New Scientist this week features an article casting money as a psychologically-rooted instrument. It may be a tool in the market to trade for goods, but it can be perceived by our minds as something with deeper significance and even activate the same centers of the brain as addictive drugs like cocaine and nicotine.
We have long associated money as the “root of all evil,” but perhaps it is more accurately a source for bad behavior. In the article, author Mark Buchanan explores the recent studies done in the fields of marketing, anthropology, and psychology showing an interesting trend linking money with narcissistic and competitive behavior. Of course, this might not be news to you. Turns out some of us are predisposed to this type of behavior, while others are inclined to treat money as an friend rather than a drug or compulsion.
Buchanan points out,”money makes people feel self-sufficient.” In fact, one study found that participants involved in money matters before engaging in a puzzle took longer to ask for help than those who did not have money on the brain. When taken to an extreme this self-reliant behavior can lead to drug-like compulsions including gambling and obsessive spending. However, this feeling of self-sufficiency can be a useful tool in some cases; we just have to know when to use it. As Buchanan notes:
“The touchy-feely social side of us may disapprove of such behavior but it is useful to our survival. This ability to asses which set of norms in a particular situation is important in guiding our behavior.”
This article does highlight some of the good money behaviors (e.g., saving not spending), as well as discussing the limits of wealth. A study is mentioned that was performed by Ed Diener, a psychologist at the University of Illinois at Urbana-Champaign, and Martin Seligman at the University of Pennsylvania, Philadelphia. They found that the influence on our happiness by money is limited. In fact, once you have enough of your basic needs met more money does less to make you happy.
Herman Daly refers to this point as a futility limit: where more growth does not increase happiness. He states, “instead the correlation between absolute income and happiness extends only up to some threshold of ‘sufficiency’; beyond that point only relative position influences self-evaluated happiness.” (Daly, Scientific American)
Often times after breaching the futility limit excess money causes stress, anxiety, and creates gaps socially. As you become bloated with cash, your friends are harder to find. You spend less time enjoying life and more time managing this inanimate object: money.
If there is only so much money that can make you happy, perhaps we make a maximum income and allow some of the extra money to do more good to someone else? With the collapse of the financial sector brought on by this greedy behavior, Buchanan hopes “that we might acquire a more balanced relationship with money.”
So how should we adjust our behavior towards money? Well, if we disenfranchise our societies lust of more and create a lust for enough – we’d be making one giant step in the right direction. But we must be careful to not push people too far away; one study found that “just handling paper money could reduce distress associated with social exclusion… acting as a surrogate friend.”
Each of us already contain the skills necessary to differentiate between the money/business/self-interest behavior and the intrinstic/selfless/community-oriented behavior. As a society we should do our best to encourage more of the latter and less of the former. Buchanan finishes by saying, “What is clear is that money… stirs up big emotions and mental strife. It’s time economists’ models took this into account.“