The Four Horsemen of Poverty

The Four Horsemen of Poverty


Just imagine, earning nine million pounds
… and spending it all. This is what happened to a garbage collector
in England named Michael Carroll. He won the lottery and spent all the money. Today, he’s wishing he still had his job at
the junkyard. You probably also know stories about people
like Michael. Before criticising these people, we should
reflect on how our behaviour can reflect Michael’s in certain situations. I like to call this analogy the FOUR HORSEMEN
OF POVERTY. These are four elements that make us act in
a financially unintelligent way. What are they? The first one is the psychology of consumption Number 2 is our cultural and biological evolution Third is our family’s influence The fourth factor is our habits In our Financial Enrichment Course, Truly
Wealthy, we’ll explore in detail how to change your mindset to protect yourself from
the Four Horsemen of Poverty. I promise that we’ll make this introductory
video a quick one. When speaking about the psychology of consumption,
I always fall back to one BBC documentary, called The Century of the Self. This documentary tells the story of Edward
Bernays and the family of the famous Sigmund Freud, who understood the importance of many
symbols in our lives. Edward Bernays was Freud’s nephew and we can
say that he was responsible for women being smokers today. Why? Because at the beginning of the last century,
it was a very strong taboo for women to smoke. Then George Hill, the president of the American
Tobacco Corporation showed up and told Bernays, who was a consultant at the time: “Look, I’m
losing half of my market because of the taboo of women not smoking. What can we do about it?” Bernays went deep into the research of our
psychological behaviour to understand the symbols that make us act in an irrational
way. For this, he used various theories proposed
by his uncle Sigmund Freud, and he discovered that there was a connection between the cigarette
and phallic symbols, symbols of power. From there, he decided that if he could connect
the idea of ​​smoking cigarettes with defying male power, he could make women smoke. But how would he be able to manipulate the
masses in this way? He knew that every year, in New York, there
was an Easter parade that got a lot of public attention. Bernays agreed with high society debutantes
that they would hide cigarettes inside their dresses and when he did the sign, they would
light the cigarettes and start smoking. At the same time, he had connections with
some photographers and journalists and said: – stay in that corner and when I signal you,
you’ll see something quite interesting to photograph. The photographers joined the young debutantes
and took pictures that were printed on the covers of all the American newspapers, and
even some international ones with a rather symbolic headline, saying Women Light the
Torches of Freedom! This became connected with a symbol that was
loved by the whole of society, the Statue of Liberty, and spawned a public debate. In this debate, women who agreed that women
should have more power and independence began to smoke. This is an extremely irrational attitude (what
do these two things have to do with each other?) This just goes to show how Bernays knew exactly
how to play on peoples’ desires and emotions. There are other very interesting stories,
such as Betty Crocker, the company that manufactures instant cake mixes. Betty Crocker created an instant recipe in
which you just add water, mix it up and put it in the oven, but no one would buy it. So, they went to Bernays and said: “Why
doesn’t anyone buy our cake mix?” Let’s remember that this all happened during
a much more sexist period, where the mentality was different. In this context, Bernays found that when women
bought the ready-mix cake, the preparation was so quick and simple that they felt guilty
and lazy. It felt as though they weren’t putting in
the effort to deliver something to their family. The businessmen asked:
“What can we do to fight this psychological barrier and get them to buy it?” Bernays said it was simple: you just had to
break two eggs and mix them in with the instant-prepared bundle. Again, it’s a more symbolic act. Egg breaking makes the process a little more
“homey”, rescuing that magic, that alchemy of the kitchen despite having little relevance
in the taste of the final product. It was the small detail that made women feel
guilty. Once they made this change, sales started
to rise. Okay, but what does this have to do with our
financial lives? All of our buying decisions have a strong
symbolic burden on how we define our identity. Write down this statement, as it’s very
important: Buying decisions have a strong symbolic burden on our identity. Why do I use a particular perfume? Why do I drive a certain car? It’s all to do with the PSYCHOLOGY OF CONSUMPTION,
which greatly influences our identity. This was the first Horseman of Poverty: we
have to tame the psychology of consumption in order to protect ourselves from the persuasion
of marketing. To learn more about the psychology of consumption,
visit https://arata.se/4horsemen – this link will also be available at the end of this
lesson. The second Horseman of Poverty is the genetic
and cultural evolution related to our habit of consumption. This idea comes from Spencer Wells’ Pandora’s
