Why Is It So Hard to Talk About Money?

DUCKWORTH:  Wait, is this a trick question?

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You’re listening to No Stupid Questions, the podcast that explores the weird and occasionally wonderful ways in which humans behave. Here are your hosts: Stephen Dubner and Angela Duckworth.

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DUBNER: Okay. Why don’t we try something new? I’ll start. Ready? Angela, read me a question right now.

DUCKWORTH: Stephen, here it is: “Hi, Stephen and Angela. Why is money so hard to talk about?”

DUBNER: Oh, this is not from you. This is a listener question. See how I intuited that?

DUCKWORTH: You’re so clever! This is from Naomi. “I’m recently working on a project about improving people’s financial literacy. During the process, my teammates and I started talking about our financial journeys, and we realized we had so many similar financial questions, or issues, that we never talked to anyone about.” And here’s the question for us, Stephen: “Why is it so hard to talk about your money problems — or, even if you’re financially secure, so hard to share advice or talk about your finances with others? Your sincere and loyal listener, Naomi.”

DUBNER: Good question, Naomi. I once set out to write a book about this very topic. It was called Money Makes Me Happy — parenthesis — (Except When It Doesn’t). And this book was inspired by behavioral economics, the early days, but also I had just observed that there are these big topics that everyone says you shouldn’t talk about in polite company, right? There’s religion, there’s politics, there’s sex. But it struck me that money was another topic that we shied away from. So, I spent a couple of years reporting on all these different sorts of money situations — inheritance, and loss, and secrecy. And I was working on the book, and then I met Steve Levitt, and then we wrote a Freakonomics book and then another, and I put it in a drawer. But I think what attracted me to it is that we attach a lot of emotion to money and really don’t dig down into what that emotion represents. And therefore, a lot of people mismanage money in a lot of different ways, because it’s too hard to talk about. 

DUCKWORTH: But maybe for these other topics — like politics, sex, and religion — it’s at least more obvious why they are emotional topics, why they could be sensitive topics, but, like, money — in some ways, money should be the least sensitive topic. It’s just currency. 

DUBNER: That is true. But, it’s an amazing invention. We fail to appreciate, I think, what an amazing invention it really is. If you think about how many things you do in a given day that involve money in some way — whether it’s buying, selling, investing, paying taxes, giving to charity — all of these different activities. 

DUCKWORTH: I mean, what is money? Money is a fungible resource. The invention of money has made it possible for people to actually trade things in ways that are much more efficient than bartering. 

DUBNER: I’ll give you this bale of wool, and you’ll give me that bucket of salt

DUCKWORTH: Right. And so, instead of that, it’s like, “Let’s just use this intermediary — money — and then everything can go through that.” So, this thing — which is, in a way, supposed to be this abstraction that allows us to trade things — what’s so interesting is how much ego is bound up in it. I mean, these transactions are not just about dollars and cents. They really are about who you are, your identity, and your status. 

DUBNER: There was a really nice piece about this topic in The Atlantic a couple of years ago by Joe Pinsker. It’s called “Why Americans Don’t Talk About Money.” And he interviewed a lot of people who think about this and made some really good points. So, for instance, a sociologist named Rachel Sherman argues that money taboos vary a lot based on class. People often feel bad about how much money they have. So, not talking about it makes that feeling of badness go away. That’s at the upper end. Meanwhile, among middle-class Americans, the piece says, the ban on talking about money is instead often brought on by financial precarity. Working-class families tend to not have those hang ups, because the utility — money is the thing you need to make a certain amount of to do the things you need to get done. And therefore, it doesn’t have, necessarily, all these emotional connections.

DUCKWORTH: I wonder if it really is more taboo at the top of the socioeconomic ladder and less taboo towards the bottom.

DUBNER: I don’t know for a fact, but that argument rings fairly true to me. There is a line in the Talmud that is, “The more flesh, the more worms.” 

DUCKWORTH: Hmm, that’s vivid.

DUBNER: “More money, more problems” is the modern version of that. So, it’s easy to say that, well, certain people have a hard time talking about how much they earn, or how much they want to have, or how they compare to other people in their family or their social circles. But then, in the same Atlantic article, this sociologist, Rachel Sherman, makes the point that there are all sorts of proxy conversations we have about money. Everyday conversation is filled with questions about what people buy, what they do for a living, where they went to school, where they send their kids to school, and these other subjects. 

