What are the typical errors that we make in the management of our money.
Finance is made of numbers: it is rational. Surely this is the thought of every young student who chooses the faculty of economics for his studies and, probably, even those who reflect on how to invest their savings. Instead, in -realty, economics and finance are not “exact science”; But real social sciences, therefore strongly linked to our choices. And to our psychology. So here’s what you need to know, in addition to the traditional basic notions (v. the previous articles of the series), to properly devote yourself to the management of your money and the creation of one’s well -being.
We are emotional. The Israeli psychologist Daniel Kahneman, the first “non -economist” to obtain the Nobel Prize (in 2002), and the American economist Richard Thaler (Nobel in 2017) were facing the question of the question. Their studies, together with those of other great thinkers such as the naturalized US Lebanese Nassim Taleb (author of the best seller The black swan), have developed the disciplines of economic psychology and behavioral finance. The traditional economy, in fact, blindly believes in the balance between supply and demand (between those who want to buy and those who want to sell) and in their constant alignment on a price that maximizes the number of exchanges.
The truth is that a person, in most cases, is not only not able to establish the value of what he has or who wants to buy, but can even be easily influenced on how he is willing to spend on an article. Marketing knows it well: in fact, the strategies of the sales are often based on this, where a high discount or an offer “pay 2 and take 3” push us to buy products that we do not actually need.
Savings of energy. All this is based on the fact that our brain is a machine set to make fast decisions with the minimum expenditure of energy. For this reason our instinct is often precious in making even important choices. But, when we do it, we are using some “mental shortcuts” that can make us mistake (the so -called behavioral “bias”, See Box above), precisely because they push us to make decisions not on the basis of an objective analysis of the data – which would require time and commitment (what Kahneman calls “slow thought”) – but on “sensations” and preconceptions (“fast thought”) . All the more reason in a world overloading information such as today, the brain tries to “cling” to felt things or previous experiences to develop, with minimal effort, information from the environment.
This attitude of ours, in fact, leads to a subjective vision of reality (the famous “bubbles” of social networks) and the taking of decisions often not properly rational, and therefore most of the time wrong.
Ancestral reactions. Irrational thrust directly influence our approach to money. The fear of making mistakes, for example, in the face of an investment often leads us to immobility or escape, which are our most ancestral reactions. These thrusts are omnipresent and systematic.
They concern emotions, trust, expectations and deeply influence the way people relate to politics, welfare and economics. More than 200 cognitive bias of this type have been identified. Knowing them is the first step to overcome them, to arrive first of all to achieve your life goals
When a spintarella is useful. Sometimes people tend to have incorrect and even self -injurious behaviors. To help them make better choices, the economist Richard Thaler has conceived the theory of nudgingthat is, of the “gentle thrust” towards more virtuous behaviors, which earned him the Nobel in 2017. A very cited example of nudge It is the following: it has been seen that it is enough to draw a fly in the male urinals to push the gentlemen to “center center”, thus improving the hygiene of the bathrooms. An example more linked to the economy was conceived by Thaler himself and concerned the adhesion to an accumulation plan of the pension by American workers, who could also choose not to have them. Simply by activating the plan six months later, and communicating that the salary would not change, many workers built a pension that otherwise would not have had.
Nudge can be very useful, but someone considers them excessively “paternalistic”. Since, however, ultimately, the decision always remains in the hands of citizens, we generally speak in these cases of “libertarian paternism”.
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Curated by Di Jonathan Figoli CEO Professionfinance® and Family Economy School manager
