Pragma Synesi – interesting bits

Compendium of interesting bits I come across, with an occasional IMHO

The rich think differently about money

“…The mid­dle class fo­cuses on sav­ing money, he says; the rich fo­cuses on how to earn it. The mid­dle class wor­ries about money; the rich dream about it. The mid­dle class has a “lot­tery men­tal­ity,” be­liev­ing their lives are in­flu­enced by luck or other ex­ter­nal forces; the rich has an “ac­tion men­tal­ity,” where they de­ter­mine their own fu­tures…”

From The Globe and Mail, September 21, 2012:

How the other half thinks

Wency Leung

The Globe and Mail Metro (Ontario Edition)
September 21, 2012

Want to think like the rich? Get over the mind­set that money is the root of all evil.

Rich peo­ple do not just live dif­fer­ently than the rest of the pop­u­la­tion, they think dif­fer­ently too.

Mitt Rom­ney’s po­lit­i­cal op­po­nents are hav­ing a field day with his re­cent 47-per-cent de­ba­cle, in which the mil­lion­aire pres­i­den­tial hope­ful was covertly taped telling a well-heeled fund-rais­ing party he would never con­vince half the Amer­i­can pop­u­la­tion “they should take per­sonal re­spon­si­bil­ity and care for their lives.”

Aus­tralian bil­lion­aire min­ing mag­nate Gina Rine­hart also re­cently came un­der fire for sug­gest­ing those with­out money are “jeal­ous,” and should “spend less time drink­ing, or smok­ing and so­cial­iz­ing and more time work­ing.”

Ar­ro­gant? Out of touch? Pompous? Maybe. Re­gard­less of how you char­ac­ter­ize their views, these in­ci­dents un­der­score the dis­par­ity.

Few know this bet­ter than Steve Siebold, au­thor of How Rich Peo­ple Think. The Boyn­ton Beach, Fla.based pub­lic speaker has spent nearly three decades in­ter­view­ing and rub­bing shoul­ders with self­made mil­lion­aires and bil­lion­aires, and has found that what sep­a­rates the wealthy and the non-wealthy is how they view them­selves, their money and the world around them.

The mid­dle class fo­cuses on sav­ing money, he says; the rich fo­cuses on how to earn it. The mid­dle class wor­ries about money; the rich dream about it. The mid­dle class has a “lot­tery men­tal­ity,” be­liev­ing their lives are in­flu­enced by luck or other ex­ter­nal forces; the rich has an “ac­tion men­tal­ity,” where they de­ter­mine their own fu­tures.

“[Rich] peo­ple aren’t any smarter than us or bet­ter,” Siebold says. “They just think about money and suc­cess and wealth dif­fer­ently than the av­er­age per­son.”

As a self-de­scribed mul­ti­mil­lion­aire, Siebold cred­its his own wealth to the lessons he learned, which helped him change his mid­dle-class mind­set. The big­gest les­son, he says, was to quit think­ing of wealth ac­qui­si­tion as an evil pur­suit. Peo­ple who are not rich tend to think of money as a bad thing, he says, not­ing that as long as you have such neg­a­tive thoughts about money, you will never have it. “There’s no ques­tion about it. Very few peo­ple be­come rich with­out the be­lief that it’s a good thing and they should be go­ing af­ter it.”

Once he al­tered his views, Siebold im­mersed him­self among the rich, go­ing so far as to buy the cheap­est house on a block where three bil­lion­aires lived. Through so­cial­iz­ing and at­tend­ing neigh­bour­hood par­ties, he says, “I would walk away from those en­coun­ters think­ing, ‘No won­der I’m broke.They’re look­ing at pos­si­bil­ity and op­por­tu­nity and I’m wor­ried about pay­ing my bills.’”

Be­com­ing rich (a process he de­scribes as iden­ti­fy­ing a prob­lem and find­ing wealthy cus­tomers who would pay him to solve it) has fur­ther changed the way he thinks. Money has freed him to think about big­ger-pic­ture prob­lems, he says, “as op­posed to where am I go­ing to get the money to fix the flat tire on my car?”

As Rom­ney him­self ad­mit­ted, his com­ments were not “el­e­gantly stated.” Nor were Rine­hart’s. But re­search sug­gests there may be some truth to their gen­er­al­iza­tions about those less for­tu­nate.

Among the lower classes, “there’s a sense that no mat­ter how hard I work and how much tal­ent I have, the con­text is so pow­er­ful, the pol­i­tics in­volved, the in­equal­i­ties that arise, other peo­ples’ in­her­i­tance and the ad­van­tages that they have are go­ing to be the de­ter­min­ing fac­tors and not my in­di­vid­ual abil­i­ties,” says Michael Kraus, as­sis­tant pro­fes­sor of psy­chol­ogy at the Univer­sity of Illi­nois, Ur­bana-Cham­paign.

Psy­chol­o­gists have found that peo­ple who are not wealthy are in­deed more prone to think that out­side forces de­ter­mine their out­comes, whether those forces are other in­di­vid­u­als or the gov­ern­ment. They also tend to be more at­tuned to oth­ers’ thoughts and ac­tions and are acutely aware of out­side threats and lim­i­ta­tions.

For rich peo­ple, their wealth of­fers them greater free­dom to pur­sue their own in­ter­ests. They are more in­clined to as­sume they are in con­trol of their out­comes, and their in­di­vid­u­al­is­tic ori­en­ta­tion means they tend not to be as em­pa­thetic. In in­di­vid­u­als like Rom­ney, this mind­set can come across as be­ing “bliss­fully un­aware,” Kraus says.

