Why We Are So Cash Conscious
Unfortunately, money’s much more than a tool for survival.
- November 21, 2022
- CBR - Ethics
How often do you think about money? And what exactly do you think about when you do?
Among William Shakespeare’s many plays, Timon of Athens is the bard’s most sustained meditation on the capacity for wealth to warp human relationships and lead us to reimagine our place and purpose in the world. Timon is a well-heeled aristocrat when the play opens, but he soon gives away his wealth to his friends, who repay his kindness, in turn, by immediately turning their backs on him.
Notably, it is only when Timon loses his money that money becomes an obsession for him. He is blithe and foolish throughout the first act of the play—the portrait of a gilded innocent—but once his empty coffers expose empty friendships, money soon transforms into a matter of endless meditation, especially its tendency to purchase the good opinions of others and reorganize social customs with impudence and alacrity:
This yellow slave
Will knit and break religions,
bless the accursed,
Make the hoar leprosy adored,
And give them title,
knee and approbation
With senators on the bench
The fact that Timon thinks about money only when he doesn’t have any hardly makes his experience unusual, except that, for most of us, not having money is somewhat less exceptional, especially in the early stages of life.
I’ll speak for myself. If you canvassed my friends, they would almost certainly tell you that not having money is one of the enduring themes of my life. This is because, well into my 30s, I didn’t have much money to speak of, and even today, I pride myself on being able to pinch a penny until it screams.
I elevated this talent to an art form in college, earning the nickname “the Pauper in Polo.” I knew how to get what I wanted on the cheap and otherwise wanted for little because there was little I wanted. I was steely, resourceful, and above all incapable of embarrassment.
In one of my more memorable hustles, I helped to retire a coupon at Tommy’s, one of the two pizzerias on campus. While working on the custodial crew for graduation exercises, I volunteered to clear out the trash depot in one of the dorms. The football player who joined me was less than enthusiastic until I fished a campus magazine from one of the recycling bins and flipped to the back cover.
Check this out, I told him. It was a coupon for a free slice of pepperoni pizza with a $2 purchase at Tommy’s. I gestured to the bins. This basement was the King Tut’s tomb of Tommy’s coupons, I explained. There were hundreds of these coupons in the copies of magazines discarded by students who didn’t think twice about leaving money on the table.
We went to work with gusto, tearing those back pages in two and filling our pockets with the loot. But that was only the beginning. Two dollars, I explained, was an odd amount to spend at Tommy’s. In fact, there wasn’t anything on the menu you could buy for exactly that price—not unless you purchased a special 32-oz. plastic mug you could refill whenever you liked for 50 cents. With one such a refill and a $1.50 slice of pepperoni pizza, you had your two dollars—and a second free slice.
Which was exactly the plan I followed twice a day for four weeks on the cleaning crew that summer, for a $5-a-day budget of four large slices of pepperoni pizza and four full mugs of Coke.
I fully grant that when I didn’t have money to solve some of my most basic problems, I made some pretty dumb decisions.
In some respects, this relationship to money seems, if not entirely healthy, at least fairly conventional. Money is a tool for survival, one necessary to solve what John Maynard Keynes termed “the economic problem” of scarcity. If you have money, you can have a roof over your head, a shirt on your back, and pepperoni pizza in your belly. If you don’t, you lack the tool needed for solving the problem of scarcity, and you had better figure out how to get it—and fast.
This, of course, is the less appealing flip side to the picaresque portrait above. If as the Pauper in Polo I proved myself uncommonly adept at temporarily solving the problem of scarcity, it was thanks in large part to the alarming amount of time I spent scheming about the various ways to make a quarter do a cartwheel.
Such obsessiveness has at least two implications that Chicago Booth’s Sendhil Mullainathan has chronicled in Scarcity: Why Having Too Little Means So Much, the book he coauthored with Princeton’s Eldar Shafir on the cognitive repercussions of scarcity.
The first is what they call the “bandwidth tax” of poverty. Yes, there may be something admirable in the audacity and inventiveness of my cut-rate meal program, but the amount of time I put into devising such schemes and executing them could surely have been put to better use.
At the same time, these weren’t merely games I played to pass the time. They were survival stratagems, which meant the stakes of screwing up—I often used to think in terms of how many $20 mistakes I could get away with—seemed harrowing and impossibly high.
For Mullainathan and Shafir, such apprehensions contain a second insight into the quality of the decisions we make when we’re under financial duress. A person dealing with scarcity often spends a lot of time figuring out how to solve what otherwise might seem like small or inconsequential problems—how to save a few bucks here or there—and those deliberations tend to be burdened with the kind of anxiety that inevitably yields shoddy decision-making.
In a 2010 study, Mullainathan and Shafir found that, for those in poverty, the cognitive strain brought about by financing a serious car repair led to a 14-point decline in IQ score, a bigger drop than participants show after staying awake for 24 hours in sleep studies. “To put it crudely,” Mullainathan says, “poverty—no matter who you are—can make you dumber.”