Seed, which is about an anthropologist who studied how agriculture influenced many elements
of society and our health. He goes on to say that problems like diabetes
and even global climate change are side effects of agriculture. How does this apply to consumption? When we find something we want, our instinct
motivates us to consume it immediately. We have a desire for immediate gratification. In the past, when finding a tree with fruits
or a suitable animal for hunting, the ideal thing to do was to consume it immediately,
as there was no guarantee of where the next meal would come from. Therefore, we’re all influenced by the impulse
of immediate consumption. In fact, when it comes to food, our body stores
energy, in the form of fat, to survive longer. But today, with access to refrigerators and
supermarkets, we no longer need this mechanism. Regardless of this fact, it’s a mechanism
that continues in our body, our genes and especially for those who overeat the wrong
foods, which can cause overweight and a risk of heart problems. Similarly, our natural instinct for immediate
gratification is what makes us want to go on a shopping spree as soon as we get paid. So, when we haven’t tried to control our
behaviour, and are relying completely on our instincts, we end up behaving like Michael
Carroll the bin man, who we spoke about before. The third Horseman of Poverty is our family’s
influence. This is a very delicate point, so I ask your
permission to comment generally on what happens to some people, not all of them obviously,
but mainly those who don’t come from a family that has a solid financial education. Here’s an example: You’re a child and
occasionally your parents come home, grumpy, telling you how terrible their day at work
has been, and from when we’re young, we’re exposed to all these negative stories, giving
us the message that a boss is always mean. Another example: when a family argues, and
eventually money becomes part of the fight, we create a bad association that money leads
to arguments. Another situation is when you also hear in
childhood how your parents would like to do something but have no money. The money here appears as a symbol of limitation. Remember the importance of the symbols and
the whole history of Freud? These are all just a few examples of the kinds
of situations in family environments that can unconsciously generate negative emotions
towards money. We don’t want to love or hate money: money
is a tool, it’s an object. It’s up to us to know how to acquire and
use it correctly, without an unnecessary emotional burden. Lastly, the fourth Horseman of Poverty appears
in the form of our habits. There are people watching this video now living
day by day guided by habits of wealth. Other people follow day after day oriented
by habits of poverty. How does a habit of poverty manifest itself? There are several ways, and I’ll try to
illustrate them for you with a concept that you’ll find very useful: opportunity cost. In an episode of The Simpsons, Homer is driving
the car with his son, Bart, and they find a truck lying on the side of the road. It was carrying sugar. Homer keeps jumping for joy, saying he’s going
to get rich. He starts filling his car with sugar and decides
to turn into one of those door-to-door sellers, selling sugar. His wife Marge, who as always is the sensible
woman in the story, says she doesn’t like this plan, and that even Homer’s colleagues
had rung her to ask why he didn’t show up to work. They’re all worried that he won’t go back. Homer’s reply is: “Don’t worry, Marge,
look – I have a dollar! I found it on the ground while I was at the
bus stop.” Marge says that while Homer earned a dollar,
he missed out on earning forty dollars by not going to work. In a very simple way, this little story illustrates
the idea of ​​opportunity cost. What are we doing today? Using our time, our resources, our focus of
attention? Are we letting go of other better opportunities? For example, let’s say that you’re going
to buy a fancy brand-new car. Seventy thousand cash. Did I only spend 70 thousand dollars by buying
the car? Or did I give up more than that, since I could
have invested that money into a good investment, yielding half a percent a month over ten years
could ultimately have turned into 127 thousand dollars? This shows how there can be different perspectives
to understanding our choices. There is no right or wrong. Everything depends on our preferences, our
priorities. Some choices, however, are aligned with habits
of impoverishment and other choices are guided by enrichment habits. The main point here is that our behaviour
is guided by the habits that we implement in our day to day lives, which in turn have
very strong impact on our financial future. I promised that this would be a very quick
video presentation of the Truly Wealthy financial enrichment course (and indeed there are five
horsemen of poverty – the fifth horseman, fear, is so complex and powerful that it needs
more time to be explained, maybe even its own video!). If you found this video interesting and want
to learn more, visit https://arata.se/4horsemen, where you’ll find a lot of important information. The log in details are only sent by email
once you’ve registered using the form on the website.

Author: Kennedi Daugherty

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