The Ostrich Effect: Why We Avoid Looking at Money

Many people avoid checking their bank balance after a big spending weekend or ignore investment statements when markets fall. Economists call this the ostrich effect, after the myth that ostriches bury their heads in the sand.

The research

Economists Niklas Karlsson, George Loewenstein and Duane Seppi found in 2009 that investors in Sweden and the United States checked their portfolios more often when markets were rising and less often when markets were falling. People seek good news and avoid bad news, even when information would help them.

Why we avoid

• Painful feelings: looking at debt or losses causes anxiety, guilt or shame.
• Hope: not looking lets us believe things might be fine.
• Overwhelm: complex finances can feel impossible to tackle.

Why avoidance is costly

• Missed payments lead to late fees and credit score damage.
• Growing debt gets harder to fix.
• Fraud can go unnoticed.
• Opportunities are missed, such as better interest rates or unused benefits.

Facing finances without dread

• Schedule short check-ins: 10 minutes once a week at a set time.
• Start small: look at one account or one bill at a time.
• Pair it with something pleasant: tea, music or a walk afterwards.
• Use alerts: automatic notifications for low balances or large transactions.
• Focus on the next step, not the whole problem.
• Be kind to yourself: the goal is awareness, not self-criticism.

A balance

Checking investments constantly can also cause anxiety and poor decisions. For long-term investments, a regular review, such as every few months, is often enough. The aim is healthy awareness, not obsession.