DUCKWORTH: They want to know what social group you’re in. And, by the way, we should talk about the psychology of taboo, right? Because, like, that’s really what this question is about.

DUBNER: All right. Let’s back up and go there. You want to define it?

DUCKWORTH: So, my good friend and my colleague at Wharton and at Penn is named Phil Tetlock. Phil got really interested in this feature of all societies, where, depending on the society, different topics are considered profane. They’re considered violations of sacred norms. And you could argue that talking about money is one of these taboos. And the reason why Phil got so interested in taboos is that: It’s not just that it’s a little bit bad to be talking about certain subjects, or to voice certain opinions. But it really is, like, thinking the unthinkable.

DUBNER: What would you say is a heightened example of a taboo that most people would think about when they hear the word?

DUCKWORTH: For example, thinking about, like, “What price would you pay if somebody wanted to buy your child?”

DUBNER: Okay, there you go. 

DUCKWORTH: That inspires moral outrage.

DUBNER: Let’s remove it from the financial realm entirely. How about, you know, having sex with someone in your family? 

DUCKWORTH: Yeah, exactly. But what’s interesting about this word “taboo,” and the things that we think of as taboo topics, is that there is a connotation of disgust. 

DUBNER: You’re leading us to Freud, it sounds like. Because Freud was a believer that people had this kind of problem with money because it was connected to these emotions that were off-limits, yes? 

DUCKWORTH: Yeah. I am not a Freud expert, but I do know that Freud believed that money was something that would inspire disgust and shame. And so, Freud would probably argue that we repress our feelings and thoughts about money. You know, I did not grow up in a house that said, “Hey, never talk about money.” I mean, my parents were pretty open about how much money was coming in, how much our house cost, how many years the mortgage would take the pay off. They were also pretty and fast and loose telling me how our aunts and uncles were doing and how much they thought their house cost. 

DUBNER: So, you think there are cultural components to it? I mean, that would seem to be an obvious thing. 

DUCKWORTH: It could be partly that, famously, Chinese culture is very direct. 

DUBNER: A lot of Chinese friends of mine — Chinese and Chinese-American friends — have a very similar attitude. And I’ve always thought that one reason is that Chinese — like my people, the Jews — were often migrants going to live in other places to do business, because it was the thing that you were allowed to do in those other places. And business involves a lot of money talk. And if you can’t be frank about that, then you’re not going to be successful.

DUCKWORTH: Right. If you’re going to be, like, in the merchant class, maybe you have to talk about money. And, to your earlier point, Stephen, maybe it’s the “high on the socioeconomic status” ladder folks  —.

DUBNER: That have something to hide.

DUCKWORTH: Yeah — to be embarrassed about. As immigrants, maybe you have less of that. I wonder about that, though. I think there’s a way to lose no matter where you are on the ladder. If you’re talking about money and you are lower in the ladder than someone else — so, you’re poorer — your house is not as nice, you don’t have the resources— Well, that doesn’t sound like a comparison that feels great. That’s what psychologists call an upward-social comparison. It’s typically something that makes you feel bad. It’s like, “Oh, you have lots of things I don’t have.” Okay. What about if you’re at the top? Well, now you’re in a conversation with somebody, and you’re the person that actually has more money than anybody else. You’re also in a terrible position, because everybody’s envious of you. You know that other people are feeling slightly uncomfortable. 

DUBNER: So, you’re suggesting socialism, plainly. We should all throw all our money in the pot.

DUCKWORTH: Maybe conversational socialism. I do think it’s a lose-lose game. Like, who wins in a conversation on money?

DUBNER: I guess my argument would be: There is a big opportunity cost to not talking about money. Let’s go back to what Naomi wrote. She said, “I’m working on a project about improving people’s financial literacy. During the process, my teammates and I started talking about our financial journey. And we realized we have so many similar financial questions or issues we never talked to anyone about.” So, those are two kind of separate problems. And if we want to think about, just, the first — Naomi’s working on improving people’s financial literacy, you may think, “Well, how big a problem is that?”  The good news for Naomi is that she has nowhere to go but up, because, on average, people are really bad. 

