Dan Ariely
Dan Ariely
Dan Arielyis the James B. Duke Professor of Psychology and Behavioral Economics. He teaches at Duke University and is the founder of The Center for Advanced Hindsight and also the co-founder of BEworks. Ariely's talks on TED have been watched over 7.8 million times. He is the author of Predictably Irrational and The Upside of Irrationality, both of which became New York Times best sellers, as well as The Honest Truth about Dishonesty...
NationalityIsraeli
ProfessionEconomist
Date of Birth29 April 1967
CountryIsrael
Kids don't care what party they have, right? They want cake and they want to run around. Nothing else matters. But in this escalation, all the kids want parties like their friends. So, if all the friends have an amazing, expensive party, they all want the same thing. If we all got to scale down as a coordinated effort, all the kids would have been just as happy.
You can think about life as a battle between you and a doughnut shop. The doughnut shop wants you to eat another doughnut and pay the money, and you want to do it in the short term, but in the long term it's not good for you either financially or from a health perspective.
Why would you take money out of your paycheck at the beginning of the month when you don't know how much money you'll need?
When you get a checking account, you should have a savings account, and the number for the savings account should be one off of your checking account.
It was shocking to realize how many low-income Americans don't have savings accounts.
When parents have college savings accounts for their kids, their kids show higher social and cognitive performance.
What people do is they pay the small loans first. Why? Because they enjoy making the number of loans smaller. But of course it is a very ineffective way to pay debt down.
Imagine you owe on five credit cards, you owe five debts. So which debt should you pay first? And the answer is very simple: You should pay the one with the highest interest rate first. But that's not what people do.
The problem is that people basically dangle debt in front of us. And the cost for the poor of course is much higher than for the wealthy.
Not all debt is bad. From time to time we should get into debt when there's a good reason for that.
What you should do is wait until the end of each month, and then say, "OK, how much money do I have? How much do I need? Let me send the rest to retirement."
When you're in pain, tomorrow doesn't exist - just the pain - and the only thing that you want in the world is for it to go away.
Money actually becomes even more difficult than other things because it's very hard to imagine what the benefits are to saving. So, imagine that you see a new bicycle, a new pair of shoes, or something today. You know exactly what you are giving up if you are not buying it, what are you gaining in the future if you are not getting it. So, you are giving up the bicycle today, what is it in the future? What will happen if you send another $1,000 to your retirement fund? What difference will it make? It is very, very hard to figure out.
Money are very difficult to think about. So, we think about money as the opportunity cost of money. So, we at some point went to a Toyota dealership and we asked people, what will you not be able to do in the future if you bought this Toyota?