Ever wondered where Money comes from, its history and why it is an intricate part of our lives? Without it, some would say we are worthless. A cliché, no less, that says Money is the root of all evil; it brings out the worst in all of us: envy, lies, cheating, corruption and greed for the love of Money. And of course, happiness, but not all in equal measure. It also brings out the best in a few of us. From philanthropists to hardcore criminals alike, Money is the driving force. It can cause upheavals among family members and, if mishandled, can break up age-old friendships. Money is the fundamental product that drives us to work; it motivates us to pursue a career. It also challenges us to build a stimulating, fulfilling life, beyond simply earning a living. Plastic Money, Chocolat money, Monopoly Money and Fiat Money (IOU's), all have their uses. Some digital money that travels at the speed of light becomes just a number and loses its existential value; it shifts from real to virtual Money. It can even be laundered.
Psychologically, money rules our behavioural economics: splitting bills at restaurants, paying Tax, shopping, and winning the lottery, no less. Money shapes our behavioural track, energising that all-important human moral pendulum. Money is both the problem and the solution. From an individual perspective, it is the indicator that personalises us; our honesty and dishonesty, wavering between altruistic or egoistic. Steering others to distinguish our moralities and judge our ethical stewardship. Money frames many of our cognitive triggers in our behaviour towards one another. I am no economist, but I guess in a hardcore economic term, every one of us is a Time Dollar, Time Pound, Time Euro - to others, we become time value.
Money on its own has no intrinsic value; it can't give pain, pleasure or desire unless somebody has something to sell. Food, housing, jewellery, yachts, even the humble tinned Tuna fish are commodities that can bring value to Money. And of course, the more we have of these things, the more status we acquire. The chain of production and consumption is driven by buying and selling. Making Money with Money, buying and selling with Money, and as Economists would say, the two faces of Money, Capitalism and markets, work in conjunction. In many ways, the psychologist says this economic behaviour creates a positive relationship between money and culture and civilisation.
On our own; Money is worthless, as a means of exchange, we need others for it to become of value. This makes interdependence a necessity, which adds to the social complexity of our everyday interactions. Money, along with language, is the chief cultural infrastructure that allows us to communicate.
Adam Smith, the father of Capitalism, talking of behaviour, said: "However selfish man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though they derive nothing from it except the pleasure of seeing it." A peculiar phenomenon, I might add. Either he was naive to think that people get pleasure from seeing others happy because they have lots of money, or envy hadn't occurred to him. Although he rightly goes on to say in his 'Theory of Moral Sentiments' that human beings can be altruistic and benevolent; hence today we tend to admire the philanthropists amongst us. However, recent studies show that being exposed to Money led to significant changes in people's actions. Those with money on their minds became more individualistic and less inclined to help someone in need. They became more prone to working alone than interacting with others.
As with almost everything, there are exceptions, even in this age of Money. Some responsible companies are meeting the challenges presented by the current COVID-19 pandemic. In contrast to the sluggish response by the US administration, Google and Facebook rushed to meet with World Health Organisation (WHO) officials to discuss their response and provided early funding for the WHO’s Solidarity Response Fund. Amazon, one of the leading employers in Seattle, Washington, US, quickly announced a halt to all international travel and, alongside Microsoft, donated $ 1 million to a rapid-response Seattle-based emergency fund. Before this virus, social distancing was the usual way to manage the gap between rich and poor.
Such social organisation, identity construction, normative standards, and the science of human behaviour as a whole are, to a great extent, bounded by money supply & demand and price & value. For instance, Christmas, Easter, Valentine’s Day, Halloween, school holidays, Black Friday, and royal weddings are times for stores to make a killing. These are promotional opportunities for stores to capitalise on consumer habits. Princess Charlotte generated more than £80 million in retail sales, with £27 million of that total being driven by souvenirs. The other side of the coin is that consumer spending at this time becomes very difficult to control; holding back is not an option, and at times buying reaches fever pitch. Scenes of people clamouring over each other to pick up a Sony, Samsung, or iPhone. People often have no plan for how much to spend when going to Malls, and instead go on a random shopping spree, often looking at brands before prices. Strangely enough, studies also show that people are more careful when spending on a card than with cash. Overall, we all have ideas about what is a necessity and what is an extravagance, since both are shaped by our personalities. So we have to work overtime juggling our priorities: what lifts our spirits can also hurt our bank balance.
