of irritation that the ingenuity of civilised man has created to mar his own felicity. There were no foreclosures of mortgages, no protested notes, no bills payable, no debts of honour in Typee; no unreasonable tailors and shoemakers, perversely bent on being paid; no duns of any description; no assault and battery attorneys, to foment discord, backing their clients up to a quarrel, and then knocking their heads together; no poor relations everlastingly occupying the spare bed-chamber, and diminishing the elbow room at the family table; no destitute widows with their children starving on the cold charities of the world; no beggars; no debtor’s prisons; no proud and hard hearted nabobs in Typee; or to sum it all up in one word – no Money!
Melville ended up in Typee, a real place on a South Sea Island, after jumping ship. But for all its charms so fondly recalled and re-imagined by Melville – the book is a blend of fact and fiction – he constantly longed to escape, back to civilisation, back to the society he knew, and back, by implication, to money.
This is how it is for us. We’ve cast ourselves out of money-free supposed Edens like Typee. And yearning to go back to them or trying to recreate them (as my old friend Dylan Evans tried to do recently when he set up a self-sufficient society in Scotland, where things didn’t quite go to plan)3 is to miss the point. The ills of our society are not caused by money itself, but the way we use it. So how can we all do a better job of using money for good rather than ill?
This book is called Mind Over Money. It’s a play on words, of course. But there’s more to it than that. My starting point is that too often we are prone to the opposite. We let money control our thinking, sometimes in counterproductive and even destructive ways. To stop that happening, to allow money to help us lead a good life and create a good society (which it can do), we need a better understanding of our psychological relationship with the stuff. There are lots of books about what to do with money or how to make it. This isn’t one of those books. Nor is this a book about the evils of money, consumerism and capitalism. They undoubtedly bring their problems, but currently this is the way we live. I’m not arguing that money necessarily sullies us. It is more complex than that, but in this book I will be disentangling the links between money and our minds.
Inevitably different disciplines approach the topic of money from different perspectives. The political economist Karl Polanyi defined money in the broader sense as a semantic system, in the way that language or weights and measures might be thought of, or in a narrower sense as the items used for ‘payment, standard, hoarding and exchange’.4 Freud compared money with faeces, saying children are initially interested in playing with their waste products before they move onto mud, then stones and eventually money. The nineteenth-century philosopher and psychologist William James considered money to be part of our extended self. ‘Our self,’ he says, ‘is all that a man’ – and he did just refer to men – ‘can call theirs which includes your body, your psychic powers, your clothes, house, wife and children, ancestors, friends, lands, horses, yacht and bank account.’5
The key psychological feature of the idea of money for me is trust. The historian Yuval Noah Harari calls money the ‘most universal and most efficient system of mutual trust ever devised’.6 Money provides us with an abstract way of freezing trust. To stay safe and to prosper we need to co-operate with each other. This is easy if you know someone well, but co-operation with strangers requires a means of quantifying and exchanging that trust. This is what money can provide. No wonder that no society that has begun to use money has reverted to doing without.7 But this is not a book about the history of money. It is a book about what money does to us today, how it changes our thinking, our feelings and our behaviour, and how when it’s scarce, it can have even more of a hold over us.
We constantly make assumptions: that big bonuses encourage chief executives to try harder, that we can bribe our children to do their homework, or that faced with a set of deals we know exactly how to choose the one that is the best value. But as I’ll show, the evidence demonstrates that we’re not always right. Along the way we’ll meet the people who find thinking about money eases their fear of death, the man who gambled away more than four million pounds, and the people of Tamil Nadu who freeze when faced with life-changing amounts of cash.
Once you’ve finished this book, I trust you’ll think there’s a better response to the problems of money than burning £50 notes or escaping to your own Typee. That instead of feeling you’re controlled by money you control it. In other words you will have achieved Mind Over Money.
1
FROM CRADLE TO GRAVE
Where our relationship with money starts, why money is both a drug and a tool, why we hate to see money destroyed and how it wards off our fear of death
If you are like me and enjoy the occasional bar of chocolate or the odd glass of wine, every time you indulge, your neurological reward system responds. A pathway is activated in your brain. You experience a spike of dopamine. Which gives you pleasure. Do it again, your brain seems to be saying. Do it again and you’ll get another reward.
It’s easy to see how parts of your brain might become active in these circumstances. A chemical and neurological chain reaction takes place. Yet the same thing has been shown to happen when people are given money.1 In one study winning money and having tasty apple juice squirted into the mouth produced similar responses in the brain.2 And the reward doesn’t even have to be a coin or banknote as long as it represents money. When neuroscientists put people in a brain scanner and gave them vouchers as prizes when they won in a quiz, the brain’s limbic system released dopamine.3
Dopamine is all about immediate reward rather than delayed gratification. And what’s remarkable here of course is that there’s no direct link between consumption and reward. Money and vouchers are promissory. They promise you can do something in the future. Okay, you could rush down to the corner shop to buy wine or chocolate (maybe even with the vouchers) but the gratification still isn’t instant.
Money is acting like a drug, not chemically but psychologically. Money hasn’t existed for long enough in evolutionary terms for humans to develop a specific neural system to deal with it. So it seems as though a system usually associated with immediate rewards has been co-opted to deal with money. Sometimes neuroscientific studies can feel as though they simply reflect in the brain what we already know to be true from our experiences. Here neuroscience can tell us something more curious.
For a promise of money – someone merely saying they’re going to give you money but not handing over notes or a voucher – doesn’t have the same effect. When this happens, different regions of the brain are activated. We don’t view the prospect of money in the same way as actual money (or even vouchers), despite the fact that the latter can’t be spent immediately either.
So it appears we desire money for its own sake. It’s a kind of drug. Of course money isn’t physically addictive as such, but as I’ll show in Chapter 2, we’re all drawn, to varying degrees, to the thing itself.
Yet, at the same time, we desire money because it helps us to accomplish what we want in life. In other words, money is a tool: a way of getting the things we want.
Psychological research on our attitudes to money has tended to concentrate either on money as a drug or as a tool. But the British psychologists Stephen Lea and Paul Webley surely echo common sense in suggesting it’s both. Sometimes money seems to control us – money over mind; sometimes we are able to use money in the way we want – mind over money.
But of course it’s more complex than that too. Money affects our attitudes, our feelings and our behaviour. And these three dimensions interlink, merge and decouple
