Category: Behavioral Finance

Question of the Day: What's the average lifespan of a toy fad?

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Dec 13, 2017
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Question of the Day, Behavioral Finance, Budgeting
Answer: About 8 months before it gets marked down With the holiday season upon us and the Fingerling in short supply, I thought the answer to this question was instructive in making me think that perhaps it may not last for long. From NY Times article: The $84 billion global toy industry is struggling for the attention of children obsessed with smartphones and tablets. Global toy sales have been growing each year, but at a slower pace than video games. The average life span of a toy fad is about...

What I'm Reading This Weekend (December 9-10)

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Dec 08, 2017
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Current Events, Cryptocurrencies, Retirement, Behavioral Finance
Thanks to Beth Tallman for curating such a great set of informative articles. Enjoy! Bitcoin crossed $16,000 (that's over 50% in less than a week); when will the bubble burst. WSJ still trying to figure out what's behind the meteoric rise (as am I). What's a Cryptokitty, anyway? Even for bitcoin, which is notoriously volatile, the upward lurch was jarring, astounding outsiders and thrilling those who have piled into the digital currency in recent weeks. The rally has been sparked by the...

Investing Reminder: Ignore the Noise of the Financial Press

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Dec 07, 2017
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Article, Investing, Behavioral Finance
  Great post here from the Irrelevant Investor that uses recent history to show poorly the financial press predicts near-term stock prices.  Here's how he opens: Could today have been a more obvious “sell the news event?” Of course it wasn’t obvious to me in the morning, and if we closed at the highs I wouldn’t be writing this, but come on. Could this have been any more obvious? The S&P 500 fell 1% from its highs, and closed down a...

Digging Deeper: Cash Incentives Lift Test Scores

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Dec 05, 2017
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Teaching Strategies, Behavioral Finance, Current Events, Research
We are so excited to have Beth Tallman writing content for the blog. Her weekly column "Digging Deeper" will involve in-depth research that goes beyond the headlines resulting in a thought-provoking piece. Enjoy! ------------------------- I caught this headline in the Wall Street Journal (11/28/17) over breakfast and decided to read more about the research on CNBC and in Ben Leubsdorf’s blog. The research findings were pretty remarkable: Monetary rewards could have raised the PISA math...

Article: Would You Watch An Ad To Get A Lower Price?

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Dec 04, 2017
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Budgeting, Behavioral Finance, Current Events
According to this article in Quartz, you might soon get to make this choice: There’s potentially another reason for Amazon to promote the use of video in e-commerce. It now has a way to offer customers discounts for watching ads. In October, Amazon was awarded a patent for “content-based price reductions and incentives.” The patent says that “customers in an electronic environment can be presented with the option to receive advertising, such as audio, video, or...

Financial Education Explained by Danielle: A Great Sale… But at What Price?

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Nov 30, 2017
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Budgeting, Behavioral Finance, Credit Scores, Credit Cards, Generosity
The holiday season is once again upon us, and accompanying it is the temptation to spend a bit more money on presents for loved ones as well as yourself. With big shopping days like Black Friday and Cyber Monday behind us, now’s a good time to reassess recent purchases we might have made in haste. Originating in the 1950’s, there is this crazy phenomenon called Black Friday (the phrase was coined in 1961), where shoppers storm stores in hopes of getting a “can’t...

Does this look like a bubble to you?

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Nov 28, 2017
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Behavioral Finance, Article, Cryptocurrencies
Headlines on MarketWatch this evening: ----------------- What are the signs I see? Meteoric increase in value without a great explanation for what's driving it Crazy predictions: I remember Dow 40,000 predictions at the peak of insanity around 2000. Well, now we have Bitcoin 40,000! Sober and experienced market observers saying "stay away."  Mushrooming number of funds to invest in the asset class of cryptocurrencies (which may actually keep the bubble inflating as they bid up the assets)...

Top 10 on NGPF Blog: What Are Teachers Reading?

