Category: Behavioral Finance

Virtual Adaptation - PLAY: The Ultimatum Game

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Jun 29, 2020
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Teaching Remotely, Behavioral Finance
PLAY: The Ultimatum Game is a classroom experiment that demonstrates how irrational humans can be when making financial decisions. With this game, students will explore the behavior and emotions behind the financial decisions they make. In this activity, students will be presented with this scenario: Two Teacher Tips: As classroom discussion will be key to learning the behavioral finance principles of this activity, it is important to review the Teacher Guide before facilitating this activity...

Question of the Day: February of 2020 marked the end of the longest economic expansion in U.S. history. How many months did this expansion last?

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Jun 09, 2020
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Question of the Day, Economics, Behavioral Finance
Answer: 128 months Questions: What happened in February that led the economy to shift from expansion to a recession, which is a period of economic decline?  How do you think that consumer mindset changes during a recession in terms of their buying behavior?  Do you think that people tend to save more during a recession or during an economic expansion?  The expansion lasted 128 months, how long do you think the current recession might last?  Click here for the ready-to-go...

Question of the Day: Do investors buy stocks in companies based on TV commercials?

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Jun 03, 2020
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Question of the Day, Behavioral Finance, Investing, Stocks
Answer: YES Questions: Why do you think that investors buy stocks in companies after they see a TV ad on those companies?  Are there ads or commercials that you have seen over the past week where you think "Hmmm...that could be a good investment?" Do you think this is a good idea? What other research might you want to do before making a decision to buy stock?  Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom.  Behind the...

Question of the Day: Consumers were invited to sign up for an automatic savings program...

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May 06, 2020
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Behavioral Finance, Question of the Day, Savings
What percentage enrolled when given the option to save $5/day?  What percentage enrolled when given the option to save $150/month?  Answer: Consumers were invited to sign up for an automatic savings program:   30% enrolled when given the option to save $5/day  7% enrolled when given the option to save $150/month Questions: Have you ever set a savings goal? What were you saving for? What helped you achieve the goal?  Saving $5 per day or $150 per month results...

Question of the Day: How did investors change their investment strategies in March after the 12% market drop?

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Apr 28, 2020
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Investing, Question of the Day, Stocks, Behavioral Finance
Answer:  Questions: In March 2020, the stock market had its worst month since October 2008. Based on the data in the previous table, what actions did investors take in March? When investors sell stocks they convert one asset (stocks) into another asset (cash). What are the reasons you think that investors were selling stocks in March and holding more cash? Your friend says, “Of course everyone knows the stock market is going to drop because of the pandemic. I’m going to wait...

Question of the Day: What's the most impactful purchase you have made recently for under $10?

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Apr 20, 2020
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Question of the Day, Purchase Decisions, Behavioral Finance, Budgeting
Answers will vary.  Hat tip to Tim Ferris who asks this question of his podcast guests. Here’s a sampling of what a few celebrities said were the best thing they bought under $100: The right backpack $4 to park near a beautiful lake to take a swim Good, plain, no-lined Moleskine notebook A book for my son which we read together Shirt that says “I can do all things” Questions: Was your purchase a “thing” or an experience? What made this so impactful to you?...

Question of the Day: What percent of taxpayers are expected to receive a stimulus check?

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Apr 19, 2020
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Interactive, Behavioral Finance, Budgeting
Stimulus checks started showing up in bank accounts over the past week so I thought this was a relevant question.  Note that if the IRS doesn't have your bank account information, checks will be sent out later this month. Answer: 83% Questions: How do you think that most Americans will spend these checks which are $1,200 for individual taxpayers and $2,400 for couples with an additional $500 for children under age of 17?  The stimulus checks are NOT going to individuals and couples...

Question of the Day: We asked 300+ personal finance teachers what they planned to do with their stimulus check. What was their #1 answer?

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Apr 05, 2020
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Question of the Day, Savings, Behavioral Finance, Parent Conversations, Investing, Credit Cards
Answer: Pay down debt Here's a summary of their responses:  Questions: How do you think YOU would handle a lump sum payment of several hundred dollars NOW?  Why do you think people answer this question with such different responses? What is the importance of having an emergency savings fund now?  Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom. Behind the numbers (USA Today) Millions of workers and their families will...

