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Evolution Responsible For Money Beliefs

Blame Your Money Behavior on Evolution

It's commonly thought that the way we handle our own finances has much to do with our parents' approach to money. That's an easy enough concept to grasp, but what if I told you that some of your feelings about money may have to do with evolution? Thousands of experiments have demonstrated that humans prefer relative social ranking to overall financial status. The Los Angeles Times article titled "Why people believe weird things about money" gives this example:

Would you rather earn $50,000 a year while other people make $25,000, or would you rather earn $100,000 a year while other people get $250,000? Assume for the moment that prices of goods and services will stay the same. Surprisingly — stunningly, in fact — research shows that the majority of people select the first option; they would rather make twice as much as others even if that meant earning half as much as they could otherwise have.

While it's compelling news, I can't imagine why anyone would choose to earn half as much just for competition's sake. It's so not savvy!

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Mintie Mintie 8 years
I think it's very misleading survey. Too easy to misunderstand. I think the results are skewed because of this.
Row-D Row-D 8 years
AGree with Geebers. Study should clarify the parameters of "others"; because it turns into an issue of economics and not so much competition. You want your money to be worth something.
Row-D Row-D 8 years
AGree with Geebers. Study should clarify the parameters of "others"; because it turns into an issue of economics and not so much competition. You want your money to be worth something.
MandyJoBo MandyJoBo 8 years
People disgust me. Anyone who would rather make less just to make more than others must have something seriously wrong w/them. Making more doesn't make you better than anyone. You're not an asset to the world. It's what you do with your 50 or 100k that make you better.
aimeeb aimeeb 8 years
I'm with you ashcwebb-pass along the 100k.
geebers geebers 8 years
I am going to have to say that if EVERYONE else made 250k -then no way am I going to make 100k. That means my dollar will be less-and simple economics shows that prices WILL increase if everyone else can afford to buy more. So in that case, Id definitely have to go with making 50,000. NOW, if we are talking a select amount of people in a certain career - and the rest of the world remains the same then id go for the 100,000 only because then who cares?
citizenkane citizenkane 8 years
This story confuses me.
citizenkane citizenkane 8 years
This story confuses me.
Lovely_1 Lovely_1 8 years
Wow. That is pretty true I guess. I mean, if I could make $100,000 over $50,00 I would, but I know a lot of people who would want to make more then everyone else...Interesting savvy.
Lovely_1 Lovely_1 8 years
Wow. That is pretty true I guess. I mean, if I could make $100,000 over $50,00 I would, but I know a lot of people who would want to make more then everyone else... Interesting savvy.
freegracefrom freegracefrom 8 years
I assumed the same thing too - that "other" meant "everyone else." I don't think that part was very clear. In that case, the market is flooded with more money in the second option, there will inevitably be inflation, so your dollars would buy less.
SkinnyMarie SkinnyMarie 8 years
mayara I thought the same thing as you. When the article said "others" I thought that it meant everyone, so therefore you would be making the most. But if others always made $250K and you only made 100K in comparison to what their normal would be, I wouldn't want to make less then the average.
mayara mayara 8 years
If the "others" are only some people, then, sure, it doesn't make sense to go with the smaller number. However, if "others" means everyone, then the fact that everyone's making so much more will mean that it won't be worth as much, and it suddenly makes sense to want the situation with the smaller number, since it's larger in comparison to what the "others" make.So, yeah, I don't get wanting to make more than people you know, but that quoted part neglects the whole money has no value in itself thing -- it's only worth what it can potentially get you. ("Potentially" to cover saving and investing for the future and contingencies.)
mayara mayara 8 years
If the "others" are only some people, then, sure, it doesn't make sense to go with the smaller number. However, if "others" means everyone, then the fact that everyone's making so much more will mean that it won't be worth as much, and it suddenly makes sense to want the situation with the smaller number, since it's larger in comparison to what the "others" make. So, yeah, I don't get wanting to make more than people you know, but that quoted part neglects the whole money has no value in itself thing -- it's only worth what it can potentially get you. ("Potentially" to cover saving and investing for the future and contingencies.)
Veekore Veekore 8 years
It's all about perception. I think I also read this study somewhere else and the writer mentioned an anecdote. A couple was shopping for a $5 million summer house in the Hamptons and the wife complained to the husband, "If you didn't make so little, we wouldn't have to live like this!"Not only do we want to be fulfilled, but we want to be fulfilled relative to everyone else. As an economist, it makes a lot of sense to me ;).
Veekore Veekore 8 years
It's all about perception. I think I also read this study somewhere else and the writer mentioned an anecdote. A couple was shopping for a $5 million summer house in the Hamptons and the wife complained to the husband, "If you didn't make so little, we wouldn't have to live like this!" Not only do we want to be fulfilled, but we want to be fulfilled relative to everyone else. As an economist, it makes a lot of sense to me ;).
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