Haven’t we all, at one time or another, found ourselves looking at a thing that we’ve just bought and found no reason for its existence in our lives?
We don’t always buy things rationally, but what exactly is the reason for this phenomenon?
Well, there is something called behavioral economics, which is a psychological field where you study the decision-making regarding purchases. So let’s put it this way, you bought something that afterwards made no sense for you to buy. Classical economics have a model of rational action, which says that before you buy anything, you weigh the pros and cons of the of the potential purchases and then base your decision on the one with the best outcome. Behavioral economics, on the other hand, says that this rational decision process rarely happens with people. Humans are complex creatures with emotions and biases and therefore can often make choices which are not in their best interest in the longer run.
When it comes to economics, we have probably made a few (to say the least) confused and irrational decisions. I know I have bought clothes a couple of times that I didn’t need, nor ended up liking. These purchases happened when there was a good deal, blinding me to make a rational choice. I know, I am one of those who loves a good deal. But it really isn’t a good deal if you won’t end up using it.
When it comes to clothes, I now make a point of only buying the items that I instantly like or love and know I will be using.
Actually, many of the choices we make are made under conditions with uncertainty and you’re not aware of every benefit or risk that comes with it. Sometimes, those risks and benefits can also be shifting, making it even harder to choose “right”.
With behavioral economics, you can reach a better understanding of the effects regarding uncertainty in decision-making when it comes to financial savings and consumer purchasing. So try to think before you make your next purchase – is it really something that will be useful or that you really want?
If not, go home and be happy you still have that money left in your wallet. Yay!
This post is also published at https://howtofindinspiration.com/the-blog/