Getting Rich - The Unexpected Vengeful People Who Will Stand In Your Path - September 4, 2008 -

In real life people who build wealth tend to continue to work hard and build wealth in spite of the penalties given to people who strive for success, people who work two jobs and earn more money to take care of their family, etc... And...In real life, people who blow their money tend to repeat the same mistakes over and over...and society rewards them...only to have them blow what they were given again and again

In general, it's somewhat fair to say that the rich get richer and the poor get poorer. It just takes more effort to accomplish BOTH of those things than we might imagine. And it's all because of our emotions.

In the United States and most English speaking countries, all things being equal, anyone without major physical or mental handicaps should be able to build wealth if they choose to. And that is a true statement.

If you and I live in the same house or the same city, or state, for the most part, it's a decision as to how much money you want to earn. And the decision is yours and it's mine.

Unfortunately that person you're living with only gets taxed 15% on his income because he works 8 hours per day. you work two jobs and get taxed at 28%.

That's real life in America. It makes absolutely no logical sense whatsoever.

And the guy in the bedroom next to you gets the same amount of services (or more) for doing less than you do.

Thus, those who build wealth tend to work with even more focus and determination to do whatever they can to not let society's punishments run them over. And just what happens when society is given THAT chance?

I'll show you in a minute.

"Equality" is an interesting concept.

And we find that people really don't like to see that other people have "more" than they themselves do...

Take people out of real life and put them in a University laboratory and some mind blowing things happen.

What we find is that people choose to punish people who work hard and succeed in order to bring them down to the level of non-success that they experience. And, they are willing to spend a lot of their money to do it!

(If this sounds like politics, I heard it too.)

I did an experiment with a group of people in an adult setting a few years ago. People in the class were given random amounts of money and had choices to share it with secret members of the audience or not, based upon offers given to them, by me, representing each secret member. It was simple. The audience member could take $20 they were given in one dollar bills and split it between someone on the panel in any way they suggested. The only catch was the person on the panel had to agree to the split or give the money back to me.

So, if a guy offered a girl $1 and he'd keep $19, it takes no rocket scientist to figure out that the gal on the panel should accept the split. Otherwise, all twenty dollars returns to me.

Make sense?

Of course it makes sense.

It's simple logic.

But people aren't logical and they don't think.

Almost everyone puts the kabosh on these wide splits. The people on the panel were always comfortable with 50/50 splits and about half the time they accepted $7 when one participant suggested they keep $13.

Obviously the people on the panel should ALWAYS agree to ANY split because otherwise the money just all gets returned to Kevin who is running the game. And that is indeed what happened with MOST of the money as the day went on.

Once everyone decided to accept or not accept splits from secret audience members, I wrote on the flip chart how much money each person had. About half had no money. Some people had as much as $10. Of those that had money about half of them had $5-7.

Next up, I gave $10 to each of the poor people on the panel. Now all the people who had nothing to start with (those who were stupid enough to not take a split whatever it was) were the richest or equal to the richest. Instantly the impoverished were "moved into the mansion."

Then I went to the people who had money from their decision to have money.

I told them I would give them $3 (to each person) or each person could take away $6 from anyone on the panel. However, no secrets. They would have to name the person and have me right down the remaining amount of money for that person on the board so the class could see it.

Now logically, every person should take the $3 and be happy. It's free money. But that isn't what happens. What happens is that people start pecking away at the people with the most money and pull them down to a level closer to their own income. Pretty soon, no one on the panel had more than $5 and I was getting money back in droves.

The richest got hit first. Then the middle class....until everyone was poor.

Given another round where i would give them $3 or they could take away $3 from someone, they typically chose to punish the person who had punished them.

Instead of taking the $3 and being pleased, they chose to take away from those with a few dollars left and impoverish them.

Now, I have to confess that I didn't invent this "game." Scientists have been playing variations of this game for years with participants all over the world.

What I did find out was how much people were angry with each other after the experiment was over. One couple who had gone out the night before, didn't speak after the game. Even taking away a few bucks from someone in a game, in a class, can cause people to have intense hostile feelings toward each other.

