When money isn’t real: the $10,000 experiment | Adam Carroll | TEDxLondonBusinessSchool


Translator: Araminta Dutta
Reviewer: Queenie Lee I recently completed an unsanctioned,
unsupervised psychological experiment on my children, (Laughter) the premise of which was
$10,000 in cash on the kitchen table and a sign next to it
that said ‘Don’t touch the money yet!’, and before I dive into it, you should know that we
are a game-playing family. We play ball games, board games,
dice games, card games, all sorts of games, but the games that my children love
to play most are games like Monopoly, and when they play Monopoly,
they play marathon games of Monopoly that last hours and hours
over days of play. Each of my kids has a unique strategy
and personality when they play Monopoly. My daughter, who is 11,
she is always the dog. She plays entirely for Chance
and Community Chest cards; (Laughter) you can say that she uses
the ‘luck’ strategy. My 9-year-old son is always the car –
a very strategic player. He buys all of the Railroads
and all of the Utilities and then proceeds to put houses and hotels
on the most expensive properties – very savvy. And then his younger brother,
who is seven, he buys everything that he lands on
with no exception, which is fitting because he
is the wheelbarrow. Now, before I tell you
how my experiment unfolded, I have to share an observation
that led me to the creation of it. One Monopoly marathon, Saturday morning,
I was playing with my kids and noticed that they were all playing
just outside of the rules of the game. So they were doing things
like buying each other out of jail and lending each other money
to buy properties, and I found myself going, ‘Guys,
this is not how this game is played!’ to which they’d say, ‘Dad, it’s fine!
We just want her on the board with us’, or, ‘He can pay me back
at the end of the game, when he’s flush with cash’, and I’m thinking again,
‘What am I teaching these kids?’ So, I started watching
how they were playing – listening to their banter, getting a feel
for how they were making decisions – and I had this thought: ‘What if they’re playing this way
because the money isn’t real?’ It’s a concept I’ve been reading a lot
about, lately, ‘Financial abstraction’, the notion that when money
becomes more and more of an idea, less tangible and therefore more abstract, it changes the way we interact with it
on a regular basis, and there’s anecdotal evidence
of abstraction everywhere around us. All you have to do is listen carefully
to people who say, ‘I loaned my child
or grandchild the phone, and a month later, all these errant in-app charges
showed up on my bill.’ In 2014, Apple reimbursed customers
for in-app purchases that were unapproved, mostly by children,
to the tune of $32.5 million. This is in a US FTC settlement. In the documentation, it said it was just too easy for kids
to make an in-app purchase. The Imagineers at Disney were charged
with making the parks ‘frictionless’ – is what they called it – so they invested a billion dollars
in a MagicBand. It’s a wearable device that functions
as your room key, your park ticket, and your ID and wallet
when you’re on park property. So if your child wants a set of ears
and a dessert in the Magic Kingdom, ‘bibbidi-bobbidi-boo’ – (Laughter) your vacation just cost a whole lot more, magically. Magically. Lastly, I had a conversation
with some teenagers who told me that $100,000 a year
really wasn’t that much money. I said, ‘Really?
Why do you think that?’ They said, ‘Well, we both have $500,000
in our ATM machines on Grand Theft Auto’, (Laughter) which is a very popular
and somewhat sketchy video game. So as I’m playing with my kids
and I’m watching them play, listening to them talk, I thought, ‘What if the money
were real on the table? Would they play differently?’ And so I calculated quickly on the box, ‘How much would it take
in capital, in currency, to play a physical game
of Monopoly with my kids so that they actually tangibly
got to feel the money in their hands?’ And I estimated, for four or five players,
it’s about $10,000. So one Friday, I stopped at the bank, I got all the denominations of bills
on a Monopoly board with the exception
of a $500 bill – hard to get – and on Sunday, I rounded the family up
for a high-stakes game of Monopoly, (Laughter) where the winner takes all. All of $20, by the way. All of $20. You have never seen kids’ eyes
light up the way mine did when I handed each of them
$1,500 in starter capital, and you have never seen
anyone’s eyes light up like my wife’s when I took it back on Monday. (Laughter) All of it. Our marathon game
only lasted two and a half hours – far shorter and more strategic
than most of the games they normally play. True to my hypothesis, two of my three kids
