A few months ago I won the lottery. No, not The Lottery, as in the nine-digit super-jackpot lottery, but more like the $42 lottery – where I had the Powerball and one other number on a couple of tickets.
Despite the disappointment of having just missed the $758.7 million jackpot, I can still vividly recall the excitement I felt cashing out my “winning tickets”, as the cashier at the local convenience store counted out my pile of forty-two $1 bills. That got me wondering once again about the influence of the physicality of cash, and some of its behavioral effects.
The Psychological Influences of Money
A study commissioned by the Consumer Financial Protection Bureau examined the subtle (and not so subtle) effects that cash has on people’s behavior. The short version of the research study examined what happens when experimental subjects were sold identical mugs for $2, and then asked to sell them back – but where one group was told they paid for the mugs on a credit card, and other with cash. The results showed the cash purchasers reflected a much higher perception of the value of the mugs than credit card purchasers. Some of this influence can be attributed to endowment effect, but not in its entirety. Subjects in a different experiment felt notably more connected (psychologically, emotionally) when making charitable contributions in cash rather than with some other form of payment.
Some of best research about the subtle influences of money, has been conducted by Kathleen Vohs, from the University of Minnesota. In a number of these experiments the power of cash to negatively influence behavior, disrupt team-based relationships and to encourage more selfish decision-making was consistently demonstrated. More telling was that money’s ability to influence people to be less socially-sensitive was not limited only to instances of the physical presence of money, but even to the very mention of money.
Give Las Vegas Some Credit
The phrase, “what happens in Vegas, stays in Vegas”, would probably be better stated “money that comes to Vegas, stays in Vegas”. Many, many years ago casinos began using chips because they recognized that gamblers were predisposed to take greater risks when betting chips, because we all know it’s much easier to ante up a pile of same-size, brightly-colored chips, rather than contemplate that you just bet fifty $20 bills that may represent a significant portion of next month’s mortgage payment.
We all know that credit cards are not the same as casino chips. Or are they? Hmmm, providing consumers with colorful plastic cards – all of a similar size, that are essentially an opaque instrument that allows for the easy purchase of products or services, as a substitute for actual currency, does sound a lot like the use of casino chips. Ultimately, whether a personal expenditure is in the form of chips in the casino or a plastic card in the retail store, an intermediary instrument nearly guarantees our insulation from the subtle, psychic influence associated with the direct expenditure of cash.
Separating Us From Our Money
Purveyors of products and services (including casinos and credit card companies) clearly have an understanding of people’s psychological relationship with money – with the goal of more easily separating us from our cash. But what about social responsibility and predisposing people toward charitable giving and feeling good about that behavior? And for total rewards professionals, what about affirmatively de-conflicting the explicit linkage between money, motivation, behavior and performance?
How is all of this influenced by the move towards a cashless society, with debit cards, cashless transactions and virtual wallets using smartphone apps, with their ubiquitous near field communication capability?
It sometimes makes me wonder whether a return to a day when employees were paid in cash, and the linkage of work to its associated outcomes and subsequent levels of motivation would be strengthened by the receipt of actual cash. Perhaps that linkage is fading, and is already being replaced by new, psychic and behavioral linkages as the workforce continues to change.
A Ticket To Ride
As is the case with most things that excite us . . . it’s complicated – mostly because it involves people. Whether it’s a winning lottery ticket or your next paycheck, what you’re really receiving is the means to an end or opportunity – maybe best illustrated by the line from The Maltese Falcon, “. . . the stuff that dreams are made of”.
Everyone probably has a different perspective. What’s yours?
Chris Dobyns, CCP, CBP is currently employed as a Human Capital Strategic Consultant for the Office of Human Resource Strategy and Program Design for one of the largest U.S. intelligence agencies. The Office of Human Resource Strategy and Program Design is responsible for organizational effectiveness, personnel assessment, compensation and incentives, occupational structure, recognition and rewards, HR policy, human capital program design, implementation, evaluation and assessment and internal consulting. Chris has worked in the area of compensation for more than 35 years, and has been employed in various compensation-related positions by a number of large, private sector companies including, Sears, Roebuck, Arizona Public Service and Westinghouse Savannah River Company.
Original image "Lottery Cashier Window" courtesy of Chris Dobyns.