Reddit reviews Misbehaving: The Making of Behavioral Economics

That sounds like an nice idea, but sadly it's not true. On the flip side, I wouldn't be so critical as to call people stupid.

Lots of studies have pointed out consistent patterns where we humans regularly make incorrect economic decisions in certain situations. In other words, we have evolved all manners of mental shortcuts that work well enough in basic scenarios but are utterly trivial to exploit. As much as I'd like to blame the corporations, the truth seems closer to: user behavior comes first, the lies taking advantage of it come second.

In this specific case, people are wired to enjoy feeling like they got a great deal and obtained something more efficiently or at a cheaper price than the average person did. They enjoy this feeling much more than they enjoy the feeling of comfort knowing they are buying something at a fair price.

If this sort of stuff sounds interesting to anyone, I highly recommend Misbehaving, which particularly comes to mind as it uses the JCPenney case to talk about these flaws in our thinking and why the idea was doomed from the start.

Nudge by Thaler (Nobel Prize in Economics) & Sunstein
A book which is unquestionably about Economics and Public Policy

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I haven't read it yet but it's on my list:
Misbehaving: The Making of Behavioral Economics also by Thaler

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Thinking Fast & Slow by Kahneman (Nobel Prize in Economics)
Not strictly about economics but Kahneman essentially created the field of "Behavioral Economics" and the implications for his theories about decision making bias are extensive in Economics. In many ways Kahneman and Tverski's work is the foundation of Thaler's in Nudge.

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Also:
Predictably Irrational by Dan Ariely
If you can't tell I like the Behavioral Econmics books...

I would check out Paul de Grauwe's lectures. A good history on Behavioural Finance, including pioneers and specific papers, can be found in Richard Thaler's Misbehaving. Andrew Lo's Adaptive Markets is the most recent book for specifically markets. But all these books on markets tend to discuss the same anecdotes from Kahnemann and Tversky, without giving much thought to applicable models. De Gauwe's book on the other hand offers some ready-made code for matlab even.

You should read books like this https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X

I'm currently reading the Misbehaving by Richard Thaler. It's a very engaging read. He has a nice writing style.
https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X#

I recommend you give this book a read:

http://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X/ref=tmm_pap_swatch_0?_encoding=UTF8&qid=&sr=

It's a summary of the results of behavioral economics since the 1960s. The upshot is this: If you gave most people that money, they wouldn't prepare for retirement, as most human brains don't come wired for that sort of long term financial planning, and most people simply haven't had the sort of lifetime cultural experience required to overcome those evolved deviations from "rational" behavior.

This isn't about assuming people are "stupid". Very intelligent and sophisticated people often deviate from economically "rational" behavior without realizing it. Until we have a comprehensive system of education in place which gives people the tools to be individually rational, we need structures in place to compensate for perfectly normal "irrational" behavior. Social Security is one of those structures.

Only as much as seatbelts and airbags encourage bad driving.

Seatbelts won’t stop your car from crashing but they will help you, the squishy human. Similarly having some % of your investments in bonds and CDs won’t stop the stock market from crashing, but will help human beings make it through without selling their stocks. Especially if they lose their job, get hit with a surprise expense, or they or a family member gets really sick.

You can try to take the emotion out of humans, or you can accept them as they are and give them appropriate advice. Check out the book by the economist who won the novel price last year, Richard Thaler, Misbehaving: The Making of Behavioral Economics for more about the differences between humans and rational robots.

Sorry for the misleading link label. Thanks for pointing that out!

About the job hopping and compensation paper:
I've read the paper a few years back, yes. I used it to justify my job hopping for a few years. But, even if you consider the act of "finding your calling" science, to have that result you'd have to job hop between different professions. Most of the job hopping I'm seeing is between almost identical companies (IT firm making websites to another IT firm making websites, marketing agency to another marketing agency). Sure, if you're finding your calling by trying different jobs, this post doesn't apply to you.

Also, I'm writing about achievement and happiness. Not compensation. And money helps with happiness up to a certain point, which most smart people reach quite easily. After that, your compensation doesn't have any lasting effect on your happiness. The driving force, in that case, is a combination of Autonomy, Mastery, and Purpose (model from the amazing Drive book). This post is about your purpose and how you can build your way towards it.

Finally, consider the fact that this is an observational study that found a correlation between switching jobs and salary. There is also a high correlation between Nicolas Cage movies and Swimming Pool drawings. On a more serious note, economic papers create generalized models which are great for certain things (studying unemployment rate), but aren't good tools for making personal decisions (I suggest looking into behavioral economics for better advice on personal improvement) .

Don't take this the wrong way, though. I will on my argumentation so that my points are more compelling. Thanks for that, as well!

PS: The post is supposed to be my opinion. Most of psychology is not backed by actual trials. It's backed by observations and correlations aka informed opinion. Also, the rules clearly state that [Advice] posts are "where users want to share key information about what worked for them when getting disciplined."

So I usually tell my MBA students to just read books, not textbooks. Here are a few of my general suggestions:

Nudge, Thaler and Sunstein

Misbehaving Thaler

Superforecasting Tetlock and Gardner

Zombie Economics Quiggin

If you need more suggestions or want to discuss any of the ideas in these books, don't hesitate to ask.

Amazon

It's a book about behavioral economics. I just got past a point where he argues against efficient market and price-is-right by looking at closed-end funds vs the sum of the positions in them. Long story short, efficient price-is-right would dictate the prices be the same, but you can often get a closed-end fund that is cheaper than the sum of its parts. Moreover over time the delta tends to decrease, so someone could reasonably point at a deeply-discounted closed end fund and expect it to rise closer to parity with the sum of its parts.

An ETF that does this for you would be a great way for me with no time to get in on that action.

nope there are plenty of systems that specifically take into account that people can sometimes fuck up, random things happen, people are irrational beings with animal spirits

https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X

https://www.amazon.com/Animal-Spirits-Psychology-Economy-Capitalism/dp/069114592X