Mind Over Money. Claudia Hammond
or gave away. It was emotional warmth that mattered, with those children living in a warm family more likely to save up their cash, sometimes for their own college fees.22
Of course, as well as knowing how much you have, successful money management also requires you to know what it will buy you. Minna Ruckenstein’s research suggests nursery-school-aged children know the former, but not the latter. The kids she studied all knew the total amount of money they had and were very keen to tell her, even though she didn’t ask them. What they couldn’t work out was how their cash converted into spending power. When one child said they had $200, the others all agreed that this was a lot, but none of them knew what that sum might buy.
It is as children that we learn about the maths of money. There is evidence that a good conceptual grasp of maths leads to better financial management in adult life, and in the American study of families referred to above, children who were not good at maths were more likely to exhibit financial anxiety. By contrast, those who were best at calculation were more likely to donate to charity and to save for the future.
It all means that just as parents should talk about money more with their children, so they should also encourage them to master maths. It will help their children grow into adults who know how to handle money more wisely and to have a healthier relationship with it. What it won’t do is allow them to enjoy total control over money. Mind over money is always a matter of degree.
We’ve seen where our relationship with money starts. But where does it end? Money is more tied up with our thoughts about death than you might ever imagine.
THE ANTI-DEATH DRUG
Here’s a statement: ‘I am very much afraid to die.’ Would you say that was true for you, or false? Here’s another: ‘The thought of death seldom enters my mind.’ Again: true or false?
If you were to take part in one of the experiments run by psychologist Tomasz Zaleskiewicz in the Polish capital Warsaw, a further ten questions measuring your anxiety about death would follow. But Zaleskiewicz is not really interested in your attitudes to death. He’s interested in your attachment to money.
Before he starts quizzing people on their mortality, he sets them an exercise. Half the participants are given a stack of banknotes to count, while the other half get a pile of pieces of paper of the same dimensions as the banknotes, with numbers printed on them. The task is the same for both groups: to add up all the numbers. The result: people who count the money are less afraid of death. 23 Their fear is reduced by almost a fifth.
This isn’t what Victorian morality tales teach us, is it? In those stories, the old miser counting his piles of dusty coins is usually portrayed as wracked with mortal terror. It is the hero living in poverty who cares nothing for worldly goods who has no fear of the end.
Hanging in the National Gallery in Washington, DC, there’s a gruesome painting by Hieronymus Bosch in which a miser on his death bed reaches for a bag of gold proffered by a demon, even as death – in the form of a shrouded skeleton – appears at his door. Meanwhile an angel puts a hand on the miser’s shoulder, hoping to lead him down the route to salvation instead. To the medieval mind, this painting was not suggesting that counting money was a way to ward off fear of death. Rather it was the road to damnation.
Fewer of us fear hell these days. A more common fear is of nothingness, a great void. Perhaps that’s why we find it comforting to reach for something concrete; something measurable; something we like to think is reliable; something that will live on – money.
That at least is the idea.
Zaleskiewicz argues that money in general is an ‘existential drug’, by which he means a drug that relieves our existential angst. So that is why we seek to accumulate money, he says: it serves as a buffer against our greatest fear.
This may all sound unlikely. We’ve been told, most famously by Benjamin Franklin, that only two things are certain: death and taxes. Yet we know that however much we pay of the second we are not going to escape the first. ‘You can’t take it with you’ applies as much to money as our other material possessions. But of course you can pass it on, provided it’s not taken from you in tax. Perhaps that’s why some people object so passionately to inheritance tax. You have gone, but your children live on, and if your money doesn’t go in tax they will have it to comfort them – which is some comfort for you.
Zaleskiewicz and his team have also conducted their study the other way round: putting death before money, as it were. This time half the participants were asked to fill in the questionnaire about death anxiety at the start of the experiment. Then they were shown a series of coins and banknotes and asked to estimate their physical size. This group overestimated the size of the coins by more than the control group, who had filled in a questionnaire about the fear of going to the dentist. There were other differences too.
How much money does a person need to qualify as rich? The death group named a higher sum than the dental torture group.
A small sum of money now, or a slightly larger sum in the future? The death group were more inclined to take the money straight away.
Now there is some debate surrounding studies of this kind, which employ a technique called ‘priming’, and I’ll come back to that in Chapter 11. Having said that, this last finding in particular does make some sense. If you are contemplating your own death – which as we all know can come at any time – it is best to cash in now. But an important point in Zaleskiewicz’s studies is that people dwelling on death seem to be comforted by having money, not spending it. In the ‘small sum now or a larger sum later’ question, it wasn’t that people were considering one final blow out. And in a further study by Zaleskiewicz and his team, when people were asked to fill in the death anxiety questionnaire and then imagine how they would deal with a surprise windfall, they allocated more to saving than spending.24
These studies all involved real banknotes, and there is nothing we like better. Numbers on a screen or figures on a bank statement don’t compare. And it is to the curious power of physical money that I turn next.
2
HOLDING FOLDING
Why we’re so attached to familiar forms of money, why we think coins are bigger than they are, why it’s good to be grumpy if you don’t want to get ripped off and why paying with cash might be better than credit.
AT ONE TIME, money was really worth something. That is to say, its physical form – coinage – was valuable in and of itself. Yet we’ve long known that isn’t really the point. The point is that money represents a store of value. Its worth lies in the fact that we can exchange it for something valuable. But even though we know that, we’re still strongly attached to the forms money takes, and we’re sensitive, and sometimes even distressed, when those forms change.
Anthropologists such as David Graeber have shown that money existed in early human societies living 5,000 years ago.1 And what’s really interesting is that its existence as a virtual concept – in the forms of debt and credit – long predated its appearance in physical form as coinage. In other words, money was in our minds long before we could hold it in our hands. Contrary to popular belief, earlier societies did not use to rely entirely on bartering – that is to say, the direct and immediate exchange of goods or services: ‘I’ll mend your wall if you give me right now something we agree is equivalent – say, ten eggs.’ Instead, people have always recognised that a form of abstract exchange is necessary: ‘For mending that wall, I’m willing to accept something that can be redeemed at some stage in the future for goods and services we agree are equivalent to the mending of the wall.’
Immediately we can see that this is a complex mental concept, requiring imagination, the ability to inhabit a mind other than our own, the capacity to conceive of a number of futures and – crucially – notions of trust, honour and confidence. We think that contactless payments, chip and pin, and all the rest are signs of twenty-first-century sophistication, but in a sense they are simply a return to money as it started out.