What causes desire for money?

Key points. When employees receive incentives for their performance, they tend to pay more attention to money. This increase in attention can lead to the increase in desire for money. Employees who receive performance incentives tend to develop a stronger desire for money than those who receive fixed salaries.

psychologytoday.com - What Makes Us Obsessed With Money? | Psychology Today

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Studies have shown over and over again that after a certain point, money does not buy you happiness (Kahneman & Deaton, 2010). In the United States, there is a positive relationship between household income and happiness, but the relationship flattens out once the income reaches about $75,000, the level of income that typically covers a household’s basic needs. Still, people often fall in love with money. At times, people develop such a strong desire for money that they start sacrificing their time for more money—above and beyond what is healthy. They may give up the activities that are shown to actually increase happiness, like going on vacation (Gilovich & Kumar, 2015), volunteering to help others (Liu & Aaker, 2008), and spending time with friends and family (Hur, Lee-Yoon, & Whillans, 2021). So, aside from supplying the necessities and some niceties that we need for a good life, why do we love money to the level where it can start to make us sadder? A former hedge fund trader, Sam Polk, calls himself “a former money addict.” And for him, the answer is quite simple: his bonus. “I would think about my bonus every day,” in the opinion piece in The New York Times, he explained about his time on Wall Street. “Every day for a year, I would think: What is it gonna be? Who’s gonna get paid more than me? I wanted more money for exactly the same reason an alcoholic needs another drink.” Performance incentives can be found not only on Wall Street but in many professions. Salespeople earn commissions, athletes receive bonuses based on their statistics, and CEOs get stock options. However, my research shows that this common type of incentive can be a major source of an unhealthy obsession with money (Hur & Nordgren, 2016).

Can’t stop thinking about you

Performance incentives contain inherent uncertainty: You are simply not sure how much you will earn each month. We show that this uncertainty causes people to fixate on their rewards. Imagine you are a salesperson at the local car dealership. You receive a commission every time you score a sale. In this system, your pay is closely tied to your everyday decisions at work, which makes it hard for you to stop thinking about money. As you talk to customers, show them cars, and go through options, you calculate what it might mean for your pay. You think about how much you have made so far this month and how much more you want to make. You wonder how much your coworker might be making. We suggest that it’s this fixation on money that leads to a stronger desire for money: If you can’t stop thinking about money, you want it more. So people who repeatedly receive performance incentives tend to develop a stronger desire for money over time.

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In one of our studies, we sampled actual car salespeople to test this idea (Hur & Nordgren, 2016). Half of them worked in performance-incentive dealerships, where they received very little base salary but huge sales commissions. The other half worked in fixed-salary dealerships, where they received a high base salary but no commission. While the salespeople in both dealerships sell the same cars, we found those in performance-incentive dealerships paid more attention to the monetary rewards at work and had a stronger desire for money compared to those in fixed-salary dealerships.

What happens when you develop a strong desire for money?

We believe this finding is important because of a spillover effect: People bring this desire for money home along with their paycheck. An increased desire for and fixation on money not only affects their behavior at work but also affects their behavior outside of work. We found that people who receive performance incentives make fewer donations, spend more of their time making money, and attach a higher value to money in general. And what we found is only the tip of the iceberg of what a strong desire for money can do to you. Studies have shown that when people have a strong desire for money, they tend to sacrifice time for self-growth, leisure, and intimate relationships in order to chase money (Diener & Oishi, 2000).

So, it’s worth reflecting on your work and your life priorities. Have you become obsessed with money since you changed your job? Do you think about money a little too much? Does your paycheck have an impact on what you desire, value, and prioritize in life without noticing it?

We spend most of our waking hours working, and most of our income comes from work. Therefore, it is important to understand that our work environment, such as incentive systems, can have significant influences on our life.

psychologytoday.com - What Makes Us Obsessed With Money? | Psychology Today

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