Money & Mind
Money is interchangeable and almost nobody treats it that way
Mental accounting — sorting money into separate notional pots — leads to decisions that are internally…
· 3 min read
Money & Mind
Why sensible people make predictable mistakes with their own money.
Money & Mind
A loss weighs more than a gain of exactly the same size
The well-documented asymmetry known as loss aversion means the same amount of money registers more strongly leaving than arriving, and money decisions bend around it.
Money & Mind
What has already been spent cannot be recovered by spending more
The sunk cost fallacy treats money that is already gone as a reason to commit further money, when the only…
· 3 min read
Money & Mind
A price only means anything next to another number
Anchoring makes the first figure a person sees do most of the work of judging every figure that follows…
· 4 min read
Money & Mind
The future self keeps losing arguments it was never present for
Present bias makes an immediate reward outweigh a larger later one, and the reversal it produces explains…
· 3 min read
Money & Mind
Two people sharing a household need a rule, and the three common ones trade different things
Joint money arrangements are usually inherited by accident rather than chosen, and the arrangement…
· 3 min read
Money & Mind
Children learn money from what they watch, not from what they are told
Household financial habits are transmitted mostly by observation, which means the explaining matters far…
· 3 min read
Money & Mind
A household sets its standard by looking sideways at other households
What feels like a normal level of spending is largely determined by the people nearby, which means the…
· 3 min read
Money & Mind
People forecast their own spending with a range that is far too narrow
Estimates of what a project or a month will cost are consistently too low, not because of poor arithmetic…
· 3 min read
Money & Mind
Money decisions get worse exactly when there is least of it
Being short of money occupies attention, and the attention it occupies is the same attention that financial…
· 3 min read
Money & Mind
The conversation about what happens to family money is postponed by everyone at once
Inheritance is a topic each generation assumes the other will raise, which is why so many families discover…
· 3 min read
Money & Mind
Most people rate their own financial judgement above average, which is arithmetically impossible
Confidence in money decisions consistently exceeds the accuracy of those decisions, and the gap does…
· 3 min read