Comments on: 3 Simple Tests to See if You’re Irrational When It Comes to Money http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html The offbeat personal finance blog for responsible people. Fri, 17 Feb 2012 00:33:27 +0000 hourly 1 http://wordpress.org/?v=3.0.4 By: MoneyEnergy http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-683 MoneyEnergy Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-683 Ha ha. this time around, I was actually rational each time! Somehow it's easier to be rational when you're reading it in black and white.... good points, though, when we think of it in relation to paying off debt the "mathematical" way etc (highest payments first, etc.). Ha ha. this time around, I was actually rational each time! Somehow it’s easier to be rational when you’re reading it in black and white…. good points, though, when we think of it in relation to paying off debt the “mathematical” way etc (highest payments first, etc.).

]]> By: Monevator http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-684 Monevator Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-684 I can never get enough of these behavioral psychology posts! One thing though, to be picky -- in question one I think it makes more sense to say "while your closest friends make..." rather than "while other people make..." If you made twice as much money as everyone else in the world as your wording suggests wouldn't it be rational to choose to be the richest man in town? The point as I understand it is that people compare themselves to their peers, where they would rather be wealthier than them even at the cost of being poorer than the general population. Anyway, just a thought. :) I can never get enough of these behavioral psychology posts!

One thing though, to be picky — in question one I think it makes more sense to say “while your closest friends make…” rather than “while other people make…”

If you made twice as much money as everyone else in the world as your wording suggests wouldn’t it be rational to choose to be the richest man in town?

The point as I understand it is that people compare themselves to their peers, where they would rather be wealthier than them even at the cost of being poorer than the general population.

Anyway, just a thought. :)

]]> By: Len Penzo http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-685 Len Penzo Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-685 @Money: Me too. I think that is attributable to the engineer in me - it tends to take all emotion out of the equation! :-) @Monevator: Hmm. Regarding your question about wouldn't it be more rational to be the richest man in town - I think the key point in the hypothetical question is that we are "assuming all prices of goods and services stay the same." If that is true, then I think it would be more rational to have double the buying power even though everyone else has even more of it. For me, that would hold true regardless of whether everyone else was just my closest friends or the entire world. But then again, I'm probably not as rational as I think - after all, I'm very happy driving my 12-year old car and living in a very modest home, even though I could afford much much better if I so desired. It makes you think, doesn't it? :-) @Money: Me too. I think that is attributable to the engineer in me – it tends to take all emotion out of the equation! :-)

@Monevator: Hmm. Regarding your question about wouldn’t it be more rational to be the richest man in town – I think the key point in the hypothetical question is that we are “assuming all prices of goods and services stay the same.” If that is true, then I think it would be more rational to have double the buying power even though everyone else has even more of it. For me, that would hold true regardless of whether everyone else was just my closest friends or the entire world. But then again, I’m probably not as rational as I think – after all, I’m very happy driving my 12-year old car and living in a very modest home, even though I could afford much much better if I so desired. It makes you think, doesn’t it? :-)

]]> By: Prepare your kids for failure…?part 1 | | Ramblings of a non-conformist | Tomasz Gorecki http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-686 Prepare your kids for failure…?part 1 | | Ramblings of a non-conformist | Tomasz Gorecki Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-686 [...] 3 simple tests for money [...] [...] 3 simple tests for money [...]

]]> By: Wojciech http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-687 Wojciech Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-687 How interesting! #2 and 3 would really make me mad, so I definitely succumb easily to my emotions! :) I'll throw another classic into the mix - ever notice that you'll try for hours to save $10 on a $50 product, but when you can save $15 on a $2,000 product, it doesn't matter all that much anymore? How interesting! #2 and 3 would really make me mad, so I definitely succumb easily to my emotions! :)

I’ll throw another classic into the mix – ever notice that you’ll try for hours to save $10 on a $50 product, but when you can save $15 on a $2,000 product, it doesn’t matter all that much anymore?

]]> By: Len Penzo http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-688 Len Penzo Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-688 I think that's very very true, and I think it is rational too - at least in my twisted mind! lol I guess, for the latter case, the key is whether the savings are readily available. If they are, then to me it doesn't make sense to ignore them. But if it requires a bit of effort - like filling out a complex rebate form or sitting through a 30 minute presentation, then I'd figure the $15 wasn't worth my time. Would the behavior scientists say that the same logic should apply to both the $50 item and the $2000 item? I'd be interested to know! :-) I think that’s very very true, and I think it is rational too – at least in my twisted mind! lol

I guess, for the latter case, the key is whether the savings are readily available. If they are, then to me it doesn’t make sense to ignore them. But if it requires a bit of effort – like filling out a complex rebate form or sitting through a 30 minute presentation, then I’d figure the $15 wasn’t worth my time.

Would the behavior scientists say that the same logic should apply to both the $50 item and the $2000 item? I’d be interested to know! :-)

]]> By: What’s Sizzling? – August 28th Edition http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-689 What’s Sizzling? – August 28th Edition Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-689 [...] Len Penzo dot Com, here are 3 fun tests to see if you’re irrational with money. I added a fourth in the [...] [...] Len Penzo dot Com, here are 3 fun tests to see if you’re irrational with money. I added a fourth in the [...]

]]> By: Money Hacks Carnival #80 — Automatic Finances http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-690 Money Hacks Carnival #80 — Automatic Finances Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-690 [...] Penzo presents 3 Simple Tests to See if You’re Irrational When It Comes to Money posted at Len Penzo . [...] [...] Penzo presents 3 Simple Tests to See if You’re Irrational When It Comes to Money posted at Len Penzo . [...]

]]> By: Santos http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-691 Santos Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-691 "Amazingly enough, this moral sense of fairness is not only hard-wired into the brains of most humans..." The sense of what is right just evolved huh? Talk about irrationality ;-) “Amazingly enough, this moral sense of fairness is not only hard-wired into the brains of most humans…”

The sense of what is right just evolved huh? Talk about irrationality ;-)

]]> By: Len Penzo http://lenpenzo.com/blog/id693-3-fun-and-simple-tests-to-see-if-youre-irrational-when-it-comes-to-money.html#comment-692 Len Penzo Wed, 20 Apr 2011 20:48:56 +0000 http://lenpenzo.com/blog/?p=693#comment-692 That just goes to show what a behavioral scientist knows. ;-) That just goes to show what a behavioral scientist knows. ;-)

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