5 Ways People Are Dumb With Money
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- Опубликовано: 23 окт 2018
- Not only do we as humans make financial mistakes, our mistakes are predictable! Here's the story of how we learned that we can predict our mistakes and 5 of them you can avoid.
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Two Cents was created by Katie Graham, Andrew Matthews, Philip Olson CFP® and Julia Lorenz-Olson and is brought to you by PBS Digital Studios. We love dropping some knowledge on all things personal finance and helping you make better money decisions.
Two Cents is hosted by Philip Olson, CFP® and Julia Lorenz-Olson
Directors: Katie Graham & Andrew Matthews
Written by: Andrew Matthews & Julia Lorenz-Olson
Produced by: Katie Graham & Amanda Fox
Images by: Shutterstock
Music by: APM
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If you want to hear more examples of “dumb stuff people do,” check out Richard Thaler’s Misbehaving: The Making of Behavioral Economics.
-"Mom, I want to watch Ryan Gosling in the big short"
-"We have Ryan Gosling and economics at home"
He looks like Ryan Gosling with a fake 'stash😜
@@TheFreeLanguageProject so from The Nice Guys, lol.
stop 💀
LOL
Wrong. He’s the air delivery guy from the Lorax
The example of finishing a meal you dislike it not a sunk cost. Finishing the meal, even if you dislike it, means you won’t have to buy something else to eat to compensate.
Depends on if your utils matter. A Whopper gives me vastly more utils than porridge. Lol.
AmyX it doesn’t because it will lead to more health problems than porridge.
If a nasty meal you already bought is worth $1 to you and a new tasty meal would cost $5, then it is only the value of that new meal that matters. If the new meal would be worth $8 to you, then you would come out $2 ahead by throwing the old meal away and buying the new one.
Timothy Schmidt but you’d come out even further ahead by eating the $1 meal and saving the $5 for the following day. Otherwise you could argue that someone buying a Lamborghini at 50% off is ahead (in terms of financial savings) of someone buying a Corolla at 20% off. Which is ridiculous. One costs far more than the other, even after discounts.
AmyX what are “utils”?
1:23 Endowment effect (A product whether you are looking to purchase or already own is of same value)
2:51 Sunk Cost Fallacy (Needn't get your money's worth of something that you don't need or enjoy just because you paid for it, the money is already lost and isn't coming back)
4:08 Transaction Utility (just because it's a good deal doesn't mean you need a product, all that matters is what it's worth to you)
5:31 Mental Accounting (fun money = free money = expected money = serious money)
7:00 Conclusion (Knowing the mental shortcuts used by our mind, it's less likely to rely on them)
7:21 Book Suggestion (To know more about behavioral economics)
❤️
Thank you!!
So, here's that guy we all looking for...
The endowment effect isn't all that irrational. It's just hypocritical. We expect others to shell out the cash because it benefits us.
Hey just one question, doesn't it say in the title that there are 5 ways. But they explain only 4 in the video. Though I loved all of them I was wondering if the title is inaccurate?
It's sad that there isn't a Nobel prize for psychology. Behavioral economics really is psychology, much more than economy.
not a real science and neither is economics hence why the nobel prize for economics doesnt really exist. its called "The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel" which was made almost 70 years after the nobel prize was made
@@kimjong-un8543get off your high horse with "econ is not a real science", social sciences are incredibly important. Physical sciences are not the end all be all, and Nobel categories come from history, not validity or importance. Of course an ancient award system founded by the guy who invented TNT wouldn't have much emphasis on social sciences, which were not quite as nuanced or understood at the time. Today physical and social sciences are enmeshed and feed into one another more than ever. Ex. "How should we design hospitals to improve patient mental well-being and treatment outcomes?" Could combine medicine, psychology, architecture, interior design, data analytics, horticulture / landscaping, etc.
@@kimjong-un8543 as any psychologist knows all psychology is biology
@@raebaconowo9910not really, the science is very finicky and a lot of studies are not repeatable
@@kimjong-un8543 Call me weird, but I didn't think the transaction utility was a fallacy. Maybe you're only willing to save $5 for walking the distance a certain percentage of the time, and the base price is used by our head to titrate how often we're willing to do it.
Whoa, whoa, whoa. A pack of Pokemon cards you forgot to open?? That's the mistake right there.
😂
A mistake worth 3k dollars
Nope, an unopened first edition pack is worth more than that charizard.
a sealed card pack is worth more than a first edition Charizard, so by opening it you have decreased the value of it
+wolfpackflt670 I think you misunderstand my comment. I don't mean to say that not opening the pack now is a foolish decision. The point is, what kind of kid FORGETS to open a pack a Pokemon cards!? That's the first thing you do when you get home, if you had the patience to wait that long.
I once bought a scratchcard to pass the time while waiting for my laundry to finish at the laundry mat. I won 5$, which paid for the lottery and the laundry. That made me feel like the boss!
Wow that must've been in the 80s or something.
@@daliacapellan why do you think so?
John Lester ya he looks like he could have been alive then...
The little things that matter
True story I was passing thru Lake City Florida after a conference and bought a $5 scratcher out of bordom and won $500. It took me finding a Pubilx be able to redeem it for cash.
I love your personalities. Financial talk is usually pretty boring but you guys make this very accessible.
Ive always been ‘good with money’ and never really thought about why, but watching this I realise that I generally avoid mental accounting, if I get given £100 I treat it the same as if Id worked a full day for it
Are you saying you don't make mistakes with money?
@@KazzoKiller3890 not at all haha the other 4 mistakes in the video I recognised I do but its interesting that being able to not make just that 1 mistake of mental accounting can make such a big difference over time
Cringe
Yeah.
I don't understand _not_ treating all money I own as money. I can budget for certain things, but if I get surprise extra money, it goes into the same things I need in life.
The extra might enable to me to make purchases I planned anyway, but earlier, or for a higher quality thing that I would otherwise not be able to get, but is absolutely worth it to me.
99% of what I buy I use, and often very extensively (over 5k hours on my ANC headphones for the past 1.5 years).
A bargain is something you don't need at a price you can't refuse
I’m very confused with the wording of that sentence
@@kevChess how so?…
High level idiocy: spending on depreciating assets
Medium level idiocy: saving a depreciating asset (money) and calling it "net worth"
Medium level intelligence: spending on appreciating assets to the point your liquidity is nearly all used up
High level intelligence: multiplying a depreciating asset (money) at 15% - 1500% (depends on your networth and trading/investing style) and using proceeds to buy appreciating assets as a % of total networth, and having some ammo, armor, guns and defenses (appreciating assets) on the side to defend all of it.
