This week’s Monday Money Funny is inspired by an email I received Sunday from a regular reader, Scott (shout out to Scott). We frequently exchange emails, in his recent email Scott advised “You may not want people at work to find your blog. Some people can be jealous and turn into back - stabbers, if they think your going some place or have more then they have ... even if you actually worked hard for it...”. This got me thinking, and not just about not sharing my blog at work (which I don’t, in fact no one who knows me in person has seen this blog – that way I can be totally open and discuss all of my finances, since so often this is a taboo topic for public conversation).
After briefly thinking about my anonymity, I moved on to really thinking over Scott’s comment about people being jealous which got me to thinking about an article that I bookmarked several weeks ago from the LA Times called “Why people believe weird things about money.” In this article the author, Michael Shermer, reports on experiment in behavioral economics.
Below are the highlights from the article:
[…] 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. How irrational is that? […]
Consider one more experimental example to prove the point: the ultimatum game. You are given $100 to split between yourself and your game partner. Whatever division of the money you propose, if your partner accepts it, you each get to keep your share. If, however, your partner rejects it, neither of you gets any money.
How much should you offer? Why not suggest a $90-$10 split? If your game partner is a rational, self-interested money-maximizer -- the very embodiment of Homo economicus -- he isn't going to turn down a free 10 bucks, is he? He is. Research shows that proposals that offer much less than a $70-$30 split are usually rejected. […]
The last experiment reminds me of a game show, Friend of Foe, that was on VH1 a few years ago and hosted by Lisa Kennedy where you answered questions together with a stranger then had to decided in the end how to split the money. The options for dividing the money were split evenly or one person take it all, if you both chose to split the money you each took home ½ of the winnings, if you chose to take all yourself and the other person chose to split then you took it all, but if you both choose to take it all then no one received any money. Guess which option was most frequently selected --- hmm I wonder why this show is no longer on the air, after all they didn’t have to spend any money on prizes.
The article concludes that: When it comes to money, as in most other aspects of life, reason and rationality are trumped by emotions and feelings.
I admit, I’m a victim of letting my emotions and feelings rule my money. Money is very personal for me, this is why its personal finance. I found a few articles to help us all with separating your emotions from your finances."Emotion and Money" from Science Central News help explain how to take risks
"Keeping your Finances and Emotions on an Even Keel" from bnet explains how to not confuse net worth with self worth
Stay tuned for next week's Monday's Money Funny. Also if you run across any Money Funnies please email them to me at email@example.com and if I use them I will give you credit and link to your blog and if you inspire the “Money Funny” topic, I’ll give you a shout out.