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Join Andrew Brill as he sits down with behavioral economist Dan Ariely to explore the psychological forces driving our financial decisions. This episode peels back the layers of human irrationality in wealth management, offering a deep dive into how our inherent biases and societal pressures skew our approach to investing, saving, and spending. From the allure of AI investments to the pitfalls of materialism, Ariely provides transformative insights on building resilience in an economy filled with unpredictability. Whether you’re looking to refine your investment strategy or simply interested in the behavioral underpinnings of economic trends, this conversation is a must-watch for anyone serious about safeguarding and growing their wealth in today’s complex financial landscape.


Andrew Brill 0:05
Our mission here at Wealthion is to help all of us keep and grow our money. Wealthion is not just a channel, it’s a conversation with you, our community. So please keep the feedback coming. If there’s anything you would like us to talk about or someone you’d like to hear from, let us know. And if you could like and subscribe to the channel, we’d really appreciate it. Now let’s dive into the discussion. I’d like to welcome behavioral economist Dan Ariely to the show. Dan has been here before and has a fascinating story about how and why he became interested in behavioral economics. He’s also an author of several best selling books, a professor of psychology and behavioral economics at Duke University known for his groundbreaking breaking research on human irrationality decision making, also the founder of the Center for Advanced hindsight, which is a Duke University Research Lab, then, thanks so much for joining me. lovely to be here. So I just want to start by asking advanced hindsight, you know, when I grew up, my dad always had the saying, hindsight is always 2020. So you can look on everything back with a clearer picture and know what’s going on. What’s advanced hindsight?

Dan Ariely 1:11
So, so we call it the central advance hindsight, slightly in jest, of course. But But the other thing is that it’s a reminder for ourselves against the protection of, for exactly what you what you said, that we find something and we said, all we knew that all along was something happened. And we, we say we knew it all along. And, you know, this, this Hindsight is not just about the past, it’s really something that is holding us back from learning new things. Imagine I asked you, when Drew, and if I asked you in 2000? What will be the value of Tesla in 2024? What would you have said, you know, it’s very hard to ignore the amazing success. They have Tesla in the stock market in these years. So So these, these things about hindsight, are really filling us. And making it actually quite difficult to lose. Because we convince yourself that we knew things all along.

Andrew Brill 2:22
So explain to me, you know, times change situations changes, and look, our country, the stock market, or our economy, all evolving, yet we look back, and we say okay, this is how things were this is how the Fed handled it. This is how we control interest rates, the control the economy, all this stuff. But yet, maybe we should be looking forward at new stuff. But we’re sort of stuck in the past I Okay, this is the way we did it. It worked. It didn’t work. So we’re going to try doing these things. How do you explain, you know, trying to look forward, while not looking too far back in the past,

Dan Ariely 3:02
one of the main things that we want as people is to feel that we’re predicting the world. My my most recent book is actually about conspiracy theories. It’s called these beliefs. And it started in COVID, with weed lots of things around there. But for example, I described fishermen in that book, and I say, look, let’s think about two types of fisherman. fisherman that fish in the deep ocean, and fisherman fishing lakes, which one of them has a more predictable environment? Obviously, the lake tomorrow will be like today and so on that things move very slowly. The ocean changes dramatically. And then I asked you to think about which type of fisherman is more likely to have superstitions, of course, the ones in the ocean. Why? Because they need a story to try. And they feel that they’re in control. Now that story doesn’t change control, but it creates a feeling of control. And in the stock market, especially now, I think it’s like fishing in the deep ocean. very unpredictable, things are moving very much. And a lot of these stories are not that correct. But it’s stories that we’re looking for, as a way to explain to ourselves what is going on. Now, would we be better off? Financially if we could abandon those stories and actually create a new story? Maybe? I think so. highly likely. But would we lose some of our psychological comfort? Yes, as well. So these these stories are fulfilling to think they’re trying to help us predict but they’re trying to tell us, give us a feeling of control as well and it’s helpful psychologically, but not financially.

Andrew Brill 4:56
So how do you explain it The uncertainty today, you know, there’s an I guess it’s different socio economic groups that are involved in that. We worry about, okay, the Feds going to do this, the Fed is going to do that when, you know, we’re worried about putting food on the table or something that we actually want, when we need the food to survive. But well, you know, I wanted that big screen TV, I’m not sure I can afford it. So behaviorally, the economic situation we’re in with spending is a little irrational. So how is that explained?

