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Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics
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Why Smart People Make Big Money Mistakes And How To Correct Them: Lessons From The New Science Of Behavioral Economics

3.96  ·  Rating details ·  1,238 ratings  ·  85 reviews
Why do so many otherwise smart people make foolish financial choices? Why do investors sell stocks just before they skyrocket -- and cling to others as they plummer? Why do shoppers overspend when using credit cards rather than cash? What do our habits of tipping or buying lottery tickets indicate about our relationship with money?

In this fascinating investigation of the w

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Paperback, 224 pages
Published April 6th 2000 by Simon & Schuster (first published 1999)
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3.96  · 
Rating details
 ·  1,238 ratings  ·  85 reviews


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Karan
Jan 01, 2017 rated it it was amazing
Read my full notes from the book at https://medium.com/@karan/smart-peopl...

Now, on to the review:

"Why Smart People Make Big Money Mistakes And How To Correct Them" is one of the best finance books I've read so far (it's more finance and economics). It's a very nice blend of finance and psychology -- the field formally known as behavioral finance.

Since the first edition of the book was published in 1999, I was concerned that the content might be dated. What I forgot was that the way humans think
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Tim O'Hearn
Mar 04, 2017 rated it really liked it
A great supplement to Thinking, Fast and Slow and Freakonomics. There is only so much behavioral economics research out there, so overlap with prominent books is unavoidable. Re-reading huge swaths of material cheapens the experience and you must carefully plan any behavioral economics kick. I've spaced the books over several years and I've found that the studies cited have clung to my brain like cicada--I remembered nearly everything.

Why Smart People Make Big Money Mistakes And How To Correct T
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Lisa
Feb 11, 2010 rated it it was ok
Quick read, but not enough original or thought provoking content to make it memorable. There are other more worthwhile books out there that cover similar themes. The advice was too generic to be applicable/practical and some of the more interesting concepts were given too simplistic a treatment to make them engaging. It probably would have been interesting and novel to someone who hadn't read any behavioral economics books before.
Mona
Jun 12, 2009 rated it it was amazing
Shelves: financial
I found this book fascinating. So fascinating that I read it in one four hour flight with yapping seat partner.

It looks at behavioral/psychological reasons we make the choices we do with our finances. The games and quizzes illustrate just how common our decisions are and explains why we make those choices.

I learned that I'm not as different or savvy as I thought I was. Also, some great financial tips and ways to gain different perspectives to help us make wise financial choices.
Fabio Ismerim
Nov 08, 2018 rated it it was amazing  ·  review of another edition
Um dos melhores livros que já li sobre economia comportamental aplicada a finanças e investimentos.

Sem rodeios, os autores explicam como os vieses e as heurísticas impactam em nossa tomada de decisão no momento em que estamos vendendo/comprando ações, escolhendo onde investir, poupar e etc.

Com perguntas para o leitor responder no estilo de joguinhos para facilitar a absorção do conteúdo, e também com muitas pesquisas no campo das ciências sociais, economia comportamental, neurociência e psicolog
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Hattas Martin
Nov 05, 2018 rated it really liked it  ·  review of another edition
Výborné postrehy z behaviorálnej ekonómie. Objasnilo mi to určité rozhodovacie procesy pri výdavkoch alebo investovaní.
Mona
Jun 12, 2018 rated it liked it
Every Lebanese citizen should read this book!
Jack Cheng
This is a great book: fun to read with lots of great information, not strictly financial advice but an exploration of behavioral economics (using psychology to explain some of the choices we make that seem at odds with our best interest). Chapters are introduced with a story and you are asked to react; the authors then explain how the situation or presentation influences your choice.

The last chapter summarizes the book. Here are the major points I took away:

-mental accounting can be good (setti
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Andrew Mutch
Jun 18, 2012 rated it really liked it
This book made for a quick yet informative read as the authors explored behavioral economics and explain why what we intuitively think is right or best for us financially isn't always so. If you've read titles like "Freakonomics", quite a bit of the material may seem familiar. But unlike "Freakonomics", the authors spent more time focusing on the basics of behavioral economics so that you can understand the key concepts that drive this field of study. First published in 1999, I was concerned tha ...more
Dara
Mar 07, 2013 rated it liked it
Shelves: nonfiction
A fine book - the only reason I didn't rate it higher is that if you've read any of the popular literature about behavioral economics before, you will be familiar with the bulk of the book. The authors do a good job of relating those conclusions to financial matters, but knowing the "wow, people ARE irrational!" experiments removes some of the more interesting parts.
J
Nov 09, 2014 rated it really liked it  ·  review of another edition
Loved reading this book. It gave an insight to our relationship with money and why we act the way that we do with money. Some of the concepts weren't new to me as I have read about them in Dan Ariely's book. I guess, there are just a few studies on which to base their writing. Nonetheless, this is a good eye opening book if you've always wondered why you do the things that you do with money.
Rayfes Mondal
Nov 04, 2015 rated it really liked it
How behavioral economics affect your decisions and how to mitigate them. I don't feel like I learned a lot since I generally follow the suggested principles in the book but I agree with them and there were some things I hadn't read about before like eliminating equally weighted items on a pros/cons list to help you make your decision.
Maria  D
Mar 21, 2015 rated it really liked it
Shelves: economics
Very handy book, I enjoyed it both as a person interested in behavioral economics, and as someone who wants to manage his money wisely. Some of the stuff is more known to people who are already familiar with Cahneman or Arieli, but there's a lot of new stuff as well. Lightly and humourously written, with points of summary at the end of each chapter - great handbook on the subject.
Amy
May 09, 2016 rated it liked it
An older book 1999 on behavioral economics that serves as a nice foundation. Easily readable but slightly annoying format that's a bit too simplistic.
SallyStenger
recommended by WSJ 11-29-30-2014 p. B9, best books for investors
Garrett Philbin
Jun 22, 2015 rated it really liked it
First book I've read about behavioral economics, really interesting in how it tackles the psychology behind why we make certain decisions (both in our own interest and not).
Steve Trevino
Nov 25, 2014 rated it liked it
Just OK. Made some fairly interesting points, but overall pretty obvious and boring.
Ed
Jun 13, 2015 rated it liked it  ·  review of another edition
Meh
J G
Dec 26, 2015 rated it really liked it
I'm a self employed musicians that's addicted to behavioral economics books. I found this one great and a very easy read. good read
Oliver
Jan 10, 2015 rated it it was ok
Interesting how they combined psychology with the way we spend money. Rather rudimentary with few (or none) applicable new ideas. easy read.
Gabriel Perlin
Jul 19, 2015 rated it it was ok
A pleasant summary of introductory material. Readers that are mildly familiar with the subject discussed will find nothing new in this book.
Jered Skousen
Sep 20, 2008 rated it it was amazing
Why Smart People Make Big Money Mistakes
Gary Belsky and Thomas Gilovich

This book looks at the behavioral psychology of why people make the financial decisions they do.

Chapter 1 – Mentally categorizing money
We place different values on the same dollar amounts. Often, money that comes as a bonus, for example, we treat much different than the money we earn.
This can be detrimental if we are paying high credit-card interest, and keeping money in a savings account for a rainy day – as long as the rain
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Adam
Feb 01, 2017 rated it it was amazing
My review is a bit skewed. Raise your hand if you like economics? Personal finance? Psychology? For me, all 3 topics are really interesting and fun to learn about. This merges all 3 so if they aren't your cup of tea this one may not be for you. Regardless though, the book is a quick read that is engaging.

The authors have a fun way of drawing you in and provide lots of predicaments to think through to prove their points, often about the shortcomings of human psychology in decision making. Having
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Jessica Davis
Jan 22, 2019 rated it liked it
I like to read a money/wealth management at the beginning of every year and this year, this was it. In the beginning I wasn't sure this book would be particularly helpful for me. There was a lot of discussion on the importance of investing. I already invest through my employer-sponsored insurance plan so this didn't feel like particularly relevant advice. I guess what was helpful was the advice that most people are terrible at making investment decisions and the best decision they can make is to ...more
Chaitanya
Nov 19, 2017 rated it really liked it
Behavioral economics became buzz word when Nobel economics prize 2017 was awarded to Richard Thaler for his contribution to this subject. That's how I stumbled upon this book. This book reveals some eye opening habits of ours, which when to think of it does not seem very logical/rational to but we do it anyway unknowingly (Initially I was in denial stage considering myself smart to take decisions but exercises proved me wrong !). This books is very much important in Financial literacy, in unders ...more
Scott
Mar 21, 2018 rated it it was amazing  ·  review of another edition
Highly Recommended

As I get older (and hopefully wiser), I’ve begun to understand some of the money mistakes I’ve made along the way. After reading Why Smart People Make Big Money Mistakes, I see that I’ve fallen prey to many of the issues raised by this excellent book. This book does a wonderful job of explaining how humans are naturally inclined to focus on the short term and have multiple inherent biases in their reasoning that lead to big money mistakes. More importantly, it provides thought
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Shailesh
Dec 18, 2018 rated it it was amazing
One of the best books that I have read on behavioral finance. The book is well organized into various chapters with each focusing on specific trait. And each chapter has numerous examples to illustrate the concept & is concluded with nice action items.
Basili
Feb 11, 2018 rated it it was amazing
This is a practical book that shows, through studies and other academic work, how psychology works against our pursuit to make smart financial investment decisions. The book is elucidating for all, as it provides some steps to improve financial decisions, and is written in an engaging style.
Marcela Segade
Jan 13, 2019 rated it it was amazing  ·  review of another edition
Excellent primer on making smart financial decisions!

Good walkthrough of essential aspects to consider in making financial decisions and staying healthy when it comes to your bank account health. Totally absorbing. Simple and good advice for experts and novices alike.
Scott Diamond
Dec 06, 2016 rated it really liked it
Shelves: nf-econ-invest
This book has some good insight on psychology that I had not been exposed to before but the finance/investing advice is pretty basic.
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