Jeff Kreisler (portrait doneoutside in city)

Jeff Kreisler will share insights from behavioural science to help us understand the hidden forces that often lead people astray when it comes to managing finances, saving and investing at CPA Canada’s annual Mastering Money Conference. (Photo by Dan Vicente)

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Why are people so irrational about money? Author Jeff Kreisler looks to behavioural science for some revealing insights 

As a speaker at CPA Canada’s Mastering Money Conference, Kreisler will highlight common money traps along with constructive ideas based on our mistakes

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Why do otherwise rational people make sometimes-irrational decisions about money? Why do they lose all sense of reality when it comes to budgeting for their discretionary expenses? Why are they always prepared to do the right thing—as long as it’s in the future?

These are precisely the kinds of questions that fascinate Jeff Kreisler, editor-in-chief of PeopleScience.com and award-winning co-author of Dollars and Sense. This year, at CPA Canada’s annual Mastering Money Conference in Vancouver (November 22 and 23), he’ll be sharing insights from behavioural science to help us understand the hidden forces that often lead people astray when it comes to managing finances, saving and investing. 

As Kreisler explains, a phenomenon called mental accounting often comes into play when people account for their discretionary spending. “They do it in a way that isn’t rational,” he says. “And the same applies to earning money. If you won a lottery for $5,000 you would spend it very differently than you would if you got a work bonus for $5,000 or if you got an inheritance for $5,000 from someone you love. Ultimately, we should think all of our money is the same. But that is not what happens.” 

Although Kreisler studied traditional economics at Princeton University, it was only much later that he developed an interest in behavioural science. He had just written his first book, a satire called Get Rich Cheating, which “was about politics and sports and business and accounting.” A copy of the book ended up in the hands of well-known behavioural science expert Dan Ariely, a professor at Duke University and the founder of the Center for Advanced Hindsight.  

“Dan asked me to give a lecture to his graduate students about the book,” says Kreisler. “It was fascinating to see their reaction and to interact with them and learn about Dan’s work. That was my lightbulb moment. Behavioural economics added a psychological component to economics—it was more about observing how people actually behave. That made a lot more sense to me than traditional economics had done.” 

Kreisler stresses that almost anyone can fall prey to irrational thinking when dealing with their own money. That’s because emotions come into the mix. “Your own money is your kids’ future, it’s your retirement, it’s taking care of your parents, it’s your marriage, it’s all of those things that are fraught with emotions as well as uncertainty.”

At the conference, Kreisler will use studies and anecdotes to discuss some common money traps, while also providing constructive ideas based on our mistakes. 

“I won’t be providing off-the-shelf solutions, but I will be pointing to some things others have done that have proven effective,” he says. “I’m sure with this audience many of the different biases will resonate—whether they themselves do it or whether they have seen their clients do it.”

BE PART OF CPA CANADA’S EVENTS

Join us at the annual Mastering Money Conference in Vancouver on November 22 and 23, 2018, where thought leaders and industry experts will bring their unique perspectives to this year’s theme, Education to Action.