“When Mitt is go­ing through his ev­ery­day life, he’ll have a ten­dency to fo­cus on in­ter­nal dis­po­si­tion, so he’ll be fo­cus­ing on how he got where he is, which is hard work and ef­fort and some of his tal­ents. So he will naively as­sume that other peo­ple got there in the same way.”

Stud­ies have shown that low-in­come and high-in­come in­di­vid­u­als even have dif­fer­ent phys­i­o­log­i­cal re­sponses to var­i­ous sit­u­a­tions. A 2001 study of Amer­i­can chil­dren and teens found that those from poorer fam­i­lies showed in­creased heart rate and blood pres­sure in re­sponse to am­bigu­ous sce­nar­ios that were nei­ther pos­i­tive nor neg­a­tive, pro­vid­ing sup­port to the no­tion that lower-in­come in­di­vid­u­als have height­ened per­cep­tions of threat.

A 2011 study, co-au­thored by Kraus, also found phys­i­o­log­i­cal ev­i­dence to sug­gest less priv­i­leged in­di­vid­u­als are more com­pas­sion­ate. When shown videos of chil­dren with can­cer, par­tic­i­pat­ing uni­ver­sity stu­dents from lower-in­come fam­i­lies showed a de­cel­er­a­tion in heart rate, while the heart rates of their well-to-do coun­ter­parts did not change. Kraus ex­plains that heart-rate de­cel­er­a­tion is be­lieved to be an “ori­ent­ing re­sponse,” an in­di­ca­tor of com­pas­sion that arises when peo­ple feel closer to one an­other.

This is not to say the wealthy are self­ish and the non-wealthy are wait­ing around for the gov­ern­ment to take care of them. Rather, the gaps in their think­ing may help ex­plain why they have trou­ble see­ing eye to eye.

“It’s not that peo­ple who are wealth­ier have a lower ca­pac­ity to be gen­er­ous, to be kind to other peo­ple,” Kraus says. “It’s that they sort of go around their lives not think­ing about that stuff.”

What is the dif­fer­ence be­tween the rich and ev­ery­one else? It is not just their money, it is their mind­set.


© Copyright 2012 The Globe and Mail Inc. All Rights Reserved.

A WEALTHY FRAME OF MIND

The Globe and Mail Metro (Ontario Edition)
September 21, 2012

What is the dif­fer­ence be­tween the rich and ev­ery­one else? It is not just their money, it is their mind­set.

Who: Mitt Rom­ney, Repub­li­can pres­i­den­tial can­di­date

Net worth: Es­ti­mated $250mil­lion

What he said: “There are 47 per cent of the peo­ple who will vote for the Pres­i­dent [Barack Obama] no mat­ter what…. There are 47 per cent who are with him, who are de­pen­dent upon gov­ern­ment, who be­lieve that they are vic­tims, who be­lieve that gov­ern­ment has a re­spon­si­bil­ity to care for them, who be­lieve that they are en­ti­tled to health care, to food, to hous­ing, to you name it. That that’s an en­ti­tle­ment.”

Who: Ge­orgina (Gina) Rine­hart, chair­woman and di­rec­tor of Aus­tralia’s Han­cock Prospect­ing Pty Ltd.

Net worth: At least $18-bil­lion

What she said (in an opin­ion piece in Aus­tralian Re­sources & In­vest­ment mag­a­zine): “There is no mo­nop­oly on be­com­ing a mil­lion­aire. If you’re jeal­ous of those with more money, don’t just sit there and com­plain; do some­thing to make more money your­self – spend less time drink­ing, or smok­ing and so­cial­iz­ing and more time work­ing.”

Who: War­ren Buf­fett, chair­man of Berk­shire Hath­away and phi­lan­thropist

Net worth: $46-bil­lion

What he said: “Suc­cess in in­vest­ing doesn’t cor­re­late with IQ. What you need is the tem­per­a­ment to con­trol the urges that get other peo­ple into trou­ble in in­vest­ing.”

Who: Kevin O’Leary, ven­ture cap­i­tal­ist on CBC’s Dragons’ Den and fi­nan­cial an­a­lyst on The Lang and O’Leary ex­change

Net worth: Not avail­able

What he said (to Forbes): “The only friend you are go­ing to have when you are old and crusty is not your dog, not your kids but cash in the bank that is still go­ing to love you.”

Who: In­dra Nooyi, chair­woman and chief ex­ec­u­tive of Pep­siCo

In­come: To­tal com­pen­sa­tion in 2011 was $19.6-mil­lion

What she said: “I had no safety net. If I failed, I failed. That kept me go­ing.”


© Copyright 2012 The Globe and Mail Inc. All Rights Reserved.

April 3, 2013 - Posted by | anthropology, behaviour, brain | , , ,

2 Comments »

  1. Reblogged this on anthroeducate.

    Comment by Chris Fredrick Orumah | April 4, 2013 | Reply

  2. Another interesting study on the same subject:

    Vohs, K. D., Mead, N. L., & Goode, M. R. (2006). The Psychological Consequences of Money. Science, 314(5802), 1154-1156. (Free with registration.)

    Abstract:
    “Money has been said to change people’s motivation (mainly for the better) and their behavior toward others (mainly for the worse). The results of nine experiments suggest that money brings about a self-sufficient orientation in which people prefer to be free of dependency and dependents. Reminders of money, relative to nonmoney reminders, led to reduced requests for help and reduced helpfulness toward others. Relative to participants primed with neutral concepts, participants primed with money preferred to play alone, work alone, and put more physical distance between themselves and a new acquaintance. “

    Comment by pragmasynesi | April 14, 2013 | Reply


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