You encounter it every day. You might count it or spend it or wish you had more of it. But can just thinking about money affect your behavior?
You've done a series of studies looking at how money affects people psychologically. Why do you think this is an important question?
Money is ubiquitous. The possibilities for psychological effects are innumerable because of the number of times we are exposed to the concept of money. So its frequency in the natural environment in and of itself makes it important to know about.
In one of your studies you tested how money affected people's willingness to help others and their desire to get help. How did you test that, and what were your results?
First we exposed the subjects to concepts of money in very subtle ways. For example, we would have some Monopoly money on the table on which they were working, or we would have them do a word task that involved unscrambling words that made up logical phrases, and sometimes those phrases related to money. Then we gave subjects the opportunity to help someone else. For example, in one experiment, after the subjects were either reminded of money or not, the experimenter would take them across the room, when they're intercepted by another person. That person is part of the experiment, but it looks like she is just generally working for the laboratory. She is holding in her arms a whole lot of different things — papers and pencils, and in particular she has a manila envelope full of those little tiny golf pencils. She drops the pencils right in front of the subject.
So the question is how many pencils the subject helps her pick up. And it turns out that it varies as a function of whether or not they earlier were reminded of money. Subjects who were reminded of money were less helpful than subjects not reminded of money.
You also found that people ask for help less for themselves.
Yes, we designed some experiments to see whether we could determine whether people were simply being selfish when they were reminded of money, or whether they were what we would call self-sufficient — wanting to do things on their own but also wanting other people to do their goals and tasks on their own. So we engineered a few situations where subjects were either reminded about money or not. For example, some of them read an essay about what life was like having a lot of money.
Then they were given either a challenging task or an actually impossible task to perform, and we let them know that they could ask for help. For example, the experimenter would say, "I'm right outside if you need anything — if you want any tips or advice or want to know how best to go about the puzzle." In another experiment, we sat a peer in the same room as the subject and we said, "She just completed the experiment that you're doing. I'll be back in a little while, but if you have any questions, you could ask her."
In both of those settings, we found that when people were reminded of money, they were less interested in receiving help from others, suggesting not that money makes people selfish, but that it makes people self-sufficient, that they are interested in performing tasks and goals on their own.
There was another series of experiments that were done in China, on how money affects the perception of pain, both physical pain and the pain of social rejection.
In that study, the subjects came into the lab and were randomly assigned to do either one of two what we told them were "finger dexterity tasks." One of the finger dexterity tasks had them count out 80 slips of paper and the other one had them count 80 bills of currency — each bill was equivalent to $14 in the United States. Ten minutes later, we brought them into a different room and had them put their hands in either very hot water or only warm water. Subjects who had earlier counted out money felt the pain of that hot water as being far less painful — in fact, it looked equivalent, statistically, to their ratings when they put their hands in the warm water.
You also tested how people would react to social rejection. How did you do that?
We used an online virtual game, where subjects log in and meet two other players and the three of them pass a virtual ball back and forth. So you can set up the game such that the other two players are playing naturally and inclusively with the subject — we call that the normal play condition — or you can rig it so that the subject is passed the ball a few times in the beginning but then is subsequently ignored by the other two players. The subject spends the rest of the game watching the two players pass the ball back and forth with no one passing the ball to him or her. This is a commonly used experimental game, and it's well known to have these social exclusion effects: people feel bad and lonely and they feel like no one likes them.
So we had the subjects go online and play the game in one of those two conditions — either normally or in the social rejection condition — and then subsequently we said, "How did you feel during that game?" And we saw that after subjects had been counting out money, they weren't that bothered by being socially rejected. The reminders of money seemed to ameliorate social pain as well as physical pain.
Do you connect that with the idea of self-sufficiency?
I do. A self-sufficient person is going to have the mindset that I have to live life on my own and I have to be able to achieve whatever goals I want on my own. Being able to withstand pain is a big part of that, since you only have yourself to rely on. We didn't say it like that in the paper, but that was what I think the connection is.
Much of economics is based around the idea that people respond to situations in terms of their economic self-interest. If when you introduce money into the equation, they start to respond in ways that have to do with these additional factors, does that mean they're behaving irrationally?
That's an interesting question. It's paradoxical: reminders of money might make people less interested in behaving rationally. I wouldn't say that we've tested that directly. You could, I suppose, make the case that people perceiving painful experiences as less painful is irrational. But it can be seen as very rational when you're thinking about goal achievement, because goal achievement means that you have to overcome some discomfort or inconveniences or displeasure. And so in order to achieve your goal, you have to be able to stand pain, broadly defined.
One thing that struck me about your work is that when you're testing people, they don't actually own the money. They just have to touch it or think about it to feel these effects. Given that there are lots of ways to get a hold of money without owning it fully — taking out a home-equity loan, for example — might people think that they are more self-sufficient than they are, and would that cause them to do things that maybe aren't the wisest choices?
That's where I would go with it as well. I think that that's exactly right, because you don't actually need to own that money or be endowed with that money, and yet it has these effects on you. It speaks to the power that these effects could have on people in their daily decisions. That may be where that linkage to irrational decision-making comes in.
Interview conducted and edited by Ben Mattison.