DUCKWORTH: Terrible.

DUBNER: Here, I’ll give you a little quiz. So, this is a little quiz borrowed from a wonderful economist named Annamaria Lusardi, who I believe is at Georgetown now. And she knows and cares more about financial literacy than anyone I’ve ever encountered. So, she put together a quiz to measure baseline knowledge about financial literacy. So, question No. 1 — there’s only three — suppose, Angie, you had a hundred dollars in a savings account, and the interest rate was 2 percent per year. After five years, how much do you think you would have in the account if you left the money to grow? A) More than 102 dollars. B) Exactly 102 dollars. C) Less than 102 dollars. Or D) Do not know.

DUCKWORTH: More! More than 102 dollars. 

DUBNER: There you go. That’s all you have to know.

DUCKWORTH: I was just like, “Wait, is this a trick question?”

DUBNER: No, you don’t actually have to calculate and compound the interest. 

DUCKWORTH: Holy schmoley. 

DUBNER: So, you got that one right. Question No. 2: Imagine that the interest rate on your savings account was 1 percent per year. So, you just got rooked by the bad bank, because before you were getting 2 percent.

DUCKWORTH: Interest rates are low, though. 

DUBNER: That’s true. This is very realistic. And imagine the inflation was two percent a year. Okay? Interest rate: one percent. Inflation: 2 percent. After one year, would you be able to buy more than, exactly the same as, or less than today with the money in this account?

DUCKWORTH: Less.

DUBNER: Very good. Number three. Do you think that the following statement is true or false: Buying a single company stock usually provides a safer return than a stock mutual fund. 

DUCKWORTH: Mutual funds are better.

DUBNER: Right. It’s false. Okay. Those questions, I’m guessing, to most people listening to this — but maybe not, we don’t want to assume — were pretty easy. However, Annamaria Lusardi, along with Olivia Mitchell of Penn, they did insert these survey questions into a variety of major U.S. surveys. And they found that, among respondents 50 and older, only half of them got the first two answers right. And only one third got all three answers right.

DUCKWORTH: Wow, that is, uh, pretty horrifying.

DUBNER: It’s pretty horrifying.

DUCKWORTH: Maybe they didn’t pay attention, though. I have to say, in survey research, you also get a fair number of people who are like, “What?” You know, they just weren’t reading the question carefully.

DUBNER: Let’s pretend that half of the ones who got them wrong didn’t pay attention and the other half were stoned out of their gourds. That’s still really bad. And the reason it’s bad is because money is kind of important. And, as Naomi is writing, there’s a need for her to help people get better at it. And she realized that she and her colleagues are having similar problems. So, the question she’s really asking, I think, is: Is the taboo-ness of talking about money preventing more of us from being better at thinking about money and managing it well in our lives?

DUCKWORTH: So, is the taboo contributing to financial illiteracy, and then to financial insecurity? 

DUBNER: Yeah. And, to be fair, there could be more than one correct answer. In other words, taboo could be contributing, but it could be that there are many other reasons why people are not financially literate. 

DUCKWORTH: I think it’s a reasonable guess that if you’re not talking about money at all, where are you supposed to learn this? I mean, people have argued this about sex education too, right? If nobody’s ever going to tell you anything, how is anybody going to learn?

DUBNER: Good point. But did you have a sex ed class in school at some point? 

DUCKWORTH: I did have sex ed class.

DUBNER: Did you have a financial literacy class? 

DUCKWORTH: I knew you were going to ask that.

DUBNER: And I’m guessing the answer is no.

DUCKWORTH: No, I did not. And smart people that I know have been beating this drum about introducing financial-literacy classes, just the way— I was going to say, just the way we teach home economics, but I don’t think we do those things anymore. But nevertheless, it does seem to me like a very good idea. 

DUBNER: Or you could do them both at the same time. You could teach them to pay for sex, and to be paid for sex. 

DUCKWORTH: That’s exactly where I was going. 

Still to come on No Stupid Questions: Stephen and Angela get to the heart of why money feels so connected to ego and identity. 

DUBNER: The reason I’m driving this yacht past you is because I have a lot of money, and I feel good about it.

DUCKWORTH: Yeah, my yacht’s bigger than your yacht. 

