Mind over money (1)

Question 1

What did they find in people’s brains when they watched money being torn up?

Answer 1

Area most activated was area to do with tool use, suggests money is seen as a tool for getting what you want

Question 2

Money commodifies what?

Answer 2

Trust
e.g. trust when we transfer money to the cinema that we will turn up and a film will be played, the cinema workers will get payed, the people working on the film will get paid etc

Question 3

What do we tend to spend faster, even if they are the same value, coins or notes?

Answer 3

Coins (spend pound coins quicker than spend pound notes)

Question 4

We tend to overestimate size of coins. Why is this?

Answer 4

We overvalue the magnitude as we think money is valuable

Question 5

What factor makes money seem even more valuable?

Answer 5

Scarcity

Question 6

What did the study in an American supermarket find when people spent cash compared to using a credit card?

Answer 6

People paying with cash spent less
People paying with card bought more unhealthy food and snacks (may be that if money doesn’t feel real, neither do unhealthy food consequences…?)

Question 7

What is a potential reason for people spending more when paying by contactless?

Answer 7

We don’t have to cognitively engage with the amount (often don’t even look at what it is), whereas have to work out correct amount to give in cash

Question 8

What is one example of when people spend more money than they would have done, because of the context?

Answer 8

People will bid more in an auction if the previous car was an expensive one (we’re bad at judging what is good value)

Question 9

In 6000 trials of blind wine tasting, what did researchers find?

Answer 9

Only wine experts could identify which the $90 wines were compared to the $5 wines
If a wine is labelled as $90, there is more activation in the reward centre of our brain than if told the wine is $5

Question 10

What did Braithwaite and Cooper find when testing pain thresholds?

Answer 10

Tested how long pts could hold their arm in ice water
If took a painkiller first, could do for significantly longer
Those than took nurofen over generic ibuprofen could hold hand in for longer… even though drugs both 200mg!!

Question 11

How does paying more influence what we think of food?

Answer 11

Found those who paid $20 compared to $12 for an all you can eat buffet said they enjoyed it more, even though they ate the same amount

Question 12

What is the name for when things are presented in threes to try and get you to buy the middle one?

Answer 12

The compromise effect
When expensive option added, twice as many people went for the middle option rather than the low one
Weigh up advantages and disadvantages of each when choosing what to buy
Middle one weighs top best, even though only been swayed to do so by the expensive one

Question 13

What is meant by loss aversion?

Answer 13

We hate loses twice as much as we hate gains

Question 14

Explain a study where monkeys demonstrate loss aversion

Answer 14

One man presents monkey consistently with two grapes and sometimes adds a third
A second man presents monkey with three grapes and sometimes removes one
The monkey prefer the man who consistently presents two (don’t want to risk loss)

Question 15

What is meant by anchoring

Answer 15

Get distracted by number someone happens to mention, even though it has no relevance

Question 16

Give an example of anchoring

Answer 16

If people were asked if Gandhi was older than 9 when he died, people on average said they thought he was 50 when he died
If people were asked if Gandhi was older than 140 when he died, people on average said they thought he was 67 when he died

People told restaurant called studio 97, much more willing to pay more for meal than when people told restaurant called studio 19, even though these numbers have nothing to do with anything

Question 17

What is meant by optimistic bias?

Answer 17

Most are optimistic about the future… think they will earn more money, spend less money and save more money
This has an effect on pension as if people think they will be earning more then they don’t think they need to start pension yet
Research actually shows like between when people earn more they also spend more

Question 18

What did researchers find when investigating how being poor or rich affected sugar cane farmers?

Answer 18

IQ was lower before harvest (poor)
IQ was higher after harvest (more money)
Because if focus and concentration on how will pay for rent, food etc then can’t concentrate on other things
Thinking changes when stressed, so when anxious and distracted can’t concentrate on IQ test

Question 19

How does scarcity impact the decisions we make in terms of loans?

Answer 19

Long-term loan would be cheaper in long run but we don’t like to loan out money for a long time
So go for pay-day loan as seems good short term fix, but ends up being a lot more expensive in the long run
Hard to make sensible good decisions when so stressed about money

Question 20

What does research show about the link between being rich and happy?

Answer 20

Happiness increases up to earning £15k to £20k then doesn’t make much of a difference
BUT a more recent study shows happier until salary reaches £75k then doesn’t make difference
(can buy enjoyable experiences which make people happier than materialistic things)
Overestimate difference income makes to happiness

Question 21

Elizabeth Dunn found spending money on experiences not products makes us happier. Why is this?

Answer 21

Anticipation of experience, experience, with someone else, look back on it afterwards (memories to look back on after, mental time travel) all make happier
Paying an advance for an experience takes pain of paying away and therefore more enjoyable

Question 22

How does spending money on others compared to on ourselves effect our wellbeing?

Answer 22

People given $5 or $20
Told to spend on self or someone else/charity, had until 5pm
People who spent money on others had higher wellbeing at end of the day than people who spent on self

Question 23

What gender gives more to charity in
1. high income countries
2. low income countries

Answer 23

1. women
2. men

Question 24

What percentage of their salaries on average do rich and poor people give to charity?

Answer 24

Rich = 4.4%
Poor = 2.3%