Dan Ariely 5:34
So, you know, there’s one way to be rational, and there are many ways to be irrational. And the reality is that when it comes to dealing with money, or actually anything in modern society, our brain is like a set of tools that have been designed for a very different environment. Like we have been evolutionarily designed to deal with an environment with tigers, and jungles and all kinds of other things. And fast forward to today, we have a very different environment. But we have the same old tools. And maybe those tools were a good fit for our history, but they’re not good fit for now. But this is all we have. So we’re trying to deal with these tools that are not fit for the job. But but that’s that’s what we have. Another question is, what kind of mistakes? Do we do it? How does it change across across people? So one very interesting finding is something that is called scarcity mindset. What is scarcity mindset? Imagine somebody who is preoccupied with something, you can think somebody who has an ailing parent or somebody who lost their job, you can imagine somebody in chronic poverty. If you think about people in chronic poverty, they are preoccupied all the time with Will I be able to pay this bill and really be able to buy dinner? And where is are they going to cancel my health, insurance and so on. And in what the results show is that when people are preoccupied with those thoughts, their mental capacity available for other things is reduced and reduced by quite a lot. So are those people have less IQ? No, but do they behave as if they have less IQ? Yes, because part of their mind is dealing with something else. And when we have financial uncertainty, we’re actually functioning at a lower at a lower performance level. The other thing to understand is that there are two types of stress in general. There’s predictable stress, and this unpredictable stress. So predictable stress to be Gee, I’m so busy, I have lots to do. I’m not sure that I’ll finish my to do list today, right? Like it’s stress. But it’s not stressed, I don’t understand the world, it’s stressed, I don’t know how I’ll have time to do all of those things. That’s very different from the stress of the fishermen in the deep sea that say, I don’t understand where these things are coming from. I don’t understand what is happening. And the reality is that we have a lot of stress of the second type these days. Of course, we had lots of during COVID. What is this virus? Where did it come from lab, not lab? Why did they shut the whole world of vaccines working, not working? What is going on here? We haven’t recovered fully from the stress of COVID. And now we have lots of new strengths. So for example, when I talk to students on campus, they asked me, they said with this new AI technologies, are we going to have jobs? What kind of jobs by the time we graduate will not be there. Like think about how comforting it is to know that you have a career path. And if you want it, it will be there for you for 30 years. And think about how stressful it is to basically say, I’m studying X right now. I don’t know if by the time I graduate, and I finish all of this effort if x will be at all needed, or maybe a different version. And then of course we have other things that create stress, you know, what’s happening with Russia, what’s happening with Iran? What’s happened with the Houthis in Yemen, what what’s happening with with polarization, the political polarization, what’s happening to truth, who can we trust, so, so we’re kind of we’re stressed Can if you ask the question of whether this is a good environment for people to make good financial decision? The answer is no. Now there’s one other curious thing if, if we have stress, what is our natural inoculation for stress? And the natural inoculation for stress is resilience. You ask yourself, how much stress can I take and not lose thinking ability and not lose control? It really is a question of how much resilience do we have. And right now, we are not only experiencing loss of stress, we’re also experiencing all time low in terms of resilience, why our social networks have changed. But if you think about what is resilience is, to what extent can you count on people around you to pick you up if they needed to? If your house got burned down? Would somebody give you a bed? If you lost your job? Would somebody help you out? If you had an ailing parent, would somebody take over and help out? We have replaced real friendships with social media, we have we are spending less and less time with our social circles, we’re spending more time in the nuclear family but less time with a broader social circle. And on top of that is interesting research showing that as income inequality increases, resilience goes down. Why? Because if you live in a particular neighborhood, and in financial inequality is increasing, you’re less likely to ask for help. So with the high tide of stress, low resilience, very bad conditions for good financial decisions.

Andrew Brill 12:05
So you’d recommend people just hold on just, you know, let the dust settle, take a step back, take a deep breath, and, you know, then maybe make your financial decisions.

Dan Ariely 12:16
You know, time time is valuable. And compound interest is important. So I don’t necessarily think that we should wait until and wait for the dust to settle. But I think it’s a it’s a point where we should doubt our own intuitive decisions. And we should, we should ask for help. You know, one of the fascinating thing about financial decisions is that people are not comfortable talking to their friends about financial decisions. Right? People don’t like to say, How much do you make? Right? What’s your what’s, what’s your debt? You know, how are you managing? what’s your what’s your insurance? But but the reality is that there’s this huge symmetry of information. You know, we ask people for recommendations for restaurants in books, why don’t we ask for recommendations for insurance and saving plans? I think the answer is not to do nothing and waste until we feel better, I think the answer is to basically reach out, get over our discomfort in asking people for advice.

