Culturally, we’ve always been aware that money influences how people behave. Just think about all the expressions about money we have in the English language: “the almighty dollar,” “as sound as a dollar,” “feeling/looking like a million bucks,” and so on.
Money is associated with power, wealth, health, good looks and even reliability. That’s why we’re used to the truism that money changes how people behave.
But now we also have research to back up what culturally we’ve suspected for a long time - and to tell us exactly how money influences behaviour.
As it turns out, there are both social benefits and costs associated to reminders of money.
Kathleen D. Vohs, Nicole L. Mead, and Miranda R. Goode designed a series of experiments to find out how money affects social behaviour that were published in their paper Merely Activating the Concept of Money Changes Personal and Interpersonal Behavior.
They found out that reminders of money make people less likely to help others, but also less social toward others, including family, friends and loved ones.
Money makes us less likely to help others
In the study, participants played Monopoly before they were moved on to a new task. Before that, however, they were given more play money that they were told was simply “for later.” Some participants were given $4000 worth of play money, others $200, and others no money.
As they were moved to a different part of the lab for the new task, someone walked in front of the participants and dropped a set of pencils in front of them. As it turns out, those who were strongly reminded of money by being given $4000 worth of play money were less helpful to the person who dropped the pencils than both those who were given only $200 and those who weren’t given any money at all.
In another experiment, subjects were asked to organize a word puzzle that was either related or not to money. One phrase made up “I cashed a check,” while the other said “I wrote the letter.”
They then ran into a confused peer that asked them for help in understanding instructions for a task.
The subjects who were reminded of money with the phrase “I cashed a check” were less likely to help the confused peer. In fact, those who were not reminded of money spent 120% more time in helping the person who did not understand the instructions than those who had been reminded of money.
Finally, the researchers wondered whether another kind of helping out would be preferred among those who had been reminded of money. So before the experiment, they gave the participants $2 worth in quarters. Then participants either sat next to images of cash, or next to neutral images.
At the end of a task, the subjects were given the opportunity to donate to the University Student Fund. As it turns out, once again those who were reminded of money were more likely to donate less money (37% of their payment) than the neutral subjects (who donated 67% of their payment).
Money makes us less social
In addition to the experiments described above, the researchers performed additional experiments to test for differences in social behaviour between participants who had been reminded of money and those who hadn't.
In one experiment, after being subtly exposed to reminders of money in the form of a computer screensaver at the desk they were seated, the participants were asked to pull a chair close to them for an upcoming interaction with another test subject.
Those who had seen a wallpaper with money on it put more distance between themselves and the other subject than those who didn’t. By placing more distance between the chairs, the participants were silently hinting at the desire for social intimacy.
So reminders of money makes us less social toward strangers. But how about family, friends and loved ones?
In another experiment, the subjects were seated at a desk placed under a poster of money, or a watercolour print to complete a questionnaire. After, they were asked to rate a list of leisure activities based on which ones they would find more enjoyable. The activities were worded so that they’d have to choose between activities to do alone (for example, reading a novel), and activities to do specifically with friends, family and loved ones (for example, go to a cafe with a friend).
Still, subjects who had been seated under the money poster preferred to go solo more than those who had been seated under the watercolour print.
What’s more, when offered the choice to work alone or with a partner on a task, participants who had been subtly reminded of money where three times more likely to opt for working alone than those that weren’t reminded of money (84% versus 28%).
How else does money affect our behaviour?
Previous research has also shown that when money is the central aspiration, it ends up affecting people negatively in personal relationships. It has even been shown that people who value both material objects and family relationships can suffer mental health repercussions because the two values conflict.
On the other hand, the reminder money causes people to work longer and harder at tasks. In one experiment by the same researchers cited above, subjects were given difficult tasks and were told that help was available from either the experimenter or a peer. Those who had been reminded of money worked 48% longer on the task before asking anyone for help.
Money also helps people live better - not only because it offers people comforts they would otherwise not have, but also because it allows people to have more control over life’s outcomes. Studies show that financial strain comes with a higher risk of depression, physical health problems, and decreased feelings of control over one’s life.
As Vohs, Mead and Goode put it in their paper, “wanting money seems to make life worse, but having money seems to make life better.”
Why do the effects of money on behaviour matter?
If simply seeing the money can have such an impact on how we relate to others, then imagine what effect the pursuit of money can have.
Now, as a business owner, you cannot not think about money. Although profit might not be the reason why you started a business to begin with, it is a requirement for you to continue running a business. You can’t run a business without taking into consideration money.
So what’s the alternative to making money without becoming anti-social and insufferable?
It might just have to do with redefining your notion of success. In our blog post 6 TED Talks for entrepreneurs, we mentioned Alain de Botton’s talk "A kinder, gentler philosophy of success." It's worth watching again, as it will definitely give you a thing or two to think about.
Also, in his book A New Earth, Eckhart Tolle writes:
“The conventional notion of success is concerned with the outcome of what you do. Some say that success is the result of a combination of hard work and luck, or determination and talent, or being in the right place at the right time. While any of these may be determinants of success, they are not its essence. What the world doesn’t tell you - because it doesn’t know - is that you cannot become successful. You can only be successful. Don’t let a mad world tell you that success is anything other than a successful present moment. And what is that? There is a sense of quality in what you do, even the most simple action.”
I believe there is something to learn from this when it comes to how money affects behaviour - the successful present moment.
And if anecdotal evidence holds any truth, there is value in enjoying the present moment. Richard Branson’s own philosophy (and the Virgin culture) is built around the motto “have fun, do good and success will come.”
So what are your thoughts, business owners? Can someone who doesn’t actively chase money be successful in that department? Or is it better to focus on enjoying the present moment and all other things will come?