Some say that money makes the world go round. Never mind the
planet’s rotation, what’s certain is that money makes our heads
spin. Among our financial confusions, most of us think that money
will make us happier than it really does; we treat equal amounts of
money as having a different value based on where the money came
from (a habit known as “mental accounting”); most of us fail to save
adequately for the future; and ironically, most of us think we’re far
more financially savvy than we really are. Behavioural economists
and economic psychologists – who plough the same research fields
but originate in different disciplines – investigate our relationship
with money, both in terms of our financial decisions and the links
between wealth, poverty and wellbeing. Consumer and marketing
psychologists investigate the science of persuasion and the factors
that influence our buying habits.
Money and happiness
Presumably the many people who play national lotteries around the
world all think that winning huge sums of money will make them
happier. Research suggests otherwise. While the gross domestic product
of the USA, the UK and other developed nations has soared over the
last fifty years, genuine progress in terms of happiness and wellbeing
has flatlined. One probable reason for this is that it’s our relative rather
than our absolute wealth that has the potential to inspire happiness or
discontent, so if everyone’s average wealth has risen, none of us feel any
better off. Another possibility is that increased national wealth tends
to go hand in hand with social ills that undermine happiness, such as
more divorce and inequality.
In 2009, in one of the first studies of its kind, Lara Ankin conducted
a scientific comparison of lay beliefs about the relationship between