@@manictiger Correct me if I am wrong (not being sarcastic). If I spend my money on a car (depreciating asset) is that decision idiotic. A lot of people need cars, I can barely get any groceries without one and considering I have lived without a car in the US for close to 3 years. Its an absolute chore not having one. I understand not buying a 2021 Mercedes Gwhatever but a nice reliable Corolla sounds like a good idea.
@@karoosogba8900
I'd consider a house a more important necessity than a car. I actually spent quite a few years just cycling and using buses, while I got my first million. Then I got my first house. Even then, it was near a hardware store. Only when I got my second property, did I get a car.
My sister-in-law talked a traffic warden out of giving her a ticket (by playing 'silly me' and flirting with him) and decided she 'saved' € 63. She used that money to buy shoes.
So, your sister-in-law got new shows from flirting with a traffic warden...
My wife used her big breast implants and flirting to get out of a ticket. She had a dress on and pulled it down to show a lot of cleavage and the top outline of her bra.
She streamed it to me. It was hilarious 😂🤣🤣. He could hardly focus and gave her a verbal warning after she asked for his number 🤣🤣🤣. She threw it away after he left. She told me that these milk cannons are worth every penny lol
@@michaelh5055 Lol, I'm sure that you are really proud of your wife's skills. 😂
women moment
she should have used it to pay bills or put in her 401k.
2:32 Endowment effect
2:50 Sunk cost fallacy
4:08 Transaction utility
5:32 Mental accounting
did i see this comment b4
What's the 5th one?
2:19 these scenarios are entirely different if your bank account isn't infinite though. The marginal utility of money goes down as you have more, so there's a point where it makes sense to keep an object worth 3k, but not to buy one.
Yeah that example was pretty weak
plus, by saving it in a frame in mint condition for another 10 years, it will likely be worth even more when you *do* sell it
@darkfuji You do have a point; however, I think that the overall point is that given the windfall is large enough compared to current assets, then selling it becomes the better option.
Replace the Pokemon card with a giant deposit of oil shale in your backyard. Although you technically own the very valuable shale, you have no way to extract the value directly from it, kind of like putting a Pokémon card on display rather than playing with it. Now you have a choice: own rights to a “valuable” shale deposit for bragging rights, or sell the rights to someone else who values it similarly. You’d probably overcome the endowment effect and sell the shale and buy a nicer home somewhere else (Or maybe you’ll try your hand at being an oil magnate. Good luck with that.)
Similarly, if you had no shale but were to come across a valuable oil shale deposit that someone else was selling, you probably wouldn’t buy for the same reason as before: it doesn’t hold enough value for you apart from bragging rights… unless it only cost a pittance to you, as you’ve pointed out.
The only real effect between the Pokemon and the oil shale scenarios is the scale of the windfall. Consequently, one could probably measure the threshold where the windfall : asset ratio overcomes the endowment effect.
Either way, I think it's a good idea to ask yourself if you would've bought it. Great way to realize if it's actually worth it or not.
In Dobelli's "The art of thinking clearly" he uses this example (paraphrasing): You buy a brand new BMW for $90,000. You drive the car for the first day and on the second you stop to buy petrol. A man sees your BMW and offers you $115,000 for the car. You are not inclined naturally to sell the car because our minds value the things we already own higher than things we do not. "You" could have made an immediate $25,000 profit on a depreciating asset but did not in this example because of the endowment effect.
This should be part of a Highschool economics class. They'll actually learn something.
Kittzy only high school seniors will need that class. Anyone younger wont care because they are under their parents’ money.
@@OriginalCovfefe ...If they can't figure out their parents can't do their shopping in a few years, they are probably terrible students anyways. They are going to waste so many thousands of dollars in their lifetime. Easily way over 100,000 dollars. People are so naive. Even basic tricks like eye level lesser value grocery products, still works. There are literally hundreds of other tactics used by stores, service companies, manufacturers and more providers. Yes...hundreds of tactics.
@@jusayenso8186 I went to walmart the other day, and I instinctively only look at the bottom shelves. Anything at eye level is just tuned out by my brain, because I've learned that I'm never gonna buy that overpriced fancy brand stuff anyway.
@@adeelrehman7692 ...It's nice to hear from someone who actually reads comments! Most actually don't. Yes, name brands are often a total waste of money. It's interesting you mentioned walmart. Hmmmm....oh ya!...Isn't that the store that came out of nowhere...and quickly rose to such popularity to become the largest dollar volume retailer ......in the country! Hahahaha...what does this tell you about so many shoppers? What do they really know about doing this basic problem solving task? What do they really know about brand name advertising on all those thousands of tv commercials? What do they know about blind taste tests and double blind taste tests? I can't possibly list way more details. Yes...the video is right about how people are dumb with money. Most of these people will never learn exactly how many excess dollars they are handing over to businesses. Don't even get me started on overcharging tricks! Freedom of speech has limitations on social media.
no this should not be part of a highschool economics class as it is full with bad advice
“If it’s on sale but you don’t need it, it’s still expensive.”
Edit: Wow! I just realized how many likes this comment got! Thanks! And I hope most of you didn’t spend too much on things you don’t need last Black Friday.
If you bought something you didn't need worth $100 on sale for $50, you didn't SAVE $50, you SPENT $50.
@@TPixelAdventures aaand if you're smart you can sell it later for some profit
@@surajsharma1992 and that is one of the reasons for the 2008 house market bubble. People bought houses they could not afford, later they expected to sell those houses at a higher price, but there was no market to sell those houses. In recent history, look at the bitcoin bubble.
@@andersonandrighi4539 then sell it later when it's of more value, just like the pokemon card in the video and since we are talking about discounted items, you already bought it for cheap and even if you don't need it someone will definitely pay you the same price or more, of course all this will depends on the item.
@@surajsharma1992 you're not considering opportunity cost
Investments cost money too, since the time while you have that money tied up in something means you cant spend that money on something else. Also not everything appreciates in value like the charizard card.
I think this is part of the issue. IMO, I think it's more so what I call, the microtransactions that add up over time that get people in trouble. For example, I once had a coworker who every day went to the store in the morning to buy water and/or coffee, something to eat etc. Costing anywhere from $5-$15 just in the morning. That's just talking about his morning routine. Times that by 5-6 days a week. All that guy did was complain about never having any money. Yet, when I explained the reasoning to him it didn't register in his head what I was saying. He justified the purchases as "it's only like $5." (let's go halfway down the middle and say $10/morning. That's almost $3000 a year just for water/coffee/snack lol) He only sees the instant charge not thinking instead of going to the grocery store to purchase food and filling up a reusable water bottle with something that's FREE instead of paying for it was the root cause of his money problems. Use that in any of person's budget. Just look at your local Starbucks in the morning, etc. All these people spending thousands a year on things you can easily do at home by waking up 30 mins earlier, etc. It's these compounding charges that end up adding up over time and causing people not to have money. It not only compounds to food/routine, it all adds up with charges everywhere else, from Amazon, cell phone charges, etc. It pushes that mentality, of it,'s okay it's only this much more. Exactly what these companies want you to think. Just as saving works, saving a bit here and a bit there routinely for an extended time compounds your savings. The same to does spending a bit here and a bit there. It all adds up over time. Money management is only taught in college to people who plan to go into careers in finance. Hmmm...why do you think that is?
