Money and the Box: Why Are We So Bad With Money?

When I told my friend, Hellen (who we dubbed Hellen of Troy) heard that I was starting a column on financial literacy, she quipped — without missing a beat, “Did you know your instant shower is making you poorer? Read more to find out.”

Ha. Ha. Funny Hellen.

No. I shall not be writing about the cost-implications of instant showers and whichever wayward children that particular brand of writing has sired. I shall not be offering advice on how to tie your hair up with shoelaces and I most certainly will not guide you towards 5-second showers to save on power—this is, after all, not the homegrown version of Extreme Cheapskates (which is a great show).  Most importantly, I shall not be advising you, period. This is not that kind of column and I am not that kind of writer. 

This is a choose-your-own-adventure sort of journey. I tell you a story and you decide whether the ogre eats the villagers at the end or they sit and kumbaya...you get my drift, no? And today’s story is why are we so bad with money? To answer this question we have to go back in time to one of my fondest memories: Money or the Box? 

Living Life as Game Show Character

There are few shows to date that have captured the imagination of a nation as KBC’s Omo Pick-a-Box did. I remember sitting around our old JVC —  which we had to smack on the side when it inadvertently lost reception — eyes riveted to the screen waiting to see the fate of whichever lucky audience member would get called up for the chance to play. 

I was quite young then yet I still remember how riled up the show made me. When Lorna posed the question, inserting the ominous pause that paved the way to the hush that lay claim to the glorious moment: money...or the box? And we, the loyal audience, spell-bound, waited, hardly breathing, (lest we disrupt the TVs reception), while another lucky Kenyan had the difficult task of choosing between cash in hand or the great unknown that lay within the box. 

It was anybody’s guess what you could get. Sometimes it was a fridge, other times you were left to walk away with anything from a nail cutter to a mwiko having passed over the Ksh5,000 bob in hand. It was heartbreaking, it was exhilarating, it was frustrating, it was exciting and it was everything, everything, everything. 

It is many years after the show’s cancellation and I still hold that Omo-pick-a-box remains the best analogy for how we think of money: will it be cash or the glorious, terrifying unknown? And every day we must make that choice which may be both to our benefit /or to our detriment. Let me tell you a quick story about my friend Brian (though at this rate and if I keep using them as props, I shall have no friends left).

Of Quick Wins and Big Losses

Brian came up to me after class one day armed with a proposition. We were broke uni students perpetually searching for quick and easy ways to make money. Brian (apparently) had found exactly what we needed: easy, well-paying work that didn’t need much effort, to begin with. It was, as he put it, almost like stealing.

Over a plate of chipo-beans, Brian told me how it worked leading, of course, with all the people he knew who’d already made unconscionable amounts off the work. It was easy: an advertising company was paying people to engage with content from their clients. It was legitimate, he said, they needed people to like their ads and that’s how you got paid. And the best part? It was free. You’d get paid 10 bob for each ad you clicked on.

I am sure you know how this particular story ends so I will spare you the long-winded explanation. The ‘work’ Brian was talking about became the infamous 2 trillion Public Likes scam. As far as I know now, Brian lost about Ksh14,000 in potential income when it all came to dust just three months after he joined. It was actually, from a purely anthropological point of view, fascinating to watch. 

So why are we so bad with money? Dan Ariely would argue it’s because we are predictably irrational. Ariely, in his book by the same name, argued that when we are faced with uncertainty we tend to fall back on our own biases. Ariely, an off-shoot of a budding crop of behavioural economists, was building on the work of psychologists Amos Tversky and Daniel Kahneman. 

Kahneman, who went on to win a Nobel Prize in economics, developed a theory on how people thought and tied this into the concept of heuristics. These were essentially mental shortcuts that people fell back on to make their day-to-day living easier. One of these is the availability heuristic, this leads us to make choices based on the initial information we have and the most common information we received. For instance, if anyone asked Brian now if he would like to commit a sum of money to buy an account that paid him for clicking on ads he would likely say no. This is because the available information he has leads him to doubt that as a sound financial decision.

We constantly make choices that fly against the face of logic or even, to a degree, basic human caution. For instance, Brian (yes, he, of the Public Likes loss) recently told me about a great new project: Q1. His friend had started working for them just a few months before and was already driving. It was... would you believe it? ...so easy it was almost stealing.

Are we so bad with money because we are irrational?

That’s one answer but what about money makes us so irrational? It seems like everyday we are confronted by a new pyramid scheme and no matter how often we stand back and watch the chips fall we still find what they represent almost intoxicating: the possibility of making a lot from very little.

Yet it could be argued this is an incomplete story. It would be remiss to discount the fact that the state of financial literacy across Africa, and Kenya in particular, is appalling. The Global Financial Literacy Survey conducted by Standard and Poor (S&P) found that Kenya had a financial literacy rate of just 38%. 

Where can we say we learn about money? Nowhere truly, we stumble along blindly and rely on our instinct to tell us what counts as good financial practice and what doesn’t. 

There is also that, often unspoken, difficult question of reason versus necessity. By this I mean that it’s possible to know how to be good with money on a purely intellectual level yet be incapable of acting on this where knowledge meets the necessities of living. Recently, there was a bold accusation levelled against Kenyans and our ‘poor’ saving culture. 

The blow-back from this claim was swift and unforgiving with most asking where exactly it is they were expected to find money to save even just in light of the recent tax increases. 

Why are we so bad with money? I presume it is because like the age-old story of the horse caught between two roads, we are similarly suspended on a precipice each day and we must choose between money or the box; between certainty and risk; between our present selves and our future ones. 

This column will attempt (through many many stories collected from close friends, and virtual strangers) to find a way to have both: money and the box. 

And no, rest assured, there will be no articles on instant-shower-created-poverty.