Tag Archives: behavioural economics

Money can’t buy friends but it may help you cope without them

Money

By Erica Zaiser

With the recent economic crisis many may be finding it harder to keep up with the Joneses. Undoubtedly, losing a job and its potential impact on one’s finances is highly stressful in and of itself, but many people may feel added pressure from the need to maintain their social status despite economic loss.

People will go to great lengths to retain their place in a group because being socially ostracized can be a highly stressful and often traumatic experience. Ostracism has been linked to a number of psychological responses as well as actually physical pain.  The bad news is that, according to a recent study, when people feel socially ostracized their desire for money only increases because money represents power and status (Zhou, Vohs, & Baumeister, 2009). The good news is that the same research suggests that just the simple act of counting money (as opposed to blank paper) can lessen the negative feelings associated with social exclusion, even when it is someone else’s money. Even more, counting money can actually lessen perceptions of physical pain. Conversely, when people are reminded of having spent or losing money they report feeling higher levels of mental distress as well as physical pain.

One explanation for this is that counting money reminds us of money, which is a potential social resource for coping and gaining status. Thus, as we lose friends we want to increase our financial resources and conversely, as we lose financial security we are more distraught by losing friends. In this way financial and social resources may act as a type of psychological currency that allows you to “buy” confidence and feelings of efficacy, which are linked to both psychological and physical pain.

So during these hard financial times, if you find you can no longer keep up with the Joneses financially, you may want to try being friends with them instead.

square-eye Read more about the effects of ostracism:  Williams, K.D. (2007). Ostracism: The kiss of social death. Social and Personality Compass1, 236–247.

Zhou, Xinyue, Kathleen D. Vohs, and Roy F. Baumeister (2009), “The Symbolic Power of
Money: Reminders of Money Alter Social Distress and Physical Pain,” Psychological
Science.

square-eye Zhou, X. , Vohs K. D., Baumeister, R. (2009). The symbolic power of money: Reminders of money alter social distress and physical  pain, Psychological Science, 20, 700-706.

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