Today I invite you to read the guest article which Paweł Strojny wrote.
I met Paweł a few years ago by organization of the second edition of DayTrader Event conference. I invited him then to conduct a lecture which in some way brought psychological issues up. He concentrated on “Distortions of the rationality of decision-making processes”. It was very interesting to hear what you do as a trader, described in a little bit more scientific way.
Today Paweł presents in a quite freeway described approaches to money, which actually traders on a daily basis hold in accounts. I invite you to read it!
The work almost always is connected with money, we work for money. However, there are few people, who similarly as trader work with the help of money. Does it have any psychological consequences?
Money – a source of all evil?
Even in 1990s, scientists noticed that students of economics in the face of conflict in interest behaved differently that the general population. They are guided largely by self-interest, generally speaking – take more selfish decisions. Someone might say: “No wonder, they learn how effectively to manage limited resources”. However, the source of differences may be much deeper – in the heart of economy, money.
The above results, but also “common sense” makes us believe that contact with the money affects people. Recently, even the Pope Francis stated that “Money corrupts thinking”. Whether indeed most sensibly would be to avoid money, and as a last resort to put rubber gloves on before going out to the grocery?
Does money affect thinking?
Yes, but not necessarily breaks it down. Authors of many studies (over 160 reports, and there are still new) almost unanimously state that activation of the concept of money in the mind (also unaware, e.g. hanging of the poster with banknotes on the laboratory wall) causes a row of psychological consequences. A large part of them is actually disadvantageous for the functioning of society, but even more is reports about the positive impact of money on individual performance and motivation.
Thinking about money harms social contacts
Experimental results indicating indicate a clear – thinking about money cools down our relationship to others. It causes that we are less willing to help, empathetic and greedier. Moreover, intellectual activation of money generally reduces willingness to social contacts and what’s more causes that participants of experiments placed their chairs in a greater distance than remaining! Effects appear irrespective of the age (already concern four-year-olds), and to trigger it out we just ask to write a short story about money, or even the task of laying strewn words associated with money (e.g. „oemyn”). So it looks like, for example, you may wish only to the worst enemy the doctor thinking about money. Is that right?
Thinking about money can be beneficial
Such a conclusion would be too soon. Inasmuch as it is hard to count on sympathy of a person, at which thoughts associated with money aroused, it is possible to expect better productivity and higher motivation. Interesting experiment illustrates it, in which in a view of examined persons, whose task was to solve challenging puzzles, lay (or no, if they were in a control group) little pile compound of banknotes. As it turned out, persons who could see money were more persistent. So that the effect appeared, the little pile could even consist of banknotes from the “Monopoly” game! In other study, having the money in hand improved the results of participant’s work.
Wherever to think about money?
In the light of above study, the answer to that question seems clear – it is worthwhile to think about money when our task consists in earning them. It is worthwhile to avoid it, when we want to relax in surrounding of other people. For traders it is particularly easily, their work consists in dealing with money. Sitting down to trade you don’t have to hang the poster with one dollar banknote on the wall, neither to hold them in a hand – just realize what numbers and graphs are symbolizing on your screen. Remember only one thing: do it you can sit ever longer.
Author: Paweł Strojny.
