Is passive income damaging your health?

Could the myth of “passive income” be damaging your health – or at least your psychological well-being – as Daniel Priestley, author of Become a Key Person of Influence,  proposed in a talk recently?

He argued that the notion of “passive income” was founded on the idea of making money by doing something one didn’t want to actually do, when in reality, money is more often made by doing what you’re truly passionate about.

It was interesting to hear this the day after experiencing TEDx Observer, a day of truly passionate speakers with “ideas worth sharing”. Speakers who were intent on changing the world for the better, each in a different, specific way: charity workers, bloggers, academics, entrepreneurs, artists, people with “causes”. Speakers who were not necessarily doing what they love so much as doing what they felt was important. More on this another day.

But Dan’s point was also interesting in the context of James Geary’s new book about the role of metaphor in thought, I is an Other.

Among many other interesting ideas, James draws attention to the metaphors we use for money markets. He says: “Psychologist Michael W Morris and collaborators studied a slew of financial commentaries and identified two primary market metaphors.

“What they call “agent metaphors” describe price movements as the deliberate action of a living thing, as in “the NASDAQ climbed higher” or “the Dow fought its way upward”. In contrast, “object metaphors” describe price movements as non-living things subject to external forces, as in “the NASDQ dropped off a cliff” or “the Dow fell like a brick.” The researchers found that “agent metaphors tend to be evoked by uptrends whereas object metaphors tend to be evoked by downtrends.””

James goes on to explore the effect of these metaphors on the behaviour of traders: all fascinating stuff.

Because, of course, the metaphors in our language influence the way we think. You don’t need to disappear into a morass of Sapir-Whorf (or more memorably, Sapir-Wolf, “if you talk like a Klingon, you think like a Klingon”) for that to be pretty self-evident.

So what happens when we think and talk about “passive income”? It’s a slightly odd phrase, because what it’s meant to mean is that the recipient of the income is passive. But what it actually says is that the income is passive.

In other words, the income is an agent, which could presumably go clambering up the cliffs of the markets, feeling the sea breezes and taking the occasional risk. But instead it chooses the life of a couch potato, putting on weight but not gaining fitness.

In this metaphor we’re comparing income, inevitably, to a human agent. So if you believe that it’s a good thing for humans to live passively, then you’ll be comfortable with the idea of “passive income”.

Personally, I’d rather my money was working for me, rather than being “fattened up”: surely it will make it more resilient to the inevitable twists and turns of financial fate?

So I’m with Dan on this one: I agree that the myth of “passive income” could indeed be damaging your financial, psychological and even physical health! What do you reckon? Please comment below.

12 Comments

  • David

    21/03/2011

    HiI totally agree with this view on income, I had this little dilemma during my first year in business. I could simply not align with that thought and was told by many nlp guys that it was a limiting belief, but still I couldn’t get rid of it. I decided to find out for myself, after a while of talking to “passive income” minded people and other very successful business men about this I realized that most of the passive income minded were struggling much harder than the ones that looked at it differently. Since I am not really a stock or share player or real estate owner I also couldn’t align with the thought of “money working for me”.

    Quickly my paradigm shifted to “income streams” thank to the real successful business men, it’s a logic metaphor for me and it works very well, completely aligned with myself.

    I think this approach creates for lots of people the golden rush effect. Mostly they believe they will create that one quick business deal or idea or campaign that will bring in passive income so they don’t have to work any more so they can do the things they love, witch isn’t logical with their paradigm they have.

  • Judy

    21/03/2011

    Thanks David. By the way I just discovered that Daniel blogged about this, as well as talking about it: http://danielpriestley.wordpress.com/2011/02/14/passive-income-will-send-you-broke/

  • Ken

    23/03/2011

    I think the foundational assumption “the notion of “passive income” was founded on the idea of making money by doing something one didn’t want to actually do” is flawed so the case thereafter is built on sand!

  • Judy

    23/03/2011

    Which “case” Ken – Dan’s or mine? Or both?

