Saturday, 18 May 2019

"Dollars and sense. How we misthink money and how to spend smarter" by Dan Ariely and Jeff Kreisler

I promise, its a fun book. One of the authors is an MIT scholar who became a comedian, which could be a good reason alone. The other author offers many interesting talks and interviews, on other topics as well. 

What is the psychology behind showing actual money on a blog? I haven't read about this anywhere, but my intention is to better illustrate this book's content: how we think about spending, saving and the thinking itself. We don't save 70% of the prize even if the sign says so - we still pay the "30%". Or another good example: always think in long-term investment and how numbers are used. People tend, for example, not want to live with 20% less salary - but they simultaneously say that the could live on 80% of what they make today. Effectively, it's the same thing! People also tend to not think that they lose money they have not had or seen - so if you had invested money long ago, it would have grown by now - and will continue to grow. But if you haven't invested anything, you don't see it as a loss. And, we are much more affected by numbers than we admit (are aware of). Some established real estate agents were tested on this matter, and they valued the same property differently depending on what number they had gotten to hear first, though they stated that they had not taken that price into account at all. Very useful when you bargain for your own salary, for example!

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