Sunday, September 9, 2018

Behavioral Economics

I'd never heard of the term 'behavioral economics' before I read this article but it looks like an interesting concept.  The author of the article explains some behavioral tricks that he used to curtail his spending (like tracking each transaction which increases the "pain of paying") and then had these tricks evaluated by behavioral economists (who knew there were such jobs?) to determine their efficacy.  That seems to be the same concept behind cash-only living.  When you spend cash it both increases the psychological pain of buying things and it becomes an excellent way to cut your spending as opposed to, say, using credit cards which make you feel like you can buy anything because you don't have to actually pay money for the things you want at the point of purchase.  While some of the experts disputed his findings, I say whatever works.  Some people really do need to switch to an all cash diet to reign in spending while others who have more financial control of their lives can use credit cards and pay them off each month while easily sticking to their budget.

1 comment:

  1. I only recently, like several months ago, got a debit/credit card. I hate using it, so it saves me money. I always feel like I am doing a bad thing when I use it. So, having to fish out cash feels better to me.