The Psychology Of Money In Practice

Last week, I was in Las Vegas and Phoenix for a mix of business and pleasure.  I had several interactions that provided real-life, end-game examples of what I wrote about in my last blog entry about the book The Psychology of Money, and now I have to share them.....

Vegas is a great venue to observe how people spend money.  More than anywhere on earth, it's a place to stay in your lane when it comes to money, because the opportunities to spend are relentless.

For those who could afford it, the Vegas strip has expensive, even exclusive places to stay, eat, shop, and gamble. For others, the strip has options for more modest lodging, fast food, convenience stores, and yes, gambling.

I saw people staying at $1,000 per night hotel rooms, and I saw people staying at $100 a night rooms.  I saw people dining at celebrity chef restaurants where no prices are posted, and I saw people eating at food courts. I saw people carrying Gucci and Tiffany shopping bags, and I saw people carrying CVS shopping bags.  I saw people playing $100 minimum blackjack, and I saw people playing penny video slot machines.

The psychology of money matters a lot in Vegas.  If a person has a disciplined spending psyche (or is very wealthy), Vegas is a fun and amazing place.  If a person doesn't have a fiscally responsible psyche, Vegas will chew them up and spit them out.

Phoenix provided a more specific example of the psychology of money.  Late winter golf has always been expensive there, with most courses charging well over $100 per 18-hole round.  Above-average resort courses charge far more, some exceeding $500 per round.  Regardless, all golf courses there are packed with players at this time of the year, so prices are much higher than normal.

My attitude has always been one of being willing to pay these higher prices.  By this time of year, I haven't played for a few months, so I haven't spent anything on golf for a long time.  I'm perfectly willing to spend up that savings on winter resort golf.

Meanwhile, other golfers I know who travel or winter there -- people with a materially similar or greater net worth -- won't spend that for golf.  They don't want to pay more than would at other times and places during the year, so they either don't play, or they only play on the lowest-priced (worst conditioned) courses.

In summary, my mindset is, it's more than I want to spend on golf, but I'm willing to do it.  The others' mindset is, it's more than they want to spend, and they aren't willing to do it.

These opposing views are another manifestation of the psychology of money.  Being able to afford / not afford things is one subset.  Being willing to buy / not buy them is another.

In Defense Of Mechanisms

 A few months ago I made a blog entry about an Intro to Psychology class I took as a freshman in college, and how much of it I still remembered.  A good deal of what was taught in that class came from the research and writings of the most well-known psychological thinker of all-time, Sigmund Freud.

One of those Freudian items was his seven psychological defense mechanisms.  These are essentially ways the mind copes with itself, none of which are particularly appealing:

• Denial: Refusing to accept that something exists or happened, or perhaps simply altering the meaningfulness of an outcome to convince oneself it wasn't important.

• Intellectualization: Thinking about something logically or coldly and without emotion.  

• Projection: Attributing a threatening aspect of oneself to someone else, like accusing another of being angry with you when you in fact are angry with them.

• Rationalization: Creating an acceptable but incorrect explanation of a situation.

• Reaction formation: Doing the opposite of what you would really like to do, such as going out of the way to be nice to someone you really disliked.

• Regression: Returning to an earlier or more childlike form of behavior.

• Repression: Keeping a thought, feeling, or memory of an experience out of consciousness, often with an emotionally difficult situation.

(It's noteworthy that Denial also happens to be the first stage of grief, as I mentioned in that prior post.  It's the quickest and easiest defense mechanism to use, and also the worst one for our society.)  

I've been thinking about these defense mechanisms a lot lately, probably because their usage is way up.  Some of them have come to mind when observing the way people are dealing with the COVID-19 pandemic.  Others have been particularly applicable to politicians and political parties in this election year.  I'm not kidding when I say the current president will occasionally use all of these defense mechanisms in a single reply to a basic question.  (The possible exception is Intellectualization, because that implies logic is involved.)

The point of this all is, 1) I remember obscure things from this college class, and 2) recognizing these defense mechanisms -- not just unknowingly using them -- would enhance everyone's ability to cope with life.

The Stages Of Grief For Celebrations

One of the first college classes I took was Intro to Psychology.  It's the kind of basic class you want to take if you have an undeclared major or an elective to fill, which is probably why it was mainly filled with freshmen and seniors.

It was an easy class, generally only requiring memorization for success, but it's surprising how much of it I still remember.  One of those things is the psychological stages of grief:  Denial, Anger, Bargaining, Depression, and Acceptance.

[Technically, these were identified by psychiatrist Elisabeth Kubler-Ross as the stages of grief for the terminally ill in her book On Death and Dying (yes, I even remember that!) but over time they've been attributed to more than just terminal illness.]

I've often applied these stages of grief to other things.  I once did an entire presentation to a large group about the years-long need for additional financing for a project, and I used the stages of grief as a simile of sorts.  I suggested that in the past year, some in the room had moved from denial to anger to bargaining, but most hadn't yet made it to depression much less acceptance.  So I told them I was taking it upon myself to depress them that day as much as possible so they'd get to acceptance faster.

Recently, I've been applying the stages of grief to how people are treating aspects of the COVID-19 pandemic.  For example, we've got an executive branch of federal government that denied it, then got angry as it happened, and is so corrupt that it will never get beyond bargaining over it while people die.

However, it's particularly applicable to those who have/had planned gatherings of many people, whether it be graduation parties, baby showers, or weddings.  First, there's a denial that the event can't happen.  Then anger about how a rare pandemic could get in the way.  Then there's the stage most are in, which is bargaining for a way to still make the event happen against needlessly exposing guests to the virus.  Of course, this also includes bargaining with vendors over monetary deposits that may have been made.

Not everyone has managed to get through to the depression stage, and then ultimate acceptance that the event either isn't going to happen, or won't be happening anywhere close to the original plan.  And not all of those who've managed to make it to acceptance are done; those proceeding with alternate plans are finding themselves right back at denial when those revised arrangements are also partly stymied.

It's a terrible year to have planned for any type of celebration, much less to try to execute said celebration.  I'm glad I'm not in that group, but if I was, I'd try to get through the stages of grief as soon as possible.