Mentally mastering money for a more meaningful life (Book Review)
Title: Mind Over Money — The Psychology of Money and How to Use it Better; Author: Claudia Hammond; Publisher: Canongate/Random House India; Pages: 384; Price: Rs 599
Money is on the minds of most of us, most of the time, as we think about how to get it and what to do with it. But our relationship with money is far more complex than this, and we need to understand this intricate psychology where we hate losing money more than making it, become more careless on high-cost items — or why English footballers tend to miss penalty shoot-outs — to know how we can use it for a better life.
Explaining these and many more surprising examples of this complex psychology, including how waiters can earn bigger tips (may not work in class-conscious India), why friends should not be paid for favours, why huge bonuses to bankers are wrong, and why Donald Trump may have entered the US Presidential race is British psychology lecturer and writer Claudia Hammond.
Contending that the “ills of our society are not caused by money itself, but the way we use it”, she says: “…Too often we are prone to the opposite. We let money control our thinking, sometimes in counterproductive and even destructive ways. To stop that happening, and allow money to help us lead a good life and create a good society (which it can do), we need a better understanding of our psychology with the stuff.”
The author, however, stresses that her book is not one of the many on “what to do with money or how to make it”, or about the “evils of money, consumerism and capitalism”, which “undoubtedly bring their problems”, or arguing that money “necessarily sullies us”.
It is, instead, “about what money does to us today, how it changes our thinking, our feelings and our behaviour, and how when it’s scarce, it can even have more of a hold over us,” she says, adding that we constantly make assumptions about money, especially in its role as an incentive, but are frequently wrong as to its intended effects.
Drawing on latest research in psychology, neuroscience, biology and behavioural economics, Hammond, who also presents psychology-based shows on BBC Radio 4 and has previously written “Emotional Rollercoaster” on the science of emotions and “Time Warped’ on time perception, shows how and why this is so.
Beginning with an account of how the outrage and disgust the video-recorded burning of one million pounds – “as a work of art” by two musicians on a Scottish island in 1994 — created among people to underscore “the extraordinary power that money has over our minds” and the strong emotions that it can raise, she goes on to cite over 260 experiments which reinforce this in many unexpected ways, and how money can be a drug or a tool — or even both at the same time.
In over a dozen chapters, which, like old novels, inform you of the varied topics that will be encountered, Hammond presents various facets of money and its use most comprehensively and lucidly. She takes special care to cite the psychological effect – “psychological salience”, “loss aversion”, “retrieval inhibition”, “referent thinking” and others — only after explaining it with concrete examples.
She also seeks to counter stereotyped thinking, which she shows is not only erroneous, but may also lead to damage or losses. Among others is that more money does not always lead to happiness, nor does an expensive self-gift — while women, taunted for their supposed propensity to buy clothes at a whim, will especially relish what Hammond’s husband did, when ostensibly out to buy a present for her.
For those who read on behavioural economics and/or experimental psychology, some of the experiments cited here will be familiar. But there is much here that will be new — and useful — especially how to deal with pathological gambling, what really motivates children to study, and the like. To help you profit more, Hammond in the end lists the key lessons in the last chapter.
You might now how to raise more in charity, how to save more effectively, and use money to make yourself more happy, but knowing what mental processes are involved may make the tips more effective.
(Vikas Datta can be contacted at email@example.com)