April 12, 2024 • 60 mins
“I deserve to buy this!” But are you really deserving of it? If you’re someone who thinks adding more items to your cart at checkout is going to solve all of your problems, then you deserve to hear this episode. Jen and Jill, together with Amanda Montell, author of acclaimed books such as Wordslut and Cultish, and a podcast host, talk about cognitive biases and their influence on not just our finances but on our everyday lives!
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Episode three ninety seven, How cognitive biases cause us to
overspend with Amanda Montel.
Speaker 2 (00:10):
Welcome to the Frugal Friends podcast, where you'll learn to
save money, embrace simplicity, and live your life. Here your
hosts Jen and Jill.
Speaker 1 (00:26):
Welcome to the Frugal Friends podcast. My name is Jen,
my name is Jill, and we are bringing you a
guest interview a little early. I know it shouldn't be
till next episode, but our friend Amanda has a book
coming out this week, and I don't know if you know,
but the first week of publishing for authors is super important,
(00:48):
and so we wanted you to hear about her book
and her in the week it comes out.
Speaker 3 (00:55):
Yeah, and this is another good one. I you all
know that my favorite is guest interviews, and lately we've
been doing a lot of interviews with people who aren't
specifically in the personal finance space, but have really rich
stuff to say pun intended that can absolutely positively impact
(01:16):
our personal finances and the rest of our lives. Because again,
we think we're whole people, so if we can improve
ourselves in one area, it will by proxy eventually approve
our financial situation as well. So this is another one
of those, and I think really really helpful and kind
of getting deep down into some of our mindsets that
(01:38):
can help us rain in impulse spending.
Speaker 1 (01:41):
Yeah, but first, this episode is brought to you by
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(02:02):
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Speaker 3 (02:09):
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Speaker 3 (02:16):
Yes, it's the best hack.
Speaker 1 (02:18):
So we are writing a book if you haven't already heard,
And one of the things that I was specifically writing
in my part of the book we kind of like
Divided and Conquered, was cognitive biases. How these and we'll
get into what cognitive biases are in the interview. But
(02:39):
when I found out Amanda was writing a book on it,
I was flabbergasted because she wrote one of my favorite books,
Cultish The Language of fanaticism, and if you haven't read it,
highly recommend reading it. It is so fun and it
talks about what modern day cults look like. So maybe
(03:03):
we're not in the era of the Mansons and stuff
like that, but it does not mean we are any
less prone to a joining a cult like that or
be our own modern day takes on cults. And she
also hosts the hit podcast Sounds Like a Cult. And
so this book that she has out, now, the Age
(03:27):
of Magical Overthinking, is about all of these cognitive biases
that we have that impact the way we make decisions,
and that is all over our lives and so many
spending decisions. So if you want to talk more, if
you want to hear more about like spending decisions, some
(03:49):
episodes like episode three fifteen, how to Build and Break
habits that cause you to overspend, in episode two seventy four,
how to Align your spending with your values, those are
some good ones to up for after this. But I'm
so excited for you guys to hear this interview with Amanda.
Speaker 3 (04:05):
Let's get with her.
Speaker 1 (04:10):
Amanda, Welcome to the Frugal Friends podcast. We are super
excited and if anybody knows us and knows you, then
they'll know why we're so excited.
Speaker 3 (04:22):
Just welcome.
Speaker 4 (04:23):
Yes, I've been looking forward to this. I've been on
my finance curly game recently. I have a new accountant.
Speaker 1 (04:31):
I know. We love an accountant. We love an accountant.
Speaker 3 (04:35):
I love being a finance Gurly means you've hired somebody.
Speaker 1 (04:40):
I mean we haven't. We joke about being the same person.
We do actually have the same accountant. I mean, that's beautiful.
Speaker 4 (04:48):
I love that.
Speaker 1 (04:49):
Well.
Speaker 4 (04:49):
Actually, my partner and I now have the same accountant,
and we like love to gossip about him.
Speaker 1 (04:55):
We love ours. He like has a little lake in
the back, and he takes so few clients so that
he can have more time to like fish between clients.
He I've never met somebody who has so much disdain
for the I R s as as our accountant and
oh that's.
Speaker 4 (05:13):
In an accountant.
Speaker 1 (05:14):
Love him for this.
Speaker 4 (05:15):
Yeah, you said that he had a pond and takes
few clients. I thought you meant he'll only take as
many clients as he can fit in his late bond.
Speaker 3 (05:27):
No opposite, and that would be a fun constraint.
Speaker 1 (05:30):
He doesn't want people around. He wants to see people
around as possible, and I love that for him.
Speaker 3 (05:36):
Well, Amanda, you've got so much that you are an
expert on your wealth of knowledge and wisdom, and I
mean we know that we're excited because you do know
a lot about cults and your podcast is about that
and we eventually, Jenna and I would love to start
a cult, but I can be able to tie it
(05:57):
into personal finance real quick. You talk about cognitive biases
and just curious to hear your thoughts on what are they?
Why should we care about them?
Speaker 4 (06:10):
Yeah? Absolutely? Okay, So my new book is called The
Age of Magical Overthinking, and it connects to cults actually
because so much of the research that I was doing
while writing that book, which is about the language of cults,
from scientology to soul cycle, so the full spectrum of influence.
As I was doing that research, I came across all
this really fascinating psychology and behavioral economics research that made
(06:32):
mention of cognitive biases and how things like confirmation bias
and the sunk cost fallacy could explain so much of
the cult behavior that I was looking into. But more urgently,
I felt like these biases could also explain so many
of my everyday irrational choices, and so many of the
irrationalities that I was noticing that I was noticing in
the zegeist at large. So a cognitive bias is basically
(06:56):
this deep rooted mental magic trick that we play on
ourselves in order to help us make efficient decisions as
human beings. So we have limited mental capacity, we have
limited time, we have limited memory, we have limited psychological resources.
We need to be able to jump to conclusions sometimes
in order to make everyday decisions, and in early human brains,
(07:20):
these shortcuts developed to help us make sense of the
world enough to describe it. But in my new book,
I kind of make this argument that are ingrained mysticisms
and irrationalities that were once so useful to us net
positive and almost every capacity, are now disserving us because
they're clashing with the overwhelm of information that we now
(07:42):
are exposed to in the digital age.
Speaker 3 (07:45):
That was a really helpful and succinct definition. I think
that's one of the things that has stood out to
me about cognitive biases as well, is I think there
can be this negative connotation to it, which they can
certainly be proper, but they first exist as a way
to kind of help us move through the world and
(08:06):
make quick decisions and be able to kind of operate
as a highly functioning human. But then they really can
get in the way. How are you seeing this as
being really important then to be aware of like what
stood out to you in your research and in writing
this book as the reason to well, let's really focus
(08:28):
in on this. Why are they important?
Speaker 4 (08:31):
Yeah, Well, they help us make decisions that are sometimes
not the best in today's society in a way that
is completely unnoticed and unconscious by us. Cognitive biases were
once purely helpful or at least mostly helpful, and now
in our ever complicating, ever technologically driven world, they're not
(08:53):
serving us so much, but they're doing that unconsciously, so
we don't realize that these men any cognitive biases are
at play. I mentioned confirmation bias in sunt cost fallacy.
These are two of the most famous biases that get
the most airplay and headlines and things like that when
talking about politics or cults, but there have been hundreds
(09:15):
described by psychologists and behaviorally economists. In my book, I
basically chose my eleven faves, like the eleven that I
found to be the most relevant. The most urgent for
modern society, and I contextualize them to make them feel
more personal, because these can feel like kind of abstract,
heady concepts when you just read about them in an
academic article or something like that. But the truth is
(09:38):
that the sunt cost fallacy doesn't just apply to finances. This,
by the way, describes our fallacious pensions to believe that
resources already spent on an endeavor, whether it's money, time,
or even emotional resources like hope, justify spending even more.
And you could easily see how that would have a
financial tie, but it also has a personal tie. And
(10:00):
so the way that I chose to approach this sun
cost fallacy in my book was from the position of
this very sort of vulnerable story where I talk about
this cult of one toxic relationship that I was in
in my early twenties, actually from my late teens to
mid twenties, so many of my formative years were spent
(10:21):
in this relationship that I kept just sinking costs into,
unable to accept that a win wasn't just around the corner.
And so I was kind of treating this relationship in
a way that you might treat a poker hand, where
you've put so much on the table you can't foold now,
or you know, in keeping, like doubling down on a
(10:43):
bad stock because you've been investing in it for so long.
There are so many parallels to be made, and so
these cognitive biases are really important to be aware of
and to understand because that awareness can drive your behavior
and improve your decision making, whether you're talking about money
or love.
Speaker 1 (11:02):
Yeah, I read the book and I really appreciated how
you use that example for sunt costs because I've like
read hundreds of articles, and anytime sunt costs comes in,
it is always something financial, something money related, and so
I thought it was really refreshing to hear like and obviously,
like all of our relational you know, you know, decisions
(11:25):
also have a money factor to them. So yeah, I
really appreciated that that example.
Speaker 4 (11:32):
Thank you. Yeah, that chapter was challenging to write, as
you can imagine, because it's vulnerable, more vulnerable than talking
about money in a way. But also money is, as
you know, better than anyone, like, such a touchy subject,
and so it was cool to be able to in
a way like personalize conversations that would ordinarily be seen
(11:53):
as kind of crass and kind of like use the
personal and the more practical in tandem to make a point.
Speaker 1 (12:00):
Yeah, so let's talk about some of these biases that
affect our money. Which ones do you believe have the
most significant influence on overspending? Oh my gosh, or it
can be all of them, but like fa choose how
to choose?
Speaker 4 (12:18):
I mean, certainly the ones that come to mind are
overconfidence bias, zero sum bias, the sun cost fallacy for sure,
and related relatedly, this bias toward additive solutions, which I
would love to talk about because becoming aware of that bias,
which is similar or at least connected to the sun
(12:38):
cost fallacy, Becoming aware of that one has really informed
my decision making regarding spending. Those are and obviously confirmation
bias is something that we can't avoid. It is like
the invisible star of all our decision making. But yeah,
I would love to talk about additive solution bias because
(12:59):
that that one probably has had the most direct practical
effect on my own spending.
Speaker 1 (13:05):
Okay, yeah, let's start with that one.
Speaker 4 (13:07):
Okay. So, as I was writing that sun cost fallacy chapter,
I came across this fascinating study that spoke about how
we as human beings, but specifically those of us who
grow up in consumerist society have this inclination toward solving
a problem by adding things to the equation, even though
a more simple solution might involve just taking one little
(13:31):
thing away. So the study involved presenting people with a
spatial puzzle involving colored blocks, and the study participants were
invited to solve the spatial problem by either adding colored
blocks or taking away colored blocks. What they didn't know
is that this block problem could have been solved in
one move by taking one single colored block away, But
(13:54):
the vast majority of these study participants went for an
additive solution. They decided to add all of these colored blocks,
and it's very like cumbersome. You could see how the
consumerist parallels come into play. This like over the top,
extravagant spendee solution. They were just spending blocks that they
didn't have to pay money for. But the point is
the vast majority of people decided to solve this problem
(14:17):
in an overcomplicated, additive way. Now I was like mind
plone when I came across the study, because first of all,
it applied to my relationship. I was like, all I
need to solve my miseries in this partnership that is
not good for me. All I need is to add,
you know, another vacation. We just need to go on
(14:37):
another splashy vacation that'll solve everything. Or we need to
get another cat. I don't regret any of my cats.
What they do help you. Yeah, yeah, no, the more
cats the better.
Speaker 3 (14:51):
That is my.
Speaker 4 (14:51):
Additive solution bias. But but what they put those cats
did not do was solve my relationship problems. I thought,
you know, we just need to add more and more
and more and more variables to this equation and surely
that will heal all of our woes, when really what
we probably needed to do was just break up. And
of course, not every relational problem should be solved by
(15:11):
cutting the person out of your life, Like I do
not believe in that whatsoever, and I think that actually
there's too much cutting of people out of lives in
today's society. Meet me on my soapbox. But I do
think that that subtractive solution versus additive solution disparity has
been really informative because now when I make smaller, lower
(15:34):
stakes decisions in my everyday life I'm aware of it,
and it can help me from making an irrational choice. So,
for example, this is a really low stakes example, but
I was recently looking at my junk drawer and I
was like, oh my god, this junk drawer is such
a mess, so embarrassing. If someone were to come over
and look at this, they would think I was deranged.
What I need to do is go online and order
(15:56):
some really cute for organizers, like that will help me
to act. I would tell you that, yes, yes, I
need to go to the container store, you know, like
that's going to solve my problem. Same thing with my office,
Like you can't see my office right now, but there's
a lot of chotchkeys going on. I was like, I
need like a beautiful acrylic like desk organizer like some drawers. No,
(16:16):
you know what the better solution is, throw the junk
away pair down, scale back. And I find again that
that awareness can help me make decisions, whether they're financial, consumerist,
or more spiritual.
Speaker 3 (16:34):
It's such a good example, and I think ties into
one of the things we briefly touched on before we
hit the record button about the way parameters can create
increased creativity, like untethered, no limits, no holds barred, we
usually aren't as productive, efficient, creative as when we have
(16:57):
some reasonable, realistic boundary is around us. And it seems
like this is kind of touching on that where no,
we don't have to add. In fact, maybe even taking
away makes this whole problem simpler, more easy to solve,
and provides better boundaries for us to play within and
be creative within.
Speaker 4 (17:17):
One hundred percent. Like it really highlights how the term
behavioral economics is kind of like the perfect term to
describe this field of study, because all of these biases
are as applicable to finances and this play pertend economics
system that we've created in society as they are to
our interpersonal relationships and our social lives, and especially in
(17:40):
the digital age, so much currency isn't actually monetary, it's cloud,
its followers, it's you know, social relationships, it's these things
that are more abstract, and so I think actually, now
more than ever, as economics and capital become more abstract,
more hazy, more confusing, learning about these biases is. Yeah,
(18:02):
it's just more helpful than ever. I think.
Speaker 1 (18:04):
Yeah, this isn't a business podcast, but I can't tell
you how many times I've thought the solution to our
business was adding more things to it, Like right, yes,
the real things that have moved the needle have been simplifying.
When we simplify the takeaway, that's when we're able to
move faster.
Speaker 4 (18:22):
Oh yeah, Like businesses have gone bankrupt by people adding
too many cooks to the kitchens, scaling too quickly, and
in capitalist society, like we are taught that growth is
you know, the ultimate goal, and you should be growing
as quickly as possible. But then I always think of
that quote, and I forget who said it. Was it
Edward Albie, I don't know. I heard of this quote
(18:44):
in the movie Triangle of Sadness when Woody Harrelson and
that Russian capitalist are having their quote off. But the
Woody Harrelson's character says, growth for growth's sake is the
ideology of a cancer cell.
Speaker 1 (18:56):
Oo.
Speaker 4 (18:59):
Wow, yeah, I wish i'd coin to that.
Speaker 1 (19:03):
All right, there we have, yeah it take that one.
That's a nugget.
Speaker 4 (19:08):
Yeah, slap that on a quote gram merchant by.
Speaker 1 (19:12):
It, Yes, exactly, and then we'll sell it perfect. Okay,
So yes, additive bias such a good one. What was
another one that you mentioned that we can dive into well.
Speaker 4 (19:25):
Zero sum bias for sure, and this describes our proclivity
to believe that another person's gain directly means your loss.
So if another person is thriving, successful, wealthy, attractive, this
mental magic trick that we play on ourselves tells us
that their wealth, their coolness, their beauty threatens our wealth,
(19:48):
our coolness, our beauty, even though that's not how it works.
Those things are not in limited quantities. But this bias
stems from a time in human history where resources like
food and mates really were zero. Some there really were
only so many in a community, and so someone who
was similar to you, similar in age, similar in build
(20:11):
really was like a material survival threat to you. But
because we don't live in those types of communities anymore,
that zero sum bias no longer applies, is no longer helpful,
doesn't you know? Inspire us to compete in ways that
help us, it can actually set us up for psychological
failure because we're applying that deep rooted shortcut to our
(20:33):
social media feeds to like endless comparisons that we're making socially,
and we're also comparing it to the broader economy. This
modern economy, and so during times of socio political turbulence,
when we start to feel more scarcity minded, that zero
sum bias really kicks in, and that causes people across
(20:54):
the political spectrum to oppose immigration more strictly. It's really
fascinating to see how zero some bias applies to our lives,
whether we're talking about like feeling threatened by another woman
because she's attractive, or feeling like we want to close
our borders because there's societal tumult.
Speaker 3 (21:15):
I could see this impacting our finances in two ways,
one being you know, for the example you gave of, Okay,
this woman's more beautiful than me, it could propel us
to now I've got to spend more. That's exactly where
I feel more attractive and feel better about myself. But
what I also think can happen with this zero sum
(21:36):
bias that you've just described, as we could pull back,
we might not pursue the job, the goal that we
wanted to because it feels like someone else did it.
So now it's taken away from me and I'm not
going to achieve what I'm actually capable of. This happened
to me. I want to say, like two months before
(21:56):
and we've not done this yet, but here's an example.
About two months before remeat Sati's Netflix series came out,
I was describing to Jen, how I want to have
a TV show that is about personal finance where we
get into the lives of people and kind of do
this whole person look at what are some of the
(22:18):
financial moves that can happen, but how does it touch
on all the rest of life? And I'm so excited
and I'm ramping up and I'm talking to a lot
of people about wanting to do this someday. Jen's like,
I'm never going to do that. But then that's how
I know it's gonna happen, because she loves to say
never and then do that never thing. We might need
to dive into whatever that bias that's attached to. And
(22:38):
then this re meet say tea thing came out and
I'm like, he took it, he already did it, And
I have to remind myself that just that only feels
that way because no one else is doing this. There's
a ton of organization shows, there's a ton of home
renovation shows. There should be room then for a ton
of financial shows, but they're just aren't. And because one
(23:01):
person did it, it feels like, well, now we would
never be able to do it.
Speaker 1 (23:05):
I told her I'd do it if it could be
a financial dating show, and we were the laches of
the of the.
Speaker 4 (23:13):
I love that which mat.
Speaker 3 (23:17):
Me, not it.
Speaker 4 (23:21):
Yeah, you know, I'm glad we're talking about this because
I also want to make the point that the dare
I say, the patriarchy sets up a very purposeful, intentional
zero sum game for women in particular. I'll say this.
Studies reflect that women make more upward social comparisons and
(23:43):
downward identifications, so women wage their social bets differently than
men based on conditioning. Of course, But when a woman,
for example, scrolls through her social media feed or enters
a room and you know, surveys everyone in it, she
will only clock the perceived threats. She will only be
(24:04):
comparing herself to the people that she perceives as wealthier,
more attractive, superior in some way, whereas a man might
scroll through his feed or enter a room and only
identify the people that he perceives as inferior. And so
that style of social comparison has a massive effect on
(24:24):
your self esteem and on your ability to pursue opportunities
or to make connections. So zero sum bias really plays
into this reality and this narrative that like women are
always pitted against each other. It's because we are conditioned
by a society that only has say, one spot in
the c suite for a woman, or only one spot
(24:47):
or a couple of spots on the Supreme Court. And
thus we view women, specifically women who we perceive as superior,
as our competition because we're competing for these limited resources,
and that really inhibits collaboration. I took great comfort in
this notion called shine theory, which was coined in a
(25:07):
viral piece in The Cut about ten years ago by
Amy Natuso and Ann Friedman, which describes this sort of
counter strategy to these really debilitating social comparisons, where when
we see a woman who we admire, who we think
is really cool or industrious or successful, don't get competitive,
befriend her, align yourself with her. And it's called the
(25:29):
shine theory because it's countering this idea that another person's
light dims yours. If you can combine the light, it
doesn't take it away anyone's light. Everyone burns brighter, and
that's kind of corny, but I think it's a really
helpful exercise and something that I've applied to my own life.
You know, when I see another woman on social media
who is, say, you know, doing something in her career
(25:50):
that's similar to mine and is doing it well, my
impulse is to feel threatened. She'll live rent free in
my She'll live rent free in my head, or like
scroll to see, like what are her accolades, Like what
has she done that I haven't? As if those things
would diminish what I've done, They haven't. They haven't diminished
me at all. And like making that enemy when I
could be making a friend is not helping anyone. So
(26:13):
I have tried to combat those impulses by instead of
like feeling threatened and you know, making an enemy in
my mind too, instead like slide into that person's DMS,
congratulate them, sincerely, make a connection. And I've actually forged
a lot of friendships that way, like real, genuine friendships
that I can't imagine not being in my life. And
(26:35):
it was because I pushed past the zero sum bias
that is in a way innate but is also encouraged
and exacerbated by being a woman. In this society.
Speaker 1 (26:47):
Yeah, I've thought about this so much in the past
years and like really had to retrain myself to do this.
But and then now something I'm coming across is having
a bias like for women who are slightly more successful
than me and feeling inferior and not wanting to reach
out to them. So not even like they're an enemy,
(27:11):
but that like that I can't reach out to them,
and that yeah, that there's just like not enough of
their time to go around, so I shouldn't even try.
And so I've been like trying to take it a
step further now. And I don't know if this is
directly related to the bias, but like it was this.
(27:31):
It was overcoming this and making more connections with women
in the financial field that led me to like reach
out to more women who are like just a little
bit ahead of me in the road and trying to
connect with them and appreciate them and glean their wisdom
like not in a like clinging like muture sort of way.
(27:53):
But and that's that's my biggest fear, right, is I
don't want to be a burden and or respect right, Yes,
So yeah, that's I've been like working through this bias
like in this journey, in this path, it's.
Speaker 4 (28:08):
Yeah, it's such a hopeful Oh sorry, go ahead.
Speaker 3 (28:11):
I just think it's such a helpful reframe that you've described, Amanda,
to be able to say, here's the bias. Here's why
it's important to be aware of biases, so that we
can identify that the bias is at play, and then
I and then see is it helping us or is
it hurting us? Is the bias helping me to come
to quick conclusions, make efficient decisions, get at the things
(28:32):
that I want in life? Or is this diminishing me?
Is it not helpful? And to be even able to
describe some of these things that we can do instead
as a result of identifying the bias that it doesn't
have to even stop at identification. There can be next
steps and actions taken that work in contrast to the
(28:53):
bias that is actually now hurting us that hopefully you're
not saying this, this is where I'm taking it can
be come our own bias that we then begin to
land on, Like if I say enough there is space
for everybody here at the table because you're going to
bring your own perspective, then hopefully that'll just overtake the
(29:14):
bias that there's not enough space for everybody totally.
Speaker 4 (29:18):
I mean, yes, you're you're kind of referencing another bias
that I bring up in the book, This thing called
the illusory truth effect, which describes our proclivity to think
that something that we've heard repeated multiple times must be
true even if it's not. Like we mistake frequency for accuracy.
And this is a bias that a lot of like
(29:39):
political figures and you know, populists take advantage of, and
it's very important to be aware of during times like
election years and things like that. But you can also
use it to your advantage, you know, like if I
tell myself over and over again that you know, another
person's light does not dim me, then eventually you will
perceive that as accurate.
