"The marginal propensity to consume from winning $1,000 in a lottery is likely to be much higher than a similar increase in the value of a household's retirement holdings. There were countless fun anecdotes in this book, from how to win at the NFL draft to bias in TV game shows, but one that got me to stop and tell my wife about it (although this happened a few times) was this one: People don't see all their money as equal I just see the other side of the argument better now. Now, I better understand the argument of the debt snowball proponents.ĭon't get me wrong - if you ask me for a debt payoff method suggestion, I will tell you to pay off the highest interest debt first. I used to brush this argument off, thinking that anyone buying into the debt snowball method was irrational. However, some argue that the debt snowball method is better for motivating people to pay off debt. It's the one that wins in a numbers-based world full of "econs." You will pay the least amount of interest with that method and keep more money in your pocket. The avalanche method is the clear mathematical winner. Another popular option is the debt snowball method - paying off your largest debt first, regardless of interest rates. I believe the debt avalanche method is the best strategy for eliminating debt - paying off high-interest debt before low-interest debt. One example of how this lesson changed my perspective regards debt payoff. Here are three of the most memorable lessons I learned from the book: 1. Or, as Thaler would put it, everyone is not an "econ." The most notable lesson from the book is that the world is not 100% numbers-based. The book was fast-paced and entertaining, and also provoked my thinking on a lot of levels.
I recently finished reading " Misbehaving: The Making of Behavioral Economics " by Richard Thaler, an economics professor who won the Nobel Memorial Prize in Economic Sciences in 2017 for his work in behavioral economics, a field in which he's considered a founding member.
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