t get it. That’s no fun!

    * Pedialyte (or generic) is good stuff!

  22. Becoming Jane says:

    I am surprised that most people focused on the first part of the article. To me the important part was the second part applying the lesson learned from the color/words. Here’s a shopping hint I relearned recently when my husband was looking for a drywall saw. He had chosen one costing $10 and asked if I saw anything cheaper. Looking up, way up since I am only 5 feet tall, I saw two other brands for only $5. The lesson is that stores often put more costly items at eye level. Look up and save some money.

  23. Bill says:

    I think the comments about whether we’re supposed to say the color or the word are themselves a perfect example of the type of distractions that can occur when shopping if not of the Stroop Effect. One seemingly little faux pas has derailed the message, to some extent at least.

    Anyway, very creative post and one worth remembering.

  24. Ryan P Smith says:

    The shopping list tip is huge. Without a list at the grocery store I end up buying at least 20% more than with a list and usually through it away expired and uneaten.

  25. Robin Crickman says:

    I would miss a lot of good deals if I followed
    your advice. I am always on the lookout for a
    new generic version of products I buy or a new
    brand with a low cost introductory price if I
    think I will like this item. My local grocery
    often packages up meat products that they were
    using a portion of for deli items into an
    brandless package and sells for a fraction of
    the regular price. Things like cold cuts,
    sausage, mixed ground meat (wonderful for
    meatloafs). These are perfectly wholesome,
    they just lack the fancy packaging the regular
    version comes with. I’ll trade that for half
    off. But this is an unpredictable offering
    so I can’t count of finding any particular
    thing. I buy as much as I can store when I
    get the chance. But then, my husband swears
    I am the only person he knows who can window
    shop a grocery store and I do seem to carry
    a list or normal prices for things I buy in
    my head. I know, some folks are odd.

  26. Bill in Houston says:

    I can see the images today.

    Now that I’ve seen them I remember this. We had this “quiz” in a Psych class I had as an undergrad. It was fun to hear people rip through the color/word match and then get all tongue tied with the color match part. Most of the class ended up laughing hard enough to draw looks from passersby in the hallway.

  27. malvika says:

    this has been of real help to me.i am a student of psychology and needed an application of the stroop effect in mundane activities.the stroop effect shoping list analogy was interesting …

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