Dollars and Sense

As we just saw, such terms of effort are extremely important. Terms like “artisanal,” “handcrafted,” “fair trade,” and “organic” are used not only to signify creativity, uniqueness, political views, and health, but also to signal extra effort. Effort terms tell us that a lot of labor and resources went into a product and implicitly suggest that the

The point is that language offers a window into the effort we so crave to see, which signifies fairness and quality. In turn, perceptions of fairness and quality become a proxy for value.

People often say they’d prefer being the highest-paid employee of a company rather than the lowest-paid one—even if it means making less money.

Transparency—revealing the work that goes into a product or service—allows a company to show us that they’re working hard, earning our money. We don’t value things much unless we know there’s a lot of effort involved.

mistakes. Determining how much money is equal to the pleasure we expect to get from an apple is a calculation fraught with danger. From this perspective, a useful financial decision-making strategy is to pretend that money doesn’t exist.

People actually refuse free money in order to punish someone—someone they don’t know and probably won’t deal with ever again—just for making an unfair offer. These results show that we can value a dollar at less than zero because of our sense of fairness.

When evaluating a transaction, traditional economic models simply compare the value to the price. Real, human people, however, compare value to price plus other elements, like fairness.

We pass up good value that seems unfair, out of spite and in search of revenge.

Money is fungible. Every dollar is the same. It doesn’t matter where money comes from—our job, an inheritance, a lottery ticket, a bank robbery, or our gig moonlighting as the bassist in a jazz quartet (dare to dream)—the money is all ours and it belongs, in fact, to the general “our money” account.

Effort gives us the feeling of ownership, the feeling that we’ve created something. After we invest effort in almost anything, we feel extra love toward that thing we had a part in creating.