Tag Archives: richard-thaler

Psychology of Money

New Sci­ent­ist provides a com­pre­hens­ive sum­mary of stud­ies look­ing at the psy­cho­logy of money. There are some fas­cin­at­ing find­ings here, includ­ing a study show­ing that “simply think­ing about words asso­ci­ated with money seems to makes us more self-reli­ant and less inclined to help oth­ers [and] just hand­ling cash can take the sting out of social rejec­tion and even dimin­ish phys­ic­al pain”.

Our rela­tion­ship with money has many facets. Some people seem addicted to accu­mu­lat­ing it, while oth­ers can­’t help max­ing out their cred­it cards and find it impossible to save for a rainy day. As we come to under­stand more about money’s effect on us, it is emer­ging that some people’s brains can react to it as they would to a drug, while to oth­ers it is like a friend. Some stud­ies even sug­gest that the desire for money gets cross-wired with our appet­ite for food. And, of course, because hav­ing a pile of money means that you can buy more things, it is vir­tu­ally syn­onym­ous with status – so much so that los­ing it can lead to depres­sion and even sui­cide. In these cash-strapped times, per­haps an insight into the psy­cho­logy of money can improve the way we deal with it.

*The ori­gin­al art­icle has, since post­ing this, gone behind a pay­wall. Simo­leon Sense has some extens­ive excerpts.

Behavioural Economics and Financial Policies

The news that Obama had some of the lead­ing beha­vi­our­ists advising his cam­paign comes as no sur­prise to me, how­ever I likely under­es­tim­ated how much they influ­enced both the cam­paign and the voters.

Time takes a look at this “beha­vi­our­al dream team” and dis­cusses how the Obama admin­is­tra­tion is using beha­vi­our­al eco­nom­ics to guide its fin­an­cial policies.

The exist­ence of this beha­vi­or­al dream team — which also included best-selling authors Dan Ari­ely of MIT (Pre­dict­ably Irra­tion­al) and Richard Thaler and Cass Sun­stein of the Uni­ver­sity of Chica­go (Nudge) as well as Nobel laur­eate Daniel Kahne­man of Prin­ceton — has nev­er been pub­licly dis­closed, even though its mem­bers gave Obama white papers on mes­saging, fun­drais­ing and rumor con­trol as well as voter mobil­iz­a­tion. All their pro­pos­als — among them the fam­ous online fun­drais­ing lot­ter­ies that gave small donors a chance to win face time with Obama — came with foot­notes to peer-reviewed aca­dem­ic research. “It was amaz­ing to have these bul­let points telling us what to do and the sci­ence behind it,” Moffo tells TIME. “These guys really know what makes people tick.”

Pres­id­ent Obama is still rely­ing on beha­vi­or­al sci­ence. But now his Admin­is­tra­tion is using it to try to trans­form the coun­try. Because when you know what makes people tick, it’s a lot easi­er to help them change.

While I like this pro­gress­ive move, I—like Mind Hacks’ Vaughan—feel the need to ask, “Where are the scep­tic­al voices?”