Culture is “The stories you tell yourself about how things ought to be, usually at a very young age.” This definition came from social anthropologist Dr. Jennifer James as she spoke to several hundred financial planners at the Financial Planning Association’s annual Retreat in Palm Springs, CA.
James’s definition of culture is similar to the idea of “money scripts,” the beliefs about money and how it works that a person typically develops during childhood. We assimilate our money scripts from a number of sources, including our parents, caretakers, siblings, teachers, and our society’s culture.
One example of a cultural money script, which James said is primarily found in the United States, is “anyone can be a millionaire.” Whether this is a realistic belief or not, she pointed out that “culture is more powerful than common sense.”
One of the big challenges in today’s world, according to James, is the rapid cultural changes we are witnessing. This is especially notable since “culture is the last thing that we change and it’s the hardest thing to change.”
I would agree that changing our deep-seated cultural beliefs about money is remarkably difficult. Why are the stories we tell ourselves about how money and finance ought to work so much more powerful than financial reality? Why are they so hard to change?
We have to look no further than our current financial crisis to understand how difficult it is to change our money 
beliefs. Is it common sense to spend more than one’s income? Of course not, yet for the past decade we’ve gone on a spending binge fueled by borrowing on credit cards and home equity loans. As of the summer of 2008, our national savings rate was a minus .5%. Spending down our savings for consumption was not sustainable. It made no financial sense. However, the power of our money culture that allowed such behavior was far more powerful than common sense.
Neuro-economics is teaching us that such seemingly illogical behavior makes perfect sense when we understand how the brain works. Our cultural beliefs are anchored primarily in our lower brain and our common sense in our upper brain. Brain imaging finds that when we step out of our cultural norms, the lower part of the brain that registers pain goes into overdrive. Sensing danger, a chemical dump allows our lower brain to take over all thought processes and go into survival mode by shutting down any input from the upper brain. Common sense and logic literally disappear.
James underscored the brain research with the metaphor of a “cultural tapestry.” “If someone starts tearing up your tapestry and you can’t see what’s being rewoven, you feel like you’re in a moral void. When that happens, we burn witches at stakes.”
She believes when societies are in moral voids, as the Unites States is currently, they move backward in time. She thinks what we are seeing economically and politically is an attempt to return to feudalism, rather than democracy. While I don’t necessarily agree with her economic conclusions, I found the analogy intriguing.
I see the same society-wide dynamic she described operating in individuals. When someone’s money tapestry is being torn up through job loss, overspending, market losses, shrinking revenue, etc., that person enters a moral void. The upper brain shuts down and the lower brain goes on autopilot. Financial decisions are made out of fear rather than logic and factual information.
Changing the cultural response to financial crisis starts with changing our individual responses. My experience, as well as research from behavioral economists, suggests several steps to help make that change. I’ll describe them in next week’s column.