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Before we return to Stephen and Angela’s conversation about why it’s so difficult to talk about money, I’d like to share some of your thoughts on the topic. We asked listeners to let us know which taboo subjects they think society could benefit from having more conversations about.

@georgeellis88 writes, “Poop… Surely more open poo dialogue could help people identify and address issues like diet, exercise, digestive problems, or cancers.”

@tizzybik says, “Menopause,” and also “Giving birth.” They write, “I remember a class for soon-to-be parents where they explained how the baby came out and the giving birth to the afterbirth… one woman nearly fainted — she had never even heard of the placenta being delivered.”

@mattmaynard writes, “Nursing homes. We all get old and many need a care facility, but so many refuse to discuss, plan, or even think about it until the bitter end. That results in rushed decisions, underfunding of this institution, and heartache. We all will get old — let’s solve this before we get there.”

And finally, @mookie5 says they just avoid taboo subjects altogether. They write that at family gatherings there’s, “No politics, no religion, no money chat. We all still like each other… we will continue to get together. This has worked beautifully.”

If you’d like your thoughts to appear on an upcoming show, make sure to follow our Twitter account, @NSQShow. Now, back to Stephen and Angela’s conversation about the connection between conversations about money and financial literacy. 

DUCKWORTH: The other day, Jason was telling me about I.R.A.s. And even though I work on some of this stuff as a behavioral scientist — like, I understand that this country has a very low savings rate, and I understand that we need to have a higher savings rate if we want people to be more financially secure, particularly in their later years. I understand that, and I can work on the motivational dynamics, et cetera, but don’t ask me questions about what I.R.A.s are, really.

DUBNER: Hey Angie, what are I.R.A.s really?

DUCKWORTH: No idea. I think I have one.

DUBNER: So, let me make a counterargument to the pro-financial literacy argument. This is an argument made by some people in the realm who, I think, want good things to happen. They say, listen, it’s ridiculous that we should have to teach so much financial literacy. The reason we have to teach so much — or, theoretically, should teach so much — is because the financial-services industry and firms, and not just them, but credit card companies who charge 18 percent interest — which, if you think about it for a second, really should be criminal, because that’s not good for anyone except the companies and their shareholders. Their argument is that, rather than teaching people how to be a lot more savvy about money, you should force firms to be less exploitive.

DUCKWORTH: Ah. Change the structures, not the individual.

DUBNER: Exactly. Make it harder for people to get in trouble by making bad decisions by removing those most painful decisions from the choice set. Now, if we wanted to give a draconian example, you would say, “No credit card should be allowed that has higher than, let’s say, 5 percent interest.” Because, especially as that compounds, that’s still the opportunity to make billions and billions of dollars. The kind of people who are paying 18 percent interest on a credit card are getting hosed so badly, it’s almost impossible really to ever catch up. 

DUCKWORTH: I think it’s not either/or, right? Because, even if you do regulate some of these things, it’s like whack-a-mole. Like, “Oh, now we need a regulation for this, because there’s this new instrument that people came up with to hoodwink the naive American public.” I think some amount of financial literacy is like, “Why not?” My kids probably know more than I do, because some high school teacher had them do this project in groups where they each got assigned some occupation — like, you are planning the retirement of a, you know, 42-year-old truck driver who lives here — and then they had to learn how to use these spreadsheets. 

DUBNER: That’s where you learned about I.R.A.s. 

DUCKWORTH: Well, I didn’t learn enough. I was like, “I don’t know, why don’t you look on the Vanguard website?” I remember my older daughter Amanda, like, ended up calling Vanguard. Turns out there’s lots of nice people who work at Vanguard, and if you call them and say, “Hi, I’m a high-school student trying to learn about retirement savings,” they’ll actually talk to you. So, why not have some amount of formal instruction to put everybody on some basic level of understanding? And, you know, have some regulation as appropriate? That sounds reasonable to me.

DUBNER: So, rather than try to turn you into a financial literacy expert —.

DUCKWORTH: That would be not a good idea. 

DUBNER: Well, let’s lean on you as a psychologist, because if we try to examine the core of this question from Naomi, again, it seems to be: Is our inability to discuss certain things leading us to a sort of ignorance that’s costly to us? So, I have a survey here. I’m looking at some data. I have no idea how good this is. This is from something called The Capital Group. It’s an investor survey series, and most surveys like this I’m skeptical of, but this is the best I could find.

