Home › Archive for Financial Decisions
Blog Archives

Improving your Habits with Choice Architecture

Choice Architecture Coaching to Improve Habits Picture credit: Ben Deavin

What is choice architecture, and how can we use it to improve our own decisions?

Choice architecture is the art and science of how to present choices to decision makers. The way a choice is presented to us has a much bigger influence on our behavior than we may realize. For example, children eat more fruit when fruit is placed in more prominent positions in a school cafeteria. Or, people are more likely to enroll in retirement savings plans if the employer makes that plan the default option – which is the option that happens when you do nothing. Similarly, people eat less when the default serving size is smaller.

Two recent books shine a light on choice architecture, and on how it affects our decisions:

Eric Johnson’s The Elements of Choice (2021) offers a guide to creating effective choice architectures.

…

Read more ›


Summer Reading List 2019

Summer Reading List: Ursina's Book Recommendations on Creative Decision Making and Goal AchievementSomehow it became a summer tradition of this blog: here’s my latest list of book recommendations (you can see the lists from previous years here). As usual, they all have something to do with creative decision making and goal achievement. The first is a novel, the rest is non-fiction:

Wood, Benjamin (2016). The Ecliptic. A Novel. 

More than the plot, it was the premise and setting that had me hooked from the start: an isolated artists’ colony on a small island – its anonymous residents lingering for years, all expenses paid. Relieved of their own ego and the burdens of everyday life, they should be free to create their next masterpieces. Needless to say, it doesn’t work out quite so smoothly for everyone. You can start reading here.

Two excerpts highlight why this book fits this particular reading list and the topic of my blog.

…

Read more ›


Summer Reading List 2018

New Summer Readings: Books on Decision Making and Goal AchievementAnother hopefully long and beautiful summer is coming up, and my intention is to spend a lot of it productively: reading. Preferably in a hammock. If you feel the same, here comes my new list of book recommendations about decision-making and goal achievement.

Dan Ariely and Jeff Kreisler (2017). Dollars and Sense: How We Misthink Money and How to Spend Smarter. I’ve always enjoyed Dan Ariely’s self-deprecating sense of humor, and in this collaboration he found a great match in Jeff Kreisler. Even though I was familiar with most of the concepts they discuss, this book not only kept me entertained, but also highlighted very clearly (and sometimes painfully) the irrationalities around money that I still allow into my life. Read a sample here.

Chris Guillebeau (2017). Side Hustle: From Idea to Income in 27 Days.

…

Read more ›


Valentine’s Special: Chocolate and Coaching

I’m offering a new coaching package for couples. Could you use some help improving your shared time management, figuring out priorities, getting better organized together? If you sign up for your first exploratory Strategy Session before Valentine’s Day, you’ll receive a box of the world-famous Teuscher Champagne Truffles at our first meeting.

Read more about the couples coaching program and schedule a first session here.

Couples Coaching Valentine Special
And no, you’re not the only one wondering: people keep asking me whether I’m related to the “Chocolate Teuschers”. Sadly, not that I know of. But that won’t stop me from loving them, and from using their most delicious treats to get us all started on a sweet note.

by Ursina Teuscher (PhD), at Teuscher Decision Coaching, Portland OR

…

Read more ›


Consumer Decisions: Should we Invest into Possessions or Experiences?

If your finances are limited at all as a consumer, you are constantly faced with the decision: how should you spend your money in order to get the most lasting happiness and satisfaction from your purchases? 

With the holidays and the gifting season coming up for many, this is a particularly important question, because you may be spending money on others, not just on yourself.

Consumer Decisions: Possessions or Experiences?

Photo by Duncan Rawlinson

Should we buy possessions or experiences?

A lot of research shows that spending our money on experiences, such as vacations and concerts, makes us happier than buying material possessions, like clothes and electronic gadgets. For experiences, we’re also more likely to regret inaction, that is the decision NOT to buy, as a missed opportunity. For material purchases on the other hand,

…

Read more ›


Decision Skills Matter

To what extent do decision skills matter in real live? Do these skills actually lead to better decision outcomes and fewer unpleasant life events?
Decision Skills Matter
Or, more specifically: do people who perform better on hypothetical decision tasks also make better real-world decisions, to the extent that they experience better outcomes over the course of their lives?

Let’s take a step back. Based on all the different theories of what counts as a “rational” choice, we know that some people perform better in the kinds of choices that are typically presented in research studies. There are people, for example, who are less affected than others by the way information is presented to them (in other words, they are better able to resist framing effects). Or, while most people are overconfident most of the time, some people actually have a pretty accurate level of confidence into their own judgments.

