Category : Basic concepts

Bankers’ bonuses.  Are they fair? That’s not necessarily about “personal finance”.  But it is a lot about psychology, in terms of “what is fair” – and also, what is a fair reward to pay somebody to invest your money for you? When … Continue reading →

Some people, particularly those involved in finance, seem to have a lot of trouble understanding chance.   Imagine that on holiday in Australia you bump into your distant cousin that you only met at Pat’s wedding fifteen years ago and it turns out … Continue reading →

I feel quite sorry for George Osborne.  Not that I take much notice of politicians normally, but he’s been made the poster boy for the blind stupidity of politicians everywhere with the reports of his “I’m going to Ireland to … Continue reading →

People advising on finance are supposed to “know the customer”.  They should find out your goals, what your attitude to risk is and so on.   That may be tricky, since you probably don’t know what your values and goals are … Continue reading →

Imagine this: You’re a contestant in a new game show.  You’ve already won £1,000 and you have two options.  A) You can take an additional £500 and walk away.   B) You call the toss of a coin.  If you call … Continue reading →

There’s a theory that if we teach people about the technical side of finance, increase their “financial capacity”, that will help people. Say we apply it to archery.  Imagine masses of people in a field.   With them is archery equipment, so there are … Continue reading →

There’s lots of evidence that we aren’t rational with money. Many people writing about money and psychology think people “ought” to be more rational. Actually, it isn’t as simple as that, there are at least three problems with it [amazon-product]0713997516[/amazon-product] First, sometimes … Continue reading →

The environment humans developed in shapes the way we are. Not just our bodies (like walking on two legs instead of four) but how we think and feel as well.     Some people talk about “social Darwinism”, meaning that we adapt … Continue reading →

The theory name always gets shortened.  More completely it is, “Evolution by means of Natural Selection”. The theory also applies to brains and emotions, not just bodies. Genes try out different combinations pretty much randomly, since sexual reproduction, apart from … Continue reading →