Why grubby notes may slip through your fingers faster.

When I popped a few notes into a card for my niece this Christmas I made sure the notes were new and crisp, rather than crumpled grubby ones.

Why should that matter, I wondered.

Surely a tenner is still worth ten pounds, whether the note is freshly minted or has been through a hundred hands. Or is it? New research from the University of Guelph** shows that not all notes are created equal, and we’ll cherish new ones over grubby ones any time.

I wouldn’t give my niece a dirty note just as I wouldn’t give her a pair of pre-worn socks.

In five different studies, the Guelph researchers gave people old or new notes to spend (bet they didn’t have trouble finding participants for that study). People spent more and took more chances with older, worn money. Each time the same main reason emerged: people don’t like "dirty money."

Apparently it's the 'ick' factor: the idea of touching something that others have handled. People want to rid themselves of worn currency, fearing the contamination from others.

People value a crisp new note because they take pride in it, almost viewing it as a reflection of themselves. So, when spending around others, we are more likely to hand over our new-looking currency, even if we have to use four £5 notes rather than one crumpled £20 note. It's about social currency. If the transaction has no social value you'll get rid of your old notes. But when spending (or giving) to impress you want your notes to spell 'clean'.

I wouldn’t give my niece a dirty note just as I wouldn’t give her a pair of pre-worn socks. This challenges the long-held belief that we take money at face value - it’s actually subject to the same inferences and biases as the products it can buy.

**Fabrizio Di Muro and Theodore J. Noseworthy. Money Isn’t Everything, but It Helps If It Doesn’t Look Used: How the Physical Appearance of Money Influences Spending. Journal of Consumer Research, April 2013

Do you suffer from hedonic adaptation?

How many of the following statements would you agree with?

• Most marriages start with a burst of joy that slowly fizzles out
• The thrill of winning the lottery would wear off after a while
• A larger salary wouldn’t make me much happier
• Losing weight would only make life better temporarily
• I have many possessions that I once thought were beautiful but don’t now
• Most people stop noticing their partner’s good looks
• I could achieve my dreams and still find I’m dissatisfied
• There’s nothing as exciting as a new relationship

If you answered Yes to more than two or three of these you may suffer from hedonic adaptation. 
But, to be honest, most of us do.  
Hedonic adaptation is simply when happiness wears off (cue Texas singing The thrill has gone). The way the excitement of that top job, windfall or new car fades with time. 
Even winning the lottery produces only short-term ecstasy, for lottery winners are no happier 18 months after their win than non-winners. And I suspect there are many readers of this blog who have stuff in their wardrobes that they once thought was to-die-for that they now wouldn’t be seen dead in.

Hedonic adaptation explains the tide of over-consumption that modern society is caught up in. If we didn’t ‘go off’ things, if last year’s handbag or winter coat thrilled us as much today as when we bought it, we wouldn’t be drooling over this year’s model. The exhilaration of acquisition gives buyers such a buzz that, like shopping junkies, they seek it out again and again. 

How did I ever love this lot?

We all know we should be content with less. We know that twenty pairs of shoes is more than enough for any bipedal creature. But the pull of the mall does, as I said in an earlier blog, threaten to make shopping zombies of us all.

How can we stop this adaptation and prolong the pleasure of our purchases, or our priveleges? What can the field of fashion psychology tell us? Research about to be published in the Personality and Social Psychology Bulletin points to two key ways. Appreciation and variety. In their hedonic adaptation prevention model the authors say:

Appreciation: Stop and appreciate every day what you have and you might be able to eek more excitement from it.

Variety: Use it in different ways, to create more varied experiences, and the bliss could persist.

Why? Because the brain habituates over time that we get bored with things*. The brain loves novelty and surprises, which is why the mantra I swear by, Do Something Different, is once again of huge relevance here.