Another observation is that money, in different scenarios, takes on a Chameleon effect. By that I mean that, when it comes to Money, we have a communal relationship with friends, whereas with strangers we have an exchange relationship. If a stranger volunteers to do something for me, I show gratitude by offering him Money. Whereas if I am invited to dinner and forget to bring a bottle of wine or a box of chocolates, I can hardly offer £20 to my host. Sorry, there was no wine shops open on the way, but here £20 instead.
Money and how we spend it can say a lot about us; we give away much of our personality by the way we behave with it. Our personal tastes often dictate how we spend our money, but no matter how rich people are, frivolity is almost certainly shunned by all. However, we can grossly exaggerate, thinking we are better managers of Money than others because we hate the sense of loss. But surely there must also be an average, which suggests some of us are bad at money management or just spendthrifts.
By and large, we try to maximise the pleasure we gain from Money, but such ideas can be complicated. We get pleasure from winning 50 pounds on the lottery in one week and 100 pounds the following week, rather than winning 150 pounds all at once. That is not all; there is something called 'Loss Aversion', where losses can mean much more to us than gains. For instance, in gambling, a loss and a gain of the same magnitude feel terrible overall. If you come away from the gambling table not having won anything but not having lost anything either, you still feel bad. (I am not into gambling, so all this stuff remains untested). Even when people hold shares, seeing them go down in value hurts, but not as much as selling them while they are going down. So people, despite seeing the downturn in the shares they still hold, hold on to them until, hopefully, they go up again. The time of crisis comes when you have to pay tax. A tax payment deducted at source is much easier than, say, for the self-employed. It can be harrowing when you have to pay back a lump sum after you earned the Money in the first place.
Our behavioural economics take a sharper turn when shopping at stores. Our spending antennae can be especially sensitive when we're looking for something we want to buy. We are particularly sensitive to any disadvantages we might spot when comparing expensive and good value. Retailers are tuned to this, so they put things out in groups of three. Three very similar mobile phones are displayed on a counter: A at £599, B at £499, and C at £399. The comparison does the trick. B always wins because it's cheaper than A and must be better than the cheapest, C. Almost always we fall for the compromise. And, by the way, prices ending in 99 are a marketing ploy, not much better value than 55 or 35. This is especially evident at Sale time when people are searching for bargain buys. This is another example of how consumers are primed and how fast thinking is essential. But when making decisions, our instinctive behavioural economics wavers, so we often make mistakes. For whatever reason, what we bought was not such a bargain after all.
When it comes to eating out with friends, spending is a different ballgame, and Money and value play separate roles. At a dinner table, people discuss anything and everything, even sex, but no one talks about Money. Looking at the left side of the menu, we see a variety of dishes on offer, then turn slightly to the right to the cost of the items. Then comes to mind the touchy and delicate question of splitting the bill. Some of us (now here ignore the personal tense), don't eat or drink as much as others, so at times choosing from the menu can be a little tricky and, a cool head for mathematics is called for because as of here it gets all very calculating. Ordering a glass of Gavi di Gavi for £24 is expensive, but if it's divided by six, it's not so expensive. Same when choosing Lobster with Pasta at £60 instead of a plate of Pasta at £12 from the menu. Since the cost of what I order gets divided over the six of us, might as well order a lobster and Pasta and a glass of chilled Gavi di Gavi. That way, instead of costing me £84, I would end up paying only £16. Problems start when all six of us are thinking the same thing, and before I know it, Lobsters are trending.
I think I stay home; I've never been good at Maths.
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