Dollars and Sense: How We Misthink Money and How to Spend Smarter

by Dan Ariely, Jeff Kreisler

Overview

New York Times bestselling author, Dan Ariely, teams up with financial comedian and writer Jeff Kreisler, to delve into the truly irrational world of personal finance, blending humor and behavioral economics to help people understand the psychology behind their financial decisions and show them how they can make better ones. He entertains critical questions such as these:

• Why is paying for things painful?
• Why are we comfortable overpaying for something in the present just because we’ve overpaid for it in the past?
• Why is it easy to pay $4 for a soda on vacation, when we wouldn’t spend more than $1 on that same soda at our local grocery store?

We think of money as numbers, values, and amounts, but when it comes down to it, when we actually use our money, we engage our hearts more than our heads. Emotions play a powerful role in shaping our financial behavior, often making us our own worst enemies as we try to save, access value, and spend responsibly. In Dollars and Sense, bestselling author and behavioral economist Dan Ariely teams up with financial comedian and writer Jeff Kreisler to challenge many of our most basic assumptions about the precarious relationship between our brains and our money. In doing so, they undermine many of personal finance’s most sacred beliefs and explain how we can override some of our own instincts to make better financial choices.

Exploring a wide range of everyday topics—from the lure of pain-free spending with credit cards to the pitfalls of household budgeting to the seduction of holiday sales—Ariely and Kreisler demonstrate how our misplaced confidence in our spending habits frequently leads us astray, costing us more than we realize, whether it’s the real value of the time we spend driving forty-five minutes to save $10 or our inability to properly assess what the things we buy are actually worth.

The result not only reveals the rationale behind our most head-scratching financial choices but also offers clear guidance for navigating the treacherous financial landscape of the brain. Fascinating, engaging, funny, and essential, Dollars and Sense provides the practical tools we need to understand and improve our financial choices, save and spend smarter, and ultimately live better.

Product Details

ISBN-13:	9780062651228
Publisher:	HarperCollins
Publication date:	11/07/2017
Sold by:	HARPERCOLLINS
Format:	eBook
Pages:	288
Sales rank:	121,383
File size:	3 MB

About the Author

Dan Ariely is the James B. Duke Professor of Psychology and Behavioral Economics at Duke University. He is a founding member of the Center for Advanced Hindsight; a cocreator of the film documentary (Dis)Honesty: The Truth About Lies; and a three-time New York Times bestselling author. His books include Predictably Irrational, The Upside of Irrationality, The (Honest) Truth About Dishonesty, Irrationally Yours, Payoff, Dollars and Sense, and Amazing Decisions. His TED Talks have been viewed more than 27 million times. His work has been featured in the New York Times, the Wall Street Journal, the Washington Post, the Boston Globe, and elsewhere. He lives in North Carolina with his family.

Jeff Kreisler is just another Princeton educated lawyer turned award-winning comedian, author, speaker, TV pundit, speechwriter, and advocate for behavioral economics. The New York Times calls him "Delectable," Rachel Maddow (MSNBC) says, "You'll be laughing all the way to the bank," and his kids still think he's "cool." He specializes in money, politics, and other human encounters. His first book was the satire Get Rich Cheating. http://jeffkreisler.com

Table of Contents

Introduction ix

Part I What Is Money?

1 Don't Bet On It 3

2 Opportunity Knocks 7

3 A Value Proposition 15

Part II How We Assess Value in Ways That Have Little To Do with Value

4 We Forget That Everything is Relative 21

5 We Compartmentalize 41

6 We Avoid Pain 61

7 We Trust Ourselves 93

8 We Overvalue What We Have 111

9 We Worry About Fairness and Effort 131

10 We Believe in the Magic of Language and Rituals 149

11 We Overvalue Expectations 167

12 We Lose Control 183

13 We Overemphasize Money 197

Part III Now What? Building on the Shoulders of Flawed Thinking

11 Put Your Money Where Your Mind Is 213

15 Free Advice 225

16 Control Yourself 227

17 It's Us Against Them 237

18 Stop and Think 253

Thanks 259

Notes 261

Index 269

Editorial Reviews

09/18/2017
Ariely (Payoff), a psychology professor, and Kreisler (Get Rich Cheating), a comedian, zero in on the average person’s relationship to money in this valuable guide. Part one, “What Is Money,” and part two, “How We Assess Value in Ways That Have Little to Do with Value,” describe ways people “misthink money,” even when these ways seem to be rational. Part three, “Put Your Money where Your Mind Is,” offers strategies for coping with our irrationality. Where money is concerned, “what should matter are opportunity costs, the true benefit a purchase provides, and the real pleasure we receive from it compared to other ways we could spend our money.” The authors assert that people “don’t handle in a way that makes sense” but rather “in a way that feels good.” The authors also address the issue of paying on credit, which they say takes away the pain of having to hand over cash and can lead to overspending. Engaging and funny, rife with anecdotes and advice, the book defangs a difficult topic while teaching a lot. Agent: James Levine, Levine Greenberg Literary Agency. (Nov.)

