Psychological Consequences of Money

I just found a research paper titled, The Psychological Consequences of Money. The Paper is written by Vohs, Meade, & Goode and presents an interesting prespective on the way we behave when induced to think about money.

Introduction (from Reseach Paper):

People long have debated the effects of money on human behavior. Some scholars have pointed to its role as an incentive, insofar as people want money in order to trade it for prized goods or services (1, 2). Others, however, have deplored money for undermining interpersonal harmony (3). We propose that both outcomes emerge from the same underlying process: Money makes people feel self-sufficient and behave accordingly.

Conclusion (from Research Paper):

Nine experiments provided support for the hypothesis that money brings about a state of selfsufficiency. Relative to people not reminded of money, people reminded of money reliably performed independent but socially insensitive actions. The self-sufficient pattern helps explain why people view money as both the greatest good and evil. As countries and cultures developed, money may have allowed people to acquire goods and services that enabled the pursuit of cherished goals, which in turn diminished reliance on friends and family. In this way, money enhanced individualism but diminished communal motivations, an effect that is still apparent in peoples responses to money today.


My Opinion:

I find it interesting that people with backgrounds in finance and economics tend to make more self centered moves when playing social dilemma games. Although, these results seem to agree with the basics of Game Theory the problem arises in training people to focus on short term interests rather than for the long term. Is it possible that people who only think about money fail to cooperate and increase the pie for everyone else?

Social dilemmas are situations in which private interests are at odds with collective interests. Such situations arise because people frequently attach more weight to their short-term selfish interests than to the long-term interests of the group, organization, or society to which they belong ” (Wikipedia)

Click here to Read the Full Research Experiment

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28. August 2008 by Miguel Barbosa
Categories: Curated Readings, Finance & Investing | Leave a comment

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