Skip to content

Top ten behavioral biases illustrated.

Good morning, money nerds! It’s Monday! It’s the start of another week. As always, Jim and I are here to share the time with you — and to share some of our favorite money stories from around the web. Let’s get started.

First up, Robert Seawright at Above the Market has been publishing a great series of posts exploring the top ten behavioral and cognitive biases that cloud our thinking — with money and everything else.

He’s illustrating each post with examples from music, film, and pop culture, which helps make each bias more relatable and understandable. As I write this, he’s covered six biases and has four more to go.

  1. Believing is seeing (confirmation bias)
  2. A bird in the hand (loss aversion)
  3. The Lake Wobegon effect (overconfidence)
  4. Intentions and outcomes (self-serving bias)
  5. Everybody loves a winner (herding behavior)
  6. The map is not the territory (the narrative fallacy)
  7. Planning is guessing (the planning fallacy)
  8. I knew it all along (hindsight bias)
  9. Fighting the last war (recency bias)
  10. Often wrong but never in doubt (bias blindness)

How much are we paying for our subscription services? A lot. [The New York Times] — “Online subscriptions sure sound cheap, but what do a few bucks a month to watch TV shows, store photos online and stream music add up to? Quite a lot, it turns out. In 2019, we each spent $640 on digital subscriptions like streaming video and music services, cloud storage, dating apps and online productivity tools.” [Related: Another six-million Americans ditched cable last years.]

If you want a marriage of equals, then date as equals. [The Atlantic] — “Heterosexual women of a progressive bent often say they want equal partnerships with men. But dating is a different story entirely. The women I interviewed for a research project and book expected men to ask for, plan, and pay for dates; initiate sex; confirm the exclusivity of a relationship; and propose marriage. After setting all of those precedents, these women then wanted a marriage in which they shared the financial responsibilities, housework, and child care relatively equally. Almost none of my interviewees saw these dating practices as a threat to their feminist credentials or to their desire for egalitarian marriages. But they were wrong.”

Why avoiding bad decisions is more important than making great decisions. [Of Dollars and Data] — “I used to think that my edge in life was being smart, but it really isn’t. My edge is being not stupid. There’s a big difference…When I look back upon my life I am quite proud of my general ability to be not stupid.”

That’s it for today. We’ll be back tomorrow with more great stories. See you then!