The Importance of Behavioral Economics in Your Financial Life (Meet Dan Ariely)

The Importance of Behavioral Economics in Your Financial Life (Meet Dan Ariely)

Feb 03, 2021

Today and in the next few weeks I will be sharing with you some highlights of my Behavioral Economics journey – meeting my heroes!

You may ask, “What is the importance of Behavioral Economics in my financial life?” What is Behavioral Economics?

Here’s my simple answer. Behavioral Economics is the fusion of traditional Economics and Psychology. Traditional Economics always assumes that the consumer (that’s you, me, and the rest of humanity) are always acting rationally – maximizing utility and minimizing costs when they make their choices. However, do we? And that is why this relatively new field adds Psychology in order to bring the focus to the actual behavior of the human being.

Come to think of it, most of the time, we already know what we are supposed to do, but we fail to systematically choose the options that are good for ourselves. And this is not only true for the happy-go-lucky, undisciplined person who lacks will power. It happens to the best persons in the world. And no one is exempt from making irrational decisions, even Behavioral Economists for that matter! 🙂

My journey in Behavioral Economics started a decade ago when I read the book Predictably Irrational by rock star professor of Duke University Dan Ariely.

You know how sometimes when you read a really good book, and you end up writing to the author? That’s what happened to me.

But before that, I looked him up and found his Ted Talks watched over a million times. I also researched more on the subject matter. Then I got in touch with him. It was a thrill to receive his reply almost immediately and it was not a written reply, it was an audio reply! So there was a bonus of actually hearing his voice talking to me.

Dan explained that writing is a difficult task for him because he is a burn victim. The fire accident happened while he was still in school. He made the most out of this misfortune because spending days in the hospital, observing his nurses and his surroundings allowed him to think about human behavior more deeply; consequently, leading him to become one of the most sought after Behavioral Economists. I invited him to come to the Philippines and he was actually open to a December 2012 visit, but due to time constraints on my end to pull it off together in a crazy December schedule in the Philippines, I offered a 2013 alternative. I got an institution to help me cover the costs.

Unfortunately, he became busier and busier. He was writing more New York Times bestsellers (he now has five and counting!), teaching, speaking, and other engagements.

We kept our online communications. My son even managed to get a video message from him for my 50th birthday! This was a treat to me. Imagine being greeted by one of your favorite authors.

In 2016, we finally met in his campus at Duke University in Durham, North Carolina. My husband and I attended his workshop on Behavioral Economics. We also had long conversations about the field, especially on the latest initiatives being done in the realm of finance.

Dan’s humor is very instrumental in getting me hooked on Behavioral Economics. That is why when I was thinking of what “pasalubong” to bring him, my youngest son Anton suggested we give him a “barrel” man (that naughty souvenir from Baguio). He appreciated the humor and also gave my son a gift – an apron with a naughty twist! In this interview with Dan, you can see his humor and the reason why he is the favorite Behavioral Economist of a lot of people. Watch this and immediately learn a few behavioral tips that you can readily apply in your FQ  journey.

If you are interested to understand more deeply the importance of Behavioral Economics in your FQ journey in the Philippine setting, I invite you to get your copy of my latest book – the second installment of the FQ Trilogy entitled Why Financial Literacy Alone Does Not Work (a crash course in Behavioral Economics). This is a two-in-one book and the flipside title is The Psychology of Money. See Announcement section below for more details.

Cheers to High FQ!

ANNOUNCEMENTS

1. Be among the first to read FQ Book 2 before its launch! This is a product of my years of studying, writing, rewriting, some more writing and rewriting. To get your copy click https://fqmom.com/bookstore/

2. To know more about FQ Book 2, watch this short video .

3. My sons Martin and I will be holding the first of a series of FQ Workshops for a major corporation who wants to enhance their manpower wellbeing through financial coaching. If you’re interested to have FQ Workshop with your company, family, civic or other kind of group, please contact us at FQTeam@FQMom.com

How good are you with money? Do you want to know your FQ Score? Take the FQ Test and map out your 2021 FQ Plan. Scan the QR code or click the link https://fqmom.com/dev-fqtest/app/#/questionnaire

Attributions: Dan Ariely photos from Israel Times and the author’s photo album.