How Social Dynamics Are Quietly Shaping Your Economic Reality

From the investment apps your colleagues recommend to the mortgage advice that just feels “right” because everyone does it that way, invisible social forces shape every financial choice we make, according to a new book, “Irrational Together: The Social Forces That Invisibly Shape Our Economic Behavior” by Adam S. Hayes, an economic sociologist and frequent Investopedia contributor.

“Money decisions are never just about the money: They are social performances shaped by the stories, expectations, and relationships that surround us,” Hayes said. “Belonging to a social category—whether a religious community, a profession, or even a die-hard fandom—provides baseline scripts for how ‘people like us’ transact, spend, and invest.”

The good news? Once you understand how these hidden influences work, you can make choices that better align with your goals rather than just your social expectations.

How Cultural Values Override Financial Logic

Hayes offered a personal example to illustrate how cultural values trump financial logic. His mother carried expensive credit card debt at 20% interest while refusing his suggestion to use a cheaper 5% home equity loan to pay it off.

“The house was her hard-won symbol of stability and accomplishment,” Hayes said. “Touching that equity felt like desecrating the American Dream, so the ‘irrational’ high-interest payments were, within her cultural logic, the only acceptable path.”

Your Social Network Acts as Your Implicit Financial Advisor

Money doesn’t just flow through bank accounts—it travels along social connections, carrying expectations and judgments with it. Hayes’s book identifies three major ways this social background shapes our financial decisions:

• It extends your reach: Colleagues, neighbors, and even distant relatives can provide valuable financial opportunities, bridging different social circles for you.
• It filters norms and information: Friends who are frugal can make lavish purchases feel transgressive, while a startup-focused peer group might normalize throwing savings into risky cryptocurrency ventures.
• Reputational management: Lending money to friends, tipping familiar service workers, or contributing to community fundraisers is less about the money itself and more about signaling reliability to people who might provide future favors or support.

How This Affects Gender and Money

Hayes’s book reveals that social conditioning, not inherent preferences, drives gender differences in financial behavior. These patterns often flip as we shift cultural contexts.

“In patriarchal U.S. labor markets, women were 70% less likely to apply for a job when pay hinged on outperforming a co-worker, reinforcing the stereotype that men relish competition,” Hayes said. But the stereotype of the competitive male is far from universal. “In India’s matrilineal Khasi society—where daughters inherit property and husbands move into the wife’s home—women proved more competitive than men in identical lab tasks.”

Hayes also studied Israel’s ultra-Orthodox Jewish communities, where traditional gender roles reverse around economics. “The same biological males who are presumed to be natural risk-takers grow averse to uncertainty once their status depends on piety rather than market success,” he said, noting how men who dedicate their lives to religious study become more financially cautious than the bread-winning women.

“Each gender is responding to the kind of resources society has taught it to value, not to an innate calculus,” he said.

How To Deal With These Social Influences

Hayes recommends several strategies for identifying when social forces are driving financial decisions:

• Name the script: “Before a major financial move, ask whose approval you might be courting and which identity you are performing,” he said.
• Think through a counterfactual: Picture making the same decision in front of a completely different audience. “If the choice flips, social pressure rather than pure preference is probably driving the outcome,” he noted.
• Diversify your advisors: “Seek advice from people who sit outside your primary circle,” he said. That dilutes any “echo-chamber effects.”
• Establish your own measures of success: Hayes recommends defining what matters most to you—”security, autonomy, impact, or whatever matters most to you—so that group cues become just one input rather than the default autopilot.”

The Bottom Line

Your financial decisions aren’t just about numbers—they’re social performances shaped by the relationships, expectations, and cultural stories surrounding you. Understanding these invisible influences doesn’t eliminate them, but it creates space for choices that align more closely with your genuine priorities rather than social expectations.

“Conscious reflection will not dissolve every bias,” Hayes warns, “but it will widen the margin for acting on priorities that feel genuinely your own.”