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Mental depletion complicates financial decisions for the poor
PBS: Kristen Doerer: How does being poor affect people’s financial decisions? What factors affect their decision making? Dan Ariely: Well, none of us always make the best financial decisions. One of the big lessons from behavioral economics is that we make decisions as a function of the environment that we’re in. And what is the environment that you’re in, in terms of your money? They — as in everyone — want to take it away from you. Your immediate environment is comprised of coffee shops, supermarkets, websites, apps and all kinds of things — none of which have an interest in your long-term or short-term financial well-being.
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New Research From Psychological Science
Read about the latest research published in Psychological Science: Failure of Intuition When Choosing Whether to Invest in a Single Goal or Split Resources Between Two Goals Alasdair D. F. Clarke and Amelia R. Hunt How do people respond when asked to perform two similar tasks simultaneously? In theory, if both tasks are easy, they should divide their attention and try to complete both; however, once the tasks become more demanding, they should change strategies and prioritize one task at the expense of the other. In a series of four studies, participants completed simultaneous detection (Study 1), throwing (Study 2), memory (Study 3), or reaching (Study 4) tasks.
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Why Some People Take Breakups Harder Than Others
The Atlantic: It’s a question that often plagues people after a painful break-up: What went wrong? As they work to figure out the answer, people typically create new relationship stories, analyzing the events leading up to the breakup and using them to build a cohesive narrative. In some cases, this type of storytelling can be positive, helping people to make sense of—and come to terms with—painful things that happen to them. Other times, though, the storytelling process can be a negative one, compounding pain rather than easing it.
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The Best Way to Keep a New Year’s Resolution
The Wall Street Journal: Millions of people resolve at the beginning of each year to make themselves and their lives better, but many fail to reach those goals. One expert, Frank Farley, a professor of psychological studies in education at Philadelphia’s Temple University, explains why Charles Darwin would approve of New Year’s resolutions and offers some tips for making them more successful. Taking stock at the end of each year is common in many areas, from inventory management to financial reporting, and that naturally leads to setting goals for the following year, says Dr. Farley, who specializes in motivation and risk-taking.
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Poverty makes financial decisions harder. Behavioral economics can help
PBS: Last month, behavioral economist Dan Ariely and his team at the Center for Advanced Hindsight opened up the Common Cents Lab. Its goal is twofold: to examine how those living in poverty misspend their money and to help the poor make better financial decisions. ... Kristen Doerer: What’s new about this initiative? Dan Ariely: The important new initiative is that we’re going to go into financial institutions for the poor — the Latino community banks, the self-help bank, the federal credit unions, all types of financial institutions that serve lower, middle-income Americans — and we’re going to try to figure out what we can do to help them out.
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Why Sports Wins and Sunshine May Lead You to Gamble
A sunny day or the fact that your favorite sports team unexpectedly won yesterday won’t improve your chances of winning the lottery and yet they might increase the likelihood that you’ll buy a ticket.