By waking up 30 mins earlier. What if I told you I’ll take 1260 dollars, give you a coffee and you get to wake up later every work day? I would do it. It is all about what is worth it or not.
@@magneto1992 Well you can't just slap that like a label maker and it works for everyone. Life isn't this way. This is directed towards people who struggle living paycheck to paycheck. There are even people making over 100k who are living paycheck to paycheck. The issues are, if you don't have money management skills, it doesn't matter how much you make. You will always struggle with money.
@@magneto1992exactly saving time is better than saving money. Time = money
Your problem is that you think these people are wasting money, but they are buying time, making your own breakfast costs up to an hour per day, or even more, considering you have to go to the supermarket, cook the breakfast, etc. buying time with money aint wrong, its just a personal descision, that many studies suggest makes you happier
@@marcogarcia7944 boy this is flying right over your head. The video is about being dumb with money and being broke. Most people who are living paycheck to paycheck and are struggling are those who are doing exactly what I said. 🤦🏻♂️ I highly doubt they are happier when they are broke and are barely making it every month praying no emergency comes up.
People value different things. It is useful to try to construct a model for why apparently disparate (yet predictable) actions are, in fact, rational (given a set of values.) The rare card the person finds cleaning the garage has a connection to his past that he may value. The one on offer for sale has no such connection.
The problem in the "sunk cost fallacy" is that people are assigning value to not admitting they made a mistake. But that is saying their desires are irrational, not how they go about achieving them.
I’d walk 10 minute for those headphones. Not only I get it, I burn calories too.
Vintage tears If you’d walk 10 minutes for those headphones you should also walk 10 minutes for the laptop if you needed one
{StrYKePlaysMC / johnpick} Hypixel PvP If I had the money to buy a laptop.
But how about if you are skinny?
@@da14a49 Even if you're skinny, walking is still good cardio. In either case, walking 10 minutes to save $5 is worth it to me (assuming I needed either the laptop or the headphones)!
Stonks 📈
Did not expect this level of quality writing. The staff really understand script writing, epic!
Snowman what makes good quality writing?
I don't think I should take the opinion of good quality writing from someone who unironically uses the word epic.
@@markcarls1896 weird flex but Ok
@@ViratKohli-jj3wj Jesus, and then he uses the "weird flex" thing. You're right, but do yourself a favor and stop typing
The first one feels a bit off the mark, now that I'm looking back at it.
The situation isn't really a fair comparison. The decision is constrained by the implication that there are limited resources to spend, being compared to a situation were those limited resources aren't a factor in the decision.
Finding a card doesn't take any skin off your nose financially, where as buying it does. If you're financially stable, then having the card doesn't affect your basic needs and only what your desires are. If your desires include having a $3000 card, then it'd be the same as finding $3000 at the store where the card's being sold.
Also, finding the card and selling it is a potential gain of 3000, it is likely that nobody will be willing to buy it. At the same time, by not selling it, you are not losing 3000, but rather having 3000 in a different form.
I suppose that even with all these other factors taken out, or compensated for, the effect would still exist. But you'll need to read the scientific paper (or the book) instead of a RUclips summary.
"Wise as Penny" said no Sheldon ever 😂
😂😂
I think my biggest one is probably mental accounting. The way it was explained made perfect sense. If a friend or family member gives me money I’m more likely to go and spend it on something I want even though if I had made that extra money on my own I would probably not think about spending it.
It’s really interesting how psychology plays into economics
"Imagine a person who always makes the right financial decisions. Let's call her PENNY."
* laughs in Sheldon Cooper *
Get out😂😂😂😂
Same here 🤣🤣
😂😂😂😂💀
hahaha!!
I don't get it
Imagine actually having that Charizard back then and sold it for 3k (and making the rational decision) instead of holding it till today. Its Worth at least 50k today...
Exactly, I thought they were saying it would be better to hold onto it and let it's value appreciate
you can make that claim towards ANY investment. You can gain or loose.
You have to take in account the general inflation as well
Their point was that if you would hold onto a $3,000 trading card from your garage to hope it appreciates you should be equally likely to buy a $3,000 trading card to hold it and hope it appreciates.
Lol it is not and never will be worth $50k
I love this channel
Damon!!
How's Ashley?
The Pokemon Card thing actually happened to me (with a different card). I found it in an old box and realised it was worth over $500, but refused to sell it and instead framed it...
Love the honesty.. if you needed the money would you sell it though? Not a death or life situation but lets say, to pay off some debt? I am assuming you don't have over $500 cash to spare...
I found an old Charizard last summer and promptly sold it on ebay.
What card? I have tons of them still but most aren’t selling for anything
Well you can still sell it after some years and unless Pokemon goes out of fashion it will be worth more.
The example given was extremely poor. If you don't need the cash, keep it. It should only increase in value with time. Also the sentimental value because it is yours can be more valuable than $500. Also $500 really is not much money... if your current situation means $500 has alot of value then forget what I said, sell immediately and invest the money into something else that will give you faster returns
You can almost hear the business owners across the planet screaming "Noooo! Don't tell everyone ffs!"
Facts bro.❤️
Dosent matters humans are humans
@@pinkynandi8894 I thought the sound was cats fighting outside 😆
Dont worry most people still wont listen 🤣🤣
Adapt and improve that's whathumans do. Sharks do it even better
The whole video feels like a personal attack. I'm everything they used as a bad example lmao!
True
And I am confused cause I'm a penny
Sounds like a terrible life.
yes
I LOVE to cook so when this pandemic hit, it really didn't phase me too much as far as eating out was concerned 😂 One things for sure, we are saving so much money now since we are not eating out, and now that I'm stuck at home it gave me the oppertunity to start my cooking channel, something I had always wanted to do 🤗 needless to say I am enjoying every minute of it 😁
Thanks for comments dont forget to hit the subscription button
+①④①②⑥⑨⑤⑥③④⑨......
=whatsap//++...............
When you learn more from one RUclips video than 4 years of high school.
You either went to a shitty school or you didn't take the right classes.
@@cronchcrunch true
Facts
CR0W That crap still exists?
🏫
its called public school lmao
You know what? After watching this video I cancelled my Amazon Prime membership...