  • Andy Smith

    23/03/2011

    Ken,

    I agree that the notion of ‘passive income’ being founded on the idea of doing something you don’t want to do is a flawed assumption (as far as I can tell without going and reading Daniel’s blog post).

    However, Judy’s case of the ‘income as agent’ metaphor isn’t built on it, so I think her point stands.

    Metaphors do take on a life of their own. So I’m afraid that when I saw ‘I is an Other’, Ali G came to mind. And as for a golden rush of income streams… well let’s not go there 😉

  • Roger

    23/03/2011

    Well, people will make their own meanings, regardless. I’ve always regarded “passive income” as simply money made on investments. I’m not aware of being diminished by this definition.
    To me, the value of this discussion is that it stimulates my thinking and can lead to new ideas and understandings.

  • James Tripp

    23/03/2011

    I would love to hear the argument that demonstrates that ‘passive income’ is a concept founded in the idea of making money by doing something that one doesn’t want to do, because for me this just doesn’t add up (not without the addition of a dubious assumption or two).

    Personally I am super keen on ‘passive income’ from things that I have created and am excited about. Things that can free me up to learn and do and create more.

    But that aside it is an interesting exercise to switch the labelling (‘passive income’ to ‘active income’) and notice the subjective difference… connotation is a powerful thing!

    One downside of ‘passive’ is that one may be mislead about the amount of ACTIVity required to set up an income that works for you whilst you attend to other things.

    Great blog post, Judy… useful thinking stimulated! Mission accomplished!

    All the very best

    James

  • Richard

    23/03/2011

    It seems in the last 30 years or so there have been many such words and phrases that have been designed in a since to miss lead.When i was growing up i ‘d, here of someone who retired at 23,and thought how great that would be .There was,and is even now, so much intended to say work is bad.How about T.G.I.F ,how would our perceptions change if we started using T.G.I.M.
    Thank God it’s Monday.What if we were to find more metaphors in our media and our world that were more about growth through our work experience and through our sharing ,than being passive.I agree the word passive, in this day and time could really mean not motivated. In my veiw just anther word in long stream of words that lend to the idea that work is bad.

  • Marc Price

    23/03/2011

    I always took the term ‘passive income’ to refer to an income stream that works by itself once it has been set-up – the recipient doesn’t have to do anything to maintain it. Investment is one possible example. Another might be a book, you do all the work upfront in authoring a book, and then it practically manages itself once it is published. Or, that is the (broken) theory at least.

    I agree that it is a myth, because you have to actively and continually promote your book (your self) and you have to actively manage your investments. If you don’t do those things then the income really is passive, and its health probably does decline over time.

    I’m reminded of Alec Baldwin’s character, Larry Quinn, in the film ‘Cat in the Hat’.

    The question that springs to my mind is this. What if someone is using the metaphor as jargon, and they mean something different?

  • Christopher

    23/03/2011

    Wow, I usually don’t do blogs or facebook but I have enjoyed reading these comments. Words really are powerful and I like the agent metaphor/object metaphor discussion…I’ll watch for this. I’d like to say that words have no universal meaning in and off themselves. They are simply vehicles that we use to carry meanings and emotions, and we all fill these vehicles with different meanings, feelings and emotions. I am amazed at how much we think we understand each other using words and creating all this meaning…I know I am going to get some bad press for this next statement, but I like to believe that at some level, there really is no meaning…but what meaning we choose to create…. I may have gone down the rabbit hole a bit deep on this blog. lol

  • Mike -Passive is Active

    23/03/2011

    It’s interesting to juxtaposition a second interpretation and notice each individual is filtering through multiple lens. The second dimension becomes a prismatic multiplier; radiating beams of thought like a rough diamond’s facets refract assymetrical light.Comparing apples to bananas to cars to international relations. So until we reach agreement on specific definitions we’ll keep going in circles.
    Active and passive are subjective terms as James Tripp mentioned above. Like the Tortoise and the Hare it’s relative to an individual’s time frame and speed of involvement. Which presupposes that passive is a degree of active. Inactivity on it’s face is the lack of activity.

    How involved an investor is in one investment over another determines active and passive relative to that individual.

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