How? Here are my tips for preventing hedonic adaption and keeping the thrill alive:

• Move stuff around so you continue to notice it.
• Re-position your art or objects of desire in the home every so often so they have new impact.
• Store winter clothes away in summer, and vice versa, and experience the newness of them when you get them out again months later.
• Ditto with young kids’ toys. Divide them into four storage containers. Let them play with one set at a time while the others are hidden. Rotate on a weekly or monthly basis.
•  Better still, stop buying toys and use a toy library or swap with friends. Babies habituate very quickly to stuff and love more novelty than even the most indulgent parent can afford.
• Keep an appreciation or gratitude journal. This trick, from positive psychology, keeps reminding you of the good stuff in your life. It's shown to boost happiness as well as curbing the urge to go and buy more stuff.
• Get excitement from experiences rather than from purchases. The effects are known to last longer and be more fulfilling. Very relevant at Christmas.
• Use your old stuff in new ways, learn how to restyle your old clothes or swap with friends.
• Rent, rather than buy, an outfit for a special occasion.
• Do something different as often as possible in your life.  You’ll come to see that it’s all about what you do, not what you have.

·      * From the paper by Sheldon et al, University of Missouri:

"By definition, adaptation occurs only in response to constant or repeated stimuli, not to dynamically varying ones. Thoughts and behaviors that are varied and unexpected or surprising appear to be innately stimulating and rewarding. Stated differently, after an individual completely understands and expects the experiences that a change produces, the experiences will no longer have the same emotional impact and he or she will drift back towards his or her initial wellbeing. Maintaining the variability and surprises inherent in the experiences and in the emotions forestalls this process… One applied implication of this view is that many people cope with their HA to their prior purchases and acquisitions by overconsuming and overspending. However, if they can continue to derive pleasure from what they already have, in part from varied experiences of those possessions, then they can resist increasing aspirations for even more."

The Challenge of Staying Happier:

Testing the Hedonic Adaptation Prevention (HAP) Model

Kennon M. Sheldon, University of Missouri & Sonja Lyubomirsky, University of California, Riverside

in press, Personality and Social Psychology Bulletin

Are your savings gathering more dust than interest?

Funny things, human beings. And never funnier (I mean in the strange sense, not ha ha) than in our dealings with money. If you doubt that, then test which side of your brain is managing your money

We search for the cheapest jar of coffee in the supermarket, tutting at the 30p price difference per jar, then hand over £2.45 for a single cup in Starbucks.

We leave our savings to fester away gathering more dust than interest, while at the same time carrying credit card debt.

Do you know what you;re saving for?
This very specific pot is by terramundi

Behavioural economists call this illogical behaviour mental accounting – or treating money differently depending on its source or label, something I've discussed in earlier blogs about using the left brain a bit more. 

An example is our attitude to money we’ve saved and money that’s dropped into our laps (I know, but bear with me on this one)... 

Would you blow your savings on a big birthday party extravaganza? Probably not, unless that was what you’d be saving for. It would seem too… reckless? Irresponsible? 

But what if you got an unexpected tax rebate and had a big birthday coming up? Woohoo, champagne cocktails all round!

I got to thinking about all this while working on a campaign for first direct, the online bank, to do with offset mortgages. 

Apparently nearly all mortgages in Australia are offset. They originated there and it's what most people go for.

Yet a mere 6% of UK mortgages are offset mortgages. This is probably because this concept feels a bit alien to us. After all, when mental accounting, we Brits have kept our borrowing and our savings very separate. It doesn’t even occur to us that we could use one to offset the other. Mentally they are two disconnected amounts of money.

  

Of course another reason we shun offset mortgages is because we don’t even know what they are.  

Offset mortgages simply allow any savings or current account balances to be offset against the mortgage, with interest only being payable on the difference between the two.

o   e.g. if a borrower has a £100,000 mortgage and £10,000 in savings, they will only pay interest on the difference (i.e. 90,000).

Dead easy really. You use your savings to work for you, but still hang on to them. 

This makes real logical sense for anyone who has both savings and a mortgage, and now more than ever before. Savings interest rates are so abysmally low at the moment, the loss of interest on them would be more than outweighed by the reduction in mortgage interest.

For more info check out the first direct website http://www.firstdirect.com