Publishers Weekly

“[A] valuable guide... Engaging and funny, rife with anecdotes and advice, the book defangs a difficult topic while teaching a lot.” — Publishers Weekly

“A lively look at how even the wisest among us are too often fools eager to part with our money...A user-friendly and often entertaining treatise on how to be a more discerning, vastly more aware handler of money.” — Kirkus Reviews

“[An] engaging guide to decision-making about money...Highly recommended.” — Library Journal (starred review)

“If you want to get better at making good financial decisions, read Dollars and Sense.…What the two authors do brilliantly is take behavioral economics and make it accessible.” — Washington Post

“[A] surprisingly breezy exploration of the most common mental blocks to building wealth...It’s the rare kind of book that makes you feel a lot smarter, while simultaneously giving you actionable tips for improving your daily life.”
— Business Insider’s Best Business Books of 2017

From the Publisher

If you want to get better at making good financial decisions, read Dollars and Sense.…What the two authors do brilliantly is take behavioral economics and make it accessible.

Washington Post

[A] surprisingly breezy exploration of the most common mental blocks to building wealth...It’s the rare kind of book that makes you feel a lot smarter, while simultaneously giving you actionable tips for improving your daily life.”

Business Insider’s Best Business Books of 2017

If you want to get better at making good financial decisions, read Dollars and Sense.…What the two authors do brilliantly is take behavioral economics and make it accessible.

Washington Post

[A] surprisingly breezy exploration of the most common mental blocks to building wealth...It’s the rare kind of book that makes you feel a lot smarter, while simultaneously giving you actionable tips for improving your daily life.”

Business Insider's Best Business Books of 2017

★ 10/15/2017
In this engaging guide to decision-making about money, author and behavioral economist Ariely (James B. Duke Professor of Psychology & Behavioral Economics, Duke Univ.; Predictably Irrational) and writer and comedian Kreisler (Get Rich Cheating) lay bare the ways monetary value is misunderstood and incorrectly assessed, noting the tendency to "overemphasize irrelevant factors, forget about important ones, and allow insignificant value cues to lead us astray." Through stories, scenarios, and descriptions of experiments conducted by Ariely and others, the authors show the mental "forces at play" in financial psychology, such as why prepaying for a honeymoon may promise a more joyful experience. They also highlight how companies and marketers use these same strategies to induce spending and consider how to design "environments to turn our mental shortcomings into tools that work in the service of our financial success." As the work comes to a close, its attention shifts toward the future, considering suggestions for retirement plans and HR departments and how to "start a conversation" about the "duty of saving," offering a good first step in that direction. VERDICT Highly recommended.—Doug Diesenhaus, Univ. of North Carolina, Chapel Hill

Library Journal

A behavioral economist and a financial comedian offer an attention-grabbing look at our worst financial instincts. Without sounding like he’s performing, narrator Simon Jones’s dramatic flair and wry personality add color to the material. His phrasing is slow, but his beautiful melodic palette and superb timing make every sentence clear and full of impact. The authors say our brains are wired to make us vulnerable to perceptual tricks played on us by retailers and others we do business with. In any transaction, what we believe we will gain or lose is influenced by our bias toward the present vs. the future and by our beliefs regarding factors like what is fair and normal, what is scarce, or what has status. This tangible advice about financial reasoning errors will give listeners new power over how they spend their money. T.W. Winner of AudioFile Earphones Award © AudioFile 2018, Portland, Maine

MAY 2018 - AudioFile

A behavioral economist and a financial comedian offer an attention-grabbing look at our worst financial instincts. Without sounding like he’s performing, narrator Simon Jones’s dramatic flair and wry personality add color to the material. His phrasing is slow, but his beautiful melodic palette and superb timing make every sentence clear and full of impact. The authors say our brains are wired to make us vulnerable to perceptual tricks played on us by retailers and others we do business with. In any transaction, what we believe we will gain or lose is influenced by our bias toward the present vs. the future and by our beliefs regarding factors like what is fair and normal, what is scarce, or what has status. This tangible advice about financial reasoning errors will give listeners new power over how they spend their money. T.W. Winner of AudioFile Earphones Award © AudioFile 2018, Portland, Maine

MAY 2018 - AudioFile

2017-09-04
A lively look at how even the wisest among us are too often fools eager to part with our money.Most of us think about money at least some portion of each day—how to get more of it, how to spend less of it. However, cautions Ariely (Psychology and Behavioral Economics/Duke Univ.; Payoff: The Hidden Logic That Shapes Our Motivations, 2016, etc.), working with comedian and writer Kreisler (Get Rich Cheating, 2009), "when we bring money into the equation, we make the decisions much more difficult and we open ourselves to mistakes." The better course, they urge, is to consider money not for its own sake—indeed, not to acknowledge its existence at all—but instead to consider the concept of opportunity cost: what do we give up when we make one choice over another? Is the forgone acquisition really the correct one? What if, instead of buying a big-screen TV or new clothes, we thought of what we might do with the hours we don't have to work in order to procure them or of the other things we might buy in their place? Such counsel comes after consideration of other economic notions, such as the endowment effect, whereby we give more significance to things simply because we own them, and our generally risk-averse economic behavior, whereby the pleasure taken in gaining something is vastly overshadowed by the pain caused by losing it. Ariely and Kreisler, writing breezily but meaningfully, allow that money has its uses as a symbolic system of fungible, storable, accessible value. However, the real consideration should always be that "spending money now on one thing is a trade-off for spending it on something else," a calculation that is not often reckoned simply because it's more difficult than fishing out a credit card or some other means of delaying the recognition that spending money now has future, downstream effects. A user-friendly and often entertaining treatise on how to be a more discerning, vastly more aware handler of money.

Kirkus Reviews