I know it easier said then done, but finding other amazon addict shoppers to share cost with you would be great. I share with my sister and absolutely enjoy prime but would not pay $100 for it but sure would pay over $20-30 if i was a heavy Amazon buyer, the shipping delivery is unbelievable, I often order on Late Saturday and get my stuff by Monday!!
Not to mention the movies, music, and other perks you get!
Good on you!
@@valoxo9467 Well being a heavy Amazon buyer probably means you spend too much money on stuff you dont need.
I prefer amazon than driving to stores and wasting time on long lines. Also I only buy what I need from amazon. Went I go shopping I always over spend Plus amazon is sometimes cheaper than stores.
The first one in particular is a terrible example (though they all have gaping flaws) - not gaining $3000 is not the same as refusing to lose $3000. It only really makes sense as an example (barely) if you have that much easily disposable money in the first place- in which case it renders the whole scenario moot.
Also... OPENING a vintage original Pokémon booster pack may have been the first mistake (honestly, that's the direction I thought the example was going to go) since, a sealed original booster will likely hold more scarcity value (and growing, as more are opened by others) than any card you can draw from it- only something truly special like the Charizard example might make opening it worth it, so right from the beginning, doing so was a MASSIVE gamble, from a purely financial perspective, if resale was always an intention.
I'd argue opening the pack was like playing lottery. "Huh, a Pokemon pack, it probably is not very valuable, might as well open it for fun". But yeah, the example is a bit flawed. You may need to spend some considerable effort to sell the card, you may possibly hold on to it to let its price increase, etc; it would make more sense if it was something that can be directly converted into money.
Seems like you nitpicked the example and missed the entire point.
The point here is that rationally speaking "worth owning" is "worth buying" assuming available cash. A rare card could be viewed as a valuable asset and worth holding for its investment value but then in that case why isn't it worth purchasing one? Yes, there could be transaction costs involved in buying and selling but the example still works if you assume transaction costs are zero.
It isn't so unreasonable to keep a Charizard card you dug up even through you wouldn't buy one. Having pulled the card from some old pack you found makes for a better story. It's just a piece of cardboard anyway, so all that matters is the novelty, and it's more novel in the first case.
Honestly, I think sentimental value is a fair justification in many situations like this.
"first edition Charizard"
Proceeds to show a non-first edition Charizard.
*TRIGGERED*
This should be taught in school, there should be a Penny-class or something!
Sadly school is not made for actual learning rip
if it was taught in class, our students would actually be smart. I'm sure nobody wants that!
there are classes about behavioral economics so there is, idk why people always hate on school its actually pretty good if you put in the effort
So You want to be in school even longer?
I plan on showing these to my Econ students in the coming weeks.
Everyone needs an extra cash flow apart from a daily job, anything that can help get a little extra dough each month is important to beat the tide. For a comfortable future in mind, you should mainly be focused in channeling funds into investments that yield returns without constant intervention.
Absolutely true, having a great savings and investing makes life goal’s easier, I make most stock purchases when the market is in a confirmed uptrend or cheap cost, although most stocks I bought months ago which showed strong signs of doing well has greatly underperformed. It’s okay for me on the long run, however it’s a good time to add to existing holdings at follow -on opportunities.
Best financial steps buddy, you could also take advantage of some growth stocks at the moment, every crypto trader is currently bagging some dips, but you gotta be careful because not all coin recovers from a dip. Luckily for me my trader and coach Frost Hilda has been using every opportunity to ensure I benefit from each turn the market takes.
I’m an Uber driver and I understand what you mean by financial planning, also being able to generate profits from those channels right now isn't a walk in the park, how are you managing the current market trends?
Hey Rahul I'm exceptionally well positioned for what's to come because my portfolio is solid enough to withstand and outperform irrespective of the market trends, through this system I have managed my financial resources and travels to most countries with family.
Nice Zachary I did my look online and got he’s profile socials, found he’s a trading coach and well established in the field. Speaking with him really change my view on financial diversity.
I love how a kid was included 'in the stuff they don't need"
This is so useful! These types of videos are like half of my education every day and I'm so thankful to all these channels and PBS digital studios
Thanks so much Laizra. Glad you found us! - Philip 👨🏻
WORD YO
*You know what.....my asian parents taught me how to be a good penny.* When the gas prices went down to 2 dollars- all I can think of is stockpile and sell later....the thought of buying higher grade gas to spend the same amount made me throw up.
Also.....don't just cancel Amazon prime bc the video told you so...the service of having things shipped to you within 2 days is worth it in many cases. If you are poor and barely order anything anyways- then cancel...)
My car makes slightly more power and gets slightly better mileage if I put premium in it. Gas prices dropping have NEVER made me even remotely consider actually getting premium. The power difference can't be felt (4 HP) and mileage difference is 1.5-2% at best. Not worth it!
Gas is a perishable though, and in most places it is ilegal to sell it second hand (because of safety hazards)
@@MiloTheFirst1 When there is money and a strong will to do something, the rules are more likely to bend.
A real Penny would consider the costs of storing large amounts of a flammable material. Suppose you save a bit on gas, and something happens and the house goes up in flames... asians are penny wise and pound foolish sometimes.
The first example is actually not irrational at all because keeping the card changes nothing in your current financial situation whereas purchasing it from the comic book store implies a 3000$ loss (or investment, depending on how you see it). So, for instance, if you make 50 000$/year and you've planned a budget where your income is barely sufficient to cover all of your expenses, then your expenses would still be covered if you refused to sell the card in the first scenario. However, if you decided to purchase the card, as in the second scenario, you would need to take out a loan to make ends meet.
Think about what would happen if I bought the Pokemon card. I'm down 3,000 dollars, but I'm up one rare Pokemon card. I assign the experience of owning the card a value greater than 3,000 dollars--otherwise I wouldn't have bought it. I have less cash than I did before, but I am actually slightly richer; unless I inaccurately judged the worth of the card.
@@jamesforrest9837 Right, but you've lost the actual cash, so if you needed that cash for something that you may only purchase with cash, then the experience of owning the card wouldn't help you regardless of the value that you assign to it.
Say you have some extra cash after meeting your needs. Would the decision to not buy the pokemon card change? 🤔
This is probably one of the most beneficial money education videos I've watched on RUclips. If only school taught this stuff
Thanks for comments dont forget to hit the subscription button
+①④①②⑥⑨⑤⑥③④⑨......
=whatsap//++...............
Starbucks barista: “Do you want to upgrade your drink to Venti? It’s only $1.”
When in fact it’s only extra milk that cost you less than 20 cents.
Starbucks is image marketing.
Getting Starbucks itself is a massive waste of money
Sounds like upgrading an Apple product with more disc space.
