Claudia Hammond on the Psychology of Money

In a sense, money is just paper, but people regard it as much more. In 1994, a group of artists set aflame £1 million [$1.4 million] in an art exhibition. The backlash was severe. Since then, studies have shown that seeing money destroyed disturbs people, triggering a part of the brain linked to the “use of tools,” such as penknives. To a degree, money is a tool and signifies “opportunity and choice.” Though money represents a “future reward” – you must exchange it to get what you want – the brain processes it as an immediate reward.

People assume that they can identify good value. Yet when bidders in an auction...