Psyblog has a post today on a series of studies done to compare how people think socially and financially and the relationship between the two.  The findings seem consistently to support the idea that people tend to separate their financial and social thinking.  The studies found that social rewards (even those like candy that have an easily measurable monetary value) engendered as much investment in a project or undertaking as a moderate financial reward.  However, smaller financial rewawrds seemed to engender less investment and performance in the activity.

This compartmentalization of thinking in relation to finance explains a lot about people’s behavior regarding money.  An alumnus of a school may feel happy to volunteer time (social donation) but not money (financial donation) to that institution.  People feel bad about homeless people on the street but are reluctant to actually give money.  It is one of the challenges of living a wholisticlally ethical life to try to overcome this barrier and integrate our financial thinking into the rest of our lives.

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