Question of the Day: What percent of investors at Vanguard (a large investment firm) have NOT made any trades in the face of recent market declines?

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Mar 31, 2020
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Question of the Day, Investing, Stocks, Behavioral Finance
Answer: More than 90% Questions: Do you think it's hard to do nothing with your investments when the stock market has dropped over 20% in a month? Why or why not? Your friend says "I know the market is going down in the next few weeks so I'm going to sell now and get back in when the prices go down?" Do you think it's easy to time the market and know when to sell and then buy back in? What are strategies that you can use to calm your nerves when the market goes down like it has over the past...

Question of the Day: What percent of Gen Z consumers are stockpiling cash in light of coronavirus?

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Mar 29, 2020
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Question of the Day, Behavioral Finance, Current Events
Hat tip to Beth Tallman for this question idea! Thank you for all of the informative articles in your weekend reading list too!  Answer: 39% Motivated by three factors: The possibility of banks shutting down The convenience of having cash during emergencies The desire to ensure access to funds Questions: How are accountholders protected if banks fail?  Are there any other reasons you can think of that might explain this behavior? What are the risks of holding lots of cash at...

Question of the Day: How much (in $s) do consumers have in unused gift cards from Wal-Mart and Starbucks?

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Feb 23, 2020
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Behavioral Finance, Question of the Day
Answer: $3.5 billion Questions: Why do you think that the balances on unused gift cards is in the billions? What strategies can a consumer use to make sure that they don't lose track of their gift cards? Would knowing that many people don’t use gift cards affect your gift-giving habits (i.e., would you decide not to give gift cards anymore since you’d be afraid it would never be used?) Click here for the ready-to-go slides for this Question of the Day that you can use in your...

QoD: What are the most popular "tricks" that shopping websites use to get us to buy more?

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Feb 19, 2020
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Behavioral Finance, Question of the Day, Purchase Decisions
Answer:  Questions: Which of the following tactics have you seen on websites?  Which of the top three "tricks" has the greatest impact on your behavior? Why?  Running out of the product..only 3 left in stock Flash sale only available for the next hour A celebrity you follow loves this product too... Why do you think these tactics are so effective?  Click here for the ready-to-go slides for this Question of the Day that you can use in your classroom. Behind the numbers...

Hook Students with Commercials in the Classroom! by Renee Nelson

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Feb 10, 2020
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Advertising, Featured Teachers, Behavioral Finance
Thanks for Renee Nelson, an NGPF Fellow teaching at KIPP NYC Prep High School in the Bronx, for submitting this guest blog post: - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -  It only takes thirty to ninety seconds to get someone’s attention and to convince them to make a big purchase or persuade them to try something new. Wrap your mind around that fact because it hasn't ever gotten the recognition it deserves. There’s only one category in the Primetime...

Question of the Day: A fair coin flipped 5 times results in Heads each time. What's the probability of the next flip being Tails?

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Feb 02, 2020
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Behavioral Finance, Question of the Day, Investing
Thanks to Of Dollars and Data for their blog post about this behavioral tic and an explanation for how it applies to investing.  Answer: Exactly...50% [Coin flips are an independent process so the prior flips have no bearing on future flips] Here's a short video explainer: Questions: Why do you think that most people would expect the next coin flip to be Tails?  This phenomenon applies to other casino games, such as the Roulette Wheel (after 6 Reds in a row, the next one must be...

Reading List for January 31-Feb 2

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Jan 31, 2020
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Personal Finance, Behavioral Finance, Budgeting, Paying for College, Taxes, Insurance
Happy Super Bowl Weekend!  In case you missed this week's FinCap Friday, Credit Crunch details how the FICO methodology will impact millions of consumers.  Personal Finance/Financial Literacy This article from the NY Times “Smarter Living” section got some attention this week in social media. “Does Personal Finance Still Work in our changing Economy?” contains a great discussion of the findings of the book The Financial Diaries (Rachel Schneider and Jonathan...