Diana Clement: Nature vs nurture and their effects on our spending habits

Two siblings growing up in the same household can turn out very differently. Photo / 123RF

OPINION

Two siblings growing up in the same household can turn out very differently in how they approach financial matters and in many other ways.

It can be disconcerting for parents to see two children who have the same shared genetics and homelife demonstrate different financial tendencies.

In adulthood, it can result in friction and stress between siblings and sometimes their parents.

Siblings should be peas from the same pod. As AUT behavioural scientist Dr Sommer Kapitan points out, the siblings are from the same baseline of social class, economic upbringing and parental habits.

Even so, we don't always start on an equal footing, says Professor Ananish Chaudhuri, who researches experimental economics at the University of Auckland. We need to take into account our experiences, our environment, our friends and our peers as well as our genetic makeup, he says.

We often take advice from our colleagues, peers and friends. "We may take advice from our siblings too, but their advice is probably one of many pieces of advice and gets aggregated with the rest," he says.

Of course, simply being the first child off the block, the middle or the last can mean a different experience. The parents may be super strict with the first child, but not at all by the fourth, says Kapitan.

So can different teachers make a difference? We all know the value of a great teacher. I've often wondered what made politician John Tamihere so different from his brother David, a convicted double murderer (who continues to maintain his innocence). I notice in the Wikipedia biography of John there is mention of him being influenced by teacher Tom Weal, who according to an obituary loved nothing more than to impart his economic and political views on his students. Maybe that made a difference.

The 2004 book The Pecking Order by Dalton Conley, a professor of sociology at Princeton University, researched socioeconomic differences within families in the United States. Conley found that the economic inequalities started in the home.

There may, for example, be turmoil at some point during the siblings' lives such as divorce or parental unemployment, which can be experienced differently at varying ages. Gender bias in the family growing up can have a big impact on financial success, wrote Conley.

One-off events can have big impacts. In the first year of Covid-19 that is so true with people's lives upended, businesses ruined and travel and study plans curtailed.

The child who experiences the fear and withdrawal from the world of the family, or missed or left school early thanks to Covid at a formative age could have a very different outcome in life to his or her life from a sibling who was a few years younger or older during the pandemic.

One-off events can have big impacts. Photo / Getty Images

Chaudhuri points out that there is considerable evidence of a strong correlation between testosterone levels and risk-taking. Women are typically far more risk-averse than men, meaning brothers and sisters can behave very differently.

Then depending on the careers, we choose often-external signals like flashy cars or expensive clothes and pieces of jewellery to signify our success and accomplishments, she says. For others, this keeping up with the Joneses is not as important.

Unfortunately, the differences between siblings can be super difficult for parents to navigate when writing a will. Should you be giving more of it to the child who is struggling financially? The other child might feel that they have savings because they've gone without for years or helped the parent/s and deserve a half or greater share.

It's unlikely you're going to change your sibling's behaviour; although taking the time to understand the differences and opening a dialogue can reduce conflict. Talking calmly and logically about possible outcomes that can be a win/win for both is a positive way to move forward.

Avoid both the temptation to moralise and the urge to using money as a bargaining wedge to get your own way.