Starbucks? More like "Bye Bucks 👋". Only idiots drink at Starbucks in India 😅. Way cheaper and efficient to order good quality coffee beans online and make a good cuppa at home. 👍My bro and I calculated that even Nescafe was much costlier than premium ground coffee powder online. We took the leap and now we get better coffee at lower price 😆
@@angelas5099 Did the same here. Worked out that a nice bean to cup machine would pay for itself over 2 years, compared to instant coffee!
2:24 these are different situations, and I make the argument that it isn’t irrational. Let me explain…
If I found this card, and it was a card I always wanted as a kid. It has plenty if perceived value. I don’t ‘lose’ money by not selling the card. I would get a sense of satisfaction to say hey I own this and only a few other people can say the same. Meanwhile this card is like an investment and will only grow in value for actual collectors who want it.
If I buy that card off the shelf of a comic book store that is almost 6months saving. A painful payment for something that I used to be interested in doing. If something came up I could re sell that card to help pay for things, but markets for collectors are a bit tricky and I may not find the right buyer right away. Instead of being an investment this card could be a deficit. It just wouldn’t be practical to buy it economically and the dissatisfaction of buying it may be worse than the satisfaction of owning it.
Exactly! Then if you start looking at everything you own just for it's financial value, may as well sell off your bed, furniture, everything not completely essential. You could sleep on the floor, but that $1000 bed you're lying on could be an extra $1000 in your bank.
Or like if I was given an expensive gift, I have the item and sure I could sell it and make some money, but I want the item and keeping it doesn't cost me anything, unlike buying a new one which would.
3:00 Well jokes on you I ve never pay for movies. :D
Me too
Hmm I've been experiencing the opposite of the endowment effect. If I want to buy something, I obsess over it and it's extremely valuable to me. Then, when I do buy it, poof, its value decreases instantly just because of the fact that I now have it and it isn't worth as much as it was before.
That's very interesting, because, for some reason, you are overvaluing something until you have it. So, the question becomes, what is it that you value about it when you don't have it? And what is lost when you do? I'm wondering how many external factors contribute to that feeling. Like, how something is marketed, if your friends or other people around you have it, etc.
@logoslive Yeah exactly. I guess it's mostly tech-related. I really want an external HDD and a high-end computer rig but when I do get them, I know they won't be as valuable to me as they are now. :D
@@feynstein1004 Same, I'd constantly obsess about a new laptop and dream about all the cool things I could do with it. But ultimately, i'll just end up treating it like shit, like all my other laptops.
@@64account33 yup i have a 900€ notebook thin, touchscreen, ssd and all that. but i dont care about it now and dont really use it. i just plug it into my tv sometimes and watch movies
@@1yasin6 That happened to me too.. but I think it gets better as you get older. I don't even have a notebook now.
Lol I hate spending money. It takes me like a week to decide on buying something that is worth like $10.
TheLaziestPersonEver penny pincher....
I completely understand you it took me 2weeks to decide to buy a hat I like once I rationalized hey its hat that will keep me warm then I brought it so I won't feel bad
@@cancel.lgbtq.6892 Dude no joke I have a penny collection at home XD Every time I get change I look at the coins to see if they are valuable at all
TheLaziestPersonEver I never use cash but that would be so cool to have. Like a huge mason jar where I collect all my spare change for a whole year and then cash it in. But I use my debit card for everything so🤷🏾♀️
Yutube SuspendedMyAccount that can be a good thing tbh. Of course some people can go overboard like on the show extreme cheapskates but there’s so many people in our country who overspend and buy more and more stuff they don’t need. If I had to pick one of both extremes I’d rather be a penny pincher than be tens of thousands of dollars in credit card debt that I got from impulse buying and not thinking consciously about my money. Ideally we would al like to be in the middle tho. But being such a penny pincher allows me to distinguish my needs from my wants and then distinguishing my wants even further. I may want those $35 cushionaire lanes but what am I gonna do with a brand new pair of sandals in the middle of November?🤷🏾♀️ taking that amount of time to think about every little purchase let’s u realize that >90% of the time you don’t need it and sometimes don’t even want it. It lets you get read of the impulse buys and think rationally. Which translates to more money in the back account by the end of the month.
I learnt more about Money and finances in this 8 minute video, then my entire economics class. Fascinating...
I hope this is a joke😅
Behavioral Economics in a nutshell: cherry-pick only data that matches your theory -> declare all other data points irrelevant/mistakes -> ignore the fact that there are millions of complex reasons why people make even the most mundane decisions -> collect your Nobel prize (bonus points if you declare the theories of all previous economists outdated).
Would Penny support RUclipsrs on Patreon?
Jonassoe
Lol patreon does present a bit of a free rider problem, so probably not
Depends on the Patreon rewards associated with it. But the real question is, would Penny give to charity?
Jonassoe charitable activity is self interest too. It depends on the utility function of charitable activity and the utility function of wealth, Penny will compare the marginal benefit of both utility functions until she gets the exact same benefit on every dollar she spends or saves. Thats how microeconomics work.
vicente benjamin yañez
That is how micro works, but we need to determine whether penny cares about the social marginal or private marginal costs and benefits.
As an individual, penny might not want to donate to charity because it incurs a private marginal cost and gives only social marginal benefit, rather than benefit to herself as a private individual
tacos mexicanstyle it might certainly be the case, but maybe she gets a private benefit by donating it depends on her utility function. She might feel good about herself by donating or i dont know. But donating money might be a completely rational thing to do, just like buying every item, with the only difference is that donating is a luxury good.
5 ways?
- Endowment effect
- Sunk cost fallacy
- Transaction utility
- Mental accounting
- And?
Exactly, why did I need to scroll that far in comments to see someone noticing this? Thank you Brandon:D
YO ME TOOO! I was taking notes and I was like...
"Theres only 4 🤔🤨"
Reason I was scrolling down the comments
And Fungibility man... pay attention! 😉
@@codesling3421 Mental accounting is the act of not treating money as fungible, so that isn't the fifth "way."
I was given money about 1 year ago, and was thinking about how to use it wisely. I paid down the balance of my mortgage on my principle residence as my first expenditure. I have also been investing in my properties by way of capital improvements, thereby, increasing the value and enjoyment of said properties. I think I am being penny wise!!
You are ahead of the curve. May your financial literacy continue to pay off. And most of all. God blest🙏🏾
My sister was always obsessed with buying things that are on discount, even if it was something she'd never use. I couldn't understand her, but this video explains a lot!
PBS Eons got me here. Glad i'm here
Sarah Haddad Same!