actually played differently; my daughter still played the ‘luck’ card. She was the first one bankrupted, (Laughter) and she happily retired
to the living room to read a book. My youngest son, the wheelbarrow,
did not buy everything he landed on; instead, he carefully calculated how many rolls away he was
from one of his brother’s properties and how much he would owe his brother
if he landed on said property, and made his decisions based on that. In effect, having real money on the table
and a cash prize at the end made him more conservative. And my middle son – very strategic – still bought all of the Railroads,
still bought all of the Utilities, but did not buy Boardwalk and Park Place
or Mayfair and Park Lane, but instead, he put hotels immediately
on Oriental and Baltic Avenue, or Coventry and Leicester Square
on the UK version. When I asked him why,
in his own words, he said, ‘Dad, they’re just
more affordable properties.’ (Laughter) At which point, I cried a tear of pride. (Laughter) So he got it! In the end, my son finished
with 28 properties, more cash than he’d ever seen
and held in his entire life, and he now knows the meaning
of the phrase ‘making it rain’. (Laughter) Look how happy he is, (Laughter) and how annoyed
his brother and sister are. In the confines of my experiment,
there is an idea worth spreading, and it is this: I believe kids today are being raised in a world
where money is no longer real; it’s actually an illusion,
but it has very real consequences. Peter Drucker, famed leadership guru, said banking and finance industries today are less about money
and more about information, and yet young people today
don’t get that information; they don’t get the experiences
of money, early on. Three researchers from
the Centre for Creative Leadership, in a study done two decades ago
that’s been replicated many, many times, they interviewed over 200 executives in a report called
‘Key events in executives’ lives’. In this report, they found that of the 200 top-level executives
who were the top of their game, all of them had similar characteristics. One of them was
that early on in their career, they had been thrust
into a leadership role that required them to make decisions
that had serious consequences. They also had a mentor in place
that helped them appreciate the lessons they were supposed to learn
from those experiences. The study created a leadership framework
that said, in essence, that someone with potential, if given the opportunity to engage
in strategically relevant experiences and given the ability to learn the lessons
from those experiences, would have a higher likelihood of success
in their career in a leadership capacity. Now if you took that study framework
and my $10,000 experiment and looked at it
through the kaleidoscope, you would get a statement like this: if kids are given financially-relevant
experiences in their life and someone is there to help them
learn the lessons from those experiences, they have a higher likelihood of achieving financial
success later in life, and in my humble opinion, they need to have them early,
and they need to have them often. We under this not-so-subtle societal shift
in the way that we pay each other, today. It’s estimated there are trillions
of dollars circling the globe in our global economy every single day, yet only four percent of that money
is actually in coin or currency. The rest is all digital, data packets,
ones and zeroes, and today’s digital-native youth – they don’t see people paying
with cash or cheques. In fact, if ever you’re in a line, and someone in front
pulls out their chequebook to pay, you are liable to say to yourself,
‘Really, a chequebook? This is going to take forever.’ You’re laughing because it’s true. The currency of today is digital. Many of these kids equate spending
with credit and debit cards, with Google Wallet and Paypal and Zap. All of these are what they
equate spending to, and by the way, I am not pooh-poohing
the technological advancements in payment technology today – far from it. I think tokenisation and randomisation
and biometrics are the wave of the future. The first time that I used Apple Pay,
it was like showing the caveman fire. It was amazing. But what snapped me back to reality
was hearing my son behind me say, ‘I sure wish I had a phone
so I could buy stuff.’ (Laughter) You see, money, to a young person,
is somewhat abstract, anyway, and when we further the abstraction
by waving a MagicBand or putting our phone over a sensor
and giving the thumbprint, all it does is further the abstraction. It’s a recipe for financial disaster
later in life to the uneducated because, to a young person,
they see money as limitless because they have no concept
of the backend until it comes around
