Meet with PWL Capital: https://calendly.com/d/cpws-jyp-znp

In this episode, we are joined by renowned expert Abby Sussman to unpack how individuals form judgments and make decisions about their finances. Abby is a distinguished professor of marketing at the University of Chicago Booth School of Business whose expertise lies at the intersection of psychology, economics, and finance. In our conversation, we discuss the nuances of financial decision-making and how personal beliefs influence our financial choices. Discover the source of reference points for financial well-being and how expense prediction biases play a role in making poor financial decisions. We explore the effectiveness of budgeting, the nuances of product sensitivity, and the drivers of excessive consumer consumption. Gain insights into navigating the complexities of financial decision-making, the psychology behind it, how AI can help you make better financial decisions, and much more. Tune in to gain a deeper understanding of the psychology behind financial decisions and uncover strategies to optimize your financial future with Abby Sussman!

Timestamps:

0:00:00 Intro
0:05:13 How the way people evaluate their own wealth differs from how they evaluate the wealth of others
0:07:24 Whether having complete information about the other person’s balance sheet resolves the differences in perception
0:10:57 The effect this difference has on how people plan for the future
0:15:09 How someone’s beliefs about their future wealth affect their financial decisions
0:21:47 How people can use this information to make better financial decisions
0:24:09 The problems that stem from inaccurate expense prediction
0:33:45 The interventions that can be used to reduce expense prediction bias
0:38:50 How common budgeting is in general
0:44:24 How frequently people reconcile their actual spending with their budgets
0:48:42 How people respond to having too much or too little slack in their budgets
0:52:48 How attitudes toward debt and investment products vary across consumers
0:59:39 The areas of consumer financial decision making research Abigail thinks will be most impactful in the future
1:07:38 Abigail Defines Success in Her Life

Links From Today’s Episode:

Rational Reminder on iTunes — https://itunes.apple.com/ca/podcast/t...
podcast/id1426530582.
Rational Reminder Website — https://rationalreminder.ca/
Rational Reminder on Instagram —   / rationalreminder  
Rational Reminder on X —   / rationalremind  
Rational Reminder on YouTube —    / channel  
Rational Reminder Email — [email protected]
Benjamin Felix — https://www.pwlcapital.com/author/ben...
Benjamin on X —   / benjaminwfelix  
Benjamin on LinkedIn —   / benjaminwfelix  
Cameron Passmore — https://www.pwlcapital.com/profile/ca...
Cameron on X —   / cameronpassmore  
Cameron on LinkedIn —   / cameronpassmore  
Abby Sussman on LinkedIn —   / abigail-sussman-ab4427  
Abby Sussman on X —   / abbysussman  
The University of Chicago Booth School of Business — https://www.chicagobooth.edu/
Society for Judgment and Decision Making — https://sjdm.org/
Episode 153: Prof. Johanna Peetz — https://rationalreminder.ca/podcast/153
Epidose 296: Adam Alter — https://rationalreminder.ca/podcast/296
Panel Study of Income Dynamics — https://psidonline.isr.umich.edu/
Consumer Financial Protection Bureau — https://www.consumerfinance.gov/

Papers From Today’s Episode:

‘Understanding and Neutralizing the Expense Prediction Bias: The Role of Accessibility,
Typicality, and Skewness’ — https://doi.org/10.1177/0022243721106...
‘The Exception Is the Rule: Underestimating and Overspending on Exceptional
Expenses’ — https://doi.org/10.1086/665833
‘The Role of Risk Preferences in Responses to Messaging About COVID-19 Vaccine Take-Up’
— https://doi.org/10.1177/1948550621999622
‘The Role of Mental Accounting in Household Spending and Investing Decisions’ — https://
papers.ssrn.com/sol3/papers.cfm?abstract_id=3051415
‘How Consumers Budget” — https://doi.org/10.1016/j.jebo.2022.0...
‘Financial Product Sensitivity Predicts Financial Health’ — https://doi.org/10.1002/bdm.2142