Why Money Messes With Your Mind

[Chett]

I am preparing to leave for vacation in Colorado for the next week. So I will be scarce around here. I'll try to check in when I can. I am also still training for a marathon November 1st, so I'm hoping I'll be able to maintain some type of training schedule while we are in the mountains.

This week I found an article titled Why Money Messes With Your Mind. It is a very interesting article that discusses a series of scientific studies of humans evolving relationship with money. Most of the studies discussed in the article attempt to explain why people interact with money differently, why some people have a healthy relationship with money and how to use it and others can't seem to figure it out.

Mark Buchanan, the author, begins by discussing money in its' most simple form and what it really is. In the article he says, "Money is supposed to be a tool of exchange that makes economic life more efficient. Just as an axe allows us to chop down trees, money allows us to have markets that, traditional economists tell us, dispassionately set the price of anything from a loaf of bread to a painting by Picasso. Yet money stirs up more passion, stress and envy than any axe or hammer ever could. We just can't seem to deal with it rationally... but why?"

So according to Buchanan, possessing money should invoke no more emotions than having multiple tools to exchange for goods. He argues that most tools do not stir emotions like money seems to. We do not become ultra greedy seeking more and more tools, nor do we sink in to depression and anxiety when we lose some tools. So what causes us to think of the "money tool" in such a different way.

Here is what Buchanan writes. "Our relationship with money has many facets. Some people seem addicted to accumulating it, while others can't help maxing out their credit cards and find it impossible to save for a rainy day. As we come to understand more about money's effect on us, it is emerging that some people's brains can react to it as they would to a drug, while to others it is like a friend. Some studies even suggest that the desire for money gets cross-wired with our appetite for food."

What is even more interesting is the mental/physical stimulus that money creates. Researchers found that just handling paper money could reduce the distress associated with social exclusion, and also diminish the physical pain caused by touching very hot water. Money, like nicotine or cocaine, can activate the brain's pleasure centers, the neurological pathways that make biologically beneficial activities such as sex feel so rewarding Money seems to have symbolic power as a social resource," says Vohs. "It enables people to manipulate the social system to give them what they want, regardless of whether they are liked." The article said it best in writing, "put bluntly, it looks as if money is acting as a surrogate friend."


Money and Happiness

Regarding the issue of money and happiness studies found the psychological effects of wealth are minimal. They report that money's impact on happiness suffers from diminishing returns: once you have enough for food and shelter, more cash doesn't bring much extra joy. Get Rich Slowly had a great discussion on money and happiness yesterday.

Shopping as an experience

One portion of the article discusses some of the different ways we spend money. One method being on concrete items such as groceries, clothes, and other durable goods. The other method of spending money would be on experiences. This is where we have over time began to cross our emotional relationship with money. Historically money had primarily been used to purchase goods, not experiences. Over the past 100 years we have used money more and more to purchase experiences. Even more dangerous is modern day marketing. The article noted "Experiential purchases", such as trips to the theater or travel, as bringing them more happiness than material purchases such as clothes. A concrete purchase may have cost more and lasted longer but a good experience brought more pleasure." Here is the dangerous part that I saw after working 12 years with the world's largest retailer, companies have found ways to allow shopping for goods to become an experience. The colors, lighting, product placement, and images portrayed all contribute to a heightened shopping experience encouraging you to spend more.

The full article to Why Money Messes With Your Mind is only about two pages in length. The studies it reviews are very insightful and help explain why people relate to money so differently and even offers some suggestions on how you can combat your own weaknesses. How does money "Mess With Your Mind?" Have you found ways to overcome your troubles, if so what did you change?