to bite them in the back end. I’ve seen this firsthand
in my work with university students – young people who borrow
and spend untold amounts of money, having no concept or understanding
of the increase in payments, the decrease in lifestyle,
and the challenges they’ll face later on. In the UK and the US,
student debt is ballooning problem. In the US, we’re at $1.2 trillion
in student loan debt, second only to mortgage debt in the US. One in three students is delinquent. One in five is in default. It’s a huge problem, and the reason that this is concerning
for all of us as a global economy is this: Dun & Bradstreet found
that people spend 12 to 18 percent more when using credit cards over cash. They have yet to do a study how much more we’ll spend
with a MagicBand or a phone, but I can imagine
it would be 15 to 20 percent, or 18 to 25 percent, and all you need to do
is read the headlines in the newspapers and magazines
across the world today. Places like The Guardian,
The Washington Post, Fortune, Forbes – these are the headlines we’re seeing: ‘New consumer debt reaching
a seven-year high’ in the UK, ‘Consumer debt hitting an all-time high’
in the US, ‘Choking on credit card debt’, ‘The credit card debt crisis:
the next economic domino’. It’s what happens when people overspend and get in over their head with money. Unfortunately, The Money Charity says
that in the UK right now, one person every five minutes
and three seconds is either declared insolvent or bankrupt. To put this into perspective,
since I started speaking today, two people in this country
have declared bankruptcy. In the UK, Demos.org says
that Americans aged 25 to 34 have the second highest rate
of bankruptcy. 25-year-olds. Everyone’s question should be, ‘Why? Why is this happening?’, and in my simplistic view, it is this: because the money they’re spending
isn’t real – it’s an abstraction. So to stem this tide
with the next generation, we have to bring them up to understand
that they are living in a world where they have to make
very real money decisions, in a world money is largely an illusion
but has very, very real consequences. Because I want your children and mine
to be super successful financially, consider any of the following: If you are going
to spend money on children, give them a set amount of money
and let them spend it. Let them tangibly feel the money
go through their hands. Let them succeed or fail
with minor consequences so that later in life,
when they’re making the major decisions, they understand there are
major consequences that go along. For older kids, it’s this: set a budgeted amount for school clothes,
supplies and what-have-you, give them that amount, and when they are
done spending it, it’s done. And here’s the key; they get to spend it
with your subtle guidance, your subtle mentorship,
your subtle supervision, and whether you call it an allowance,
you call it commission for chores or you call it a weekly stipend, every single child,
from the age of five on up, needs to be given some tangible amount
of money on a weekly basis so that they understand how to function
in a cashless society someday. Better to teach the young
the habit of saving when they have a little bit
of money to save than try to teach savings
when they have no money because they’re in over their head. I met an American named José. He was a 20-year-old student
at an American university. He was the child
of two Cuban-born parents. At the age of 15, his parents told him, ‘José, we will give you food,
we will give you shelter and we will give you $50 a month,
but the rest is up to you.’ I asked him, ‘What was that like?’ He said, ‘Clothing, toiletries,
school supplies, entertainment, gas – it was all on me. I resented my parents for a year. But you know what? I realised it was the single best thing
they could have ever done for me.’ When I met José at 20, he was on a full-ride scholarship
at the university he attended. He had $20,000 saved in a savings account
from working part-time in high school, and this kid exuded financial prowess
and unmistakable leadership potential. At the heart of my message today is this: it does not take a $10,000 board game and it doesn’t take cutting kids off
financially to make a difference. The first step is, honestly, quite easy. It’s about educating the next generation
to make decisions in a world where money is largely an illusion
but has very, very real consequences, and the reason it’s so important for all
of us, as a global society, to do this is this next generation coming up will inherit the global economy
that we are handing to them, and we will precariously place it
on their shoulders. We owe it to them to set them up
for financial success. Thank you. (Applause) Thanks. (Applause)

