Money Illusion

When Convenient Illusions Hold Precedence...

Language, Substance, and Money are intermediaries which crumble under weight of inspection

Quotes

I have a theory, which has not let me down so far, that there is an inverse relationship between imagination and money. Because the more money and technology that is available to [create] a work, the less imagination there will be in it.

Quotes

I have a theory, which has not let me down so far, that there is an inverse relationship between imagination and money. Because the more money and technology that is available to [create] a work, the less imagination there will be in it.

A Model of Money and Credit, with Application to the Credit Card Debt Puzzle

Abstract. Many individuals simultaneously have significant credit card debt and money in the bank. The credit card debt puzzle is as follows: given high in

The Future of Money: How the Digital Revolution Is Tran…

A cutting-edge look at how accelerating financial chang…

The Impact of Payment Frequency on Consumer Spending and Subjective Wealth Perceptions

Abstract Payment frequency is a fundamental yet underexplored feature of consumers’ finances. As higher payment frequencies are becoming more prevalent, consumers are receiving more frequent yet smaller paychecks. An analysis of income and expenditure data of over 30,000 consumers from a financial services provider demonstrates a naturally occurring relationship between higher payment frequencies and increased spending. A series of lab studies support this finding, providing causal evidence that higher (vs. lower) payment frequencies increase spending. The effect of payment frequency on spending is driven by changes in consumers’ subjective wealth perceptions. Specifically, higher payment frequencies reduce consumers’ uncertainty in predicting whether they will have enough resources throughout a period, increasing their subjective wealth perceptions. As such, situational factors that reduce prediction uncertainty for those paid less frequently (e.g., the timing of consumers’ expenses, income levels) moderate the impact of payment frequency. The effects of payment frequency on subjective wealth and spending can occur even when objective wealth favors those with lower payment frequencies. More broadly, the current work underscores a need to understand how timing variations in consumers’ income impact their perceptions, behaviors, and general well-being.

Pay Enough or Don't Pay at All*

Abstract. Economists usually assume that monetary incentives improve performance, and psychologists claim that the opposite may happen. We present and disc

The Illusion of Clarity • Ness Labs

The illusion of clarity is the confident feeling that you understand something, when in reality your grasp is full of gaps you’ve never noticed.

value noun - Definition, pictures, pronunciation and usage notes | Oxford Advanced Learner's Dictionary at OxfordLearnersDictionaries.com

Definition of value noun in Oxford Advanced Learner's Dictionary. Meaning, pronunciation, picture, example sentences, grammar, usage notes, synonyms and more.

Pain of Paying? — A Metaphor Gone Literal: Evidence from Neural and Behavioral Science

How do individuals consider the price of a good when making purchase decisions? Standard economic theories assume an analytical process: Individuals consider th

The marketplace of rationalizations

Recent work in economics has rediscovered the importance of belief-based utility for understanding human behaviour. Belief ‘choice’ is subject to an important constraint, however: people can only bring themselves to believe things for which they can find rationalizations. When preferences for similar beliefs are widespread, this constraint generates rationalization markets, social structures in which agents compete to produce rationalizations in exchange for money and social rewards. I explore the nature of such markets, I draw on political media to illustrate their characteristics and behaviour, and I highlight their implications for understanding motivated cognition and misinformation.

Cognitive Capitalism - Public Seminar

There are broadly three ways of thinking historically about capitalism. One draws on Marx’s value theory and pretty much treats...Read More

Payment method and perceptions of ownership

How consumers pay influences how they feel about a transaction. In particular, paying by card has been argued to have an effect on the perception of cost, making it less salient and painful. We propose and show that payment method also influences how consumers feel about the acquired good. Specifically, we focus on effects of the payment method on psychological ownership, i.e., the perception of an object as “mine.” We propose that cash payment results in stronger psychological ownership because it influences the extent of perceived investment in an object. We provide evidence for the proposed effect from field and laboratory settings. Results of a longitudinal exit survey and an experiment show that cash payers report higher levels of immediate psychological ownership than card payers. However, this effect seems to depend on the meanings associated with a payment method. Asian students (who associate credit card payment with investment and debt) do not exhibit this effect. Moreover, the initial boost in psychological ownership seems to be comparably short-lived. While those paying in cash experience no further increase in psychological ownership over time, those paying by card do.

The Coholding Puzzle: New Evidence from Transaction-Level Data

Abstract Why do individuals pay debt interest when they could use their savings to pay down the debt? We explore why individuals “cohold” debt and savings using detailed and highly disaggregated daily-level data on household finances. We find that coholding mostly occurs in short spells within the month and the level of coholding is typically modest. Periods of coholding are not associated with shocks at the individual level. We show that mental accounting has a role to play in explaining coholding, in particular how individuals allocate different categories of expenditure to accounts in credit and debit.

Monopoly money: The effect of payment coupling and form on spending behavior.

Madness and Enterprise: Psychiatry, Economic Reason, and the Emergence of Pathological Value

Uncovers a powerful relationship between pathology and money: beginning in the nineteenth century, the severity of mental illness was measured against a patient’s economic productivity.  Madness and Enterprise reveals the economic norms embedded within psychiatric thinking about mental illness in the North Atlantic world. Over the course of the nineteenth century, various forms of madness were subjected to a style of psychiatric reasoning that was preoccupied with money. Psychiatrists across Western Europe and the United States attributed financial and even moral value to an array of pathological conditions, such that some mental disorders were seen as financial assets and others as economic liabilities. By turning to economic conduct and asking whether potential patients appeared capable of managing their financial affairs or even generating wealth, psychiatrists could often bypass diagnostic uncertainties about a person’s mental state. Through an exploration of the intertwined histories of psychiatry and economic thought, Nima Bassiri shows how this relationship transformed the very idea of value in the modern North Atlantic, as the most common forms of social valuation—moral value, medical value, and economic value—were rendered equivalent and interchangeable. If what was good and what was healthy were increasingly conflated with what was remunerative (and vice versa), then a conceptual space opened through which madness itself could be converted into an economic form and subsequently redeemed—and even revered.