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

Why Smart People Make Big Money Mistakes And How To Correct Them by Gary Belsky
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it was amazing
bookshelves: economics, favorites, psychology, money

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 and behave doesn't change in a few decades. As such, most of the cited research and learnings still hold true.

Which bring me to the best thing I liked about this book -- the authors pull in and quote a TON of research. This whole book could be described as an aggregation of behavioral finance research done by a few authors. Each of the eight chapters covers something unique and the book itself doesn't feel fluffed. Each chapter has a very readable, skimmable and consistent format. I do recommend reading page to page and not skimming if you're interested in the subject matter. Speaking of the format, each chapter starts with a thought-provoking story or situation, explains what the actions and influences are, and ends with warning signs and ways to improve.

What I didn't like about the research is lack of diversity in quoted material. Most of the cited research is by Tversky and Kahneman. Now that could very well be because those two did the most work in this field (did they? I don't know), but I'd still like to see a diverse collection of research.

Finally, I would recommend this book to anyone who's new to behavioral finance. It will give you a good base understanding of how human mind operates when it comes to money, what our biases our and how to check (and fix them). I certainly will be applying some of the knowledge I gained!
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Reading Progress

December 5, 2015 – Shelved
December 26, 2016 – Started Reading
January 1, 2017 – Finished Reading

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