94 thoughts on “When money isn’t real: the $10,000 experiment | Adam Carroll | TEDxLondonBusinessSchool”

  1. Money is the illusion and not how we use it!!! How you ask… The myth of ownership of communal resources means money / currency what ever you want to call it in truth merely represents man hours! Prove from your creator you have more authority than any other person in a court of law means bring your creator for testimony and cross examination. No one can so lawfully we can all only have equal authority, and hence equal rights to the creators creations! So this means we can only own what we create which is our labour! The farmer only tends the crops, the creator "grows" them so why does society give the privilege to charge for that privilege??? Society needs to redistribute the usage rights which is what "ownership" truly represents!!!

  2. Consumer debt was at a seven year high, but that was because consumer debt was so low in 2008 and 2009.

  3. Let me tell you something: Money, is not real. Money comes from nothing. We cannot use it like the things that God made from nothing. We can use, them.

  4. Three houses and one hotel secret. To success. In a board. Game that has been around for as long as i can remember. Now at age 50 i finally. Got it….

  5. Student debt is because college students don't understand the concept of money and spend lavishly? right…. He has a small point but to project this on to student debt is ridiculous.

  6. i think that its not good to breed our kids in just making as much money as possible no matter the cost or what you do to others but doe to your "tear of pride" you seem to think diffrent there

  7. Everything he says is true. When most young people nowadays gets money from a birthday or holiday they immediately spend all of it on something expensive they will use a few times or over the year and then get bored with it and move onto something else.

    When I was young you know what I did? I took 80% of all my money and saved it. Later in life I invested some of it into stocks. Now I own my own company that I payed for with my own money through savings and stocks.

    Now I’m one of those people who teaches younger people to invest early rather than get that new game now. I went from saving to running my own company that makes me a good amount of money. I still save, I still invest in stocks, and now I invest in assets like Gold and Silver. I invest in stuff I’ve always wanted to buy before when I couldn’t and now I can.

    That might not sound like much but to put it in a prospective. I own my house, I own my cars, and I own my assets. I don’t pay anything off in payments. I’m nowhere near in debt to someone/something.

    So, to all the young people out there, next time It’s your birthday or it’s Christmas. Take a % of the money you got and save it, when you get older take charge and ask your parents that you want to invest some of your money in stocks. I’ll tell you one thing that will happen. They will be shocked, trust me, I should know because that’s how my Father reacted.

  8. The issue is not the abstraction of money, it's the intent of abstracting it. This is designed for us to fail, the house is against us, the cards are stacked and every single example you mention to show the pitfalls of the abstraction of money are actually calculated strategies for addiction. You blame digital abstraction of money, but not the game mechanics of pay to win, daily engagement strategies and dopamine rushing users to trigger their impulse to buy. The problem is digital drug addiction, not abstraction of money.

  9. Which is why they want to get everyone onto virtual currency………. and not money into your pocket………

  10. Why do i watch so many videos on bringing up children in these improvement videos like I'm to young for kid's

  11. Just wait for the recession, all this non existant money will be gone, and then people will start using cryptocurrency, money that isnt inflated, money that cant just be printed away, its the best store of value.
    Good video and great talk.

  12. another way to introduce this idea is by giving them monopoly money for any completed chores/homework/extra activities. This adds value to the monopoly money. Have little prizes that cost a certain amount of fake money to buy, such as a day out to get icecream, or a day at the park, extra time on the video game, etc. That way, the same concept as this video applies to when they play the game, the better they do the more money they make.

  13. My 6 year old daughter carries a $5 bill of hers every time we go to the store so that she can buy something if she wants. I was happy to see that she didn't waste it and still has it 🙂

  14. That's when you want your kids to value money more than happiness. I prefer having my kid chase things he's passionate about than money. And if he likes money, well, double win.

  15. I seen a father letting his kid pay for his food on his own it was cute and very smart the kid was like 2yrs old

  16. Your kids had it right from the get go. Money doesn't really matter "we just want her on the board with us." We should be making money as friction-less as possible so it disappears into the background and everyone can acquire and access whatever they choose.

  17. How does one go about getting one of these educational management jobs you talk about? These opportunities for financial success are not open to the majority of people.

  18. I got an infuriated feeling when he said that this child that got money to spent regularly per month gained leadership skills, because I never recieved any money to spent regularly per month. And as for now, I am 17 years old and I still can't buy anything by myself with my own money.

  19. Actually, your youngest kid had it right at the beginning buying all the properties you land on is the best idea because you can trade anytime you want for what you want

  20. So he sees his kids changing the rules so that the game is more fun and everyone has a good time, and his takeaway is not "wow my kids have learned to play cooperatively and care about each other's success" but "they must not understand the value of money"? No, your kids understand the value of money. They understand that without it their siblings will suffer, even if it's only in the game, and that they have the power to avert that. You should be fostering that community spirit in them. Tbh if anything is going to give them a skewed view of money it's having a dad who will casually break out $10,000 for them to play with.

  21. not in Germany and the usa….germany and the US together have more than 60% SIXTY PERCENT! of ALL THE GOLD RESERVES IN THE WORLD…

    and in Germany MOST PEOPLE still, have their SAVINGS half on the bank HALF IN CASH…thats too because the pop pyramid in Germany is the WRONG WAY around. BUT STILL…MOST transactions in Germany ARE STILL made in Cash EUROs…Germany is THE ONLY COUNTRY in the EU. Where cashflow is still EQUIVALENT to the tech one.

