E04 - Epilogue: The Social Science of Money

So far, in this podcast series, I talked about rewards, incentives and reinforcers. And often, these came in the form of money. So that is to say, when I reflect on the first three episodes, I think I find myself talking about monetary rewards quite a lot, especially where I gave examples. So in this final episode, or at least for now, this is the final episode, I will ask the question, can we think of money as just simply a reward? So is money just a desirable outcome that can be earned through behavior? Or is there maybe something special about money? Let's first consider what money actually is. And for that, we need to look at other social sciences, such as economics and anthropology, where researchers have thought about the question of what money is very deeply. When you ask economists to define money, they often say money is three things at the same time. First, money is a medium of exchange. And this means that you can use money to exchange between different goods and services. So money is something that can function as a payment. Second, money is a unit of account. And this means that you can use money as a measure of how valuable something is. And also, for example, to measure how much debt you have with someone else and so forth. Third, money is a store of value. So you can use money to preserve your current wealth for later, for the future, for example. If we stop here and think about the original question, is money simply a reward, then the answer could clearly be yes, because people can often earn money through work and money seems to be universally desirable. It can serve as a payment and it can be stored. So it can just satisfy many different desires that people might have. So this could actually be the end of this episode. Money is a desirable outcome that can be earned through behavior. So it's a reward and the story. But it is also interesting to look at anthropology. In this field of study, they do not just study what money is, but also how money is used. I have to be a bit cautious here, because when I read anthropological work, I'm usually not 100% sure if I understand everything correctly. But there are two things that I took away from this field. First, in anthropology, there are interesting ideas about how money originated. Money likely emerged about 10,000 years ago when societies transitioned from a hunter-gatherer lifestyle into a forming lifestyle. So with this transition, people evolve to need to more efficiently exchange stuff like food and also they evolve to need to measure value than to store wealth. So people invented money or so the story goes. Anthropologists do not seem to agree on everything though. So one debate is about what came first. Some anthropologists argue that the physical form of money like coins and banknotes and seashells came first and then evolved into early forms of banks. An early form of a bank would be a credit system in which people keep track of who owed what to whom. These could be things like farming products like people would keep track of things like Eric O. Staniella back of a grain. By contrast, other anthropologists argue that early banks came first and that the physical money only developed after that. I can tell which perspective is better or correct, but I know both exist. Another thing I took away from my reading of anthropological work is that people around the world do tend to attach a lot of meaning to money. Some anthropologists speculate that this is because there is a large gap between the value of the material form of money versus the value that that money represents. So to clarify, the paper of which banknotes are made has very little value by itself. Yet these banknotes are very valuable. And these anthropologists, Taylor Nelms and Bill Marrer, speculate that this huge gap invites magical thinking about money. And as a result, people quickly tend to give symbolic meanings to money. I will now give you some examples. In many parts of the world, money plays a role in wedding ceremonies. There are different varieties of this, but in the Eastern European tradition, near the end of the wedding party, the guests form a circle around the mate of honor and they throw banknotes at her. Sometimes, the guests instead pin the money to the bride's dress. And in exchange for that money, they get to dance with the bride. And the money symbolizes good fortune and prosperity. Similarly in some cultures, people are buried with money. And generally, the idea is that this money will somehow be helpful in the afterlife. When Pope Francis was buried, he was also buried with 12 coins and medals, which served as a memory of his 12 years as a Pope. In large parts of Asia, around Lunar New Year, people give each other red envelopes with money. And the specific meaning of this money differs by country, but in China, this ritual relates to an ancient story of a demon who would terrorize children on New Year's Eve in their sleep. The parents would try to protect their kids from this demon by keeping them awake. One mom at some point gave her kids some coins to play with to help them stay awake. But the kid nonetheless fell asleep and then the demon came. But then the coins started to emit a powerful bright light that scared the demon away. So as a result, people now give each other envelopes with money because this protects them from the demon. And more generally, these envelopes are also a wish for good fortune. In Indonesia, in the 90s, the Indonesian banknotes had an image of General Suharto, who was at a time the president of Indonesia. Suharto was a military dictator, so he was not that popular. So when his regime ended in 1998, there was an intense period with demonstrations and protests. And one of the banknotes, one of the higher denominations with Suharto's face on it, became central in these protests. This banknote became to symbolize corruption and abuse of power. There are many more examples like this from around the world, and also there are just so many artists that made art about money. And the central point is, the physical form of money, so coins and banknotes easily acquires symbolic meaning, possibly because there is such a big gap between the value of the material of which the money is made, and the money itself. A final observation from the intersection of anthropology and psychology is that there are many social rules around money. For example, depending on the culture and the setting, there are many specific rules about whether it is okay to give money as a gift. And though money, of course, has value to the receiver, giving money as a gift is still considered careless in some cultures. You can pay for services, but not all services. If your friend helped you move to different places, for example, you can buy them dinner and you can give them a gift to thank them, so you can reward them, but it would be weird to use money for this purpose. Also in some cultures, conversations about money are taboo topics. In these cultures, it is hard to discuss finances with family, for example. In the Netherlands, it's quite awkward to ask people how much money they make. So this episode is a lot more anecdotal than the previous ones. There is less quantitative data, but I do think there's a clear pattern here. You can't always use money as a reward. In some cases, that is just socially unacceptable and that depends very much on the culture. I am getting to the end of this episode. In the beginning, I asked the question, can we think of money as just simply a reward? Well, yes, we can. Money can clearly function as a desirable outcome that can be attained through behavior. But on the other hand, banknotes and coins can acquire all kinds of meaning, and this goes far beyond the traditional economic idea of what money is. Also, the use of money is restricted by culturally specific social rules. So yes, you can think of money as just a reward, but I think this perspective would be way too narrow. For now, this is the end of this podcast series. Thank you for listening. [MUSIC]