There are so many commentators stressing the very obvious, very real and very important downside of the recent market tilt that in this Mind Over Money post we’ve decided to risk looking hopelessly Panglossian by discussing an overlooked upside, albeit a psychological one.
The reason is that knowing about this surprising benefit might help you weather this latest stock market reset cycle, and maybe even grow happier because of it.
In our previous post we discussed how most financial downturns create buying opportunities; that in the immediate aftermath of a market decline — or during it, since no one knows when prices have hit a true bottom — stocks can and should be reasonably viewed as being on sale (“30% off all Wal-Mart shares!”; “Wells Fargo at half price!”). Today we want to discuss a less widely known advantage, which accrues to all of us and the societies in which we live. Specifically: Being aware of limited, diminished or otherwise modest financial resources makes people feel more connected to one another. Which, if Mark Zuckerberg has taught us anything, is what most of us want out of life: social connection. (Name a film or book in which a dying character’s last wish is that she’d had more money. Or one in which her last regret is having spent too much time with family and friends.)
This silver lining comes from research conducted by the University of Minnesota’s Kathleen Vohs, who “primes” people with the idea of monetary abundance or scarcity. That is, she puts the idea of money — or the lack of it — in their heads, without their being consciously aware of it. In many of her experiments, the primes are as subtle as having participants fill out a questionnaire in front of a computer with a screensaver showing various denominations of cash floating underwater.
But subtle or not, Vohs consistently finds that people with lots of loot on their mind become more independent and less social: They put their chairs farther away from people with whom they must interact, they’re more likely to pursue leisure activities that are done alone and they’re less likely help another person in obvious need of assistance. They’re also less likely to ask for help themselves when having trouble with challenging tasks. On the other hand, folks primed with monetary scarcity tend not to feel independent, and they have no problem asking others for assistance. Connection to others is embraced, not avoided.
And that’s not an insubstantial result. Yes, having more money is better than having less. And although lots of experts often claim otherwise, people with more money tend to be happier than people with less. But the relationship between happiness and money is not nearly as strong as the relationship between happiness and manifestations of social connection — being married or not, losing a spouse, solitary confinement.
So a market downturn, while brutal on the bottom line, may be the perfect time to get in touch with what really matters to you. Not just because in times of trouble we need social connections more than ever, but because when those troubled times are money-related we’re more open to the prospect of reaching out and opening up.
Who knows, you might just counter a loss in your financial portfolio with a gain in your emotional one.