Abolish the taboo of money-talk!

“How much do you make?”

“Go screw yourself.

Even though egalitarianism is one of my terminal values, there’s one case of the egalitarian instinct that should be abolished, and that’s the taboo against talking about money.

I’m instinctively curious about everything — I remember many cases where I was inquisitive about someone’s financial position, only to have them react with anger. You can get seriously hated for asking how much someone earns, or in turn, telling people how much you earn.

I suspect that one of the reasons people get upset is because it feels like a case of power assertion. In any conversation between two people, one person is going to be more successful than the other, or more attractive, or intelligent, or physically stronger, etc. — there are all of these invisible “ranks” where one of you has risen over the other on society’s ladder.

But yet we’re not allowed to mention them. If I told you tomorrow that I’m much smarter than you are, you’d be pretty upset and hate me for it, even if it were true.

And in the case of money, pretending that it doesn’t exist is a common temptation to both the rich and the poor. The rich get to pretend that they’re just ordinary hardworking people, and the poor get to fit in. Isn’t an obvious solution to income inequality to pretend it doesn’t exist?

But that’s not true egalitarianism. It’s running away from the issue; and it leads to less egalitarianism, not more. How can we be egalitarian if no conversation about income occurs?

And ignoring differences in income further increases our susceptibility to the just world fallacy. We subconsciously assign positive traits to people who are better off, even if they absolutely don’t deserve it, and are better off only due to luck. That’s because we subconsciously want to believe that the world is fair.

“Lerner also taught a class on society and medicine, and he noticed many students thought poor people were just lazy people who wanted a handout.
So, he conducted another study where he had two men solve puzzles. At the end, one of them was randomly awarded a large sum of money. The observers were told the reward was completely random.
Still, when asked later to evaluate the two men, people said the one who got the award was smarter, more talented, better at solving puzzles and more productive.
A giant amount of research has been done since his studies, and most psychologists have come to the same conclusion: You want the world to be fair, so you pretend it is.”

And the more you believe that the world is just, the more shame you feel having a low income (or the more righteous you feel at having a high income), which further contributes to the desire to not talk about money, which leads to a feedback loop.

But the world is not just. And so we shouldn’t act like it is. I don’t mean this in the sense of “The world is unfair, deal with it”, as this addage is commonly used to imply. I mean this in the sense of “The world is unfair — but it doesn’t have to be! But if you want to change it, the first step is to acknowledge that it’s currently unfair!”.

But if we accept that the just world fallacy exists, then we can start talking about income. I can say that even though I may earn more than you, you are still a better person than I am. Conversely, we can also accept that differences in income, intelligence, strength, and conscientiousness exist — but why should that stop our loving friendship? To be friends with someone who is an identical clone of yourself is boring — like talking to yourself. It’s these differences between us that make our friendship exciting and novel!

Not talking about money is also unoptimal. We pay a huge premium if we keep how much we earn a secret.

Discussing a problem is one of the most effective ways to frame, understand it, and come up with a solution to solve it. Most people are significantly more creative and think more critically when discussing a problem, regardless of the discussion partner.

Problems such as: “How much of our pay should we be saving?; Are stocks as safe as the “experts” are telling us? Why are we taking on so much debt even though we earn more than our parents or grandparents did?; Does it make sense to pay off the mortgage early?”

It’s impossible to start discussing any of these issues if you don’t share your income. And yet most people don’t. That’s why most people are utterly horrible at personal finance; 30% of people have no savings, one third don’t have money for retirement, and about half of us have less than $500 dollars in savings.

Not talking about money also hurts us because we can’t get customized money advice on our situation. Sure, there are books out there on personal finance, but none of them are customized; we can only get that from people who genuinely know us. To give that up over the taboo of talking about money is silly.

And furthermore, not discussing income leads to a severe case of information asymmetry, and you getting screwed out of your wallet. By knowing how much your peers make, you’re in a much better position to demand pay raises, and greater income from your bosses. It’s basic economics — if you don’t know how much your co-workers are getting for the same job, then your boss can pay you the bare minimum needed to make you stay, rather than how much he actually wants you there.

This leads to things such as:

Several minority groups, including Black men and women, Hispanic men and women, and white women, suffer from decreased wage earning for the same job with the same performance levels and responsibilities as white males (because of price discrimination). Numbers vary wildly from study to study, but most indicate a gap from 5 to 15% lower earnings on average, between a white male worker and a black or Hispanic man or a woman of any race with equivalent educational background and qualifications.
A recent study indicated that black wages in the US have fluctuated between 70% and 80% of white wages for the entire period from 1954–1999, and that wage increases for that period of time for blacks and white women increased at half the rate of that of white males. Other studies show similar patterns for Hispanics. Studies involving women found similar or even worse rates.
Overseas, another study indicated that Muslims earned almost 25% less on average than whites in France, Germany, and England, while in South America, mixed-race blacks earned half of what Hispanics did in Brazil.

If we don’t talk about money, we can’t assist each other in times of financial troubles. There’s even a common philosophy that says My money is mine, and yours is yours, but that sounds unoptimal. The old adage “shit happens” is true, because unexpected situations really happen. Your house might burn down, or you may get a serious illness, or your car might fail and you desperately need to buy a new one. One doesn’t “choose” to have these things happen to them, and it is in these cases that friends need to help one another. As someone who has experienced temporary homelessness, I know this firsthand. It’s a classic case of game theory cooperation (that’s what friends are for, right?).

Furthermore, there’s also the hedonistic treadmill to take into consideration — beyond a certain level of meeting basic needs, spending more money doesn’t make you happier; with only one exception, and that is spending that money on friends. The Ayn-Randian trend is silly because humans are naturally social creatures, our happiness is dependent upon how much we are needed by others.

We should also start talking about money because we all need reassurance in our decisions to make them succeed.

As emotional creatures, we need reassurance.
Financial advisors get paid a lot of money for assuming these hand holding duties. And they do not always give the best possible advice. Sometimes that’s because they are compromised by having goods and services to sell. Other times it is just because they do not know the people they are trying to advise well enough.

Our friends know us well. And our friends have our best interests at heart. We should be talking about money with our friends a lot more than we do. They have the ability to give us what we need to deal with the emotions attached to money problems and wouldn’t think of charging a big hourly fee for doing so.

Furthermore, sharing your plan helps turn thoughts into actions. Books tell us the benefits of buy-and-hold; talking about money supplies the reassurance needed to make it happen in the real world. Speeches explain the benefits of saving; talking about money permits the back-and-forth that expands the good idea into a workable plan that inspires changes in human behavior.

Finally, not talking about money should irk you because it’s a case of shying away from knowledge; it feels irrational.

In the words of Eliezer Yudkowsky;
“If the iron is hot, I desire to believe it is hot, and if it is cool, I desire to believe it is cool. Let me not become attached to beliefs I may not want”

If my friend has a higher income than I do, I desire to believe that he has a higher income than I do. If my friend has a lower income than I do, I desire to believe that he has a lower income than I do. I wish to know the truth; for knowing something does not change the territory, only my map of the territory. And having a more complete map is always desirable. I will not shy away from the truth because I fear it.

You should care less about income being a case of power assertion, and more about the fact that talking about income will help all parties involved. The truth should never be offensive.

Furthermore, I dislike keeping secrets from friends; ever since my Transhumanist coming of age, I’m trying my best to keep as few secrets as possible from others. So I have decided to discard this taboo in favour of optimization — those that matter won’t care, and those that care won’t matter.

I Reject your Reality and substitute my own!

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One Comment on “Abolish the taboo of money-talk!”

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