Same
'5 Ways People Are Dumb With Money'
1. Endowment Effect @2:40
2. Sunk Cost Fallacy @3:20
3. Transaction Utility @4:50
4. Mental Accounting @5:50
So, what was the 5th! :P
5. All of the above xD
Wow great thinking
Thanks
fungibility of money? $1 = $1
@@MulroePhoto Fungibility of money is the reason why Mental Accounting is wrong, so not a separate reason.
I think the idea that unexpected money is easier to spend on something "indulgent" might be because money, while fungible, is also part of a budget. There are things that are NOT worth $100 to me, no matter what. And then there are things that are *worth* $100 to me, but they are not necessities and I prioritize other spending, like rent, utilities and groceries. But if I budget well, all the necessities are already covered when I get that unexpected money. So I can then spend it by either saving/investing or treating myself. But it is not directly interchangeable with the rent money, because I already budgeted for that for the foreseeable future. The indulgent stuff can be the logical choice if it is what you would spend a $100 salary increase on as well, which might be the case for some people.
This.
If you earned more from salary, you'd have used the money that way anyway.
The "Penny Hypothesis" is why I've never trusted economists.
Knowing that the field has finally begun to recognize the fact that humans aren't perfectly rational actors gives me hope for the field. I can finally start calling it a science in good conscience!
Wonderful video, and great channel!
1. Endowment Effect
2. Sunk Cost Fallacy
3. Transaction Utility
4. Mental Accounting
5. ???
Did I miss something, where's the fifth?
6. Profit!
There was no 5th...
I plead the fifth on that one.
They pled the fifth.
FIF !
That is really true. My father once thought his credit card useless as he doesn't have much use of it.he went to return the card but came home with another card with higher fees just because of perks.corporate rules
I just want to point out that in the first scenario when you find the card you’ve acquired $3000 of value, or at least the situation is just like it, while purchasing the card you net 0 in value. If I would’ve thought “yeah, I’ll buy that card” if I had $3000 more in my account then the behavior is totally reasonable, not to mention that the selling not only loses fees and such but also requires effort, so while I do think the point is super valuable to get across I don’t think the situations are equivalent.
Words of wisdom I learned from someone “If an item you don’t absolutely NEED is on sale for $500 instead of $1,000 then you didn’t save $500 you lost $500”
It's not so much "need", but "would have bought anyway".
It's only saving money if the purchase was going to happen either way.
"Dumb people power the modern economy" - Old Klingon Proverb
This is pretty true, therefore smart people take advantage and understand how the system works. But why would smart people tell others about this.... then they don't earn money anymore.
@@HermanWillems Because delivering information to dumb people is pretty much futile . While providing uneducated people with valuable information in certain area is a good deed and contribution to a better society, after all you were also the "uneducated" one at certain point.
@@WTFIWFYDB The problem mostly is that alot people are bad with classifying certain information as valuable or garbage. For example, poor people mostly don't learn this very well, therefore are more prone to for example take part in a lottery, or fall for a multi level marketing scam. Rich parents, mostly learned this because you mostly need a constant source of valuable information to be succesfull or to become rich, therefore the kids of these type of people are learned how to filter out information and classify something as garbage or valuable.
@@HermanWillems You can tell all the people. Only the top 10 % has discipline to execute it. It is the same like the recipe for weight loss. It is simple, eat less and excercise. Still, most of the people rather look for expensive diet plans, buy clothes that makes you look slim or complain about fat-shaming on twitter. Most people are truly dumb.
Damn! The 5 dollar discount got me!
This video is awesome 👍🏽👍🏽 good work
Having a digital budget actually helped me overcome mental accounting, because it reduces my money to numbers on a screen that are easier to manipulate. I no longer need money to buy something I need? I put it in to pay for bus rides. sometimes I fall into it, but I try to repurpose the money, such as using money I was meant to buy a pair of shoes to buy a less fancy pair of shoes that I needed anyway and store the extra away.
I’m a contractor, the mental accounting always gets me good when I come off a job with tip money. I never expect it, but it comes often and I instinctively go straight to wanting to buy myself some good takeout that night. Money feels so much more spendable as cash than it does as a direct deposit.
Hey, I want to help traslate this video!
I'm a native spanish speaker, and I really think this videos need to have traslations to all languages!
Anyway, thank you guys!
Awesome video!
Hey, I'm also a native Spanish speaker 😃
We'd love your help! If you can email us a copy of the transcript, we can add it to this episode and any episode you would like to add CC for! You can send it to "twocentspbs@gmail.com". Thanks! -- Philip :)
@@TwoCentsPBS OMG!
Allright, I'll do that!
Thank you for your work!
@@leelya6272 me too 😊
@@gilberthjimenez431 - let me know if you need any help.
The difference between finding and not selling your 1999 first edition Charizard (actually valued in more than $200k) and not buying a new and encased one is not that you don't value the same monetarily. Instead, in the first scenario, you are simply deciding you don't actually need the extra cash and, in the latter, you are deciding you don't have the extra cash to buy one. There's absolutely nothing irrational about it.
I don't think that's a proper example of the Endowment effect.
I’ve seen this video long ago and for some reason RUclips recommended it again. I gladly watched it again! Top notch production and advice priceless!
I literally sat there and saw that it was $5 either way, but immediately said no to walking for the laptop. That blew my mind. Please keep making these videos, they are going to be so helpful as I try to get my life in order money wise.
Patrick Jeffrey I feel like it was the right decision still. Falacy or not. 5 dollars off over $600 is basically nothing. 5 dollars off of 15 dollars like she said was over 33% off. Ur getting a better deal w/ the headphones than u are for the laptop. The $5 difference is more negligible in the case of the laptop where it become debateable weather u wanna waste 10 mins walking or not; whereas in the case of the headphones $5 is more than a third of the whole cost, which is well worth the 10 min walk.
Don't feel bad I wouldn't have walked ten minutes for 5 bucks in either example
Same here. I said hell to the no no, not for 5 bucks. But on the headphones I was like...hmm 5 bucks is a lot. Fk me
Yea but how often do you buy a laptop? Every couple years or so. If you are buying shitty ear buds for $10 you'd have to continuously go to the store and buy new ones, making that $5 saving add up over time.
Why not walk the 10 minutes and make use of the $5 difference? I'm getting a numeric keypad, microfibre cloths, or some other accessory.
I really like the idea you're sharing about the MSRP. I manage at a retail store. The kind where our price tags are all made up. Everything is on sale always. I find myself trying to explain to my high school aged associates that the tag may say $100 but it isnt a deal and I'll challenge them sometimes with "when was the last time you priced these out to know if it's a good deal?" I see it daily with my kids they try to impulse buy because we write whatever silly number we want on the tag and throw up "LIMITED OFFER" and a week later we offer the same exact sale or one very similar.