The rich didn't get richer -- at least not in my game under my rules, or under other scientists recent studies.

According to a new study of behavioral economics, published in the April 12, 2007 issue of Nature, people will spend their own money to make the rich less rich and the poor less poor. They do so without any hope of personal gain, acting, it seems, out of a taste for equality and sense of fair play. Earlier research has demonstrated that people are willing to incur costs to punish and reward others, especially in scenarios where every player's contribution to a common pool results in greater benefits for all. But in those cases it is hard to tell whether the actions are motivated by egalitarian preferences for similar income levels or a desire to enforce norms and encourage group cooperation.

So James Fowler, associate professor of political science at the University of California, San Diego, doctoral student Christopher Dawes and their coauthors set up a game to see if there's a drive for equality.

The results suggest that a form of material egalitarianism is more than just a long-held ideal of utopian philosophers and political theorists. With not only self-interest but also group cooperation removed as factors, people still, at a cost to themselves, gave money to the poorest players and took it away from the richest.

Fowler and colleagues believe that their experiment shows that egalitarian motives, to some extent, underlie the evolution of cooperation and reciprocity in humans. "One of the reasons we cooperate may be because we care about equality," Fowler said.

Real-world analogues for egalitarian preferences, said Fowler, can be seen in the wide acceptance of a progressive tax and a social welfare net.

"If people didn't have a taste for equality, then I would expect the world would be even more unequal than it is," he said. "It has not been fully appreciated yet how much people are willing to level the playing field and how much this determines our ability to cooperate with each other."

A total of 120 volunteers took part in the experiment over six sessions, playing the game five times in groups of four. Group composition changed with each game and players' game histories did not follow them. In other words, reputation and retribution were not allowed to play a role.

Participants were randomly allocated different sums of money. They were shown what each player got and presented with a choice to do nothing and maintain the (unequal) status quo or to reduce their own real takeaway pay by one monetary unit in order to either increase or reduce another player's income by three units. Outcomes of each game were then displayed.

In all, income alteration was frequent: About three-quarters of participants reduced or increased another player's income at least once and about a third did so five times or more.

Subjects who had received more than the group average were penalized most frequently and most heavily, at a rate of about three-quarters of a unit for each unit above the average. In contrast, those that started out with considerably less than the others got sizeable gifts, at rate of about eight-tenths of a unit for each unit below the average.

The pattern of behaviors had the effect of equalizing income. It also did not change as players gained experience with the game (and so could clearly see that there really was nothing to be gained from their costly actions). Furthermore, it didn't seem to matter whether individuals had themselves been the targets of an increase or reduction in the previous round: They continued acting as they had, either redistributing winnings according to apparently egalitarian principles or, as was the case with a minority, concentrating wealth in the hands of a few.

The researchers capped their experiment with a questionnaire designed to elicit emotional reactions. Players expressed the greatest levels of annoyance and anger in a hypothetical situation where one player got far more than they had. And the players who felt this way the strongest spent more to equalize the distribution.

In related research, Fowler has shown that game behavior correlates with people's political participation. Those that engage in costly giving and taking in a game tend to also be registered with a major political party and to vote at greater rates.

"The 'Robin Hood impulse' people display in the lab," Fowler said, "appears to translate into good citizenship out in the world."

The press release that the second half of this article quotes cited Coauthors on the Nature paper quoted Tim Johnson, of the Max Planck Institute for Human Development in Berlin and Stanford University, Richard McElreath, of UC Davis, and Oleg Smirnov, of the University of Miami. The research was supported by the Center for Adaptive Behaviour and Cognition at the Max Planck Institute for Human Development and the UC Davis Institute of Government Affairs.

My research was sponsored by private funds.

Interested in learning more about getting rich, building wealth and facing the problems that others in your environment will pose? Go to http://www.kevinhogan.com/ for several free reports.

Interested in learning more about getting rich, building wealth and facing the problems that others in your environment will pose? Go to http://www.kevinhogan.com/ for several free reports.

Kevin Hogan, Ph.D. is the author of 15 books including the Psychology of Persuasion, and, The Science of Influence. He is the creator of Manifesting the Millionaire Mind

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