Category: Money

Money, Social

Why Are We So Quick To Scrutinise How Low-Income Families Spend Their Money?

By Matthew Warren

As shops re-opened in the UK this week, social media users were quick to pour scorn on the hundreds of eager shoppers who queued up to get in. Yes, it’s unclear whether it was a good decision to re-open businesses — but there was a certain snobbishness to many of these posts. Most of the ire was directed at those lining up outside Primark, which sells clothes at prices more affordable to those on low incomes than most other high street stores. Meanwhile, queues also formed outside high-end shops like Selfridges and Harrods — but these shoppers somehow escaped the wrath of most social media commentators.

This situation seems to reflect a broader inequality in how we judge other people’s purchase decisions: we’re much more willing to scrutinise — or even dictate — how people on lower incomes spend their money compared to those on higher incomes. There are countless examples of this — think of the low-income mother who is criticised for treating her children to a rare meal out, or the refugee who is shamed for owning a smartphone.

Now a new study in PNAS provides some clues as to the origins of this bias. Across a series of 11 studies involving more than 4,000 participants, Serena Hagerty and Kate Barasz from Harvard Business School find that we tend to believe lower-income people need less than those on higher incomes, and that this in turn restricts our perceptions about what is acceptable for this group to buy.

Continue reading “Why Are We So Quick To Scrutinise How Low-Income Families Spend Their Money?” →

Money, Social, The self

Aspiring To Be Rich May Damage Your Relationships

By Emily Reynolds

Daydreaming about an ideal life, it can be easy to slip into fantasies about wealth — there’s a reason, after all, that “winning the lottery” is the ultimate dream for so many people. The reality of being rich, however, often doesn’t match that dream, with some research suggesting that people who prioritise time are much happier than those who prioritise money.

A new study in the Personality and Social Psychology Bulletin drives home the message that money really isn’t everything. The team finds that “financially contingent self-worth” — self-esteem based on financial success — can leave people feeling lonely and disconnected.

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Feature, Mental health, Money

The Psychological Impacts Of Poverty, Digested

street of long abandoned and derelict collapsing houses and commercial buildings

By Emma Young

For a “rich” country, by global standards, the UK has an awful lot of people who are not. Fourteen million people — one fifth of the population — live in poverty. Of these, four million are more than 50% below the poverty line, and 1.5 million are classed as destitute, unable to afford even basic life essentials.

For children who grow up in poverty, there are impacts that go way beyond the fact of material shortages. “Children experience poverty as an environment that is damaging to their mental, physical, emotional and spiritual development,” notes UNICEF. Clearly, there’s a critical role for psychological research in this area, first in revealing just what poverty does to children and adults — but also in developing strategies to ameliorate those impacts.

Continue reading “The Psychological Impacts Of Poverty, Digested” →

environmental, Money, Social

Giving People Simple “Moral Nudges” Encourages Them To Donate Much More To Charity

Woman collecting money for charity and holds jar with coins.

By Emma Young

How do you persuade people to do the “right thing” when there’s a personal price to pay? What convinces someone to spend time and effort on a task like recycling batteries, for example — or literally spend cash by giving to people in desperate need?

It’s an important question. “Finding mechanisms to promote pro-social behaviour is fundamental for the wellbeing of our societies and is more urgent than ever in a time of key global challenges such as resource conservation, climate change and social inequalities,” write the authors of a new paper, published in Scientific Reports. Across a series of five online studies involving a total of more than 3,000 participants, Valerio Capraro at Middlesex University of London and colleagues provide evidence for a cheap, effective method: simply “nudging” people to reflect on what is the morally right thing to do. This simple intervention had some impressive effects, even increasing actual charitable donations by close to half.

Continue reading “Giving People Simple “Moral Nudges” Encourages Them To Donate Much More To Charity” →

Autism, Faces, Money

In the “Trust Game”, men with more autistic traits were less influenced by their partner’s facial appearance 

By Emma Young

We make all kinds of snap decisions about a person based on their facial appearance. How trustworthy we think they are is one of the most important, as it can have many social and financial consequences, from influencing our decisions about whether to lend someone money to which Airbnb property to book.

However, as the authors of a new study, published in the British Journal of Psychology, note, “Although facial impressions of trustworthiness are formed automatically, they are not especially accurate predictors of trustworthy behaviour.” People who are less susceptible to forming these impressions could, then, be at an advantage. And, as Jasmine Hooper at the University of Western of Australia and colleagues now report, men with high levels of autistic traits fall into this category. 

