Name: Why Smart People Make Big Money Mistakes--and how to Correct Them
Rating: 3 (1 reviews)
ISBN: 9780684859385

Thomas Gilovich

Gary Belsky

Lessons from the New Science of Behavioral Economics

Why Smart People Make Big Money Mistakes--and how to Correct Them

Fabian Beiner

Think of it this way: If you have $200 cash in your pocket and you pay $100 for a belt, you experience the purchase as cutting your pocket money in half. If you charge that belt, though, you don't experience the same loss of buying power that emptying your wallet of $100 brings. In fact, the money we charge on plastic is devalued because it seems as if we're not actually spending anything when we use the cards. Sort of like Monopoly or Sims money. The irony, of course, is that the dollar we charge on plastic is actually more dear, inasmuch as it costs an additional fifteen cents to spend it—15 percent or so being the typical interest rate for such borrowing.

Dana Kraft

This book was published in 1999, and many of the authors' recommendations have become conventional wisdom in personal finance circles. I like how they started each section with a general theoretical concept, then grounded it with (mostly) realistic examples and "warning signs" that you may be falling victim to a specific fallacy mistake. So, I liked the book, but didn't really learn much from it.

Protect and grow your finances with help from this definitive and practical guide to behavioral economics—revised and updated to reflect new economic realities.

In their fascinating investigation of the ways we handle money, Gary Belsky and Thomas Gilovich reveal the psychological forces—the patterns of thinking and decision making—behind seemingly irrational behavior. They explain why so many otherwise savvy people make foolish financial choices: why investors are too quick to sell winning stocks and too slow to sell losing shares, why home sellers leave money on the table and home buyers don’t get the biggest bang for their buck, why borrowers pay too much credit card interest and savers can’t sock away as much as they’d like, and why so many of us can’t control our spending. Focusing on the decisions we make every day, Belsky and Gilovich provide invaluable guidance for avoiding the financial faux pas that can cost thousands of dollars each year.

Filled with fresh insight; practical advice; and lively, illustrative anecdotes, this book gives you the tools you need to harness the powerful science of behavioral economics in any financial environment.

Why Smart People Make Big Money Mistakes--and how to Correct Them Lessons from the New Science of Behavioral Economics

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