I once stood in a queue behind a Scotsman checking out of a hotel in Germany. After he had finished scrutinising his bill in agonising detail, he demanded that it be reprinted, this time removing the €1 discretionary charge which had been added in support of the local homeless.
More recently some friends of my daughter’s met a Yorkshire-born Spectator writer at a local fête. They mentioned the connection, expecting some mild pleasantries. Not so.
‘’Appen that reminds me: he still owes me for a taxi.’
When I heard this, I was bemused. Then I remembered I had indeed shared a taxi with the Yorkshireman in question, requesting a minor diversion to drop me off at Cannon Street. This, granted, would have added two quid to the overall fare. Point taken. But here’s the thing. The taxi ride in question had taken place nine years earlier.
You might think that if you belong to a group with a reputation for parsimony, you would feel obliged to defy the stereotype. But our attitude to money is psychologically ingrained and varies from person to person.
One academic paper on the topic, co-authored by one of the pioneers of behavioural economics (and Sigmund Freud’s great-grandson) George Loewenstein, divides people into three groups along a TW-ST axis, where TW stands for tightwad, ST for spendthrift. The (largest) middle group – the ‘unconflicted’ – have a fairly sane relationship with money. Spendthrifts spend too readily, often getting into debt. Tightwads, contrastingly, find the very act of opening their wallet arouses so much emotional distress that they cannot bring themselves to buy things they urgently need, or which would add significantly to their overall wellbeing.
The survey found that tightwads significantly outnumbered spendthrifts, the imbalance mostly driven by men, who were notably likelier to be stingy than women. The sample was small, but it also revealed a huge increase in tightwaddery among those aged 71 or older. Recent data bears this out: economic theory holds that people will save money in early and middle life and spend it in retirement. Instead people seem to become intensely frugal in later life. (One reason why garden centres may be so popular with the elderly is that they are a great place to spend three hours wandering around pointing at things without actually buying anything.)
Tightwads find the very act of opening their wallet arouses so much distress they cannot bring themselves to buy things they need
One theory of mine, as yet unsupported by evidence, is that the Treasury is heavily dominated by tightwads. This would explain why UK tax policy largely serves to take money from people who spend it and give it to the parsimonious instead. A childless couple who lack the need or imagination to spend much of their salary can pop £40,000 a year into a cash Isa for a generous tax break which they patently don’t need. Meanwhile a high-earning individual who goes out and patriotically buys a hot tub or a bottle of Johnnie Walker Blue Label is heavily taxed for his efforts. But it is the latter group who are keeping the whole economic show on the road.
There is one glimmer of hope on the horizon: the proposed tourist tax in London. To oppose this, I am sure economists will develop some fatuous model that suggests it will reduce tourist numbers by 4.2951 per cent (yawn). I see it differently. Via the lens of the TW-ST axis, we can conclude that the only people likely to be discouraged from visiting London by a £5 hotel surcharge will be tightwads, who are simply too stingy to be worth hosting. All they would do is wander around staring at things for free, while cluttering up the streets for everyone else.
To keep the tightwads away, I would set the London tourist tax at around £20 a night – £40 if they have a backpack or are wearing trainers.
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