The Dark Side of Money
What we can learn from the ways money brings out the worst in us
Last year, the YouTuber Mr. Beast posted a Twitter poll that revealed an evilness lurking in our relationship with money.
As you can see, almost half the respondents said “Yes.” Yes, to the death of a person – who could be a devoted parent, an innocent child, the world’s leading cancer researcher, or Tom Hanks – for $10,000, about the worth of a used Honda.
It’s proof that money has power. The power to take our lives – with diligent saving and patient investing – to great heights. But also the power to lead us to some dark places.
Perhaps, that’s where the best financial lessons lie.
When discussing how dark experiences acted as life’s greatest teacher, endurance athlete and former Navy SEAL David Goggins said: “There are no answers in the light… knowledge comes from the muck.”
The same rings true for money; financial knowledge often comes from unfortunate events — job loss, market crashes, bankruptcy, fraud, et al. Most finance books and articles tell us we deserve financial success. Less frequent are those that help people identify their own toxic relationships with money as a route to personal growth. Fortunately, we can learn from the experiences of others.
For instance, I’ll briefly tell you why I don’t gamble. It’s not that I think gambling is a waste of money (which I do), or that I think the “games” are boring (which I do), or that I think of casinos as pitiful dungeons soiled with the stench of stale cigarette smoke and desperation (which I also do). It’s because it reminds me of the tragic death of a family.
When I was 18, my best friend called me one day to tell me that a family had been found murdered in their home nearby. This was a quiet, upper-class neighborhood where such tragedies never happened. Out of shock, we drove by the family’s once comfortable home that now resembled the set of a cop show with telltale props and extras – yellow tape, detectives, reporters, coroners.
It turned out the killer was the father. He had been a successful businessman who started to gamble and gamble some more, and then he started to lose and lose some more, until he inevitably lost almost everything. Distraught and at rock bottom, he decided to cash in the last thing he had left, the lives of his family and his own.
The experience taught me how a potentially big financial windfall could influence our psyche, like a siren call toward the rocks and cliffs of financial ruin. And at times, much worse.
I don’t believe money is inherently evil. But research shows that it can trigger the worst parts of our nature if we let it.
The surprising thing? Unfortunate consequences can arise through both financial strain and abundance. Go too far in either direction, and you end up in the same miserable place.
So, when does money transform from an illusory store of value to an accessory to evil? How do we keep it from ruling over us?
For that, we need to step away from the light and journey through the muck, into the dark side of money.
Higher income inequality leads to higher homicide rates
A man stabs another man to death in a Brooklyn bodega during an argument over bad manners.
What seems like a random, senseless act of violence may be a symptom of something bigger. Researchers believe this kind of “status killing,” motivated by an act of disrespect, is often the product of a lopsided distribution of wealth, a.k.a. income inequality.
As this Scientific American article notes, studies show that “inequality—the gap between a society's richest and poorest—predicts murder rates better than any other variable.” It is more strongly linked to murder than other societal problems, like poverty and substance abuse.
The inequality-murder relationship works like this: when income inequality is high, people lose important social status markers, such as a steady job or home. As those on the losing end struggle and see those at the top enjoy a lifestyle that seems out of reach or unfairly attained, desperation rises. And then matters of respect and disrespect essentially become matters of life and death.
How does this relate to our own financial lives?
Humans may have an inherent sensitivity to fairness, which explains why inequality can feel so stressful and damaging.
Consider a video of an experiment with two capuchin monkeys, our distant relatives often used in psychological tests as human stunt doubles. The capuchins perform the task of giving the experimenter a rock in exchange for a slice of cucumber.