Continue reading “In the “Trust Game”, men with more autistic traits were less influenced by their partner’s facial appearance “ →

Emotion, guest blogger, Money

The “experiential advantage” is not universal – the less well-off get equal or more happiness from buying things

By guest blogger Juliet Hodges

Being rich(er) may not guarantee happiness, as shown by ample evidence from the social sciences, but there are ways of spending money that will make you happier than others. Recent research has uncovered the “experiential advantage”: greater happiness from spending money on experiences (holidays, meals, theatre tickets) instead of material things (gadgets, clothes, jewellery). This could be for a number of reasons, such as experiences being more closely aligned with our values and being less likely to produce rumination and regret. There are exceptions to this rule, of course. Studies have found that personality traits can influence whether experiences or things make a person happiest; for example, introverts are made much happier by spending vouchers in a bookshop than a bar.

Another likely exception, that hasn’t previously been studied, is how social class, and specifically access to resources, affects this experiential advantage. Indeed, most research in this area has been performed with college students, who are typically more affluent than the general population, and there are reasons to believe that those who are less well-off might prefer material goods. For them, buying things as opposed to experiences could be more practical: they last longer, can be used multiple times and potentially resold in the future. To put this reasoning to the test, a recent paper in Psychological Science investigated whether the experiential advantage is diminished or absent for people who can afford very little compared with those who can afford a lot.

Continue reading “The “experiential advantage” is not universal – the less well-off get equal or more happiness from buying things” →

Money, Social

Does receiving favours and freebies make you uncomfortable? Maybe you have “reciprocity anxiety”

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By Christian Jarrett

Years ago, my wife and I were window shopping in the Brighton lanes when we decided to enter a posh perfume store to take a closer sniff. A smiling sales woman approached and, to our delight, offered us each a complimentary glass of sparking wine and some nibbles. Soon though, our glee turned to discomfort: could we really just walk out having enjoyed the freebies? Conspiring like thieves, we decided that although we wouldn’t buy anything (not that we could have afforded to), we had better stay and look interested a while longer; we even dropped a false hint to the woman at our likely return.

According to a team of researchers led by Xiling Xiong at Zhejiang University in China, my wife and I were suffering from an acute bout of reciprocation anxiety. In their new paper in the Journal of Economic Psychology, Xiong and his colleagues propose that this is not just a state, but a trait – a specific kind of social anxiety – that some of us are more prone to than others, and what’s more, they’ve created a new questionnaire to measure it.

Continue reading “Does receiving favours and freebies make you uncomfortable? Maybe you have “reciprocity anxiety”” →

Money, Occupational, Personality

Contrary to stereotypes, study of hedge fund managers finds psychopaths make poor investors

GettyImages-457803795.jpgBy Emma Young

If you’re a psychopath who’s good with numbers, you could make the perfect hedge fund manager. Your lack of empathy will allow you to capitalise blithely on the financial losses of others, while your ability to stomach high-risk, but potentially high-return, options will send your fund value soaring…. Well, that’s the story that’s been painted by popular media, folk wisdom and Wall Street insiders alike. The problem, according to a new paper in Personality and Social Psychology Bulletin, is that hedge fund managers with psychopathic tendencies actually make less money for their clients.

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Cognition, Decision making, Money, Political

We have an ingrained anti-profit bias that blinds us to the social benefits of free markets

GettyImages-1538307.jpgBy Christian Jarrett

“Harnessing the ‘base’ motive of material self-interest to promote the common good is perhaps the most important social invention mankind has yet achieved,” said the American economist Charles Schultz. And you can see why. While acknowledging its problems, many credit free market capitalism for the dramatic reduction over recent decades in the proportion of people in the world living in extreme poverty, not to mention rising health standards and technological advances. Conversely, according to some commentators, one only has to look to modern-day Venezuela to see the dangers of extreme anti-profit socialism.

And yet, according to a new paper in Journal of Personality and Social Psychology, most of us have an instinctual anti-profit bias. We view for-profit companies and industries – upon which capitalism is based – with inherent distrust, assuming that the more profitable they are, the more harm they do to society. In fact, research shows the opposite is true: companies that make greater profits actually tend to contribute more value to society, for example in terms of their environmental responsibility and corporate philanthropy.

The authors of the new paper, led by Amit Bhattacharjee at Erasmus University, believe this anti-profit bias leads many voters and politicians to endorse anti-profit policies that are likely to lead to the very opposite outcomes for society that they want to achieve. “Erroneous anti-profit beliefs may lead to systematically worse economic policies for society, even as they help people satisfy their social and expressive needs on an individual level” they said.

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Money, Personality

Find a sense of purpose and you’re more likely to get rich

Young woman with long hair staring into the cameraBy Christian Jarrett

As the dawn breaks on a new year, now might be a good time to think about what you want to get out of life over the longer-term. We already know from past research that having a greater “sense of purpose” is good for us psychologically: it’s linked with experiencing more positive emotions and generally feeling better about life. Now a study in the Journal of Research in Personality suggests there are material benefits too. Researchers followed the same sample of people over a period of about nine years, and they found that during that time, those individuals who reported a greater sense of purpose at the study start had accumulated greater wealth.  Continue reading “Find a sense of purpose and you’re more likely to get rich” →