04 Jun Money Priming – How being Exposed to Money makes us more Selfish
I was researching for a new and exciting project over the weekend and came across the very interesting concept of money priming.
Psychologist Kathleen Vohs from the University of Minnesota conducted a series of research investigating how a simple reminder of the concept of money affects people as they go about their every day life.
She got unsuspecting participants to come into her lab and separated them into different groups. In one group, participants were subtly ‘primed’ and exposed to the concept of money. They were made to think about life with abundance financial resources, made to rearrange phases that were related to money (eg. I cashed a cheque), or made to sit near images of cash.
Participants in the other group received no money primes whatsoever. They rearranged phases that were neutral (eg. I wrote a letter), or were exposed to money neutral images such as flowers.
With that setup in place, the researchers ran a series of experiments to investigate how each group would react under different social situations.
They first got confederates to drop an entire box of 27 pencils on the floor, measuring the number of pencils each unsuspecting participant helped to pick. Participants who were exposed to money picked up very much less pencils than those who were not.
Participants in both groups were also given a chance to help a fellow participant (who is another confederate) understand a set of complicated instructions. Those who were not reminded of money spent 120% more time helping someone in need.
Over and over again the same scenario repeated itself. People exposed to money donated a lesser amount than those who are not. They also choose to sit further away from other participants when given a choice, and preferred isolation and working alone over working in a group with other participants.
The researchers’ original hypothesis was that in the modern world, money often follows performance efforts. People who put up a good performance get rewarded with money. Reminding people of money would encourage individual performance efforts and to quote from the study –
Although promoting personal performance may be beneficial for getting ahead, it may not be the best for getting along with others.
Results from Kathleen Vohs’ series of studies confirmed that being subtly reminded of money made people less sociable, less helpful and far more selfish. The effect is subconscious. Most people, myself included, will never have realised that it is happening to them.
The Subject of Money
Here on Bigfatpurse.com, we write about the subject of money every week. We write for many reasons.
We write because we are fascinated with trading and investing. We are constantly learning new things about the markets and it is interesting to share them with the community.
We write also because we believe that retail investors are at the receiving end. Many are misled to purchase products they do not need or understand. Even more are misled to believe they can invest and trade their way to financial freedom with scant little effort. We want to tell people that is not and will never be the case.
We write because we want to make the world a better place, in our own little way.
But suddenly we are being told that, by reminding people about money, we could be making them more concerned about their own survival and prosperity rather than the world they live in and the people around them.
In other words, we are making the world a slightly worser off place instead of the other way round. That is a sobering thought indeed. (Maybe we should close rebrand ourselves to become BigFatTummy and start writing about yummy food instead).
Trading and Investing is all about making decisions. And decision making operates on many different levels.
Many decisions are made consciously. For example, we choose to buy Stock A over Stock B because it has better prospects. Or that we choose to close out our trade when the price has hit resistance and technical indicators says that we should.
An even greater number of decisions are made subconsciously. These decisions we make are largely unknown to ourselves even. Choosing to engage in less helpful behaviour, choosing to behave more selfishly after being exposed to money are but some of them. We all hold in our minds many many more of such unconscious biases and quirks.
(For example, we might choose to purchase a Stock A over B simply because we are more familiar with the name or that it is easier to pronounce. It is freaky but true!)
These biases and quirks can affect the way we make financial decisions. To achieve success in the financial markets we must first understand the decision making process and more importantly, ourselves.
Are you conscious of the money decisions you are making today?