Back and forth they go, rock for cucumber. But then, in a twist, one capuchin receives a sweeter, tastier grape. Once the other capuchin sees this more delicious reward, it performs the task with greater enthusiasm, hoping to earn a grape. Alas, it is given another meager cucumber slice. Dismayed by the unfairness of the situation, the capuchin hurls the cucumber slice at the experimenter and shakes the cage in rage, presumably screaming, “Take this cucumber and shove it up your…”
In this experiment we call society, money is our reward for fulfilling tasks. And inside us all is a fairness-conscious capuchin monkey. When we see someone with more money than we think is justified, it can trigger feelings of resentment. That sentiment transcends all income levels. Just look at sports stars squabbling over multi-million dollar contracts.
Our bias toward fairness is generally a good thing. It compels us to fight injustices. But it shows how vulnerable we are to the invisible forces at work around us and within us, especially when it comes to matters of money. As a study by Nobel Prize-winning psychologist Daniel Kahneman revealed: 90% of our financial decisions are driven by emotion, with only 10% based on logic.
Therein is the lesson I take away from this. Even if we are well-intentioned, even if we think we know right from wrong, there may be factors influencing our decisions and behaviors that we’re unaware of.
Furthermore, everyone should care about income inequality, as the ramifications are deadly clear. It produces more than just sour grapes.
Financial stress is a leading catalyst for taking one’s own life
In 2021, a young man took his own life after mistakenly believing he’d lost hundreds of thousands of dollars in a risky bet on a trading app.
It’s a tragic story, but a common one.
The legendary trader Jesse Livermore – the inspiration for the main character in the classic book, Reiminences of a Stock Operator – amassed and lost fortunes three times over. After struggling to rebound from his third bankruptcy, he fatally shot himself. In a suicide note left to his wife, he wrote, “Things have been bad with me. I am tired of fighting… this is the only way out for me.”
It makes one wonder if Livermore had a more poignant meaning when he said:
“Profits always take care of themselves, but losses never do.”
Numerous studies link financial hardship to suicide. Financial worries contribute to increased psychological distress, such as anxiety and depression, which can put someone at risk for suicidal ideations. One study states people experiencing financial strain are up to 20 times more likely to attempt suicide.
But it’s not only a lack of money that impacts our psychological well-being. Affluence creates its own form of financial strain – an unbearable pressure to live up to the expectations of one’s high social status. Unfortunately, affluence's adverse effects often manifest in wealthy families' children.
Research has found that wealthier children tend to be more distressed than lower-income kids and are at high risk for anxiety, depression, substance abuse, eating disorders, cheating and stealing. Famously, Gunn High School in Palo Alto, the birthplace of Silicon Valley, received national attention for a suicide rate that was four to five times higher than the national average.
Psychologists attribute this distress to the immense pressure to achieve the academic and extracurricular success expected of the elite, all while being isolated from their parents, who are overly busy with work or high-society activities.
Our mental conditions often reflect our economic conditions. When we make financial mistakes, suffer misfortunes, or struggle with a particular lifestyle, we tend to internalize it and make it personal. It’s why money is such an uncomfortable and emotional topic, as evidenced by the fact many people would rather discuss politics.
It serves as a reminder to take money seriously but not let it define you; a reminder to ask for help when you need it, and when someone asks to borrow money, to recognize they may need more help than that.
When money’s tight, couples fight
Some people don’t turn on themselves during times of financial stress. Instead, they turn on their partners.
Domestic violence is more likely to occur when couples are under financial strain, according to the National Institute of Justice. Of course, abuse is primarily perpetrated upon women. Repeated domestic violence toward women is more frequent among financially troubled couples.
Maybe money can’t buy you love. But money can make or break relationships. One of the leading causes of divorce is “money issues.”
What seems to improve a couple’s marital and financial harmony is talking. According to a Fidelity Investments study, couples who communicate effectively make better financial decisions. The couples who say they communicate well are more likely to expect to live a comfortable retirement, rate their household’s financial health as excellent or very good, discuss finances together monthly, and say money is not their greatest relationship challenge.
Take it from billionaire investor Warren Buffet who said choosing who you marry is one of the most important decisions you’ll make in life.
Financial stress can literally kill you
Being in poor financial shape can do more than lower your credit score; it can lower your life expectancy.
