Conversations with your hairdresser can be quite revealing. And when I went for a trim earlier this year, the gossip was especially good. It was close enough to Christmas for our chat to turn to gifts and giving and, as he snipped away, my stylist had some juicy anecdotes to share. One customer had complained that despite her sister being about to buy a £1 million house, she still moaned about contributing £20 towards a gift for their aunt. Another described presents from her son as “a bit thin”. And a third felt physically sick at the amount his family members had spent on his young nieces.
Money, money, money. We have such different attitudes towards cash, but taboos make it tricky to talk about. As a result, it can drive a wedge into otherwise happy relationships. This is exacerbated by growing financial divides: analysis from a charity called the found that, between 2011 and 2019, the wealth gap between the poorest and richest UK households grew by 50 per cent – and the situation is even worse in the US. Yet psychologists have only recently begun truly getting to grips with why money is such a deeply emotional topic for us – something filled with meanings and belief – rather than simply a necessity to pay the bills.
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Now, they are unpacking everything from how and when our ideas about money develop to what constitutes a healthy – or unhealthy – relationship with the stuff. Psychologists may be late to the party, but some of their findings are surprising. Others are counterintuitive. Above all, they are putting a new spin on why money is so divisive.
Can money buy happiness?
One obvious fact about money is that, at a basic level, of course it matters: it buys us the essentials of survival. More controversially, it can also buy happiness. In 2010, research by Nobel laureate Daniel Kahneman and his colleagues suggested that kicks in at an annual income of $75,000 (around $108,500 in today’s money), above which earning more won’t make you feel any better. Since then, a survey of more than 33,000 people in the US with incomes ranging from $15,000 to $480,000 per year, found that . And a 2023 study by researchers from both groups confirmed this to be true – for most people at least.
Proof, if it were needed, of the deep psychological impact of money is even visible in brain images. Making a loss or being hit by an unexpected bill to those that fire when you experience pain, , such as being ostracised by friends. Brain imaging also shows that we strongly than equivalent gains – reflecting a well-known psychological bias called loss aversion. And when money is very tight – as it is for many people right now – neurons fire in the brain’s amygdala and hippocampus, initiating the physiological stress response. This can affect both mental and physical health, says psychologist at the Catholic University of the Sacred Heart in Milan, Italy. Constant financial worries can lead to a cognitive overload. “When this happens, our cognitive resources are so busy focusing on potential threats and issues that it might impair our ability to make good financial and life decisions,” she says.
Nevertheless, whatever their wealth, the way any two people think about money is likely to differ. What’s more, a widespread reluctance to talk about it means we seldom get an insight into how much our views vary or why. A UK study, for example, found that see money as a taboo topic. Psychologists are now bridging that gap.
Our response to money – or at least its equivalent in terms of material resources – starts earlier than you might imagine. New research indicates that infants have already begun to judge people by markers of wealth at 15 months – and they prefer interacting with those who appear richer. That may sound mercenary, but in evolutionary terms, displays of wealth are “honest indicators of fitness”, and it makes sense for infants to affiliate with fit individuals because that increases their chances of survival.
Making a loss activates similar brain regions to when you experience pain
Given that an understanding of who has assets and what that means takes hold early, it isn’t surprising that the income, social class and financial habits of parents have a big impact on children. “The familial context plays a pivotal role in shaping attitudes towards money,” says Sesini. That isn’t to say the lessons of your early years set such attitudes in stone. As we grow older, she says, life-changing events, such as parenthood and bankruptcy, can drive big shifts in our views and financial behaviour. What’s more, even within the same family, differences in children’s exposure to their parent’s fiscal stresses – or profligacy – combined with personality differences and individual experiences, can make for strikingly divergent attitudes in adulthood.
Measuring your love of money
To drill down into these outlooks, psychologists use a variety of questionnaires that capture perceptions, beliefs and feelings related to money. These tend to comprise sliding scales that measure things like the degree to which you favour saving for the future versus spending now, how anxious you feel about money, how hesitant you are in situations that involve it, and the extent to which you see finances as a means to show off and influence others. Some studies focus specifically on the concept of “love of money”. Here, the scale records things like how keen you are to be rich, how motivated you are by a desire for money, and how important, good and valuable you think it is.
Sesini recently led two major reviews of such research. , she and a colleague analysed results from 226 papers exploring a range of potentially influential factors, such as age, personality, personal values and wealth. A few patterns were quite clear. For one, younger people tend to attribute greater importance to money and associate it more strongly with power and freedom. They are also more anxious about it – perhaps unsurprisingly, given rising student debts, unaffordable housing and stagnating salaries in many places.
Some personality traits are influential, too. Neuroticism and conscientiousness, for example, can increase financial anxiety. Conscientious types are often less materialistic. And introverts are more likely than extroverts to view money as evil. There is also a link between “love of money” and unethical behaviours, such as lying and cheating. Other factors were less clear cut. Several studies (mostly in the US) indicated that wealthier people were more likely to believe money can solve all problems. However, a study in the UK concluded that such attitudes are more common among people on lower incomes.
