Friday, December 18, 2009

Is That Fair? Depends, How Much Are You Paying?

A new study, discussed in Science Daily, shows that:

...when it comes to distributing resources, people's ideas about what's fair change depending on what's being handed out. If it's something that has its own intrinsic value -- in-kind goods such as food or vacation days -- people are more likely to see equal distribution of such items as fair.

But if it's something that is only valuable when it's exchanged -- such as money or even credit card reward points -- ideas of fairness shift to a more market-based attitude. In that case, the thinking is that people should receive according to what they've contributed.

This study furthers a great deal of psychological research that suggests that when you bring money into the equation, it has a social distancing effect.

I discovered too many studies to mention all of them in a chapter that deals with the phenomenon in the book Broke is Beautiful, so I'm pleased to have the opportunity to share some of this material here.

The moment money enters into the equation everything changes. Researcher Kathleen Vohns conducted a series of experiments to gauge the influence of money on social obligations. In one experiment, she and her team invited subjects to take part in a "get acquainted" conversation. The experimenters met by a desk with a computer running a screen saver. One screensaver had fish swimming, the other was a blank screen and the third showed a shower of money. The people exposed to the money screensaver put a significantly greater distance between their own chair and that of the experimenter. Next they asked subjects whether they would want to work alone on a task, or with another person. Of those exposed to the money screensaver, 72% chose to work alone, compared to 16% of those who saw one of the other screensavers.

Sitting near a poster of money has a similar effect, another experiment showed. Those seated near the money poster chose solitary activities from a list of what they would most like to do. People sitting under a floral poster were more likely to choose social activities.

In yet another test, research subjects had to unscramble phrases, some of which involved money, and others not. On the way out of the lab, participants were told that the University student fund was requesting donations, and there was a box outside if they'd like to contribute. Those who had been subconsciously prompted to think about money donated less.

In a 2004 experiment, researchers James Heyman and Dan Ariely asked three different groups to perform a simple menial task, dragging as many circles across the computer screen as they could in five minutes. Each of the three groups was offered something different for performing this task. One group was told they were doing this as a favor to the researchers, the second was told they would get 50 cents, the third $5.00.

The group that performed the task as a favor dragged the most circles across the screen, more than the $5 group and significantly more than the 50c group. People seem to be willing to work as a volunteer, and to work for a fair wage, but when they believe they are being underpaid, performance really suffers.

"It seems that our brains activate this concept of 'money,' suddenly we look at the world around us and prioritize things differently," wrote psychologist John M. Grohol, "It appears to make a person more self-interested and more socially isolated."