Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics

Features

• Cover Type: Paperback with 224 pages
• Published by: Simon & Schuster; Fireside Ed edition April 6, 2000
• Written in: English
• ISBN 10 Number: 0684859386
• ISBN 13 Number: 978-0684859385
• Book Dimensions: 8.3 x 5.5 x 0.6 inches
• Weighs: 7.2 ounces

Product Review
Why do so many otherwise rational individuals make irrational decisions when it comes to money? Financial journalist Gary Belsky and Cornell University psychology professor Thomas Gilovich contend the answers can be found--and the deficiencies remedied--with help from a relatively new science called behavioral economics. Still largely unknown outside academic circles, the field can be traced to research on the impact of rewards and punishments on human judgment and decision- making that first were undertaken at Jerusalem's Hebrew University some thirty years ago. In Why Smart People Make Big Money Mistakes , Belsky and Gilovich update this pioneering work and show readers how to understand exactly why they invest, spend, and save as they do. More importantly, using examples that everyone can identify with and language that anyone can understand, the authors offer dozens of workable suggestions that can help readers manage their money better. "We believe that by identifying the psychological causes behind many types of financial decisions," they write, "you can effectively change your behavior in ways that will ultimately put more money in your pocket and help you keep more of what you already have." --Howard Rothman --This text refers to an out of print or unavailable edition of this title.

Product Review
Business WeekGreat stuff. Fresh and helpful.

Money MagazineA terrific introduction to the emerging science of behavioral finance, which identifies the ways in which investors' minds play tricks on them.

Paula Throckmorton ZakariaThe Wall Street JournalIntelligent and valuable.A large step toward educating consumers about their financial behavior and its causes.Provides several useful financial rules.

Beth Koblinerauthor of Get a Financial LifeThis is a terrific book. Belsky and Gilovich tackle financial decisions from the inside outsweeping away the psychological obstacles that stand in the way of our goals.

Reader Reviews
This review is from: Why Smart People Make Big Money Mistakes--and How to Correct Them: Lessons from the New Science of Behavioral Economics (Hardcover) People don't act like computers when making economic decisions. This book is full of examples that show why people make miseconomic decisions. The basic point is that we have rules of thumb learned in daily life that we apply to economic decisions, and the results are costly. This book reminds me of Robert Cialdini's excellent book, Influence, that explains the psychological biases that harm us as consumers and how to protect ourselves against unethical sellers. If you read and apply them both, you will have much more prosperity in your life. Here are some examples: We are all more careful about saving money in some areas than in others. For instance, I'll go to great lengths to save money on air travel, but frequently buy expensive wines in restaurants (not a great value). Most of us are more concerned about avoiding losses than in making gains. This often translates into holding stocks with losses, rather than selling them, even if there is not much chance of a rebound. I know I'm guilty of this. Another example is assuming that we have knowledge that we really don't have. Someone who is good in math may not take the time to mathematically evaluate the choices. For instance, a 15 year mortage on your home is only a little more costly per month than a thirty year mortgage. The different in the cost of the total interest you pay is enormous, yet almost everyone gets a thirty year mortgage. Almost everyone has the skill to compare the two choices, but few take the time to do so. This kind of stalled thinking can be irresistible, and your wallet will inevitably be lighter as a result. When you discover that you have a weakness in one of these areas, you can then be more cautious in avoiding your biases in the future. This book is very helpful in this regard because each chapter explore one bias and begins with a question to test your instincts. In answering that question, you will probably find (if you are like me) that you make the wrong choice. This book will return its cost in time and money hundreds of times over the rest of your life. Be sure to read and apply it! Comment (1) | | (Report this)