In a second review, Sesini and her colleagues . Here, most of the 100 relevant studies had been conducted in the US, with a few in Europe and Asia. Together, they paint a puzzling picture. The men surveyed tended to see money as a way to control, influence and impress other people, and as a symbol of power and prestige – this was true for those in both higher-income and lower-income countries. Overall, they had higher “love of money” scores than women and were more likely to believe that becoming richer would make them more attractive and desirable.
The women’s attitudes were more complex. They were more likely to view money as a source of anxiety and stress – but also to associate it with security and love. The studies span a period from 1972 to 2021, but even the newer ones found these disparities, despite women having better work opportunities and greater financial independence in recent decades. “It may take time to fully appreciate the tangible effects of these changes,” says Sesini.
Culture, too, strongly influences attitudes to cash. Research into the psychological effects of money tends to be concentrated on people living in WEIRD – Western, Educated, Industrialised, Rich and Democratic – countries. Last year, however, at the University of Chicago and his colleagues published work highlighting the countries, specifically the US and UK versus China, India, Mexico and South Africa. The results were unexpected. “The basic intuition we have from an economic perspective is that someone from a less-wealthy country should be more motivated by a single dollar than someone from a wealthier country,” says Medvedev. “We show the opposite. And the effect gets stronger as we move to countries that are more dissimilar to the US.”
For WEIRD participants, work ethic was more tightly tied to monetary incentive. One particularly notable finding was that as soon as US participants had done enough to qualify for their base pay, over half of them quit the task, while more than 90 per cent of Mexicans continued with it. But Medvedev cautions that this could simply reflect a less contractual approach to work in non-WEIRD countries.
Research reveals why ostentatious displays of wealth often backfire
Although there is still more to learn about the factors that shape our individual attitudes to money, psychologists are also keen to work out how these views . One key finding is that attitudes are a problem. While having enough to comfortably provide for yourself and the people you love inoculates you from the downstream health impacts of financial stress, at Washington University in St Louis, Missouri, and her colleagues have found that your concept of wealth matters. The more value someone places on wealth, they found, the less likely people are to report feeling a sense of purpose, personal growth, self-acceptance, environmental mastery and life satisfaction, and the more negative emotions they tend to experience. Sesini’s work provides a clue as to why. It shows that people who view money as a sign of power, status and prestige tend to be more impulsive, less friendly and more Machiavellian – cunning, scheming and unscrupulous.
How not to win friends
Research also reveals why ostentatious displays of wealth often backfire. Although studies indicate that , a team led by at the University of Michigan . Participants in an online game of cooperation were less likely to choose partners who had dressed their avatar in a shirt featuring a designer logo, rather than an unbranded shirt – even if they had chosen branded clothing for their own avatar. “Wealth signalling reveals two things: that a person is wealthy and that they have decided to show off their wealth. It is the showing off that’s bad for your image as a cooperative person,” says at Yale University, who was part of the team.
It is now well-established that being materialistic – having an excessive focus on acquiring wealth and possessions that display status – also . Research published last year might help explain this. When at Cardiff University in the UK exposed people to money-focused, status-related messages, such as ads for luxury brands, they had – in particular, wanting them to be more attractive and more ambitious – which would seed dissatisfaction with the people around them. But being non-materialistic isn’t necessarily a better way to go. In their study on the influence of various factors on financial attitudes, Sesini and her colleague found that less materialistic people tend to have a “conservative, retentive” approach to money – some might call them “careful”, others would say “tight”. Either way, as well as being less likely to get into debt or end up bankrupt, they are also more likely to feel anxious about money, and more inclined to save in an “excessive and irrational way”.
Given such findings – and the apparent tightrope between having enough money and maintaining some sort of psychological distance from it – the million-dollar question is “What is a good attitude to the stuff?” Of course, there is no one right answer. Being aware of how money manipulates your behaviour and mind should help. The scientific literature also offers some pointers about how to get the most bang for your buck in wellness terms. If you have cash to spare, . So too will , but only if you can afford to do so. And using money to free up your time – like choosing the more expensive gym that is closer to your home, paying for supermarket deliveries or taking your family for a meal out on a Friday night, rather than spending hours chopping vegetables and washing dishes – will leave you . “Before buying that new pair of shoes or the latest gadget,” says Medvedev, “ask yourself: ‘Is this worth more to me than extra time or meaningful moments with loved ones?'”
Such advice will ring hollow if you are struggling to get by. Knowing that your brain is registering social pain and stress won’t help much either. Worse yet, psychologists have found that , undermining the ability to make good financial decisions. Nevertheless, research by Qiyan Ong at the National University of Singapore and her colleagues offers a ray of hope. They found that giving people a one-off debt-relief payment both , helping them escape the poverty trap.
Sesini, for her part, believes we can also all benefit from deeper personal exploration. “Ask yourself: ‘How do I feel when I think about money?'” she says. “This simple question can reveal a great deal about your relationship with money and offer valuable insights into your personal attitudes and emotions.” Talking about these insights could benefit romantic relationships and improve broader family dynamics, she adds. And while being more open about money might not prevent grumbles about tightness or profligacy, it might just help us break down some taboos. That can only be a good thing because, as my gossipy hairdresser highlighted, a reluctance to broach the subject of money is keeping many of us from sharing our honest perspectives with those we love.
