Psychology of Money

by

Erik Bijleveld, Lena Schäfer, Dorottya Rusz

• LAST REVIEWED: 27 March 2019
• LAST MODIFIED: 27 March 2019
• DOI: 10.1093/obo/9780199828340-0239

Introduction

Around ten thousand years ago, several communities around the world transitioned from a hunter–gatherer lifestyle into an agricultural one. Along with this lifestyle transition, many communities evolved the desire to efficiently store and exchange value. Thus, people invented money, and by now, money plays an important role in most people’s lives. ‘Money’ refers to the institutions people use to store wealth, to measure value, and to exchange goods and services. Also, money encompasses the material objects tied to these institutions, such as coins and banknotes. This article provides a broad overview of the psychological literature on money. In particular, it points the reader to research that addresses the following questions: When and how does money motivate human behavior? When and how does money distract people from working? How does money acquire cultural associations? How do these cultural associations manifest themselves on the behavioral level? How do young children and older adults process money? How does spending money affect people’s feelings? What are the psychological consequences of being wealthy versus being poor? What is the nature of money-related problematic behaviors, such as compulsive spending and pathological gambling? To answer these questions, this bibliography mainly highlights classic and recent psychological research, but it also cites insights from economics, neuroscience, and anthropology.

General Overviews

Lea and Webley 2006 presents an in-depth review of the psychology of money, proposing a novel distinction between different psychological functions of money. Furnham and Argyle 1998 presents a rich overview of intellectual traditions that deal with how money relates to human behavior. In an edited volume, Bijleveld and Aarts 2014 offers reflections on money from different scientific perspectives, such as social and experimental psychology. A philosophical perspective on money is presented in the historically important work Simmel 2004, which provides a wide-ranging discussion of the psychological and philosophical aspects of the money economy. In contemporary work, it is important to note that two general fields of study are particularly important to the understanding of the psychology of money: the study of motivation and the study of behavioral economics. Giving a full overview of these fields is beyond the scope of the present article, but the interested reader is referred to Richter, et al. 2013 for motivation science, and to Hochman and Ayal 2014 for behavioral economics.

• Bijleveld, E., and H. Aarts, eds. 2014. The psychological science of money. New York: Springer.

  Edited volume. Gives an overview of several scientific approaches to the study of money.

• Furnham, A., and M. Argyle. 1998. The psychology of money. London: Routledge.

  Provides a well-informed and broad overview of how money may affect the human mind and behavior.

• Hochman, G., and S. Ayal. 2014. Behavioral economics. Oxford Bibliographies in Psychology.

  A literature review about behavioral economics, similar in structure to the present article.

• Lea, S. E. G., and P. Webley. 2006. Money as tool, money as drug: The biological psychology of a strong incentive. Behavioral and Brain Sciences 29.2: 161–209.

  DOI: 10.1017/S0140525X06009046

  Provides a comprehensive review of the psychological science of money. Based on this review, the authors propose that money has two broad psychological functions: People use money as a tool, but money also functions as a drug. Includes commentaries by other researchers, some of whom offer alternative perspectives. Available online by request.

• Richter, M., R. A. Wright, K. Brinkmann, and G. H. E. Gendolla. 2013. Motivation. Oxford Bibliographies in Psychology.

  A literature review about motivation science, similar in structure to the present article.

• Simmel, G. 2004. The philosophy of money. Abingdon, UK: Routledge.

  Simmel presents an analysis of the exchange and circulation of commodities, considers the relationship between the use of money and people’s personality, and targets important areas of life, such as individual freedom. Originally printed in 1900 (Leipzig: Duncker & Humblot).