Mind over Money ||

Question 1

How do people spend their money?
Elizabeth Dunn has done lots of research on this

Answer 1

• Her conclusions are that you need to spend money on experiencing rather than things
• Adults under 25 are tending to do this more
• If you look at how we perceive time, it’s not just on our experience in the present moment. There are time frames going on
• When you spend money on an experience, you enjoy the experience at the time and look back on it after
• Evidence on a whole says spend money on experience not products, if you want your money to improve your well-being
• Paying on something months in advance doesn’t feel as close to the pain of paying

Question 2

Another study showing how to spend money by Dunn et al. (2008)

Answer 2

• gave people a well being scale
• gave the same people an envelope with either $5 or $20 with a note either saying ‘please spend this money on yourself, you have until 5pm’ or ‘please spend this money on someone else, or give it to charity, you have until 5 pm’
• at 5pm they then gave them another scale
• they found: the people with higher well being were the people from the second group who spent money on other people and not themselves

Question 3

What do we know about giving out money?

Answer 3

We know that giving away money makes us happier

Another study showing people who said they did kind things more often, gave kindness and observed kindness had higher levels of well being.

Question 4

Income, gender and giving money to charity

Answer 4

In higher income countries, on average women give more to charity where as in low income countries men give more on average to charity.

Question 5

Paul Piff:
Pedestrian crossings

Answer 5

He hides in pedestrian crossings and see whether cars stop to let people cross and then looks to see how expensive their car was
Found: People driving more expensive cars were less likely to cross
Criticisms:
* what car someone was driving doesn’t necessary reflect their income

Question 6

Paul Piff:
monopoly

Answer 6

• made people artificially rich
• gave some people at the start of the game twice as much money to start with
  Found:
• the people who were artificially rich took more than their fair share of pretzels (bowl of pretzels was put in the middle)
• would think the people who won was because they had an unfair advantage of the game however people who had an unfair advantage didn’t think it to was to do with this and they just thought they were more skilled

Question 7

Paul tiff:
titanic

Answer 7

• Questionnaires eg. about entitlement
• If i was in titanic, would you desreve to be saved first
  Found:
• People on higher incomes deserved to be saved and be on the first lifeboat

Question 8

Study on dropping letters:

Answer 8

Dropping stamped letters and counting up how many get posted in different neighbourhoods

Found:
letters dropped in more expensive areas were more likely to get posted than in the poorer areas

Question 9

Study on Donor

Answer 9

Donor:
Look to see which states in the US have the most altruistuic kidney donors to stranger

Found:
richer states are more likely however, there might be different restrictions or people who have high demanding jobs wouldn’t be able to get recovery time

Question 10

Financial incentives
Experiment done in schools in the US
Procedure

Answer 10

• gave pupils money if they did things well
• was controversial because these were large sums of money
• wanted to know if they could improve academic success
• in the end they paid out 9.4 million dollars to 36,000 children
• trails were done in NY, Chicago, Dallas, Washington and Houston
• In different studies they were done in different studies:
• in NY: 10 year olds were paid $25 and 13 year olds $50 if they got A grades
• in Washington: paid for attendance and if they got their homework in on time. Some people felt that it was unethical. Whatever the ethics you would expect it to work

Question 11

Financial incentives
Experiment done in schools in the US
Results

Answer 11

• in NY and Chicago where you paid for grade, it didn’t make much difference to grades but in Chicago attendance did improve
• in Washington, results on reading test rose for some subjects but not other subjects
• in Houston- they paid them to study particular areas and in maths they got better on these areas
• in Dallas- they were rewarded for particular things such as a chapter. The results here were the highest
  Therefore for incentives to work you need to know how to get the grades

Question 12

Question of ‘what happens when the incentives stop?’

Answer 12

Loss aversion- there is a risk that people could see it as a loss

Question 13

What are some opinions on financial incentives?

Answer 13

Some people said could providing financial incentives take the joy out?
Sometimes it is better to offer no payment at all than to pay them as what they see as an insulting amount?

Question 14

Stanerela and friends

Answer 14

Never pay a friend to do a favor because as soon as you do it it puts them in a financial state of mind. And people are very sensitive to being ripped off.

If its peace work- the more blackberries you pick, the more money you get so you do it faster

Question 15

Incentives can backfire for many reasons:
Problem 1: intrinsic motivations- joy comes from the task itself

Answer 15

• Students got given blocks with a picture which shape they have to put it into.
• First of all no money was involved and they were watched through a one-way mirror
• When they were given a break and they continued working
• Next time, each time they got one right they got a dollar for it.
• When given a break they didn’t continue working
• This is because it now felt it was work so didn’t enjoy it as much
• If any is linking to performance- what message is it sending that people need to be paid extra to do something. Any interaction changes once money is brought into it
• so… incentive needs to be the right size

Question 16

Incentives can backfire for many reasons:
Problem 2: if the incentive is too high, people will choke
How do you do a study to have reasonable incentives?
Worked out you could do this:

Answer 16

• Study was conducted in a village where incomes were low and nobody in the study had a car.
• People did all sorts of games such as measuring their memory ect.
• game called simon was given
• varies amounts of prize money was given
• such as 6 months worth of income
• when he offered them smaller amounts of money, they were able to do it but with bigger sums of money, people would choke

Question 17

Problem 2: if the incentive is too high, people will choke
How do you do a study to have reasonable incentives?
theories why:

Answer 17

1) people are distracted by knowing they are being monitored
2) the size of the reward
3) too much dopamine is realized
This study therefore shows that money has the opposite effect and can backfire completely

Question 18

People were asked ‘Would you accept a lower to middle nuclear waste dump’ but then asked again when money is involved

Results and theory it links to

Answer 18

It went from 50% saying no to 75% saying no

Known as crowding out- didn’t say no before but then the money crowds out the other emotions like your sense of civic duty

Question 19

Children picked up late study which failed

Answer 19

• decided to bring in fines of $3 for being 10 or more minutes late
• this backfires- because it was $3, it gave people the sense that it wasn’t too bad to be late because $3 isn’t that much
• within weeks, staff had twice as many children left over
• after 12 weeks they ended it and parents were still late. This sent the messsge that being late was okay.

All these problems can apply to incentives in the workplace

Question 20

What needs to be in place for incentives work?

Answer 20

• PIECE WORK
• SPECIFIC TASKS
• INTRINSIC SATISFACTION
• UNEXPECTED- not just completely assumed
• THE RIGHT BEHAVIOUR
• CONTINGENT ON SUCCESS- it’s no good if you just get paid anyway
• Fairness- people care more about fairness than the actual amount

Question 21

What can bonuses do?

Answer 21

Bonuses can make people controlled but it can also put people in a financial state of mind

Problem is subjectivity- perceived or unconscious bias