Discussing the Importance of Money and Why We Value It
When I showed up for my first-ever job interview, the owner furrowed his brow and asked, “You know the job requires putting on the mouse suit, right?”
“Yes, that’s a big reason I’m applying,” I replied.
He rolled his eyes.
I was surprised I’d annoyed him.
“Everyone here thought dancing around as the mouse would be fun. It will be fun the first time. Each time after that, though, it feels more like work.”
“When would it ever not be fun to make kids happy?”
He gave me another long eyeroll.
“Just make sure you finish the days on your schedule when you decide to quit. And here’s a piece of advice for the rest of your life: you’ll never have fun for long at any job. Just find the one you’re best at that pays the most and have fun with the money.”
He was right, of course. Less than two months later, I was sick of getting walloped by the ungrateful kids who saw me as a giant punching bag. Also, it smelled bad in the costume.
So, I found a job that paid more.
What Is Money?
As a teenager dancing around in a mouse costume, money was my ticket to freedom. I was going to use money to buy a car, drive away, and never look back.
Now that I’m older, money is clothes, food, and a house for my family.
But, what is money, really?
Money is status. Money is comfort. In the words of Zig Ziglar, “Money isn’t everything, but it’s reasonably close to oxygen on the ‘gotta have it’ scale.”
In short, money makes us keep putting on the mouse suit long after the thrill is gone.
Let’s step away from the abstract and look at money over the years. Then, we’ll look at the philosophy of money today.
The History of Money
“Salary” comes from the Latin word “salarium,” which refers to the practice of paying ancient Roman soldiers in salt. It’s also where the phrase “worth your salt” originates.
However, money predates Rome.
We won’t cover everything, but here are some of the most interesting and bizarre moments in the history of money, from before the ancient Romans to well beyond the fall of Rome.
Ancient Lydia: The First Coins (600 BCE)
The Lydians created the first coins using electrum, a natural alloy of gold and silver. Coinage’s invention allowed for standardized trade, a concept that still exists today.
The Yap Islands: Rai Stones (500 CE)
Money on the ancient Yap Islands challenges money values as view them today. Imagine paying back a creditor with a 12-foot stone disc. That was the currency on the Micronesian island of Yap. The Rai stones were too heavy to move, so ownership was transferred verbally. The value of each stone was based on its size and history.
Africa, Asia, and Europe: Cowrie Shells (9th Century CE)
Today, you can purchase 100 cowrie shells on Etsy for under $5. However, the shells used to be a currency. For example, back in the Ashanti Empire, a bride’s dowry was paid in thousands of shells, which could be used to purchase livestock, food, and household goods.
China: Paper Money (11th Century CE)
China was the first country to use paper money, reducing the need to carry heavy metal coins and shifting the idea of what makes money valuable. Initially issued by merchants as promissory notes during the Tang Dynasty in 7th century CE, the government under the Song Dynasty adopted and standardized the paper currency.
America: Tobacco Notes (17th Century CE)
During America’s colonial era, warehouses issued receipts for tobacco, which consumers used as money. The tobacco notes were so reliable that colonists often preferred them over British pounds.
England: The Great Recoinage (1696 CE)
In the late 17th century, the public no longer trusted England’s silver coins. This was because people had been shaving silver from the edge of the coins to melt it down and sell it as bullion.
At the behest of philosopher and economist John Locke, the government decided to restore the full weight and value of the coins, believing that this was the only way to restore public trust in the value of money. After all, how does money work if people don’t trust it?
Isaac Newton, who was Warden of the Royal Mint, oversaw the re-minting of the clipped coins, making sure they were restored as full-weight silver coins. He also introduced the idea of adding ridges or grooves to the edges of the coins to make it more obvious when a coin had been tampered with.
France: Assignats (1789 to 1796 CE)
During the French Revolution, the government introduced Assignats, a form of paper money backed by confiscated church properties. However, they printed too many of them, leading to hyperinflation and the currency’s collapse.
Earth: Bitcoin (21st Century CE)
The first real-world purchase made with cryptocurrency happened on May 22, 2010, when Laszlo Hanyecz bought two pizzas for 10,000 Bitcoins. That purchase would be worth over $630 million today (considering the increased value of the Bitcoins, not the value of the pizzas).
Money in the Modern World
While money has evolved over time, it’s not so different from the first coins minted in Ancient Lydia. Money is still how you buy stuff. That said, here are some unique aspects of money in the modern world:
- We now live in a largely cashless society. Credit cards and online banking reduce our reliance on paper money. Some merchants have even stopped accepting paper money altogether.
- Mobile payment platforms like PayPal, Venmo, and Zelle make instant, cashless transactions possible anywhere there’s an Internet connection – no credit card terminal necessary.
- Even the marketplace has gone digital, with e-commerce making up 15.6% of total retail sales in the U.S. in 2023. Experts expect that to reach 20.6% by 2027.
- Modern money is more abstract than ever before. Rather than tying its value to a 12-foot rock or a tobacco receipt, we tie the value of money to our trust in government or financial institutions. This shift has made money less of a tangible asset and more of an abstract representation.
- Today’s transactions are less private than ever. Instead of taking place between a merchant and a consumer, a middleman almost always processes a digital transaction, raising data privacy and surveillance issues.
- Instead of being localized to a region or country, digital banking makes money more global. This makes it harder to regulate, benefiting those who wish not to pay taxes. This can affect how much money goes into maintaining a country’s infrastructure.
The Relationship Between Money and Happiness
Two recent studies dug into how money affects happiness. The findings may surprise you.
Kahneman and Deaton Study (2010 CE)
Does a higher income always mean a greater emotional well-being? That’s the question Nobel laureate Daniel Kahneman and Angus Deaton tried to answer with their study.
They found that your daily feelings of happiness, sadness, etc., increase up to an annual salary of about $75,000. Beyond that, though, the study shows that additional income does not improve emotional well-being.
However, higher incomes do lead to a higher life evaluation, albeit at a diminishing rate.
Andrew T. Jebb Study (2018 CE)
Andrew T. Jebb conducted a similar study. His research looked at a survey sample of more than 1.7 million people from 164 countries and found that people’s emotional well-being peaked at $75,000 annually. His study also found that the income satiation point for life evaluation is $95,000 annually.
Jebb’s study showed that when people pass that threshold, making more money actually leads to less life satisfaction and well-being.
A reason for this could be that money is essential for basic needs, but after reaching an optimal point of needs, the desires behind wanting more (material gains and social comparisons) often lead to lower well-being.
Conclusion
Understanding money means you know it will always be a path to power, status, and quality of life. However, modern perspectives are shifting, and while money is seen as necessary for basic needs and comfort, there is a growing awareness that money will not buy greater happiness beyond a certain point.
