[F] Why Your Brain Sabotages Your Money [GREATEST HITS]

Merry Christmas. Happy final day of Hanukkah. Today is Monday, December 22. We are doing something very special this week. We are playing five of our greatest episodes from our greatest hits vault. These five episodes are themed around our favorite acronym, f, double I, r e. Today, we are playing an episode around the letter f, financial psychology. Tomorrow, we're gonna play the letter I, increasing your income. On Wednesday, Christmas Eve, we're gonna be playing the second letter I, investing. On Thursday, Christmas day, we're gonna play r for real estate, and on Friday, e for entrepreneurship. Five episodes this week, all from the greatest hits fault and themed around f, double I, r e. In honor of the letter f for financial psychology, we are playing an interview with the psychologist and behavioral finance expert, doctor Daniel Crosby, who discusses why we so often pay attention to the wrong things. This interview originally aired on 11/16/2022, and we are pulling it from the greatest hits vault to share with you. Enjoy. Hi, Daniel. Paula. Hey. Great to be here. Daniel, you are trained both as a clinical psychologist and as a behavioral finance expert. At the risk of an obvious question, how have you seen the worlds of psychology and investing overlap, and what is there new to say about it? We all know about cognitive biases. We all know about heuristics and mental models. What is new that is being discovered in this field? I don't think it's an obvious question. I think it's a great question, and I think the growth and the development of behavioral finance has largely mirrored the growth of psychology broadly. If you look at psychology, you know, it starts, you know, more or less is popularized with Freud. And Freud is, of course, studying what's wrong with you, right? He's studying brokenness, depression, anxiety, all these things. Only in like the eighties and nineties that we begin to get a psychology of wholeness, you know, a psychology of not just what makes people sad, but what makes people happy and what makes people great leaders and great spouses and great teachers. Same direction. It had to break with traditional economics by sort of documenting these departures from full rationality. You know, the heuristics and the biases that you mentioned. And that was an important break. Like, we had to sort of break ties with the old school and that was necessary. But, you know, now I think you're seeing a lot of talk about what makes people financially happy, what makes people well. And that I think is an exciting new direction for the field. Are there any discoveries that you've made as a behavioral finance expert? Any conclusions that you've read about or discoveries that you've encountered that are counterintuitive? A lot of what I'm finding is that money is so central to our lives. I'm 42. The American Psychological Association has studied the stressors in the lives of …