Tuesday, July 12, 2016

Credit cards Human psychology and Hypocracy/ Behavioral economics


Holiday spending volume on Visa credit and check cards between November 24 and December 29, 2000, reaches $101 billion.
 Online spending more than doubles over the past year.
 Visa U.S.A. launches its national consumer education program, Practical Money Skills for Life which is aimed at helping high school students learn better money management skills.

It is  well established in Behavioral economics experiments that  people tend to spend more when they are not dealing with cash. this is the main underpinning of all credit card business. it is like  a small child thinking  money can keep coming out of an  ATM machine.

There is actually an anecdote narrated by  Dan Ariely  about the time he approached  some bankers  with an  idea of  a " responsible  credit card " idea where  the  credit card will not allow you to spend  more than what you have in the bank.

As you can surmise  he never heard back from the bankers.



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