DUCKWORTH: Scrounge up.

DUBNER: It was conducted by something called A.P.C.O. Insight, a global opinion research firm. This is from a couple of years ago — the overall sample is said to be representative of U.S. demographics. There’s a roughly equivalent grouping of millennials, gen X-ers, and baby boomers. Varying income levels. So, the question was asked: What do you consider too taboo for discussing with friends? And let me just read out to you some of the potential answers, okay? Racial harmony, sexual orientation, political views, religious beliefs, marital problems, size of your retirement savings, salary or household income, psychiatry or mental illness. Of those that I’ve read, what do you think would be considered, among these survey respondents, the most taboo?

DUCKWORTH: Absolutely household income.

DUBNER: You’re right. Again, I’m taking this with a grain of salt, because this is a survey conducted for some kind of investing group. So, plainly, they have at least half a thumb on the scale — and maybe as many thumbs as they have. But according to them, the top four categories of all taboo topics are about money: Salary, retirement savings, debt, and inheritance. And then, after that come marital problems, religious beliefs, and so on. What’s also interesting is that there’s a big gender split here. Women are much, much, much more uncomfortable than men in talking about these money topics.

DUCKWORTH: Oh! I was going to go the other way. I was going to generalize to all women my own views. But that’s very interesting.  I mean, I’m guessing here completely, but maybe women, if they are more perceptive, period, about how the social dynamics are going, you know, how uncomfortable people are — and there is some evidence to suggest that women are more empathic, more sensitive to other people’s emotions, more interested in other people’s feelings — maybe they just have longer antennae when it comes to taboo topics and things that we should avoid. But let’s leave the gender question aside. When you think about all those topics, like: How do you think about racial harmony? What about marital problems? Et cetera? Yeah. They’re personal, they could be sensitive. But money is a status concept where, clearly, we know that 100,000 is more than 50,000 and 50,000 is more than 25,000. It’s a pretty clear, ordinal ranking. So, if you’re having a conversation with four people, pretty immediately you know who’s on top, who’s two, who’s three, who’s in the bottom. It’s a status hierarchy where your position is unequivocal, and I don’t think that’s great for bonding. I think there is a kind of lose-lose dynamic with this, because the person who’s No. 1 — you know, two, three, and four hate them. Number four feels terrible, because they’re in the bottom. Two and three have some version of both of those. So, wow, money has such a clear ranking. It is very tied to your social status. And there’s a precision to it. So, maybe those factors combined make it such that it’s immediately uncomfortable. Whereas other things — like, my views on racial harmony are not tied to my social status. Even things like education. It’s like: “Is this school better than that school? Well, it’s debatable.” But nobody has to debate whether 100,00 is more than 50,000.

DUBNER: I think that’s the big issue. In a lot of society, money does practically equal status. And I would argue that whether you’re high-, medium-, or low-income, probably nobody really likes to be identified by their financial standing. It doesn’t feel complete, don’t you think?

DUCKWORTH: And yet, people want to have these fancy handbags and these other outward-status symbols that clearly are all about money. I mean, the reason why there are status symbols is because they’re expensive. 

DUBNER: Well, I think we’re talking status in a little bit different way. What I’m saying is that I don’t think that high-income people want to be thought about as successful or as good people because they have a lot of money. I think it’s a dimension of it. 

DUCKWORTH: We may or may not be right about that, honestly. Like, we hang out with nerds. So, I don’t know, maybe the vast majority of humanity would be, like, very happy— 

DUBNER: “The reason I’m driving this yacht past you is because I have a lot of money, and I feel good about it.”

DUCKWORTH: Yeah, “My yacht’s bigger than your yacht.” I do think, though, the taboo-ness there — I mean, did you watch Parasite? 

DUBNER: I did! This is the first movie we’ve both ever watched.

DUCKWORTH: I loved it! I found it incredibly uncomfortable. I mean, a lot of that was about money. 

DUBNER: And why did the people who have money get to live a life of dignity and enjoyment, and the people who have less money live a life of total misery?

