Money is essential for our survival, freedom, desire, power, status, work, possession, among many other things. Addiction for money could be for acquiring status or to compensate for social shortcomings. Money is important for everyone but not everyone has the capability to make money. To make money, one must have some amount of greed. Thinking about money changes our thinking. Money worries, it is said, are about psychology as much as economics. We suffer from ‘money illusion’. We are seized with ‘loss aversion’. Compared with gains, we react more strongly to losses. It is said that money makes one less rational and more self-centred. We know that people value the money they have earned more than the money they are given. It is true that we can’t ignore money as we are not Paramahansa Ramkrishna. Only for him was ‘taaka maati’. We like to spend money but the important thing to remember is to separate the pleasures of purchase from the pains of payment. Money can buy happiness provided that happiness is more than the happiness of your neighbours and well-wishers. This is not the problem of money but happiness. The relativity bias is not easy to get by. The problem is that we don’t realise and accept that we are making comparisons. We make mistakes while making comparisons. Money matters, like many other matters, are related to rewards. The magnitude of expected reward governs our motivations and efforts for making money. We often don’t know what prompts us to do a certain thing. Neuroscience researchers are trying to understand the connection between expected reward and behavioural activation.
Money changes colour depending upon how we get it. If the money is hard earned, we like to invest it wisely. It is more difficult to spend hard earned money on unnecessary things. If the money is ‘loosely earned’, like in a lottery, our flawed thinking comes to the fore, and it takes us to the places where otherwise we would not go. In the process, we lose the loosely earned money the way we earned it. The ‘house-money effect’, as Richard Thaler calls it, often makes us poorer because of the frivolous ways we spend it. So it is wise not to accept ‘free’ money. The chances are always there to spend such money more than what you have earned. There is always a hidden cost to things like free lunches or free drinks. Often it is difficult to refuse such tempting offers. Often we don’t recognise its inherent pitfalls. We accept them in good faith. We often tend to ignore the compelling pull of reciprocity. Rolf Dobelli calls it ‘gentle blackmail’.
Money is a great motivator, but not always. Often it does the opposite and distorts relationships. I remember an incident that happened many years ago. My mother missed her train due to some nasty traffic jam. I was accompanying her to the station. The next train was after two hours. I went to the reservation counter and told the clerk about it. He issued another ticket along with reservation for my mother. My mother was relieved. I was happy, and to express my happiness I offered some money to the reservation clerk as I thought he did a great favour to us. He did not think so and refused to take the money. He was visibly upset and said, “I can’t cheat a mother.” I still feel bad when I remember the offended expression on his face. I feel bad for offering him money. Incentives work but they need not always be monetary. A major incentive for the reservation clerk, perhaps, was to be simply a son.
(The writer is a biotechnologist and ED, Birla Institute of Scientific Research, Jaipur)
Purnendu Ghosh