Our ways of speaking about money, and using money, are intimately tied. So can the language of financial experts influence our money decisions?
Linguistic Relativity, also known as the Sapir-Whorf hypothesis, states that the structure of a language influences its speakers’ world-view.
The philosopher (of mathematics, mind and language) Ludwig Wittgenstein’s theory of language as the means by which people both picture reality and reason famously concludes ‘Whereof one cannot speak, thereof one must be silent’.
In other words, in order to be able to talk about money, and make effective decisions about money (key aspects of financial literacy), we need to understand the language of money.
Almost a century later, John Lanchester concluded the preface of his book How to Speak Money: ‘economics is about tools. And the most important of these tools, the one without which the others won’t work, is language’.
Is your financial knowledge ‘semiknowledge’?
Most of us ‘sorta-kinda’ know what is being talked about. But not in enough detail to really engage with the discussion in an informed way. This is what Lanchester calls ‘semiknowledge’. Language, he says, is the starting point from which ‘we begin to have the tools to make up an economic picture’.
In addition to understanding the basic vocabulary, how something is phrased, including by experts, can have a significant influence on the decisions we make.
Experts and the media
Financial planners and other experts are trained to monitor their clients’ verbal and body language. But aside from instructions to avoid jargon and to follow legislated requirements, how much attention do advisors pay to they way they speak? And the influence this may have on a client’s decisions?
How an expert frames risk can powerfully influence whether or not a client is willing to take that risk, says Furnham.
Zweig recommends guarding against this by reframing:
If someone offers you a 90% chance of success, ask yourself whether you’d be happy with a 10% chance of failure.
Although the risk is exactly the same, you may find yourself reacting differently.
In the media, inflammatory words like ‘crisis’, ‘recession’, and ‘fiscal calamity’ are often used, portending disaster and agitating people. Such words create emotion, in contrast to the unemotional words used to downplay other situations. Clearly, Gross concludes, the mainstream media use such words to trigger a sense of urgency in relation to the economy, so that we tune in more often, and buy more newspapers.
Financial experts: beware the unintended consequences of your linguistic choices
‘The media may know what they’re doing’ Gross continues, ‘but financial experts don’t often consider the unintended consequences of their linguistic choices. For example, many financial planners and counsellors talk to financially troubled customers about ‘budgets’’. But as Wall Street Journal reporter Jeff Opdyke opined, ‘budget’ ‘might well be the dirtiest word in financial language’. A ‘spending plan’ on the other hand ‘is all about prioritising – deciding how to spend whatever money one has. Whether one’s financial income is large or meager, everyone can make financial choices. That capacity to decide is empowering’ says Gross. As Gerrit Antonides observes in Psychology in Economics and Business, those who feel in control are more motivated. They are also more open to new information, and willing to assume responsibility.
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This post is the ninth of a 10 part series over 10 days introducing Enrichmentality.
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Are you a financial planner, or do you deal with one? What language issues have you noticed? Let me know in the comments.