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Dollars and Sense

288 pages, 2017

psychology

psychology

705 books
money & investing

money & investing

165 books
business & management

business & management

1082 books
Takeaways
Description

Why does paying for things make us feel pain? Why do we find it easy to overpay for something in the present, even if it’s overpriced in the past? Why is it hard 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? The answer is simple—the heart overrules the head. 

We don’t see money as numbers, values, and amounts. When we 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. 

In Dollars and Sense, bestselling author and behavioral economist Dan Ariely team 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.

Understanding the Value of Money

In Dollars and Sense, Dan Ariely explores the concept of money and its perceived value. He explains that we often misunderstand the value of money, leading to irrational financial decisions. By understanding the true value of money, we can make smarter financial choices.

The Power of Relativity

Ariely digs into the concept of relativity in financial decisions. We often compare prices and make decisions based on these comparisons, even when they don't make sense. By being aware of this, we can avoid falling into the trap of relative thinking.

The Pain of Paying

The book explores the psychological pain associated with spending money. Ariely finds that we feel less pain when we use credit cards compared to cash, leading to more spending. By understanding this, we can control our spending habits better.

The Influence of Free

Ariely takes a look at how the concept of 'free' influences our decisions. He explains that we often overvalue items or services that are free, leading to irrational choices. By being aware of this, we can make more rational decisions.

The Endowment Effect

In Dollars and Sense, Ariely researches the endowment effect, where we overvalue things we own. This can lead to poor financial decisions, like holding onto investments for too long. By recognizing this bias, we can make better financial decisions.

Quotes 5

Dollars and Sense, a masterpiece by Dan Ariely, provides a deep understanding of our financial behavior, which is often irrational. It's a must-read for anyone who wants to make better decisions about their money.

Richard ThalerRichard Thaler - Behavioral Economics Pioneer

Ariely's Dollars and Sense is a fascinating exploration of the intricacies of our financial behavior. It's a book that will change the way you think about money.

Daniel KahnemanDaniel Kahneman - Nobel Laureate Psychologist

Dollars and Sense is a brilliant and insightful guide to the ways we mismanage money. Ariely's book is a wake-up call for all of us.

Adam GrantAdam Grant - Organizational Psychologist

Dan Ariely's Dollars and Sense is a revelation. It's a book that will make you rethink your relationship with money.

Tim HarfordTim Harford - Economist, Journalist

In Dollars and Sense, Ariely offers a groundbreaking look at our financial behavior. It's a book that will change the way you think about money.

Malcolm GladwellMalcolm Gladwell - Bestselling Author
Richard ThalerDaniel KahnemanAdam GrantTim HarfordMalcolm Gladwell

Recommendations

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Cleo Abram

filmmakermedia personality

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