Money affects our minds like a drug. In fact, brain scans of a person high on cocaine and one expecting a cash windfall look almost identical. Former Wall Street executive and author Kabir Sehgal says we even have genes that determine how we spend. He walks us through how we developed money and why it’s so important to us.
Three Takeaways:
- Money taps deep into our minds. Sehgal says money stimulates one of the brain’s reward pathways known as the nucleus accumbens.
- Physical money started with goods, such as salt, gold and silver. But Sehgal says those examples don’t represent the earliest exchanges of currency. “The first type of currency is actually debt and obligation,” he says. “If you look at ancient Mesopotamia, there were no coins, but there were financial records of people taking out loans.”
- Spending cash and swiping our credit cards affects our brains differently, Sehgal says. “When you take out your credit card and spend, there’s actually less activation in your anterior insula, and that translates to less feelings of anxiety,” he explains. “You don’t feel like you’re parting with your money as much, and it makes it almost easier to spend your money.”
More Reading:
- Kabir Sehgal happens to also be a Grammy-winning music producer. He describes his journey from Wall Street to the music business in this CNBC story.
- The New York Times reviewed Sehgal’s book about money, Coined: The Rich Life of Money and How Its History Has Shaped Us.
- The New Yorker looks at what like would be like in a world without cash.
