- Personal Finance
The power of dirty money: how to use science to help you spend less
Even super geniuses are vulnerable to psychological tricks. Everyone’s brain is hardwired with a specific anatomy, and beyond the foibles of abnormal psychology, it’s easy to trick the brain into perceiving things a certain way.
TV shows like Brain Games expose the faulty perception of the brain, and researchers look every day for ways to get people to spend more through psychological tactics. Consumer psychology is a lucrative field.
Some of these psychological vulnerabilities can be mitigated. While it’s not possible to overcome shortcomings based on anatomy--peripheral vision can be bettered, for example, but the brain perceives visions a certain way--tricks based on faulty thinking can be overcome through conscious awareness.
People spend dirty money alone, but spend crisp bills when socializing
When paper money is in circulation, it’s inevitable that it becomes crumpled, dirty, and defaced. Unless a crisp new bill is locked away in a plastic sleeve, it will eventually lose its crispness and degrade in quality.
While this seems like a problem more for currency collectors than the average Joe, consumer research has discovered that the cleanliness of money plays an important role in spending.
According to this press release released in November of 2012, researchers at the University of Guelph have discovered that people are more likely to spend rid of dirty-looking money when they’re alone. If a person has a pocket full of crumpled, ragged bills, they’ll have a desire to spend that money quickly because they want to rid themselves of the dirty bills.
Conversely, if that same person went to a social event, they would hesitate on spending those bills due to a perceived social fault in spending “dirty money.” There is an ingrained cultural idea that crumbled bills are somehow gauche. If that person had uncirculated money, however, they’d spend it in a heartbeat due to the crispness being a positive social indicator.
Although this research is still new, it’s still worth trying to hack your spending through new and old money. Try bringing only old, crumpled cash with you to the bar, and keep crisp bills in your wallet while window-shopping. See if it influences your spending habits.
Brand psychology can influence the way you act
At Boston College, two researchers found that the attitude of a brand can actually influence the way you act. A 2011 press release describes how consumers playing a racing video game with a Red Bull-branded vehicle tended to embody the traits of the Red Bull brand: reckless, spirited, adrenaline-soaked, super-charged.
While driving the virtual car, consumers drove past the point of safety and often crashed. This overclocked performance wasn’t seen with control cars, and all of the virtual cars had identical coding.
Although this finding doesn’t directly relate to spending, it’s worth noting how certain brands push towards excess, towards bling, and towards a consumerist lifestyle. If these scientists’ experiments are true, then that would indicate that as a consumer of these products, you might subconsciously begin to emulate this buy-buy-buy mentality.
Certainly it’s been proven that advertising feeds on the desire to “keep up with the Joneses.” If the brand identity also embodies these desires, then as a consumer, you’re doubly screwed.
If you’re a fan of luxe brands or brands that radiate shopaholic desire, keep your consumerist impulses in check and take a critical view of advertising. Don’t fall into the advertisers’ ploys.
Highlights from Flugtag, a Red Bull-sponsored event
Self-control is easy to deplete, but with forewarning, it can be improved upon
Window shopping can be fun, but a long day of abstaining from spending can actually result in greater spending if the opportunity arises. Scientists are still on the fence about self-control. Is it like a muscle that can be built up through training? Is it innate from person to person?
One study from the University of Iowa suggests that self-control is a finite resource. In mid-2012, scientists did fMRA imaging of people trying to exercise self-control. After awhile, the study participants’ self-control began to slip. Out of two tasks, the second task showed neurochemical reactions in line with a phenomenon called “regulatory depletion.” They just couldn’t keep up their self-control from the previous task.
This sounds bad. Is spending inevitable if self-control is finite? Not necessarily. One way to avoid spending on a long day out is to just cut the shopping short. Don’t allow yourself to window shop when you begin to feel the waning of your self-control. Another idea is to use rewards for good behaviors. The feel-good reactions from the rewards of self-control can supersede the gradual depletion of resources.
Another study on self-control has some good news. Marathoners, those tired souls running for 26.2 miles at a stretch, are the epitome of endurance and self-control. In order to complete a marathon, pacing is vital. If a runner starts their run too quickly, they’re likely to run out of energy by the midway point. If that happens, a finish becomes near impossible.
Think like a marathoner. Pace your spending and know that there might be roadblocks ahead. Keep a future mindset when you’re out and about, and you can attempt to head off spending at the pass.