DUCKWORTH: Do you remember that scene where the aristocratic housewife is smelling the driver, and she’s disgusted. And that is the real essence of the psychology of taboos. I do think that this discomfort we have is very emotional. I think, when we feel looked down upon by somebody who has more money than we do, we do feel like there’s something about us that’s disgusting to them. 

DUBNER: So, I think the good news for Naomi’s question is that younger people are less hung up on money conversations than older people. There’s emerging sets of data that shows that to be true. I can also tell you that in our little company, even in the Freakonomics Radio Network, I do know that many of the folks who work here — most of whom are certainly way younger than me — that they actually practice salary transparency. They share their information. So, that suggests that things are changing. I think also, though, as far as Naomi is concerned about trying to spread financial literacy, I think news is sort of good there too, which is that it’s getting easier to be financially literate using not just the standard tools of education, but technology, and so on. That said, I think there still are a lot of forces conspiring against it, because there are a lot of firms and shareholders who make a lot of money by people being financially illiterate. So, hopefully Naomi is giving people some good clues toward financial literacy. I think the best advice I’ve ever heard about, and seen some evidence for its success, is recording all your spending.  And this one is much easier now with technology, especially since so much of our spending is digital. If you can see everything and you look back at the end of the week or the month and say, “Why do I not have as much money as I think I should have?” The answer will be very obvious. And then, if you have a little bit of willpower, you can overcome that. And I think the best advice for Naomi and the people she’s trying to help would be to make podcasts, because this is where the big cheese is happening.

DUCKWORTH: So much money! Well, don’t tell anyone. You’ll make them feel uncomfortable.

No Stupid Questions is produced by me, Rebecca Lee Douglas. And now here is a fact-check of today’s conversation.

In the first half of the show, Stephen gives Angela a financial-literacy quiz created by economists Annamaria Lusardi and Olivia Mitchell. Stephen says that Lusardi is currently a professor at Georgetown University, but the Italian-born economist actually works for George Washington University — an understandable mistake as the schools are both prestigious institutions that begin with the same syllable and are less than a mile and a half apart.

Later, Stephen says that while sex and money are both taboo subjects, there are sex education classes but not financial literacy classes. I’m guessing that some listeners took issue with this comparison, as sex education in America is far from comprehensive, and some of the information offered is arguably more harmful than helpful. While 39 states and the District of Columbia mandate sex education and/or HIV education, only 19 states require inclusion of information about contraception, and 28 states require that abstinence be stressed. 

Also, Angela suggests that we teach financial literacy the way that home economics used to be taught. She doesn’t think that home ec classes are offered anymore. In the 1990s, home economics was rebranded as “family consumer science.” And according to the Association of Family and Consumer Sciences, approximately five million secondary school students still participate in these classes, where they learn things like nutrition, responsible parenting, and — Stephen and Angela will be happy to hear — basic finance.

Finally, Angela says that she does not know what an IRA is, even though she’s pretty sure that she has one. IRA is an initialism for Individual Retirement Arrangement — a tax-advantaged investment account that helps you to save for retirement. Through most IRAs, you can invest in different stocks, bonds, and other assets, which then allows your money to grow and compound. For more information about IRAs, feel free to call up Vanguard and tell them you’re a high-school student working on a homework assignment, as this seems to be an effective way to garner basic financial information. 

That’s it for the fact-check! 

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No Stupid Questions is produced by Stitcher and Renbud Radio and is part of the Freakonomics Radio Network, which also includes Freakonomics Radio, People I (Mostly) Admire, and Freakonomics, M.D. This show was mixed by Eleanor Osborn. Our staff also includes Alison Craiglow, Greg Rippin, Morgan Levey, Zack Lapinski, Mary Diduch, Ryan Kelley, Jasmin Klinger, Emma Tyrrell, Lyric Bowdich, and Jacob Clemente. Our theme song is “And She Was” by Talking Heads — special thanks to David Byrne and Warner Chappell Music. If you’d like to listen to the show ad-free, subscribe to Stitcher Premium. You can follow us on Twitter at NSQ_Show and on Facebook @NSQShow. If you have a question for a future episode, please email it to nsq@freakonomics.com. To learn more, visit Freakonomics.com/NSQ. Thanks for listening! 

DUCKWORTH:  Can you swear to me that you’ve never looked up to see where somebody lived and to see how much their house costs?

DUBNER: I cannot swear that to you.