  22. Great video showing us the critical importance of be aware that we only can consume as much as we produce… there´s no magic wands. First we produce, then — and only then — we can consume.

    Are we teaching our children that way?

  23. Current liabilities turning into long term liabilities with high interest rates and low payments increasing the debt by the month.

  24. Maybe try teaching kids finances in school! We learn nothing about taxes, savings, investment, debt… Nothing at all!

  25. Yea money is digital, because its CONVENIENT.. and people use it how they fkin want.

    You got 1 life in this world,if you feel like using 100 bucks on candy crush..noone can tell you its wrong or right.
    Enjoy.

  26. You took away the kid's fun of the game, you took away the won 10k from one of your kid, you didn't consider for one second, what your experiment would do to you kids and their feelings. You just wanted to prove your hypothesis. Nobody needs such an egoistic and arrogant father. Shame on you!

  27. This whole video felt like those Facebook posts where parents see their kid doing something and make a post about it bragging about how brilliant their kids are but really they’re just applying their own thoughts to their kids simple actions so they can manufacture pride

  28. "They have no concept of the back end." Perhaps. But, do you have a concept of the front end? Do you know that when your mortgage is signed, the Fed prints 10x the amount for banks to lend, all completely out of thin air? Do you know why the root word "Mort" is also in "MORTality" and "MORTuary"? The kids' initial idea of monopoly money is actually a lot closer to the fact about money as we know it than your experiment has lead them to believe.

  29. Would Be nice to know my parents that my parents are that financially stable. Some people don’t know how lucky they are.

  30. Those gta players he referenced don’t sound too bright…
    They really have no idea about how much money people make?

  31. theory: kids who were made to do chores for money are more financially stable then those who are not.

    side theory: inherently rich kids have better financial stability since their parents have more tangible money to play with and their abstraction of money lessens over time.

  32. Really, such small kids eyes light up seeing real money, I am really confused if they perceive real money so well

  33. A lot of people mention this being similar to what Casinos do where they replace your money with chips, to change the perception of value.
    However, we also see this trend a lot in the gaming industry. Many game launchers have their own digital currency that you can spend on their own games and products, which is also a way of screwing with the value perception, and it also creates a way for them to transfer your actual money into a media where it can only be used on their products, which removes a large part of the value becaus,e in the user's mind, that currency is now a part of their gaming platform and has no other real world value, so it might as well be a part of the games you play, like having a lot of cash in GTA etc. Just the fact that you can't use the currency in the real world, has a psychological impact where you are more inclined to think less of the value of said currency as it's something you in theory already have sacrificed real world money for and it's essentially gone, outside their game platform.

  34. Would have liked if his stats would have broken out debit based tokens/currency versus credit based like credit cards. I wonder if the physical currency is as relevant as much as having a number that stops at zero, instead of a credit card which starts at zero and works down to a arbitrary limit.

  35. When we were kids our mom would go grocery shopping every 2 weeks (early 70s). Each of us kids got 50$ and a money counter. We bought our own food and it had to last the entire 2 weeks. Very quickly you learn the difference between a 2$ box of brightly colored and attention grabbing cereal (mostly sugar) and the 50 cent box of corn flakes. She had many other money tricks she taught us…lessons well learned and now being passed down to my kids.

  36. Those kids are lucky that having him as their dad. My parents don’t know how the money work, so i have to learn all of those stuff myself. And im a bit late since I understood it when i was 19 years old.

  37. Schools, even highschools seldom teach kids what money and value are, and how to handle them. It's not just parents that leave young adults unprepared.

  38. Its a really interesting topic but I (still a teen) have and always did value money but I was never given allowance i was only given birthday money and never bought little things in-between and i hink i value it well because I keep more than half of it each year

  39. Ever played online poker with fake money? Most people only bet "all in" and it´s really annoying. If the money were real they would actually look at their cards.

  40. I feel it's because when you turn to the legal age in your country, sharing and caring goes out the window. Then instead of helping you with your future they expect you to pay them… I feel we need now more than ever to start working together to help fix all our broken people.

  41. I actually do much better since I stopped using cash almost completely. The thing is, I write down all of my expenses, and keeping track of cash is much harder, so I tend to spend much more by using cash. Also, I can always look in my app how much money I still have, this keeps me from spending too much, because I am always aware of how much is left. Cash is easier for me to spend, because there is no visual representation of the total number.

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