The Psychology of Money

April 7, 2015 9:04 PM

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The Psychology of Money

If your brain is like most brains, it’s got an awfully high opinion of itself—pretty darned sure it’s pretty darned good at a lot of things. That probably includes handling money. But on that score your brain is almost certainly lying to you. No matter how much you’re worth, no matter how deftly you think you play the market, your reasoning lobes go all to pieces when cash is on the line. That is one of many smart—and scary—points made by author and J.P. Morgan vice president Kabir Sehgal in his new book Coined: The Rich History of Money and How it Has Shaped Us. Here, in no particular order, are seven reasons you should never leave your brain alone with your wallet.

Inflation? What’s that? You’re way too smart to think that if your salary doubles but the price of everything you buy doubles too you’ve somehow come out ahead, right? Wrong. In one study, volunteers were given the opportunity to win money that they could use to buy gifts from a catalogue. In later ...

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