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Monetary Wisdom: How Do Investors Use Love of Money to Frame Stock Volatility and Enhance Stock Happiness?

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Abstract

Monetary intelligence asserts: individuals apply their money attitude to frame critical concerns in the context and strategically select certain options to achieve financial goals and ultimate happiness. Bridging the gap between stock volatility and behavioral economics, we collected longitudinal data from multiple sources and at multiple times: First, private investors (N = 229) in Shanghai—the financial capital of China—completed their love of money attitude measure (Rich-affect, Motivator-behavior, and Importance-cognition) and demographic variables in a survey. Second, we recorded daily Shanghai Stock Exchange Composite Index (“the Index”) for 30 consecutive trading days during the financial crisis in 2008—public records. Third, we text-messaged investors, collecting their daily Index Happiness, Stock Percentage (stocks/liquid assets), and Stock Happiness—private information. Here, investors illustrate: high Rich investors fret about low Index happiness, yet high Rich and high Importance investors boast high stock happiness, supporting the endowment effect and investor hubristic smirk. High Motivator investors quickly adjust their stock percentage/portfolio, suffering low Index happiness and low stock happiness. Gender moderates the relationship between the Index and Index happiness. Our panel data of intra-personal changes of stock happiness demonstrate investor monetary wisdom in the boom-and-bust cycles. Behaviorally, investor must become masters (but not slaves) of money and deactivate money as a Motivator. Curbing the desire to become Rich enhances happiness after gains (boom/risk aversion); appreciating money’s Importance bestows happiness after losses (bust/risk seeking). We expand prospect theory and offer implications to investor wealth, health, and happiness during financial crisis in particular as well as individual subjective well-being and happiness in general.

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Notes

  1. To anyone who has more will be given and he will grow rich; from anyone who has not, even what he has will be take away (Matthew 13: 12).

  2. Those who want to get rich are falling into temptation and a trap and into many foolish and harmful desires, which plunge them into ruin and destruction. For the love of money is the root of all evils (1 Timothy 6: 9–10).

  3. Brady’s two yoked monkey received electric shocks every 20 s that were signaled by a preceding tone. After training, the executive monkey was able to press a level to avoid shocks, whereas the other yoked control monkey could not. These monkeys were in a continuous 6 h on and 6 h off schedule of electric shocks. After 23 days, the executive monkey died from perforated ulcers. No yoked control monkey ever developed an ulcer. It is not the electric shock, but the stress that causes the death of the executive monkey.

  4. We thank an outstanding reviewer for this interesting comment.

  5. We thank another excellent reviewer for this important point.

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Acknowledgements

We would like thank Hai Fu Tong Investment Management Co. Ltd. for data collection, Chinese National Science Foundation (Grant Numbers: 71132003 and 71672114 to Ningyu Tang and 71571118 to Jingqiu Chen) and Shanghai Education Science Research Fund (B11006) to Jingqiu Chen for financial support, Christopher K. Hsee for offering his insightful suggestions to this research project, Ping Ou, Yue Zhou, Xiang Luo, Guomei Yu, Wenjing Liu, Qian Li, Bo Zhu, and Qiufeng Huang for data collection; Dan Morrell and Kevin M. Zhao for their comments; Daniel Coleman Mangrum, Joshua D. Pentecost, and Xinyan Ye for their assistance, and late Fr. Wiatt Funk, and late Kuan-Ying and Fang Chen Tang for their inspiration. Brenda and Deacon John D'Amico (God sent an angle and revealed his amazing grace and miracle on June 11, 2017. I would not discover my typo, If Brenda did not check the Bible. Brenda stated: “It never ceases to amaze me who God uses as a vessel for a particular moment. I am humbled by His faith in us... Thanks be to Our Loving Father.” Here were the lessons for the day: “Bless the Lord, all you angels”, Psalm 103: 20; “I will never forsake you or abandon you”, Hebrews 13: 5).

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Authors and Affiliations

  1. Management and Organization Department, Antai College of Economics and Management, Shanghai Jiao Tong University, Shanghai, 200030, China

    Ningyu Tang, Jingqiu Chen & Kaili Zhang

  2. Department of Management, Jennings A. Jones College of Business, Middle Tennessee State University, Murfreesboro, TN, 37132, USA

    Thomas Li-Ping Tang

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  1. Ningyu Tang
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  2. Jingqiu Chen
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Correspondence to Thomas Li-Ping Tang.

Appendices

Appendix 1: The Love of Money

Factor Rich

  1. 1.

    I want to be rich.

  2. 2.

    It would be nice to be rich.

  3. 3.

    Having a lot of money (being rich) is good.

Factor Motivator

  1. 4.

    Money reinforces me to work harder.

  2. 5.

    I am motivated to work hard for money.

  3. 6.

    I am highly motivated by money.

Factor Importance

  1. 7.

    Money is important.

  2. 8.

    Money is valuable.

  3. 9.

    Money is good.

Appendix 2

See Tables 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14 and 15.

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Tang, N., Chen, J., Zhang, K. et al. Monetary Wisdom: How Do Investors Use Love of Money to Frame Stock Volatility and Enhance Stock Happiness?. J Happiness Stud 19, 1831–1862 (2018). https://doi.org/10.1007/s10902-017-9890-x

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