Andrew Brill 13:31
You talked about scarcity mindset? And is is my question is, is that scalable? My son did some research in Uganda and was fascinated about how much they didn’t have. But how happy they were. And you come here and you find it, you obviously run the scale of where there are people who don’t have a lot when we say that they have a roof over their head, they have food on the table, but they don’t have the luxuries that a lot of us would say, Oh, those are luxuries. But then there’s people who are who have all these luxuries and have money, but yet they are as stressed as anybody. So is that scarcity mindset thinking like, Oh, my God, I have all this money. But you know, it’s in the market, I might lose it all. Yeah.

Dan Ariely 14:12
So so first of all, the mind works to a very large degree on an algorithm of relativity. You remember when you were young, your mother would pull you orange juice, and she would pull your brother and sister a tiny bit less or more. And, you know, you didn’t care about your absolute amount of oranges you cared about, you know, do I get more or less than? Then my share? Why is the cubicle next to me a little bit bigger and smaller. The reality is that we run a relative algorithm in our minds, relative to what, relative to what we had yesterday relative to the people around us and so on. And that algorithm also creates counterfactual thinking, what else could I have? And counterfactual thinking has a real impact on quality of life. So if you live next to somebody who is much wealthier, you’re going to be actually more miserable. Right, you’re going to be actually more miserable, because the thought of looking at them, and seeing what they have is going to penetrate your joy with what you have. So, you know, part of the 10 commandments is is not to not to be envious, right? Impossible. Impossible to do. So we run on these algorithms of relativity and those, that relativity is real. So you know, when when you look at what we see on social media, if you think about the relatively high rates of depression, I’m sure that seeing like nobody, nobody on social media puts pictures of them being depressed.

Andrew Brill 16:12
I have that discussion all the time

Dan Ariely 16:14
With a crummy car. People put pictures of themselves happy, mostly, you know, but but almost always. And and what we do is we get in unrealistic sense of what people can can achieve. Right? And it’s not healthy. And you could say, oh, it’s not real. It’s just relativity. No, the way we compute our happiness is connected to relative happiness. And it’s the real algorithm. It’s not just the fake. It’s the real, it’s the real algorithm. So, you know, can people be objectively better off in some external sense, but their brain is actually experiencing worse themselves as being worse off? Absolutely.

Andrew Brill 17:06
How did we get to that point where, you know, it’s material goods, it’s stuff like that there’s there are people that live perfectly happy without these material goods. But how did we get there? Is that societal is that look, you know what, I need to buy this stock, I need to do this, I need to do that I need to go on vacation to an extravagant, extravagant place. How did we get to that point?

Dan Ariely 17:28
So so first of all, let’s let’s also remember that, that there’s some good things about that. Right? Yes, you know, we’re pursuing all kinds of things that might not be ideal. But the world is incredibly complex and incredibly interesting. And part of it are things that are that are good. So So you know, we don’t we don’t say all, you know, forget all of this, all of this stuff. But we have it we have a phrase in behavioral economics called you are what you measure. And think about something like frequent flyer miles. The goal of life is certainly not to maximize your frequent flyer miles. The goal is to maximize some happiness in some general abstract way. But guess what? Happiness is hard to measure. frequent flyer miles are easy to measure. Right? So So you know, often we what we do is we measure what’s easy, rather than what’s important. Or think about relationship between spouses, one spouse is funnier, one spouse is kinder, one spouse is more generous. one spouse makes more money. From all of those things, which one which attribute is the easily quantifiable attributes?

