Did You Know?
Financial illiteracy cost the average American $1,634 in 2020
Jeff Kreisler is a highly-regarded behavioral scientist, current Head of Behavioral Science at JP Morgan, Founder of PeopleScience.com, award-winning comedian, and best-selling author of several books.
One of them, “Dollars and Sense: How We Misthink Money and How to Spend Smarter”, explores the psychology of money and financial behavior.
In this episode we discuss strategies to make better financial decisions, common irrational behaviors which influence our choices, how credit cards and subscription services have changed our relationship with money, the “IKEA effect”, money as a measure of success, among other topics.
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0:00 Intro
02:10 How Jeff became involved in behavioral economics
04:50 Classical economics doesn’t account for the human element
07:03 Everybody makes money mistakes
08:28 Opportunity cost is the theoretical bedrock of financial decisions
11:07 Behavioral science and financial advisory
12:32 JC Penney’s pricing tactics
14:42 How comparison and price relativity affects us
18:01 The pain of paying
21:56 Be judicious about significant purchases not every little purchase
23:13 Anchoring and over-valuing what we have
28:03 The “American Dream” as a social anchor
29:48 Prospect theory and loss diversion
31:42 The IKEA effect
34:16 How we measure the fairness of a price
35:55 Why do people love Uber?
37:01 Picasso story on demonstrating your value
40:12 How marketing language sets expectations
44:06 Money is an easy way to assess our success, but a flawed one
49:09 Strategies to make better financial decisions
53:10 Connect with your future self
54:14 There’s no shame in talking about money and our mistakes
56:23 Wrap-up
56:44 One final question
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References: “Dollars and Sense: How We Misthink Money and How to Spend Smarter” by Dr. Dan Ariely and Jeff Kreisler
https://amzn.to/3a2GHRJ
http://jeffkreisler.com
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