Money and your Mind

A big hat tip to fellow EconoMax author Mark Johnston for finding this superb article by Mark Buchanan in the current edition of the New Scientist. ‘Money - supposedly a dispassionate tool of exchange - stirs up big emotions and mental strife. It’s time economists’ models took this into account.

If the age of excess and rampant consumerism is drawing to a close then we might be entering a time period when people are naturally more cautious about their spending and the value and happiness that they get from their purchases. This month I have made two ‘big ticket purchases’ - a new concept 2 rowing machine and an Apple MacBook Pro. Both are products that I have considered buying for some time and I am not quite sure what emotions prompted me to buy both on the same day! Despite having planned to buy them for months, at the moment of purchase it still felt like a dramatic impulse buy!

Here are comments from Mark on the Buchanan article

Basically it looks at research by psychologists suggesting that the human mind has an association with money at the deepest, most primal level, which is why we can’t think about it rationally. Researcher by Kathleen Voh of the University of Minnesota is enlightening. She believes the way thoughts about money can change human behaviour has implications for tax and welfare policies. She alludes to the fact that the great focus people have for money the less people will support actions that take care of other people. Hungrier people tend to give less to charity.

There is also mention of Dan Ariely - Predictably Irrational fame. He suggests that modern society presents us with two sets of behavioural rules - social norms and market norms. Social norms which are “warm and fuzzy” and encourage co-operation and long-term relationships. Market norms revolve around money and competition, and people being more self-interest focused. Arierly says the trick is to get the balance right between the two norms. The You Tube video shown above gives Dan a chance to talk about the difference between the two!

Back to me!

Researchers have found that “experiential purchases”, such as trips to the theatre, a comedy show, a live music festival or travel to a new destination can bring people more happiness than material purchases which cost more but which last longer - often for years. With that in mind, I am online now booking tickets for the Damned United and for the new Kenneth Williams tribute show in the West End!

This ties in with this article in the Independent - Why spending money is like a drug!