Wolfers talks investment behavior in NPR Special Series, "Your Money and Your Life"

October 28, 2015

On October 23, Justin Wolfers was quoted in the NPR Special Serices, “Your Money and Your Life,” discussing savings and investment behavior.

In the article, “Why Is It So Hard To Save? U.K. Shows It Doesn't Have To Be,” NPR Correspondent Chris Arnold reports on behavioral saving and investing patterns. “Our instincts make us bad investors,” writes Arnold, “For example, many people have a strong urge to sell stocks after a 20- or 30-percent market crash.”

Wolfers gives insight into the rationale behind this type of behavior. "Our minds are programmed to try and find order where there's chaos, to see any way we can make sense of the world around us...So when we see stocks fall for several days in a row, we see a trend and expect them to keep falling.”

"If deer always walked along a particular path, then you know where to go hunting," Wolfers says. "The difference with financial markets is in a financial market, randomness may be the norm, even if in much of the rest of our lives, order and predictability is the norm."

Justin Wolfers (@JustinWolfers) is a professor of public policy at the Ford School and a professor of economics in the University of Michigan Department of Economics. He is a regular contributor to The Upshot, the New York Times’ blog on politics, policy, and economics.