Why Money Is The Oxygen For Life

(By Michael Noer)

We don’t always know … and because of this we need to experiment with more things. Imagine that one year you try an expensive vacation and one year you try the cheap vacation. Then you ask, ‘Does it matter which one? Does it change my happiness?

Dan Ariely is probably the most important economist on the planet who has no formal training in economics. Rather, the 46-year-old American-born Israeli received his doctorate in psychology–and he concentrates on studying how people actually behave (irrationally) rather than how traditional economists would prefer them to behave (perfectly rationally). That simple insight–and the complex, counterintuitive implications–is the basis of both his academic research and his 2008 bestselling book, Predictably Irrational. “The key to being rich is saving and saving early,” Ariely says. The problem is that saving is a long-term behavior and “in the whole repertoire of human behavior, there are almost no behaviors in which we take the long-term future into account: smoking, overeating, unprotected sex.”

Since saving is so hard, Ariely thinks we should rigorously audit our spending–and try to calculate how happy that spending really makes us. “We don’t always know … and because of this we need to experiment with more things. Imagine that one year you try an expensive vacation and one year you try the cheap vacation. Then you ask, ‘Does it matter which one? Does it change my happiness?’

“The other approach, of course, if you can’t save money, is to be really nice to your kids.”

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(Source: Forbes)

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