Clothes at the Nordstroms rack that you think you're getitng a steal on but you're actually getting ripped off. OMG $300 msrp for only $80 Dollars! Meanwhile at Target or Fred Meyers its $29.99
My husband bought a iPhone at Walmart last year on black Friday for $100. Looked at blackfriday deals this year saw Sam phone for $135. BTW he ended up saling that phone a couple months ago for the same price he paid. Coz the guy buying it didn't have change.
In Denmark we got some very strict rules for sales, you always have to put the price lower than the normal sales price and it means the normal sales price have to had been offered over an extended period before you can put a sales price on it and it have to be a lower amount than the lower price it have actually been for sale for over a longer period first. It’s illegal to write a higher msrp price and then put the normal price as a sale so it looks like you get a bargain when you are not. It goes under the false advertising law for that reason it’s scamming people. But luckily now a days you can google most prices but now in the old days
Lmao eb games 😂
Jedidiah Young don't feel bad, People are Cattle, take advantage of them every chance you get.
I just found these videos and they are fantastic. Every video should be shared within the public education system. Taking all of these lessons to heart will pay significant dividends down the road and will enable individuals to achieve financial freedom. I have applied many of these lessons to my own life starting at age 24. I am 32 now and will be retired in the next 2 years.
Thanks for comments dont forget to hit the subscription button
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Best financial advice I’ve ever heard: If you can’t buy it twice, you cant afford it!
I’m not going to walk 10 min down the street to save $10 because the hamburger that I just ate costed me $12; and I need that energy for the rest of the work day! You need to think about the TOTAL cost including TIME. Time also cost money.
jim liu true, but if you invested in a Snickers bar....
Time is way more valuable than money
10 min to save $10 is equivalent to a wage of $60/hour. That's WAY WAY WAY higher than what most people in this country earn, so unless you earn more than that, its worth doing. The number of calories you burn in the process is maybe 100 calories, which is the equivalent of a 50 cent bag of chips. That brings the wage down to $54/hour, still ridiculously high.
You should walk.
Adeel Rehman You’re sort of right, but really it depends more on what you would to with the 10 minutes otherwise. You wouldn’t leave work 10 minutes early to go buy those. In my case I would spend less time watching RUclips videos or TV wich earn me no income at all. So it’s even more of a no brainer to go the distance and save the money.
Adeel Rehman
The video says it's a $5 saving, and for a 10 min walk you'd have to be earning less than median wage to justify it... most people are earning enough to not walk!
2:33 Endowment effect = ‘a bird in the hand is worth two in the bush’?
Actually, if you assume there is some amount of cost associated with getting the bird "in the hand", then it is rational to say that it is worth more than birds "in the bush". However, in the case of just comparing buying something vs. owning something already, then yeah it's the endowment effect.
The effort it takes to sell is far more than buying. It gets taken into consideration exactly as it should. This was left out of the endowment effect.
I dont think the analogy applies
I think this analogy is closer to another concept of behavioral economics: Loss aversion = People are more likely to avoid losses than seeking gains.
@@heeerrresjonny There's also the trouble of trying to catch the birds in the bush. Releasing the one in hand assuming you will catch the other two (which is what the saying teaches) entails high risk and a "cost of doing business" (investment in the catching process). Be it time spent chasing, necessary tools, or wherever. I believe this is the meaning of the saying, metaphorically speaking, and it is spot on. I don't think the endowment effect applies here.
Eliminate debt is the biggest thing you can do. Without having debt (risk) you can take more risks in careers, take trips and remove stress. But it often takes two or three years of very little spending. Lesson learned from experience. I came out of school making nearly 6 figures so I bought a house, a truck and jeep only to get laid off with an industry down turn. Was a straight up bad time lol
I am very guilty of transactional utility esp during Amazon prime day! just unsubscribed from lots of newsletters from shops that always have sales/discounts on! Thank you for this video!
I just stumbled across this channel today, I have already watched several videos.
You guys are extremely informative, the infographics are aesthetically pleasing, and the diversity in talks styles is perfect.
So what I mean is....I really enjoy your stuff.
The scenario of the Pokémon card is a scenario where you immediately sell a potentially appreciating asset. Is always immediately selling every asset you have a good idea? Instead, you could a little research and determine if your $3000 could be even more next year or if you should actually sell.
That's called speculation. See their Bitcoin episode. You can only sell it for more if a bigger sucker comes along to buy it.
And it's just as likely to be worth less as it is more.
That doesn't really change the outcome. If you believe it is an appreciating asset then wouldn't you buy it for $3k and hold onto it, just like you would hold on to it instead of trading it for $3k?
It depends on your financial situation. If you have $300k in the bank, then you can probably do what you want with that card. If you have $3 in the bank, then sell the damn card. And consider all of the things that could happen to that card to destroy the value; unless you live in a perfectly controlled environment, like the special collections room at my university library, just the humidity alone could ruin the card. Spots of fungus, for example. Or a visitor steals it. Any number of things can happen. Therefore, if you don't have big wads of cash already ( in which case, why are you here?), then it's the responsible thing to do to sell the card.
@@edennis8578 if you think like that though you probably won't ever save up that much money.
@@Excalibur2 just look up smpratte, literally worth millions of dollars because of Pokemon cards. Pokemon cards are not in a bubble like bitcoin was, they are more akin to collectible comics, coins or gold.
Okay, but in the charizard card example, the card doesnt just have a monetary price. It's a semi-unique item that has sentimental value. Its a peice of nostalgia, a memory from your childhood, and a cool story to tell friends. It also happens to be able to be sold for 3000 on ebay. However, that same card in a comic book store has none of that sentimental value and, while in a strictly monetary setting, costs the same, it doesnt have to same value to me as a person. I would frame a first edition charizard card and keep it as a sentimental peice about both when you were helping your mom, and of your childhood.
Also, while they are valued the same, one is randomly found in your old garage, or is "money" you happened apon, rather than money you could spend on the card. Same value but different direction.
What I got from this video is to treat everything with value and treat every penny as equal as if I worked for them.
That Pokémon card will be worth $5,000 in 5 years... hold assets!
A Boring Revolution but he’s not holding it b/c of its massive financial value tho, the whole point is that he’s not letting it go because it has a connection to his childhood and he’s keeping it for emotional value. It can be worth 10grand in 10 years but does that mean he’s gonna give it up even then? For me, my likelyness to hold something valuable simply for nostalgia and emotional reasons goes down sharply if the price of that item increases, screw nostalgia, I’m buying myself a ‘brand new’ used car with that 5 grand
@@leilanidru7506 I have an Acorn Computer - many games. It's gone from £140 up to £800 in less than 4 years. i'll sell it for £1,500 but it'll be very hard to do so.
If I only paid £60 for it - what does it matter if I hold onto it???