…

Read more ›


Upcoming Workshop: Business Vision

Workshop: Business VisionMy next workshop is targeted to small business owners, solo-preneurs, people in private practice, or those interested in starting a business. It will be an intensive session to hone your business vision and mission.

The workshop is limited to a small number of participants to allow for a very personalized and interactive approach. We will work together to systematically explore your vision and purpose as a business, and to clarify your intention, values and goals.

As a take-home gift, you will receive a little guidebook for strategic planning. The guidebook goes beyond the contents of the workshop. It can serve as your own resource later on if you choose to develop a more detailed strategic plan based on your core vision.

If you know of people who are either thinking of starting a business or are running their own small business or private practice,

…

Read more ›


Numerical Skills for Financial Decisions

Relatively few people own private long-term care insurance, even though long-term care is one of the largest financial risks currently facing older people. A new study suggests that poor numerical skills may explain a part of that phenomenon: people with better numerical skills (even after controlling for education and cognitive function) are more likely to hold long-term care insurance.

Given the complexity of this particular financial decision, it is not surprising that a lack of numerical skills would create barriers. Assessing the value of a private long-term care insurance policy involves a variety of calculations, such as determining the probability of needing care, evaluating the likely lifetime expense of premiums against the payments one could expect to receive, and comparing the costs and benefits of insurance against other strategies to manage the same risks. It is easy to feel overwhelmed by all this. A lack of skills to deal with all those numbers would certainly prevent people from making the best decisions for themselves.

…

Read more ›


Featured Video: Raise Your Children As Entrepreneurs

Entrepreneurial skills are not a part of traditional education, even though they are important if we want to empower more people to make an independent living in a world where not everyone can find a good job.

In this TED talk, Cameron Herald argues that we should encourage and foster those skills in children. He makes a case that entrepreneurial traits occur quite naturally in children and can be encouraged and reinforced in playful ways. He gives many practical suggestions how parents can help their children develop those skills. For example, rather than giving children allowances and thereby getting them used to expecting a regular paycheck, children could be paid for specific projects.

Many important traits could be developed in that way, including such big ones as creativity, social skills, a proactive attitude towards working, and an understanding of what it means to create value for others.

…

Read more ›


Poll Results: My Readers’ Guesses on Retirement Savings

Thanks to all of you who submitted your guesses on retirement decisions!

You can still access the poll, and read the original post.

We always hear that people are not saving enough money in this country, and I was therefore curious to find some actual data on how people are doing with their retirement savings. But I was also curious as to how my readers would estimate the numbers. Here are the results of my little poll and my search:

My readers’ guesses are shown in red, and the correct answers according to the U.S. Census Bureau in blue.

Sadly, it turns out you all were not nearly pessimistic enough! The actual data look a lot bleaker than my average reader’s guess. As many as 80% of Americans aged 30-54 believe they will not have enough money for retirement;

…

Read more ›


Savings and Retirement Decisions

How many Americans aged 30-54 believe they will not have enough money put away for retirement? According to the U.S. Census Bureau (retrieved from Statistic Brain Research Institute), as many as 80%.Savings and Retirement Decisions 1

How many Americans don’t save anything for retirement? The U.S. Census Bureau estimates 38%.Savings and Retirement Decisions 2

How many Americans who started working at the age of 25, have adequate capital stowed away for retirement by age 65? The correct answer is 4%, again according to the U.S. Census Bureau, as retrieved from Statistic Brain Research Institute.Savings and Retirement Decisions

Decision scientists have long been interested in savings decisions. They have found many reasons why people don’t save enough,

…

Read more ›


Book Recommendation: Strategic Decision Making

Craig W. Kirkwood (1997). Strategic Decision Making: Multiobjective Decision Analysis with Spreadsheets.

*** Geek Alert! ***

Skip this month’s book recommendation if you don’t like spreadsheets. This book by Craig Kirkwood is all about spreadsheets, and how to use them to make smart decisions.

It goes way beyond anything I’ve ever taught in my own classes, and beyond anything I will probably ever use, even in my consulting work. But it’s great stuff! So yes, this is a book for geeks.

