Thursday 19 March 2020

Money, Money, Money.

To begin with, the word ‘money’ itself comes from the Roman mint at the temple of Juno Moneta. Moneta was Latin for Mnemosyne, the Greek goddess of memory and mother of the Muses. Thus, for the Romans, Money was a store of collective memory linked to the reproduction of the arts as a living tradition.

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 cliche no less that says Money is the root of all evils; it brings out the worst in all of us; envy, lie, cheat, corruption and greed for the love of Money. And of course, happiness, but not all in equal measure.  It also, of course, brings out the best in a few of us.  From philanthropists to hardcore criminals alike, Money is the driving force.  It can cause upheavals upon family members and if mishandled can break up age-old friendships.  Money is the fundamental product that forces us to work to hold an occupation motivates us towards a career. It provides a challenge towards a stimulating and fulfilling lives aside from creating the potential for 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 ceases to have existential value; it shifts from real to virtual Money.  It can even be laundered.

Psychologically, Money is the ruler of our behavioural economics; splitting bills at restaurants, paying Tax, shopping and winning the lottery no less.  Money surrounds our behavioural track which energises that all-important human moral pendulum.   Money is the problem as well as 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 neither 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 are motored 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.  And in many ways, the psychologist says such economic behaviour provides the positive relationship of Money to culture and civilisation.

On our own; Money is worthless, as a means of exchange, we need others for it to become of value. Making interdependence a necessity which can add to the social complexity that is part of our everyday interactions. Money, along with language, is the chief cultural infrastructures that allow 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 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 who had money on their minds became individualistic and were less inclined to help someone in need. More prone to work alone than interact with others. 

Like in almost all things, there are exceptions even in this age of Money.  There are responsible individual companies that are meeting the challenges presented by the current pandemic outbreak of  Covid-19, of this deadly disease. In contrast to the sluggish response by US  administration, Google and Facebook rushed to meet with the World Health Organization (WHO) officials to talk about reactions and provided early funding for the WHO’s Solidarity Response Fund. Amazon, one of the Seattle, Washington State, US, leading employers, quickly announced a halt to all international travel and, alongside Microsoft, donated $1million to a rapid response Seattle-based emergency funds. Before this virus, social distancing was the usual method of managing the gap between rich and poor.

Such social organisation, identity construction, normative standards, and the science of human behaviour as a whole are, in no small 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 the time for stores to make a  killing. 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 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 or Samsung or iPhones.  People often have no plans for how much to spend when going to Malls, but simply go on a buying journey of merely random shopping when more often look at brands before they look at prices. Strangely enough, studies also show, people are more careful when spending on a card than with cash.  Overall though, we all have ideas of what is a necessity, and what is an extravagance since they are both tendered by our personalities. So, we have to work overtime juggling our priorities: what puts our spirits up can also hurt our bank balance.

Another observation is that Money in different scenarios takes on a Chameleon effect. By that I mean when it comes to Money, with friends we have a communal relationship 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 forgot to bring a bottle of wine or a box of chocolate with me, I can hardly offer £20 to my host.  Sorry, there was no wine shops open on the way, but here £20 instead.  

Money and spending 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 almost certainly shunned by all.  However, we can gross exaggerate thinking we are better managers of Money than others because we hate the sense of loss.  But surely, here also there must be an average which suggests some of us are bad at money management or just spendthrifts. 

By in large, we try to maximise the pleasure we gain from Money, but such ideas can be complicated. We get pleasure in winning 50 pounds on the lottery in one week and winning 100 pounds the following week than winning 150 pounds all in one go.  That is not all; there is something called 'Loss Aversion', and that is where losses can mean much more to us than gain.  For instance, in gambling loss and gain of the same magnitude feels terrible overall.  If you come away from the gambling table not having won anything but not having lost anything either, you come away feeling bad. (I am not into gambling, so all this stuff remain untested).  Even when people are holding stock of shares seeing them going down in value although it hurts but not as much as if they were to sell them when going down.  So people, despite seeing the downturn on the shares they still hold on to them until hopefully, they go up again. The time of crisis comes is when paying of Tax.  For a tax payment to be deducted at source is much easier than say for self-employed.  It can be harrowing when its time to have to pay back out 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 particularly sensitive when looking around for something we want to buy.  We are particularly sensitive to any disadvantages we might spot comparing between expensive and good value. Retailers are tuned to this, so they put out things in a minimum of threes.  Three very similar mobile phones on a counter are displayed; A at £599, B at £499 and C at £399.  The comparison does the trick.  The B always wins because it is not as expensive as A and must be better than the cheapest C.   Almost always we fall for the compromise.  And, by the way, prices ending in 99 is a marketing ploy so much better value than 55 or 35.  This is especially evident at Sale time when people are searching for bargains buys.  This is another example where consumers are primed and where 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 takes a different ball game and Money and value play their separate parts.  At a dinner table, people discuss anything and everything, even sex, but no one talks about Money.  Looking at the left of the menu, we see a variety of dishes on offer before turning slightly to the right to 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. To order a glass of Gavi di Gavi that cost £24 is expensive but if it was going to be divided by six then 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 glass of chilled Gavi di Gavi.  That way, instead of costing me £84, I would end up paying only £16.  Problems start when every one of the six is thinking the same thing, and before I know it, Lobsters are trending.  

I think I stay home, I've never been good at Maths.  

No comments: