How Money Influences Our Behaviour

"The love of money is the root of all kinds of evil." — The Bible, 1 Timothy 6:10

“Money is like sex, when you don’t have any, it seems more important” — said the poet Charles Bukowksi. Everything revolves around money. Research shows that less well-off individuals feel ashamed about their lack of resources, which makes them neglect their finances even more. As a result, they feel more shame, embracing a vicious cycle known as shame spiral.

It’s no wonder why talking about money is frowned upon socially — the so-called money taboo. This taboo is two-fold. On the higher end of the income spectrum, affluent individuals avoid discussing money with their peers because they take it for granted. It goes against money etiquette. On the other hand, the working-class avoids talking about money to hide their financial struggles. Everyone needs money, but no one is talking about it.

Money makes people more self-sufficient

Even if we don’t talk about money, it has a deep influence on our behaviour. In a study titled The Psychological Consequences of Money, researchers Kathleen D. Vohs, Nicole L. Mead, and Miranda R. Goode found that priming people with money makes them more self-reliant and less likely to help others. It even increases the physical distance when interacting with acquaintances.

The results of nine experiments suggest that money brings about a self-sufficient orientation in which people prefer to be free of dependency and dependents. Reminders of money, relative to non-money reminders, led to reduced requests for help and reduced helpfulness toward others. Relative to participants primed with neutral concepts, participants primed with money preferred to play alone, work alone, and put more physical distance between themselves and a new acquaintance

One possible explanation for this finding is that money helps you depend less on other people. But the subjects of these experiments didn’t own the money. They were subtly influenced by words related to money, or by Monopoly notes. This is known as priming, and it evinces how little control we have over our behaviour. People changed their demeanour inadvertently, a testament to the power of the mind to shape how we carry ourselves.

Empathy is at odds with money

Self-sufficiency can lead to being inconsiderate to other people, though. Ever heard of the stereotype of the cold, cunning business owner who treats his employees poorly? Well, it has a some truth to it, like most stereotypes. Research suggests that wealthy individuals are worse at reading facial expressions, a hallmark of empathy.

It makes sense. When you are on the lower-end of income, your survival depends on other people. If you can’t afford day-care for your children, you need to recruit your relatives or neighbours to do you a favour. Or, in Michael Kraus’ words:

Other people's thoughts, intentions, or wishes loom larger in my outcomes if I'm lower income, that's because, if something happens to me, I need to recruit other people to help me deal with situations.

Poverty makes you more stressed

Despite these undesirable effects, not having any money is worse. Much has been discussed about the role of money in happiness, but more significant is the effect of lack of money.

In a study with 522 participants, individuals kept a daily journal for 30 days, documenting their daily events and emotional reactions. Their annual incomes ranged from less than $10,000 to $150,000 or more. The results highlighted some key insights.

The frequency of distressing events was similar across all income levels. But high-earners experienced these events with less intensity. A higher income give individuals a sense of control over negative events, which reduced their stress levels. The upper-class feels more capable of managing everyday challenges. According to Jon Jachimowicz:

It’s not that rich people don’t have problems. But having money allows you to solve problems and resolve them more quickly.

Closing thoughts

Money has a wealth of effects on everyone, both good and bad. While it makes people more independent and worry-free, it can alienate us from the rest of society, hampering our relationships with our peers.

Most studies cited on this article use yearly income as the variable to control for how affluent an individual is. While this sheds some light on the behavioural influence of money, wealth and income are not the same thing. Wealth refers to the net worth, to the sum of all assets someone owns. I have the inkling that high net-worth would tell a different story than high-income.

I will find out more in future articles.

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