If that’s you: I have a copy that you’re welcome to borrow (it’s out of print and very expensive to buy at this point). AND: when you pick it up in my office in Portland, I’ll treat you to an excellent Affogato at Spella Caffe. Just because I like to talk to geeks,

…

Read more ›


Featured Video: Baumeister on Self-Control

Here’s a great talk by Roy Baumeister about all the cool research he and others have done on self-control:

Self-control seems to be one of only two human traits that can predict success through a broad range of situations. The other one is IQ. But the good news about self-control is that we can train it, even as grown-ups, while IQ is much harder to increase. (Only recently have attempts to increase people’s fluid intelligence shown some success, but the effects are small, not very robust, and very hard-earned.)

One of the intriguing findings that Baumeister mentions in his talk: effective self-controllers actually show LESS frequent resistance towards desires, less guilt, and lower life stress. Instead, it looks like they have more proactive coping mechanisms, which set in before the desires even show up. In other words, they have learned to avert crises in advance and therefore have to cope with them less.

…

Read more ›


Book Recommendation: Smart Choices

John S. Hammond, Ralph L. Keeney, & Howard Raiffa. (1996). Smart Choices: A Practical Guide to Making Better Decisions.

It’s time to recommend another classic. This book is a short and very useful guide, presenting a variety of decision tools. It doesn’t offer too much in the way of psychological explanations of why we need the tools and how they work, but it is a nice little toolkit.

by

…

Read more ›


Book Recommendation: Strategic Planning

Erica Olsen. Strategic planning kit for dummies.

If you’re a decision-maker in an organization and you’re serious about strategic planning, I highly recommend this book by Erica Olson as a very thorough but practical reference. It will give you more than you need, but it is very clearly structured so that you easily focus on whatever aspects are relevant to you. It also includes a DVD with worksheets, templates, and videos.

Book Cover Strategic Planning Erica Olson

Why does strategic planning matter?

Strategic planning offers a systematic process to figure out where you’re going – as a business or as any kind of organization.

Erica Olsen reports that CEOs of the Inc. 500 spend 50-90 percent of their time on strategy and business development. Why? Probably because they realize how much it pays off. According to her research, the firms with a high commitment to strategic planning had higher sales volumes as well as net incomes than those with  lower commitment.

…

Read more ›


Book Recommendation: Nudge

Richard Thaler and Cass Sunstein.
Nudge: Improving Decisions About Health, Wealth, and Happiness.

This book offers very well-researched insights into how “choice architecture” can successfully nudge people toward making the best decisions for themselves, such as choosing healthier food, exercising more, saving more money, etc. Nudges consist simply of changing the way choices are presented, without changing or restricting the options or adding any incentives.

The book is especially interesting for people who care about the promotion of human welfare in public policies, but the knowledge can also be help us change our own environment to help us make healthier long-term decisions.

As a very useful practical addition, Dilip Soman, Min Zhao, and Nina Mazar have published a free online-report called “A Practitioner’s Guide to Nudging”

…

Read more ›


Book Recommendation: “Decisive” by Chip and Dan Heath (2013)

Chip and Dan Heath (2013). Decisive: How to Make Better Choices in Life and Work. New York: Crown Business.

Book Cover: "Decisive" by Dan and Chip Heath

I was impressed with this new book by the Heath brothers, a very helpful guide to decision making. It does not offer any formal tools to evaluate options, but a process with powerful ideas that are easy to apply to any personal or business decision.

They call their approach the WRAP process, an acronym standing for (1) Widen your options, (2) Reality test your assumptions, (3) Attain some distance, and (4) Prepare to be wrong.

Here’s a sample of some ideas that I’m finding very effective with clients as well as for my own decisions:

For widening your options,

…

Read more ›


Book Recommendation on Consumer Decisions: “Spent”

I guess I could call this a “seasonal pick”, as Amazon keeps counting down the days to Black Friday:

Geoffrey Miller (2009). Spent: Sex, Evolution, and Consumer Behavior 

Book cover (cropped) of "Spent" by Geoffrey Miller

Geoffrey Miller presents an evolutionary psychology perspective on consumer decisions: why do we buy so much, and why do we buy the stuff we do?
(No, it’s not about cave dwellers and their preference for fur.)

Just like his earlier book “The Mating Mind”, it was very much worth reading the whole book, rather than just leafing through it and thinking that I “got the message”. The main message may indeed be simple (conspicuous consumption as a mating signal to indicate fitness), but there is a huge richness in data and an elegance of theory that make this book thought-provoking, amusing, and insightful on many levels. It also helps that Miller is a fearless,

…

Read more ›


Top

Privacy Policy - Terms and Conditions