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The Psychological Value of Money

Money is generally seen as "any item or verifiable record that is generally accepted as payment for goods, services and repayment of debts, such as taxes, in a particular country or socio-economic context". Money also has the added benefit of making trade easier to facilitate. There are many parts of the brain that work with money, such as the ventral striatum, ventral pallidum, extended amygdala and basal nucleus of Meynert. Money can also work as a drug for the human mind, so can it increase a person's feeling of self worth and even reduce pain to a certain extent. But there are also some personal that influence how we see money, such as age, socio-economic status and our own self-concept to name a few.

Biological processes

Significant activation was located bilaterally in the basal forebrain, bordering several structures encompassing the ventral striatum, ventral pallidum (VP), extended amygdala, and basal nucleus of Meynert. These structures have been conceptualized as forming output channels for the limbic system, which is devoted to emotional and motivational functions. According to fiber tracing studies, reward-related information may access these structures either by a subcortical route via the hippocampus and/or amygdala or by a cortical route via the orbitofrontal and/or anterior cingulate areas. The main inputs to the VP come from the ventral striatum, where reward-related activations have been consistently found. VP activation might denote engagement of the same ventral striatopallidal pathway, with a shift in its expression being related to the nature of the upcoming task. More specifically, ventral striatal activity has been linked to reward prediction and reward prediction error during learning. finding accords well with evidence in rodents, showing that VP neurons encode rewarding properties of environmental stimuli, and suggests a role for the VP in incentive motivation.

Response to monetary prizes increases with nominal changes that have no consequence for subjects’ real purchasing power. A 2005 study at Stanford investigated what happens when investors choose between stocks (high risks) and bonds (low risk). The MRI scans showed that those who chose stocks over bonds had more intense activity in the nucleus accumbens, a section of the brain involved in the reward circuitry and the processing of emotions.

The following three brain structures were involved in the presence and occurrence of rewards, regardless of reward value: amygdala, striatum, the dopaminergic midbrain. The dopaminergic midbrain, often considered as the brain’s reward system, is involved in reinforcement, and the amygdala is involved in the processing of emotions. Another interesting finding is that the premotor cortex shows a linear relationship with increasing reward value. This might reflect a preparedness to respond to larger rewards as we want to be motorically prepared to obtain a large reward. Taken together, it seems that there is an observable association between money and the activation of brain regions that are involved in reinforcement mechanisms and reward. This might explain why money is addictive, and why gambling is addictive as well. The findings in this paper suggest that money illusion is real in the sense that the level of reward-related brain activity in the vmPFC in

Money as a drug

Another way to see money when discussing the psychology behind it is as a drug. Certain drugs, produce the same physiological or psychological effect as some other stimulus that is biologically significant. For that reason, one might be motivated to use them. Money in that line of thought can be considered as a drug. Money acquires its incentive power because it has the same neural activity or behavioral consequences as natural (primary) incentives. The fact that money can mimic natural incentives at physical and behavioral levels, can explain the motivation for it. Certain cortical area that are associated with immediate rewards are activated in the presence of money.

Money behaves in many ways like a drug. For those who value it highly, it strains personal relationships. This might be because money activates our feelings of self-sufficiency. When people handle money both their need for social acceptance as well as their physical pain perception goes down. In the rejection experiment they measured this by first letting participants count either money or blank paper and after this the participants were either rejected or accepted by a peer that they themselves choose. The rejection or acceptance was at random. Afterwards the participants were asked by questionnaire how they felt. It was shown in this paper that participants who got rejected were less likely to feel rejected if they counted the money. In another experiment participants were again asked to count either money or blank paper. After this, the participants' index finger was inserted in 43°C (baseline) water, and in 50°C (Hot-condition). As it turned out, participants who counted the money felt less pain than those who counted just blank papers.

Reinforcement

When discussing the psychology behind money, it is important to mention the role of money as a reinforcer. A reinforcer is a consequence/outcome of a behavior that leads to an increased likelihood of that behavior occurring in the future. In this way, we can say that if an organism behaves in a way that provides it with food (the reinforce) then it is more likely to behave in the same way again so it can get access to food once again. Yet, money isn’t a biological need to maintain one's body homeostasis. So, how can it be a reinforcer? Psychologists distinguish between primary and secondary reinforcers. According to operant conditioning theory, money can serve as a secondary reinforcer. That is to say, money is not valuable biologically as other primary reinforces might be for the organism (e.g food). Instead, when paired with primary reinforces the money gets its value for the organism. For example, if money can buy food, which is of biological value for humans, it will have a value and thus can serve as a reinforcer, a positive goal to work for. Looking at money as a secondary rather then primary reinforcer can be a good way to understand the strong need of humans to obtain money and the repetitive nature of such behavior. In this case, supported in the same light by the tool theory, money can serve as a tool, a means to an end, a biological satisfaction.

Personal factors

The individual differences concerning materialistic views and the personal value of money can be traced back to a multitude of reasons.

Delayed Gratification

Delayed gratification plays an essential role in self-control. Children who performed better in Mischel et Al.'s "marshmallow test" as children were better at saving money as adults than the ones who wanted instant gratification. They also were more academically and socially successful and had higher SAT scores. Studies have shown that Delay of gratification behaviour in girls is reinforced more often and viewed more positively, whilst the lacking of self-controlled behaviour is more culturally accepted in boys.

Socio-economic status

The higher one individual’s socio-economic status position is, the more likely is it that they express saving aspirations for the future. Psychological features that supported these findings were more rationality in decision-making, a longer time horizon, and more future-orientation in middle-class individuals as opposed to lower-class individuals. It is important to look at the way in which cultural norms related to money are created. The early experiences of people within their families are thus of major significance. In a study by Tokunaga from 1993, it was found that people's reports of their parents' use of and views on credit correlated with their own ability to use credit successfully. Studies suggested that there is a growing culture of acceptance of impulsive behaviour.

Age

The importance of material possessions decreases in middle-aged people and has its highs at a young and old age. These changes are connected to the significance granted to acquisition-centrality and possession-defined success. Money is seen as a sign of success, which is more prominent in younger and older people, compared to middle-aged persons.

Self-concept

Having less self-concept clarity is associated with more materialism. This connection exists for both genders, even though it holds a higher strength for women. Possessing money and buying goods with it seems to reduce the unclarity of the self and can lead to a better mood. It is possible that owning money serves as a substitute for other ways of building a solid self-concept since the possession of money and luxury items is seen as reflecting personal qualities and is being highly prioritized, especially for adolescents.

HEXACO personality types

Materialistic values are connected to low honesty-humility and agreeableness in terms of HEXACO personality types. There are two subcategories of materialism; it is either related to low emotionality and high extraversion, or to high emotionality. The former are referred to as “peacocks”, whereas the latter are “mice”. Both put a high emphasis on their possession of money and luxury items. The mice personality type however shows rather anxious behavior in the handling of money and the peacock personality is more focused on fast gains. They scored higher on grandiose narcissistic traits and seem to see money as a form of showing their value to their social environment. This finding suggests that materialism and the value granted to money are generally based on two different approaches, either anxious behavior and wanting money for security or the narcissistic behavior with approaching money as a status symbol.

Consequences of Money

The mere exposure of money already influences our behaviour. Above all, our willingness to help decreases while our self-sufficiency increases. People help less because they believe that others must also manage their tasks alone. Therefore they also ask for help less quickly. This is also related to a lower willingness to donate. Money promotes the feeling of self-sufficiency because you can achieve your goals independently. At the same time, it reduces social contact and cooperation with others. As an example, business students who are constantly exposed to the topic of money tend to believe that competitors would act selfishly to achieve their goals.