Financial stress has been linked to higher mortality rates among cancer patients and those with heart disease. Adults who experience financial stress are up to twice as likely to die following a heart attack than those who worry less about money. An Australian government study also found people who suffered under prolonged financial stress were highly likely to become obese.
However, the same dangerous stress levels can be found in wealthy people overworked in high-pressure jobs — such high amounts of adrenaline and cortisol cause physiological damage.
Wealth doesn’t guarantee healthier living, either, as the rich drink the poor under the table.
Coupled with the psychological effects discussed above, this shows that it’s imperative to be mindful of money's powerful influence on our entire sense of well-being.
Money can make people engage in unethical behavior
Several stories portray Steve Jobs as problematic in his personal life, in the boardroom… and behind the wheel. He was known to drive without a license plate and park in handicapped-only spots at Apple headquarters. He reportedly berated a police officer for slowly writing a ticket for driving 100 mph in a 55 mph zone. They paint a picture of someone who “absolutely believed that the normal rules didn’t apply to him.”
You could argue that it’s an example of his “reality distortion field” or a characteristic of an eccentric genius. But it may have been a product of his wealth and elevated social status.
Numerous studies and papers indicate that individuals from higher social classes perceive themselves differently than others.
Even while driving.
A UC Berkeley study shows luxury car drivers in San Francisco were four times less likely to stop for pedestrians at crosswalks, as required by law, compared to drivers of less expensive vehicles. They were also more prone to cutting off other drivers. The study also found that upper-class individuals were more likely to take valued goods from others, lie in a negotiation and cheat to increase their chances of winning a prize, among other unethical behaviors.
Paul Piff, author of the study above and other studies on the behavior of upper-class individuals, told New York Magazine, “The rich are way more likely to prioritize their own self-interests above the interests of other people. It makes them more likely to exhibit characteristics that we would stereotypically associate with, say, assholes.”
Additional research suggests that those higher on the socioeconomic ladder are less empathetic and compassionate.
But researchers have found that money can unleash anyone’s inner Gollum.
In one study, just exposure to money-related terms increased the likelihood of someone lying or making immoral decisions. The allure of money and all its trappings can unmoor us from any sense of connection and responsibility to others.
The good news is that we can avoid this money-selfishness trap by practicing empathy. Contrary to what people think, empathy is not an immutable trait. It can be developed like a muscle.
Why practice empathy? It’s been shown to make you more productive, loved by others and overall happier – all of which combats many of the ill effects of money discussed in this post. Empathy arguably helps you foster a better relationship with money. Consider people feel happier when spending money on others than themselves.
Therefore, protecting yourself from the corrupting influence of money can be as easy as reading a book, speaking with people from different backgrounds, or reminding yourself that you don’t own the road.
Money supercharges our tendency to compare
The worst neighbor you could ever have is a lottery winner.
That’s because a study by the Federal Reserve Bank of Philadelphia found that neighbors of lottery winners were more likely to go bankrupt. The larger the lottery prize, the greater the likelihood of declaring bankruptcy.
We have a tendency to compare ourselves to others – and an innate desire to keep up. This is known as the bandwagon effect, where people adopt certain behaviors, beliefs or trends simply because others around them are doing the same.
Money can activate the bandwagon effect. In a 2015 study, researchers discovered that the bandwagon effect influences people to spend more on luxury goods. Meanwhile, the authors of another study concluded that “living in wealthy neighborhoods increases material desires and maladaptive consumption.”
When you see everyone in your neighborhood driving a Mercedes, it becomes tempting to believe you need a Mercedes, too.
As the lottery study shows, the race to keep up with the Joneses is a competition you cannot win. You’ll always find a new foe, someone with more money and better stuff.
Envy is financial death by a thousand comparisons.
A lesson from this bias is the importance of having a personal meaning for our money. That meaning is a value or goal you work toward, such as getting out of debt or saving for a child’s education. That way, you’re only comparing yourself today to yourself from yesterday.
