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Common Errors When Buying Insurance

The Wall Street Journal

Sunday, February 11, 2018

When it comes to picking health insurance, many consumers make choices that are detrimental to their financial health and that can cost them hundreds if not thousands of dollars a year. 

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The Secret to Getting Workers to Save More for Retirement

The Wall Street Journal

Sunday, December 10, 2017

In the mid-1990s, we began thinking about how to solve an emerging problem: American workers weren’t saving enough for retirement. At the time, traditional pension plans were starting to disappear (they have since become increasingly rare), and it was clear that most workers would need help saving enough on their own.

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How Digital Tools and Behavioral Economics Will Save Retirement

Harvard Business Review

Thursday, December 7, 2017

In my work as a behavioral economist, I’ve thought a lot about how nudges can drive lasting behavior change. In the domain of retirement savings, Nobel laureate Richard Thaler and I devised a program called Save More Tomorrow back in the mid-1990s that used nudges to help people make better decisions about their long-term financial future.

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To Make Smarter Spending Decisions, Answer This Question

The Wall Street Journal

Tuesday, September 12, 2017

We’d like to ask you a question about your current self and future self. The question will involve a bunch of circles, but bear with us: knowing which circles you identify with can help you determine if you should be spending more or less money now to live the life you want—and the life you can afford.

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Governments are trying to nudge us into better behavior. Is it working?

The Washington Post

Friday, August 11, 2017

All over the world, public and private organizations are showing keen interest in “nudges” — interventions and policies that rely on behavioral science to steer people in a particular direction but preserve their freedom of choice. A warning is a nudge; so is a reminder (for example, that a bill is coming due). Automatic enrollment in retirement plans, or in green energy, also count as nudges, so long as people are allowed opt out.

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As an Investor, Do You Suffer from ‘Narrow Framing’?

The Wall Street Journal

Sunday, June 11, 2017

Many of the financial mistakes people make are caused by a fundamental shortcoming: They can’t see the big picture. In behavioral economics circles, this is known as “narrow framing”—a tendency to see investments without considering the context of the overall portfolio. Many people are vulnerable to it. Are you? To find out, consider a few questions about a coin flip.

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Would You Rather Have $1 Million or $5,000 Monthly in Retirement?

The Wall Street Journal

Monday, March 27, 2017

These days, investors can track at any moment how the market’s daily ups and downs are affecting their wealth. Even investors with multiple investment accounts spread across different firms can calculate changes in their net worth in real time, thanks to websites and apps that do all of the work for them.

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People Trying to Save Prefer Accounts That Are Hard to Tap

The Wall Street Journal

Sunday, February 12, 2017

Imagine this scenario: Somebody offers you $5,000 to save for a future financial goal,such as a vacation or home purchase. You can allocate the money across three accounts, all with the same interest rate. The first account comes with no restrictions, meaning you can withdraw the money whenever you want. The second account comes with a 10% penalty if you withdraw the money within the first year. The third account prohibits withdrawals within the first year.

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The Mistakes We Make When Giving to Charity

The Wall Street Journal

Sunday, December 11, 2016

All of us think about giving during the holiday season. But it’s possible that we’re thinking about it wrong. That’s the conclusion of recent research, which suggests that our generosity and good intentions are hamstrung by tricks our minds play on us. Most people by their nature are very generous, but they don’t think clearly about the choices they make when they donate to charity.

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Before Retiring, Take This Simple Test

The Wall Street Journal

Wednesday, October 26, 2016

One of the most important financial decisions people make is when to retire. It’s also one of the worst decisions many people make. Specifically, they retire too early, resulting in serious financial shortfalls in old age.

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How to Get More Pleasure Out of Retirement Spending

The Wall Street Journal

Sunday, September 11, 2016

When I came back from a trip recently, I surprised my 6-year-old daughter with a box of chocolate truffles. In return, she surprised me with an insight into retirement planning—and why we’re doing it all wrong.

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The Financial Price of Forgetting Bad Times

The Wall Street Journal

Sunday, June 12, 2016

How well do you remember the last financial crisis? Can you clearly recall what happened to your finances? Most people are pretty confident in the accuracy of their memories. Unfortunately, decades of research suggest their confidence is likely misplaced. And that overconfidence can cost them, especially as they age.

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How People Underestimate Spending in Retirement

The Wall Street Journal

Sunday, March 27, 2016

It’s conventional wisdom among financial advisers: People planning to retire should aim to maintain 70% of their current income in retirement. It sounds sensible enough. But in reality it can encourage people to underestimate the amount of money that will keep them content in retirement.

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Why Fund Ratings Could Be Misleading

The Wall Street Journal

Sunday, February 7, 2016

How helpful are mutual-fund rankings from research firms such as Morningstar and S&P Capital IQ? New evidence suggests that for many investors, the answer may be “not very.” Fund guides such as Morningstar’s popular rating system of one to five stars appeal to fund buyers because they transform complicated data into an easy-to-understand metric: A five-star fund is superior to a four-star fund, which is superior to a three-star fund, and so on.

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How Social Media Can Feed Investors’ Panic

The Wall Street Journal

Sunday, December 13, 2015

It isn’t always good to know what other investors are thinking. In recent years, a branch of scientists known as neuroeconomists have discovered a connection between a person’s ability to recognize what others are thinking and how well that same person’s investment portfolio will likely perform in the next market crash. And the connection is not a positive one.

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Keep Stock-Market Apps Off Your Phone

The Wall Street Journal

Sunday, November 1, 2015

Is your smartphone making you a not-so-smart investor? For many people, the answer is yes, for a simple reason: They tend to make investment decisions based on short-term losses in their portfolio, ignoring their long-term investment plan. Behavioral economists call that tendency “myopic loss aversion”—and it can be incredibly costly.