Andrew Brill 18:58
The money,

Dan Ariely 18:59
They make more money, the making money has decimal, right, think about the level of precision. So so when we look at the power relationship in a couple, it ends up being way too influenced by income than by who is more generous or kinda or or something else is easy to measure. Therefore, it becomes something. So material goods, your question was, how did we get there? So so the reality is that we we are relative creatures, as we, as we said, so think about the tail of the peacock. The tail of the peacock, it’s called the handicap principle. And the tail of the peacock is very dysfunctional. Why would the peacock want a long, heavy tail? It’s easy to be caught by Wolf. In fact, if you take young peacocks When you stitch longer tails to them, they get eaten quickly. Because the tail is really making things harder for them. But at the same time, the tail is communicating to the females. Look how strong I am. Look I can manage with this long tail, just think about how strongly so now, no do the peacocks care about the absolute length of the tail. No, they just care about the relative length, I want to have my tail slightly longer than your tail. That’s it. That’s all I care about. But of course, we all want that. And there’s a competition for this for this thing. The same thing with relativity and happiness and communicating things to others, these are just very natural instinct that are built into us. So we want to found that is just as good as yours, or maybe slightly better and want to call that is just as good or maybe slightly better. We want to communicate it to ourselves, we want to communicate it to other people. And and that’s how they will continues. So

Andrew Brill 21:19
I once saw a quote saying that he who dies with the most money wins, but you can’t take it with you. So it doesn’t really matter. But I want to get back to the market a little bit and the interest rates and you know, the Fed, is there a behavioral component to their decision making, we know that they look at all the data, they look at all the charts, all the graphs and all the the indicators. But is there something saying look, you know, the Feds trying to get our inflation down to 2%. Now, I’ve just read and listened to the thinking that maybe they’re thinking, well, maybe it could be two and a half percent? And what’s the behavioral component of their thinking? Do you think?

Dan Ariely 22:07
So first of all, I don’t want to predict their particular way of thinking. But you know, there is things like consumer confidence, that is actually a very important input. Because when we think about rates, rates are basically supposed to drive behavior, right, where they expect changes in behavior to rate changes. And if they didn’t think so they wouldn’t change the rates, right. So it’s a way to try and drive drive behavior. But of course, people don’t react directly to the rates. It’s an indirect reaction. So for example, in a case of a war, and people have a very different attitude to life. You know, depends on the stage of the war. But at some point, people are depressed. And they just don’t want to buy anything, because they’re so unhappy and miserable. And then there is always something in in a time of war, where people are feeling a sense of being alive. And I don’t know if there’ll be tomorrow, and let’s spend now, if you think about the cycle of a war, it’s usually start with the depressed thoughts. And then at some point, people say, I’m alive. Life is precious. Let me not worry too much about the future. Now, I’m giving this as an extreme example, because it’s the same physical thing, there’s a war, but the psychological reaction to it is very different. And therefore the interest rate reaction should be should be very different. So you know, it’s a it’s a very coarse measure inflation. But if you think about inflation, interest rate, influencing behavior, it goes through consumer confidence in what we think people will do, will they buy more? Will they buy less? What are we trying to get? So I think, I don’t think there’s a specific model, a behavioral model, but I think it’s somewhere in the mind of the people of taking also consumer confidence into account.

Andrew Brill 24:32
So consumer confidence is something obviously that the Fed looks at and says, Okay, you know, people are spending money, we’re in good shape. What the Fed is saying, and I don’t know we’re not in such good shape. But yet the consumer numbers continue to come in. Very, pretty good. They weren’t spectacular. This last go round, but they were still pretty good. Yeah. What is the what drives that confidence, where people now are saying, You know what, I’m not going to listen to the Read and say, You know what I need to cut back. But I’m gonna keep spending, the spending has come down a little bit, but people are still spending like they hadn’t been in when we were in other recessions. Yeah.

Dan Ariely 25:14
So So I think that habits take a very long time to cut down. That’s one. And the second is that I feel that we’re still under the COVID influence. I think our psychology right now is the psychology of survivors. You know, it ended up being a much smaller tragedy than we feared, from a health perspective. But, but there’s a sense of, we’ve just gotten over some really tough things. And by the way, it’s my age. No, it was two years of, you know, 56 years. But But I look at my kids. For them, it was two years of a much shorter life, the impact that it had is very significantly different. And as a consequence, it it shaped them to a very large, to a very large degree. So I think we’re, we’re kind of in this survivorship mode that says, let’s celebrate, we don’t know when the next big tragedy would, would come from. And I think the combination of that and in habits are slow to change is, is getting our spending to be at the higher level than you would otherwise predict.

Andrew Brill 26:44
I feel you were the same age. And I have kids as well, who are and where you talked about the decimal point of money and the precise city and measurability, you all you can measure the two years out of the 56, or the the two years out of the 18 years in terms of my daughter. So it’s a it’s a much longer, you know, timeframe and a much larger chunk of her entire life. But you talked about or I’d like to get into, you know, the theory or the behavior of buying stocks now, is there do you think some sort of triumph when you buy a stock or when someone goes and buys a stock? Someone has to sell that stock? They’re like, Oh, you know, they sold it to me, so I’m feeling good about my decision. So is Is there some, when someone decides to buy a stock? Or get into AI stocks, so to speak? What is the thinking behind it? Or is there a thinking behind? Oh, you know, what, I just want, I got what I wanted, I bought the stock that I wanted, and I got it at the price that I wanted.

Dan Ariely 27:49
Yeah. So I don’t think that buying stocks have the same shopping satisfaction is buying a hat or shoes or something like that, you know, there’s a term retail therapy.

Andrew Brill 28:05
I’m aware of it, yes,

Dan Ariely 28:07
we talk therapy is real, because, you know, imagine that I feel that I have little control over my life. Somebody else controls my job and somebody else control my taxes and I got an illness and you know, my life is not really under my control. And all of a sudden, they can show somebody this plastic card. And something changes in the world. This hat that used to be there is now mind this jacket that used to be there is like there’s something about changing the state of the world with shopping. And it’s a real feeling of being in control and changing something, something real in the world. So of course there’s other things right, we hopefully enjoy what we bought, we get to anticipate remember and experience it and so on but but it’s a very important component of, of feeling in control. I don’t think that stocks have the same thing. Because Because when we buy stock, we buy it for the value appreciation, we don’t buy it for the for the thing itself. It’s not like like it has so I don’t think that it has the retail therapy kind of notion. But I do think that it is a test for intellectual quality. You know, a little bit like a game like you know, people play games and their points. And to some degree, if I buy stock and it goes up. I feel I’ve outsmarted some people. It’s the game of life and I’ve done I’ve done well. And by the way, we always tell people look at your posts All you don’t look at a single stock. But it’s very hard. Because at the end of the day, we want to know, how many decisions did we get correctly? And how many decisions?

Andrew Brill 30:10
Talk to me about FOMO. I mean, you know, there’s this whole AI craze. And, you know, my son just bought some AI stock. And you know, he’s been thinking about it, and what drives us. There’s an irrationality right now going on in the market, where we just saw with AI stocks and the valuations that just came out, and these stocks because people are looking at the future, they’re saying, Oh, this is the best I have to get in. And then there’s people like, Oh, my God, I need to get in now. Because I need to be part of this. We discussed a little bit about, you know, the scarcity mindset, but how, where does that come from where like, Oh, my God, you know what I need to get in on this craze.

Dan Ariely 31:00
So sort of, if you look at the increase in the stock market, a lot of them come from very small number of companies. And a part of it is herd behavior. And herd behavior is very human only. It’s very, very much a human trait. Imagine you walk down the street, and you see two restaurants. One has no line of people, one has a long line of people. What do you assume, you assume that that restaurant must be fantastic. Now, he doesn’t have to be that good. Like, you can say, the first person came to the street, there were two empty restaurants, he chose it randomly. The next person came, they saw this one person is zero here, let’s stand here. The third person can do here and zero here. And soon enough, with no information, there was one long line in front of one of them and zero in another one. This is basically how bubbles are created. Right? We don’t look at the information, we look at the number of people who are following something, and we assume that there is knowledge behind it. But it doesn’t have to be. And, and if you think about it a lot more financial reporting, is not reporting about fundamentals. It’s reporting about these prices is increasing. You know, and, and they imply that this is a good idea, right? They imply out everybody’s doing it. Also, also, in general, we have this instinct, that with what is called social proof. We see what other people are doing. And we think that’s the right thing to do. And sometimes, it’s a reasonable strategy. But one of the easiest things to create in the lab is to create bubbles, on the increase and on decrease. We are just hurting animals. We look at what other people do. We assume that what other people doing is the right thing. Like, think about AI sounds amazing. What is scary, but amazing, you’re scary, but amazing. Some of the images, some of the videos some of the things certainly occupying a lot of our mindset, a lot of the news a lot of the media we think about it, we worry about it and so on. So now that it’s it’s very popular news about it, push things up. And and we follow the news. And we say you know, what are people talking about? For the AI only this more coverage, more coverage gets more interest, more coverage, and so on. So there’s certainly a bubble of information and in carrying an interest and investing with it, by the way, the same thing on the downside. When downside starts, people also report about it more I mean, it has the same, the same kind of cycles. No, no some some bubbles are justified. In ay ay, ay think is a real revolution. But but the reality is a model that just relies on the fact that other people are doing it and therefore it’s a good idea is not the right model. We should try to even to ourselves, create some kind of notion of what are the what are the fundamentals that we care about and and use that as a as a gauge of what’s Good bye and what’s too expensive.

Andrew Brill 35:02
So basically, don’t follow the crowd, do your homework,

Dan Ariely 35:06
I would say follow the crowd to figure out what you should do homework about. But of course, you know, some of those things are self fulfilling prophecies. If the crowd is coming in, you buy the right time your and other people follow. You have a good chance to get something. But yes, I think long term strategy following the crowd is not the right approach.

Andrew Brill 35:37
Wanted to ask you about housing a little bit and mortgages and the thinking, you know, right now, because interest rates are higher, the Feds kept them higher, mortgage rates are higher, home buying is less. But now if we look to the past mortgage rates at one point were 1314 15%. So it looks like buying a house now is cheaper. But five, six years ago, interest rates are two and a half 3%. So behaviorally, how can we convince ourselves okay, you know what, I need a house, I’d like a house, I can buy today. And I don’t have to wait, because rates could go up, rates could go down? How do I find it within myself? Or behaviorally? How do I say okay, you know, I can be happy here.

Dan Ariely 36:30
Yep. So, so first of all, this goes back to the notion of relativity is 5%, higher low, depending if it went down from 13 and came up from two, you know, you’re it’s fine. There’s a there’s a beautiful paper asking the question of when people move to Pittsburgh, do house or houses expensive or not, depending of where you moved from. If you moved from New York, it looks really cheap. If you move from Texas, things look very expensive. And in this paper, they show that the people who moved from expensive places, let’s call the New York, buy houses the two big and the people move from Texas by hazard to small. Now, if they rent for a year, they adjust. But if they just come fresh, they still remember the numbers. So somebody that’s their current house is in the 3% interest rate. And they’re thinking about upgrading to 5%. That feels to them like daytime robbery. Not because it’s daytime robbery, but because they have a mortgage on 3%. And it’s very hard to do that. So so we are relative creatures, this relativity has a real impact. Now the question is how do we get over this relativity? And the right approach is to compare it to another option. So I’m not comparing 5%. Now to 3%. That used to be, first of all, why would you want to compare it to something that doesn’t exist anymore? But you want to compare it to another option, which is to rent it? So the question is not now that interest rates are 5%, should I buy or not? The question is, how good is decision to buy compared to rent right now? mortgages have gone up, rent has gone up? How do I calculate it? And then when we think about housing, there’s another component which is the joy of living in that place. You know, yes, housing is a financial investment. But it’s also a quality of life investment, unlike stocks, you know, stocks, if I own stock a stock B doesn’t change the quality of my life. The House does. Yeah, and and I think that people should should look at houses is a mix. As a mixed purchasing, yes, I want the value of this house to go up. But I also want to wake up and feel joy of living. So imagine you’re a family and every year you spend $10,000, on vacation. Could it be that you would be better off spending 5000 on the vacation and 5000 more and mortgage because your joy of living in the house would be would be higher. So so the but but when it comes to housing, I think often people think too much about the investments and not about them. Not enough about the quality of life. But but it’s a mix. It’s a mix of We should think about it as a mix.

Andrew Brill 40:01
So there’s a there’s an opportunity cost, behavioral opportunity cost to buying that house, or doing something else with that money. That’s right. And

Dan Ariely 40:12
you know, in these days, many of us spend more time at home. Some, some work from home, or spouses work from home or kids spend more time at home. So this question is becoming even more so a question of quality of life.

Andrew Brill 40:34
One last question, then do you see any behavioral issues due to the economy that you’ve, you’ve noticed that have popped up?

Dan Ariely 40:45
I think a lot, you know, as we said, we have these tools that are not fit for this modern life. So for example, we see that when we move from cash, to checks, to debit cards, to credit cards to touch the systems, people end up spending more money. You know, as you move to things that have less attention and memory, people don’t remember how much they spend. And they think they haven’t spent anything. So lots of things in that, in that regard. And we see a lot of waste, especially food waste. We see dramatic changes in the ways people take, get food delivered. Since since COVID, a habit that we acquired that is both not very healthy, healthy, and a bit in a bit expensive. But if you ask me, What do you think are kind of interesting trends? Moving forwards? I’ll describe two that I think are interesting. One is usually our financial system is designed for individuals. Yes, you can have a joint checking cover, it’s really a one person checking account with another person joining. And there’s a couple of interesting efforts out there to say, how can we get people to start thinking together about their money? You know, basically, we have two questions we have, how much do we spend now versus spend later? What because savings? And on what do we spend now? Do we buy a new car? Or do we buy phones? And and there are cases in which making decisions together as a family as a couple is better? So can we design a financial system with people together, we make better decisions that they make separate? Plus, can we get people to sightless about about money, you know, and people fight a lot, a lot about the other thing that that I’m personally involved with, and I, because of that I’m a big fan of is, in the last seven years, we have tracked how companies treat their employees, and how the employees feel about the company. And we looked at the resulting stock market return as a consequence of that. And it turns out that there are things that companies do, that doesn’t change much stock market performance. For example, health benefits don’t change much. Retirement benefits don’t change, my salaries don’t change much furniture doesn’t change. But there’s some things that companies do that has a real impact on stock market returns. For example, do employees feel appreciated? Do they have a good relationship with their direct boss? Do they feel aligned with the company? Do they feel psychological safety that they can say what’s on their mind? Do they feel that bureaucracy is low? And we call this human capital? And what we’ve shown is that companies that have high human capital, do perform, do perform better. And, you know, in an ideal world, I want companies to start quantifying human capital. It’s kind of funny when you think about it, but a company who buys a warehouse, it’s an investment, a company that invest in its people, it’s a cost. Then I want I want companies to start being able to invest in their employees and and think Profit is a capital expense, maybe amortize it over a few, a few years. And, and that that I think is quite interesting, because, you know, there are there are a few cases out there where it’s a win win. And I think finding out which companies treat your employees, well investing in them, it’s kind of a win win. It’s better to invest in those companies. And these companies deserve our money. And it’s good for the employees, it’s good for the management, it’s good for the, for the shareholders. So for me, this, this notion of thinking deeply about companies, when you say, oh, Company X or Y, are they going to do better or worse? Should I invest in those companies? I think to the extent that we get deeper into those companies, and we start reasoning about why, why do I think that company X, we do better than y, one of those things, I think we’ll have to be human capital. If you ask the question of what’s driving any company forward. It’s the people. I mean, nobody would say, Oh, if I’ll treat people worse, and you’ll like me less and care less about the company will will do better. Now, of course, of course, it’s the people. So I am hoping that that human capital is going to be kind of one of those important waves. And not just the wave that companies are managing it. But we as people who invest demand that companies take human capital more more serious

Andrew Brill 46:38
We should look at those companies that are that are investing in human capital, as you say, and make it a habit he was you talked about habits, people spending habits and stuff like that. Companies have to make it a habit to treat their employees better.

Dan Ariely 46:51
That’s right. That’s right.

Andrew Brill 46:53
And you know, I really, really appreciate you being here today. And spending time with me, I know that, you know, I know you’re overseas and dealing with stuff there. Where can people find you on social media? I have found you on Twitter, and I love your Twitter, I think you’ve put some great stuff out there. Where can people find you on social media?

Dan Ariely 47:10
So the best place to find me is just on my website, And then I’m on all the standard social, social medias. And these, as you said, are complex times. But, you know, complex times call to all of us to think differently about what it is that we’re doing. Where stress coming from, where’s resilience coming from? What are we not doing? Well, what should we watch will be modified so. So hopefully, we’ll this these tough times, we’ll also hopefully come up with some good, good residue of reflecting better about where we are and hopefully making better decisions.

Andrew Brill 48:00
Absolutely. Your most recent book is misbelief. And you have a blog, too, where can we read your blog.

Dan Ariely 48:06
Also on my website, it is a blog. And there’s also a a podcast with only eight episodes. But as a podcast with eight episodes and resilience where I you know, I will myself was badly injured my scars so I went and spent the day with people with different injuries and try to understand where they drew their resilience and successful so it’s also on the website. Excellent.

Andrew Brill 48:38
Well, that’s a wrap on another discussion here on Wealthion. Thank you for joining us and joining me with Dan if you need help being financially resilient, please head over to Sign up for a free no obligation consultation from one of our vetted registered investment advisors and remember to follow us on social media for the latest news and information to help you invest wisely. Thanks for watching, and until next time, stay informed, stay empowered, and may your investments flourish


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