It's not costing me money every month. However if you own a motor bike that requires work every month - i'd sell it.
Hold assets "long term" like Pokemon cards, Games, Old Coins, Comics e.t.c Sell for a 9x or 10x return!
A Boring Revolution no I understand the point you made. I’m saying the motivations of the guy with the card isn’t to hold on to the card as an asset and wait to sell it for a higher value later, he is simply holding on to it for its emotional value to him. The card could go up in value over the years but will he let it go tho?
And then you realize... Pokemon its not popular anymore
@@meilazgaming All rare assets go up in value - especially with collectors.
For the 4th one, my explanation is the Weber Law - basically, as things get bigger, you need a bigger range to feel a difference between x and y. For example, take weights - you can easily tell the difference between 10 and 20 grams but not 1kg and 1.01kg.
Exactly!
I can't
I love that the grocery store cashier mentioned that the receipt shows how much money I saved by shopping there but she didn't say anything about the money I spent!! :D
So I answered all questions correctly but I think that's only because those were isolated scenarios where I had no emotions invested. Great video, I will watch out for those in my daily life.
He's not giving up the $3000, he framed it in the form of the card. It will only go up in value, theoretically.
Except if he really believes that the card will appreciate then he would have bought the framed card in the store.
@@tylerpeterson4726 maybe he doesn't have extra $3000 to spend. If you want something and can't afford it, it's rational not to buy it. But if you got it for free, why would you sell it?
@@tylerpeterson4726 Endowment effect can be good. If someone gave you a free Bitcoin when it was worth $100 you would have held onto it instead of selling at $100 since it's free. Nothing was lost if it went to $0. Now you'd be glad you kept it even though you'd have never actually bought one. You wouldn't have wasted a day working for it. The effect is greater if it was a few thousand dollars and a whole month of wages would be wasted if the price crashed after buying it versus getting a free Bitcoin.
@@tylerpeterson4726 If he bought that pack of cards originally, he probably paid less than $3 for it. I'm sure if the card was on sale for a few dollars maybe he'd have bought it.
Well, he couldn't have known what bitcoin would do...
If you actually think bitcoin is going to increase then you should buy more
but if you don't believe in it enough to buy it then you should sell your bitcoin and buy something else that will appreciate more in value.
Use other cryptos today as an example, keeping one etherium versus selling it and buying s&p 500 instead. Yeah sure etherium might go to 15000$ or something crazy, but you can say that about anything, and the rational decision is still probably to sell your coin and buy something else if you don't trust it enough to buy more of it.
This video just made me more aware of how bad I am with money
And now you know what to do to improve!
The best financial decision I can make is getting my wife to watch these videos.
Thanks for comments dont forget to hit the subscription button
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Thanks for the great video. But I only counted 4 ways. Did I miss something? I only have the following on my list: 1. The Endowment Effect 2. Sunk cost fallacy 3. Transaction Utility 4. Mental Accounting. So what was number 5? I probably just missed it.
2 years later, but you're right there's no 5th one
Just don't become "penny wise and pound foolish" the large purchases count too.
It'd be nice if you could elaborate.
It’s when you buy the non brand cereal but also buy a Gucci bag. Wise about saving a little here and there, but you’re prone to spending big.
@@SeanFrancisNBallais Kind of like if you buy something cheap to save money vs the more expensive option and it breaks or doesn't work as well and you have to sink more money into the problem to fix it or replace the original purchase, when buying something more expensive and better quality would have not given you these problems. You would have saved money in the long run.
@@mae2759 That's more neatly encapsulated by 'false economy'
@@SeanFrancisNBallais Saving £5 from your utility bill but failing to transfer your mortgage to save £200
4:45
Logically, I would still more likely to choose walking in the case of $15/$10, given the product qualities are surely the same, because I just don't like supporting shops which are ripping off customers for that much margin. If it's the case of $675/$670, maybe the customer service can justify that $5 difference; when I buy a ~$670 laptop, I would care about the shop/retailer 's reputation more than $5 anyway, regardless of walking.
Surely the "abusive store" which rips off clients will go bankrupt by your decision. And about the reputation you mention, you're giving an imaginary edge to the comparison to justify what you would do. Your point won't make sense if you are talking about same product, same quality, same service, same store reputation in both cases.
because real life is more complicated than they're examples so her answer is valid
I think everybody misses the health aspect of the walk itself.
Your missing the point of the hypothetical. Lol
Thanx for this. I was born in 1957 so I watched my Grabdparents how they Worked spent and what they didn't spend on.
that pennywise joke probably scared someone to death lol
"why put myself through the extra pain"
.
.
"Cuz I paid for that pain woman!"
That’s me.
I really do love and appreciate how accurate these videos are, not overzealously fake or overreacting. I have taken a few classes in behavioral economics and yeah this video is a really good summary.
Example 1. There is a difference between spending $3000 you've worked for vs not making an extra $3000
2. I prefer to watch a bad movie all the way through just for the experience and possible future talking points
3. I'll definitely walk 10 minutes to save $5 on a laptop
4. If I win $100 I will treat it the same as earned money, with good food lol
❤ she said across the world, not around. Hats off to the especially smart lady.
Basic summary:
-Endowment effect ( you typically put loss of current positions at a higher priority than gain)
-Sunk cost fallacy ( the phenomena that you wish to "squeeze out all your money" out of a product that you buy, regardless of it being satisfactory or not, which can cause subscriptions and other promotional methods to convince the consumer that they should consume more because they already have invested in their product
-Transaction utility (the amount of pleasure or pain one gets from paying less or more than something's really worth. such as a fake discount (what other examples do you guys know? reply and i'll add them here)
-mental accounting ( separating money into imaginary categories in your mind, removing the philosophy of though that all money regardless of how it's earned, has the same value. Leaving you more susceptible to more frivolous products or liabilities when you "earn easy money". reminds me of the lottery and how so many people blew it all)
This isnt highschool no need to take notes
You got me at the laptop vs headphone thing
1. Endowment Effect
2. Sunk Cost Fallacy
3. Transaction Utility
4. Mental Accounting
5. Fungible
Me: Watches Their Videos For Financial Advice
Also Me: Gets depressed because I'm broke & single.😪😂
Thanks for comments dont forget to hit the subscription button
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7:16 admit it you guys chose the name "penny" just for this pun
"Dumb people power the modern economy" - Old Klingon Proverb
@@Andrzlnn lol
It's really punny!
no fuckin shit
@@Andrzlnn shut up nerd
Please make a video on how to properly use a credit card
Paid it off every month or don't use it at all. The End.
Oh easy. Thanks
use a debit card
Use it like a debit card. Only buying things you know you can pay off.
ApRiL3706
Debit cards don't help you with credit rating or cash flow management though