Traditional Economists or Self-help authors?
So the question is whether popular finance books give the same valuable advice as academic economists.
Economist & Finance professor James J. Choi was so interested in this question that he surveyed the 50 most popular personal finance books on Goodreads.
1️⃣ Economists
You might assume that economics professors have more sophisticated perspectives than self-help authors: perhaps popular authors are mistaken & their suggestions are oversimplified or ill-informed.
Academics in finance & economics who employ a traditional way of modeling human behavior, often known as ‘the rational actor model’ (which is most associated with neoclassical economics), are grounded in math & theory about optimal decision-making for rational agents.
They are often trying to answer the question “what should the perfectly rational person do?”
But we humans – that’s you & I – are the living proof that we are hardly rational.
2️⃣ Self-help Authors
Their recommendations are more focused on real human behavior (which is often far from rational) & are more in line with less-classical schools of academic economic thought (such as behavioral economics).
Behavioral economics & popular self-help book authors (at their best) offer practical approaches that work well when we can’t act like rational actors due to our limitations & psychology.
Sometimes self-help books have really good advice, but then again, many self-help books say silly or even harmful things.
In all cases, it’s up to you to apply discernment & a skeptical mindset in order to find what’s helpful for you in your personal situation.
➡️ 𝗡𝗼𝘄, 𝘄𝗵𝗼 𝗶𝘀 𝗿𝗶𝗴𝗵𝘁 𝗮𝗯𝗼𝘂𝘁 𝘆𝗼𝘂𝗿 𝗺𝗼𝗻𝗲𝘆?
A) Traditional Economists
B) Self-help authors
C) My financial advisor
D) I am
Chime in below in the comments👇👇👇
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One thing is for sure: Money matters, whether you want it to or not. There are many things you can go through life safely ignoring, but money isn’t one of them.
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“Isn’t it strange—the same people who laugh at gypsy fortune tellers take economists seriously.” — Unknown
Just one example where experts fail in predicting (just check out the last five years):
