ABSTRACT
Historically, money went from being commodity-based and possessed of intrinsic value to being conventional, its value grounded in the trust of the community, and orchestrated by a central authority. Most people don’t know where money comes from, nor how it is distinguished from actual wealth. They treat money as if it were a commodity valuable itself (rather than having a fiat value). Money consistently evokes emotions and affects behavior in ways that suggest it acts on the human mind and physiology as a kind of drug. It is not only treated as a tool for future acquisition, but as gratifying by itself. For this reason, we suggest, people violate the notion of fungibility: they are more willing to spend money that feels less “real” such as credit cards and gambling chips, though it is not. That is also why people prefer to get dividends rather than accrue capital gains. We suggest that money is perceived along a continuum, from “real” cash to bank credit, to “virtual” money embedded in financial instruments.
