Financial advisors can supplement their more typical reading material with Claudia Hammond’s provocative and engaging brain teaser, Mind Over Money: The Psychology of Money and How to Use it Better.
Hammond, who is a psychologist, is the host of All in the Mind and Mind Changers on BBC Radio 4 in England, and she lectures on social psychology at the London campus of Boston University. Hammond bases her arguments in this book on citations from more than 200 studies, research projects and both scholarly and popular publications. Mind Over Money should provide advisors with fresh insights into their clients’ impulses and choices.
She begins with an anecdote about the videotaped 1994 “performance art’’ burning of 1 million British pounds by KLF, a pro-anarchy British pop band. Reaction was hostile, even hateful. In defense of torching cash, KLF said “There’s no less bread or apples in the world.’’ Hammond argues that although money can be seen as an intellectual concept, the anger was rooted in the tangible: “It’s true that no actual bread or apples were destroyed in the fire, (but) the possibility of bread and apples (were). Food that could have fed people.’’
Researchers that Hammond quotes conclude that money has a unique status in society, whether it is used selfishly or for the wider good: in many countries, including the United States, it is illegal to deface or destroy money.
She cites the 1978 work, completed before Daniel Kahneman and Amos Tversky’s studies were published, of psychologists Herb Goldberg and Robert Lewis who established 12 typologies based on attitudes about money, including two that advisors are probably familiar with: the Money Buys Freedom type—those who believe money frees you from being told what to do—and the Manipulator type, who uses money to get and keep power.
And yet, Hammond writes, studies found that “Overall, (the size of) income did not dictate attitudes about money: rich or poor, there was no difference to whether they valued money for security, freedom, love or power. Perhaps we can conclude that our attitude to money is innate: it comes before our financial situation,’’ she says
In the Big Money Test undertaken by BBC Science in 2013, Hammond says, men were found to be more likely to associate money with security and freedom, and that women worried about money more than men, using shopping as therapy! Moreover, women tested considerably more financially generous than men.
One wishes that here and elsewhere that Hammond provided more information about the ages of respondents, to see if women’s changing role in and confidence about managing money is altering test results.