Spending money gives brain the same buzz as doing drugs

Date: 2010-06-17

The research also found that people tend to spend more if they have higher salaries even if prices are correspondingly high.

Such a behaviour has been described for years by economists as the ”money illusion”.

In the study, which was led by Professor Armin Falk of the University of Bonn, 18 volunteers undertook a series of tests looking at how their purchasing decisions varied when given different salaries and product prices.

The volunteers were provided with two salary levels, one being 50 per cent higher than the other. However, when they received the higher salary, product prices in a catalogue were also 50 per cent higher.

During the same time, the participants underwent brain scans to determine the levels of activity in a part of the brain associated with reward, the ventromedial prefrontal cortex.

A purely logical response would have been for the brain to react identically in both situations. The scientists, however, found that when people were given a nominally higher salary they felt more rewarded when spending, even though their real purchasing power was the same.

“This result means that reward activation generally increases with income, but was significantly higher in situations where nominal incomes and prices were both 50 per cent higher, which supports the hypothesis that activity in the ventromedial prefrontal cortex is subject to money illusion,” The Telegraph quoted Prof Falk, as saying

Prof Falk added: “Economists have traditionally been sceptical about the notion of money illusion, but recent behavioural evidence has challenged this view.”

The study is published in the journal Proceedings of the National Academy of Sciences. (ANI)


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