Why People Make Bad Decisions About Money

Daniel Kahneman Interview ('Big Think')

Daniel Kahneman discusses how bias affects our decision choices in spending. Emotion plays a significant role in how we make these decisions. Our cognitive processes become fairly narrow when faced with even large spending choices. We struggle to look at the bigger picture the broader view- we engage in 'narrow framing' during these choices. Individuals who are more numerate tend to make broader and therefore more effective financial decisions.