Just don’t underestimate how hard it is when the forces of capitalism work against you. We are sold the idea that everyone is a lottery winner except us, so we better keep up.
As E.E. Cummings observed:
“To be nobody-but-yourself — in a world which is doing its best, night and day, to make you everybody else — means to fight the hardest battle which any human being can fight.”
Wealthier individuals are generally bigger polluters
Money influences not only the way we treat other people and ourselves, but also the planet.
The 2023 “Climate Inequality Report” from the World Inequality Database says income is one of the best predictors of emissions, both on a national level and an individual level. The rich emit far more than the poor.
Every year the World Economic Forum becomes a punch line as billionaires converge on Davos aboard carbon-spewing private planes to wax poetic on the need to care for the environment. But I don’t want to criticize them. There’s nothing I can say that hasn’t been said already. Instead, we can earnestly try to learn from them. As Dostoyevsky wrote, “Nothing is easier than to denounce the evildoer; nothing is more difficult than to understand him.”
The environmental hypocrisy of the rich offers a lesson on lifestyle creep, something we’re all vulnerable to. We’re all a little less judgmental when it’s our lifestyle on trial. As our income rises, so often does our consumption. Large bank accounts lead to large lifestyles, especially when isolated from the consequences.
There is no trick other than to exercise conscientious money management. That is, to recognize the impact of our choices, from how we spend to how we invest. Can you in good conscience accept the ramifications of your financial habits?
ADDICTION (TO MONEY)
The pursuit of money can become an addictive behavior
In the Biblical parable of the rich fool, Jesus tells the story of a wealthy man who accumulates even more wealth and plans to store it all for himself in larger barns. The man doesn’t consider the uncertainty of life or all that he’s missing while consumed by the focus of accumulating possessions. He is admonished for his shortsightedness and is called a fool because he dies before enjoying his riches. The parable serves as a cautionary take against materialism and greed, as Jesus concludes with the famous line: “For where your treasure is, there also will your heart be.”
I reference a religious parable because money to many people is an object of worship. In fact, psychologists say that the pursuit of money can become an addiction, much like compulsive eating or watching pornography. Money can produce the same chemical response, like the release of dopamine, in our brains as drugs.
As with any addictive substance, a preoccupation with money can lead to negative consequences and harm to one’s well-being. A 2017 study found that “basing self-esteem on financial success predicted making more financially-based social comparisons with others, feeling less autonomy and control over one's life, and experiencing more financial hassles, stress and anxiety.”
The relationship between money and happiness is a tenuous one. Money can make you happier. But eventually, more money does not equate to more happiness. If money becomes your primary focus, you end up chasing an unattainable “high.” Life is no longer filled with appreciation for what you have but with a desire for more and more.
It brings to mind the words of the philosopher Epicurus:
“Stupid fools are those who are never satisfied with what they possess, but only lament what they cannot have.”
Again, the folly of rich fools.
Unfortunately, we often overlook the potential drawbacks of associating our identities and self-worth with money because society places high importance on wealth as a standard for how we should exist.
Therefore, the lesson that money isn’t everything is one we seem to have to tell ourselves over and over. It can feel like an ongoing ritual, like meditation or prayer. Maybe that’s why one of my favorite bits of financial wisdom comes from a saint:
“Those who possess riches outwardly must take care not to possess them inwardly, that is, with desire.” –St. Catherine of Siena
Mastering money is as much about understanding yourself as it is understanding markets, budgets, taxes, etc.
Self-awareness goes hand in hand with financial self-awareness. Master one and the other becomes second nature. This is because a better understanding of your situation and tendencies can translate into a better handling of your finances.
It starts with knowing oneself on a personal level. This way, money then becomes a tool to build the life you want to live. As has been said countless times, money is a good servant but a bad master.
All told, if you make money everything or make it nothing at all, you’ll likely get more than you’ve ever wanted.