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Nov 20, 2017
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Investing, Budgeting, Video Resource, Current Events, Retirement, Behavioral Finance
Here's what trending recently on the NGPF Blog: Chart of the Week: What is average credit score for 18-24 year olds? Hint: It takes good behaviors (and time) to perfect the credit scoring game.  Let's Go To The Videotape: 5 Personal Finance Documentaries to Consider. From professional athletes going to bust, to the retirement crisis we face in this country to the largest investment fraud of our time, this list has something for everyone.  NGPF Announces Scholarship...

Question of the Day: How long has the average U.S. adult used the same checking account?

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Nov 07, 2017
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Checking Accounts, Question of the Day, Behavioral Finance, Research
Answer : 16 years From Bankrate:  "The average U.S. adult has used the same primary checking account for about 16 years, according to a survey conducted for Bankrate and MONEY. More than a quarter (26 percent) have held onto a checking account for more than 20 years. Being loyal to a bank is fine if you’re getting a good deal. But the survey also finds the average checking customer pays about $14 a month in fees. “If you’re paying any kind of fee or having to...

Article: Psychology of Online Shopping

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Nov 02, 2017
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Behavioral Finance, Article, Purchase Decisions, Research
Insightful NY Times article about the psychology of online shopping and the multitude of ways it can trip us up from paying too much for items, to feeling regret to not making a decision at all. I've put each observation in the form of a question so you get the discussion going with your students about their experiences with online shopping:  How do those targeted ads make you feel after you make an online purchase? "Over the next week I was hounded by online ads for the same...

Video: Father of Behavioral Finance Receives Nobel Prize

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Nov 01, 2017
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Behavioral Finance, Research, Current Events, Video Resource
Richard Thaler just won the Nobel Prize...here's a 10 minute video from PBS NewsHour that can lead into a discussion about the field that Thaler is given credit for: behavioral economics. In the process, your students will get a better understanding of what exactly this field of behavioral finance is. Enjoy! Questions: What are examples of recent bubbles that demonstrate that markets are not always rational? What are sunk costs and how does it play into the theater ticket experiment described...

Retailing Trends: Amazon Making It Easier for Young People to Purchase Using Parents' Credit Card

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Oct 25, 2017
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Current Events, Credit Cards, Purchase Decisions, Parent Conversations, Behavioral Finance
From Washington Post (subscription): The company’s newest efforts are aimed at getting shoppers ages 13 to 17 to purchase items on its site — with approval from their parents. Teens can now log into Amazon.com using their own accounts to buy items and stream videos. Their parents, meanwhile, can approve their purchases by text message or set spending limits per order.  From a business perspective, this makes a ton of sense in developing the next generation of shoppers hooked on...

Don't Forget The Parents!

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Oct 10, 2017
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NGPF Fellows, Activities, Advocacy, Behavioral Finance, Featured Teachers, Lesson Idea, Teaching Strategies
A blog post from NGPF Fellow, Kerri Herrild: -------- There are many reasons why I would not enjoy teaching elementary students. One is that I like it when students can blow their own noses, tie their own shoes and zip their own coats.  Another reason is that I don’t have to worry about sending home cutesy newsletters and calendars peppered with ClipArt to parents.  By the time students reach the high school, let’s be honest, we don’t communicate with parents very...

Chart: What Are The Mental Mistakes We Make And Why Do We Make Them?

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Oct 09, 2017
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Current Events, Chart of the Week, Behavioral Finance, Research, Question of the Day
Answer (from Visual Capitalist): There's a lot of them (and that's what makes us human). This chart shows all 188 cognitive biases we have (click for higher-res version): Questions: Chose 3 of the cognitive biases on the outside part of the circle (there are 20 of them) that you think you are most prone too. Give examples of times that these cognitive biases have crept into your thinking. Here are a few examples: We tend to find stories and patterns even when looking at sparse data: "I heard...

Developing Future Mindedness in Students

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Oct 06, 2017
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Employment, Tips for Teachers, Teaching Strategies, Featured Teachers, Behavioral Finance, NGPF Fellows
Credit to NGPF Fellow, Barbara O'Neill for the following post: According to research by Sarah Newcomb, a behavioral economist at Morningstar, people who focus on the future and feel that they create their own financial destiny tend to save more than others for retirement and other financial goals. When people focus on the future, they tend to be less impulsive (e.g., spending habits), regardless of their level of financial literacy. In other words, time orientation is a key factor in financial...

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