How Money Changes Trust

Money is a fickle mistress. According to a new study published in PNAS, introducing money into a small group causes a drop in trust, but doing the same to a larger group will increase trust.

In the study, participants in groups that ranged in size from two to thirty two had the option of helping each other by giving gifts, relying solely on the expectation that they’d be rewarded with a reciprocal good deed in the future. Under this arrangement, smaller groups were more likely to help each other than larger groups.

Then, researchers introduced the element of tokens to the proceedings. The tokens had no monetary value, but the groups quickly started using them as fait currency, exchanging them for gifts. Under this arrangement, the previous generosity of smaller groups suffered, but the larger groups became more willing to help each other.

Of course, this study demonstrates why, given that you don’t know everyone at the market or on Bay Street, a medium of exchange is needed to keep everyone honest. That said, it also demonstrates how money can poison personal relationships—and probably why family Monopoly games can quickly turn into screaming matches.

Photo courtesy of 401(k)2012.

This is a test