Money Addiction: It’s Really a Thing
There is a fundamental principle in economics that applies to food, clothing, and even all of those shiny tech gadgets that start with the letter ‘‘i’’: The more of them we have, the less we value them.
But that may not be true when it comes to money.
New research from Jeffrey Pfeffer, a professor at the Stanford Graduate School of Business, and his colleagues at the University of Toronto and Renmin University of China finds that the more money people make, the more they value it.
It then compared hourly earnings to respondents’ views on how important it was to them to ‘‘have a lot of money.’’
‘‘We thought it was quite possible that money was different because of its symbolic nature — when I pay you, I’m also signaling your worth,’’ Pfeffer said.
And that is what they found. The more that people earned, the more they said money mattered to them. The same correlation was not true when it came to money made from sources unrelated to work. That kind of income, Pfeffer said, has ‘‘much less implication for one’s sense of mastery or worth.’’
Oh, and my favorite part:
When asked what his research tells us about how to get outsized CEO pay under control, Pfeffer referenced an answer he has provided in the past: Tax it at a higher rate, just like any other addictive substance.
Photo: Tax Credits