I wince at this interpretation, though I fully grant that when I didn’t have money to solve some of my most basic problems, I made some pretty dumb decisions. Typically, they came in the form of what Mullainathan describes as “short-term financial fixes that can have disastrous long-term effects.” The most obvious example was my monkey’s paw of credit cards that waived finance charges for an extended period of time before an interest rate kicked in that was typically so predatory it would make the boss of a protection racket blush.
These so-called zero-percent credit cards solved a short-term problem—cheap cash at my fingertips—but using them was something like taking advantage of an empty beach on a warm summer’s day when the sirens warn of a tsunami.
What would it mean for money to have no role in determining place and opportunity, for it to be merely a tool readily available to obtain things?
We don’t normally think of money as a tool for mere survival. (I use “we” advisedly, for I assume that the budgets of those bothering to read this essay do not turn on pocketing Tommy’s coupons.) Therefore, if money is an object of undue concern for us, it is not out of life or death, but instead because, as Timon realizes once it is too late to make a difference, the power of money goes well beyond securing basic necessities, or even luxurious alternatives.
Money doesn’t merely mediate the physical goods needed for survival. “That which mediates my life for me, also mediates the existence of other people for me,” Karl Marx contended in Economic and Philosophic Manuscripts of 1844, a loose collection of scholarly reflections that was only published decades after Marx’s death.
In one of the work’s most famous passages, Marx cites at length the scene in Shakespeare’s play where Timon rages against the demonic capacity of gold to subvert moral hierarchies and human relationships. “The extent of the power of money is the extent of my power,” Marx says of the central lesson of Timon’s diatribe. “Thus, what I am and am capable of is by no means determined by my individuality.”
I am bad, dishonest, unscrupulous, stupid; but money is honoured, and therefore so is its possessor. Money is the supreme good, therefore its possessor is good. Money, besides, saves me the trouble of being dishonest: I am therefore presumed honest. I am stupid, but money is the real mind of all things and how then should its possessor be stupid? Besides, he can buy talented people for himself, and is he who has power over the talented not more talented than the talented? Do not I, who thanks to money am capable of all that the human heart longs for, possess all human capacities? Does not my money, therefore, transform all my incapacities into their contrary?
Marx may be laying it on a bit thick, but his essential point—that money shapes the opinions of others decidedly in one’s favor—seems hard to deny. Moreover, the value of such “good opinions” is not merely the meretricious comforts of constant fawning. To be rich, we might say, is to live in a world where people are always rushing to hold the door for you, and the benefits of such solicitude are not limited to who gets a good table at Delmonico’s.
To be top of mind, to be given first opportunities and final chances, to be invariably extended the benefit of the doubt—these are just some of the advantages that money affords. More importantly, they not only shape social relations, but they also structure the institutions of society. Some of these changes are obvious and official—the set-asides for wealth are evident in acceptance letters and skyboxes—but more often they are implicit and largely imperceptible, an erosion of norms, insidious and steady, that accommodates the tidal current of cash.
Such tendencies together with the more naked favors of first consideration and flattery are the properties Timon has in mind when he dubs gold a “visible god.” Indeed, what could be more godlike than an invisible force that reorganizes the physical world and appoints angels among us?
“When the accumulation of wealth is no longer of high social importance, there will be great changes in the code of morals,” the late economist John Maynard Keynes wrote not long after World War I. “We shall be able to rid ourselves of many of the pseudo-moral principles which have hag-ridden us for two hundred years, by which we have exalted some of the most distasteful of human qualities into the position of the highest virtues.”
By “pseudo-moral principles,” Keynes had chiefly in mind the elevation of self-interest from a blind and often brutal instinct to a benign, enlightened guide to the invisible hand. For Keynes, this was an example of moral alchemy, and a highly distasteful one at that, but he granted that it was necessary to get the wheels of capitalism turning. Still, he held, once we effectively solved “the economic problem” by expanding productive powers so that people wouldn’t have to work long hours or lead lives of drudgery, we would no longer have a compelling reason to lionize this antisocial impulse. “We shall be able to afford to dare to assess the money-motive at its true value,” he declared, that motive being to self-interest both signal and spark in a capitalist society.
Such predictions may sound supremely utopian, but I would note that Keynes gave them a century to come to pass. He envisioned for his grandchildren in 2030 a world of 15-hour workweeks, and if we pause to think about a future for our own grandchildren a hundred years from today, a world in which little labor is required of us hardly seems among the most fanciful of predictions.
No, it is not a solution to “the economic problem” per se that seems most improbable but the idea that, as Keynes put it, we should so easily “discard” the “social customs” that revolve around money. This is not merely a matter of collective mindset but a metamorphosis of the customs and institutions that so thoroughly shape our lives.
Think about it: What would it mean for money to have no role in determining place and opportunity, for it to be merely a tool readily available to obtain things? It seems inconceivable, doesn’t it? A departure from the world we know so complete as to resemble the stuff of science fiction.
And yet, this is what is required for Timon’s “visible god” to lose its sway over our hearts and minds, for money to no longer be the subject of so much time and attention, so much endless plotting and late-night perturbation. Until then, the essential truth is not that we will spend immense amounts of time thinking about money—we most certainly will—but that we would be crazy not to.
John Paul Rollert is adjunct associate professor of behavioral science at Chicago Booth.
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