Underlying psychological factors involved in how we earn, spend/give, borrow and save money utilizing technology.

1. Psychology of Money
Erika Torres, PhD

2. Background
• Psychologist who specializes in
program
evaluation/development
research
• Passionate and intrigued by
the psychology of tech use and
the neuro-psychological
factors that impact behavior
https://www.linkedin.com/in/erikatorresphd

3. Objectives
• Basic needs (and wants)
• Abundance & Scarcity
• Satisfaction & Wealth
• How/why do we earn, spend, borrow and save
money?
• How Fintech meets our needs to earn, spend,
borrow and save money?

4. Ice Breaker
• What is your name?
• What is your line of work?
• How do you:
▫ Earn, Spend, Borrow and
Save money
• Do you use technology to earn,
spend, borrow or save money?
If so, which? If not, why?

5. Needs v. Wants
• Surviving (living) v. Thriving
(exceling)
▫ Food
▫ Shelter
▫ Clothes
▫ Transportation
▫ Vacations
▫ Retreats
▫ Spa treatments
▫ Entertainment

7. Abundance & Scarcity
• Abundance
▫ Flexibility, Opportunity
▫ Relaxation, Relief
▫ Optimal functioning
• Scarcity
▫ Limitations, Fear
▫ Limited functioning
▫ Fight, Flight, Freeze
Response

8. Fight, Flight, Freeze…
• SNS and PNS Video
• Sympathetic activates when we
are stressed (real/perceived
danger)
• Parasympathetic activates
when we are relaxed
• Optimal Functioning
▫ Deactivate sympathetic
(except in emergencies)
▫ Activate parasympathetic

9. Satisfaction & Wellness
• Perceived life satisfaction
increases wellness and vice
versa
• Increased spending
▫ Bad mood
▫ Self-focused
• We seek to feel good, avoid
feeling bad
• Perception increases
consumerism and satisfaction
▫ Highly valued item
▫ “Good deal”

10. Money & Happiness
• We need money
(goods/services) to survive in a
capitalistic society
• Can money buy happiness?
▫ Robert Waldinger-75 year
study of males & their
partners (college and non-
college educated)
▫ “Good relationships keep us
happier and healthier.
Period.”
▫ TED Talk
Happiness & Wealth
Wealth
H
a
p
p
i
n
e
s
s

11. Psychology of Fintech
• Technological applications
help us meet our fundamental
need/desire to earn, spend,
borrow and save money

12. Why do we Earn?
• Earn
▫ Meet basic needs & wants
▫ Survive-pass on our genes
▫ Thrive-excel and reach self-
actualization

13. Fintech-Earning Money
• Gig Economy
• Allow individuals the agency
and autonomy to make money
using simple apps
• Convenient for customers and
employees
Low risk-
aversion
Time-saver

14. Why do we Spend/Give?
• Spend
▫ Neurologically rewarding &
reinforcing
▫ Euphoria/feel good
neurotransmitters
• Giving/Charity
▫ Reciprocal altruism
▫ Survival of the species
• Same process involved in
addictive behaviors

15. Fintech-Spending/Giving Money
• Rewards/Coupon Programs
• Giving
▫ GoFundMe
• Positive immediate
reinforcement at a social,
neurological and psychological
level
Abundance!
Dopamine
High

16. Why do we Borrow?
• Meet basic needs
▫ Payday loans
• Meet wants
▫ Luxury item purchases
• Question: need or want?
▫ Mortgage
▫ Student loan
• Global differences
▫ Spend within means
▫ Micro loans
▫ Line of credit
Delayed
responsibility

17. Fintech-Borrowing Money
• Market place
lending/borrowing
▫ Sofi, Lending Club
• Payday Advance
▫ Active hours

18. Why do we Save?
• Unlike other animals, we have
complex cognitive abilities
which allow us to plan for the
future
• We are wired to survive,
reproduce and thrive

19. Fintech-Saving Money
• Apps and tech that help us
save money
▫ Robo Advising (Betterment,
Wealthfront)
▫ Acorns
• Make saving easy and
automatic
▫ Out of sight, out of mind
▫ Delayed responsibility
• The less we think about saving,
borrowing, spending the more
likely we are to do so

20. ABCs
Thoughts:
“I Want..”
“I Need…”
“I Should…”
Behaviors:
Earn, Spend,
Borrow, Save
(do nothing)
Emotions:
Seek Abundance
Avoid Scarcity
External
Event
(TV on sale)

21. Conclusions
• We are programmed to get our needs (and wants) met
and feel good
• In a capitalistic society this means having access to
resources (goods/services) which can be acquired with
money
• Because we have ascribed symbolic value to
goods/services, financial transactions become rewarding
at bio-psycho-social levels
• Fintech apps help us:
▫ Get our needs (and wants) met
▫ Feel good and satisfied (to a certain degree)
▫ Survive and thrive in a new era
▫ Experience immediate reward which reinforces behaviors

22. References
• Association for Contextual Behavioral Science (2016). Acceptance and Commitment Therapy. Retrieved from: https://contextualscience.org/act
• Cryder, CE., Lerner, JS., Gross, JJ., & Dahk, RE. (2008). Misery is not Miserly: Sad and Self-Focused Individuals Spend More. Psychological Science, 19 (6), 525-530.
• Drew, J., Britt, S., & Huston, S. (2012). Examining the Relationship Between Financial Issues and Divorce. Family Relations, 61 (4), 615-628.
• Fehr, E. & Rockenbach, B. (2004). Human Altruism: Economic, Neural, and Evolutionary Perspectives. Current Opinion in Neurobiology, 14 (6), 784-790.
• Kahneman, D. & Deaton, A. (2010). High Income Improves Evaluation of Life but not Emotional Well-Being. PNAS, 107 (38), 16489-16493.
• Ma, Q., Hu, Y., Pei, H., & Xiang, T. (2015). Buffering effect of Money Priming on Negative emotions-An ERP Study. Neuroscience Letters, 8, 77-81.
• News and Communication Services. (2016). Researcher Finds Correlation Between Financial Arguments, Decreased Relationship Satisfaction. Retrieved from:
http://www.k-state.edu/media/newsreleases/jul13/predictingdivorce71113.html
• Nova (1996). The History of Money. Retrieved January 29, 2015 from http://www.pbs.org/wgbh/nova/ancient/history-money.html
• Randall, L & Chatterjee, P. (2012). Do Payment Mechanisms Change the Way Consumers Perceive Products? Journal of Consumer Research, 38 (6).
• TED Blog: http://blog.ted.com/6-studies-of-money-and-the-mind/
• The Psychology of Money: http://www.spring.org.uk/2008/04/psychology-of-money.php
• Worchel, S., Lee, J. & Adewole, A. (1975). Effects of Supply and Demand on Ratings of Object Value. Journal of Personality and Social Psychology, 32 (5), 906-914.