Cool, calm and collected
Even the best thinkers can fall for financial thinking traps. Cass Sunstein, behavioural economist and co-author of Nudge tells the story in a post for Bloomberg View of when he made a “really dumb” investment decision. The stock market was suffering a series of stumbles, and as a new father he was worried about his financial position. Sunstein detailed how he decided to sell a significant chunk of his stock, despite co-author Richard Thaler telling him to “reread” their book first which is about how humans are susceptible to various biases that can lead us to make mistakes.
More to life than money
Money doesn’t necessarily make us happy but losing it tends to cause a lot of distress, blogs Christopher Boyce for the London School of Economics and Political Science. He tells how income is said to be important to happiness and how losing income can be detrimental to wellbeing, linking the economics of happiness to ideas around loss aversion.
The internet is helpful for many things but it doesn’t seem to be a particularly good platform for signing up to retirement plans, behavioural economist Shlomo Benartzi told CNBC. Benartzi, who co-authored the Save More Tomorrow retirement plan with Richard Thaler, shared figures from a retirement planner that showed almost 100% of employees signed plan paperwork when it is done at a retirement seminar, falling to 35% of those sent home with a form to send back in and only 5% sent home to sign up online. He suggests a more user-friendly online system may help.