Speaker 1 (30:01):
Is there any other bias that you think has to
do with our or will help us make better spending decisions?
I think we have time for one more.
Speaker 4 (30:12):
Yeah, well, I would love to talk about overconfidence bias.
Speaker 1 (30:16):
Okay, I love that.
Speaker 4 (30:18):
Yeah, because hold on, let me, let me just make sure,
because this is actually the when I talk about this
bias is like not typically in the context of money.
So over confidence bias. It kind of tells on itself,
you can imagine what it means, but it's basically this
inclination that is defined by like three key features. Basically,
(30:39):
people overvalue their actual skills, express excessive certainty in their evaluations,
and overcredit themselves with positive outcomes. So altogether, this trifecta
is known as overconfidence bias, and there have been amazing
quotes stated about this. There's journalist named Roger Lowenstein who
(31:02):
wrote a book called When Genius Failed, and in it
he said, there is nothing like success to blind one
to the possibility of failure. And what he meant by
that is that if we just so happened to get
lucky in an endeavor, whether it's a financial endeavor or
something else, we will think that we're the exception and
we're just amazing, and that we're actually not lucky, but
(31:25):
instead the man and are going to continue succeeding over
and over and over again. And so we might continue
to make the same decisions even if they were not
the most rational, not the most prudent. And this type
of over confident bullishness is responsible for so many tragedies,
from the Challenger space disaster to massive corporate lawsuits, to
(31:51):
just feeling really smug when you scroll through your social
media feed or watch reality TV and think that person
is an idiot and I am brilliant and I would
never make a mistake the way that that person is
making a mistake. So over confidence bias shows up in
so many arenas of life, including how we set up
(32:11):
our lifestyle and spend our money.
Speaker 1 (32:13):
Yeah, I think this one's This one might get some
of our listeners. But I think over confidence bias comes
up in sales, sales shopping. When we get a sale,
we are conditioned to think that we are we're smarter,
like I got I did not pay as much for
this thing as it's worth. I got a great deal.
I'm so good, And so we keep shopping sales even
(32:37):
when we don't need the item that is on sale.
Most a because our dopamine release, you know, triggers us
to remember that smart feeling. But that can lead to
an over confidence bias.
Speaker 3 (32:49):
Oh, and I think this is one that could really
harm us. Beyond the clearance section. This is something where
we could make big, take big risks, and gamble a
lot with our big spending decisions, Like I'm thinking housing transportation,
like our big purchases. One of the things that Eric
and I noticed my husband, we used to live in
(33:12):
an RV and through that process, there were a lot
of people who were telling us I'd love to do that.
I would totally want to do that, And some people
then did just because well, you're doing it and it
looks easy, I'm going to do it, and they really
(33:33):
went all in. And we would try to advise people, hey,
rent an RV, go on a two week trip, just
to make sure that this is a lifestyle that you
would want to do. But a lot of people we
saw sold everything, broke off their lease, sold their house,
moved into this thing, and three weeks later discover that
(33:54):
this is not at all what I want to do,
and that's a massive amount of money lost. It overconfidence, Yes, oh.
Speaker 4 (34:02):
My god, your example is reminding me so much of
an example from my own life. First, I want to
make the disclaimer that, like overconveidence, bias is one of
these biases where you're like, no, no, no, no, no,
this does not apply to me. I'm a reasonable person.
I hate myself like I'm not overconfident. That can't possibly
be true. This is a bias that other people enjoy.
(34:23):
But with all of these biases that I write about
in the book, I really try to invite us all
to kind of like look in the mirror, and I
try to do that by example. Like every time in
that book that I really wanted to like apply over
confidence bias to someone else, I tried to look in
word and be like, no, I am completely susceptible to
this as well. And oh my god, Jill, your example
(34:45):
reminds me of my poor dad. I don't want to
put him on blast, but yeah, my dad. My dad
made a big overconfident financial decision. Get this. In two
thousand and eight, he was in spir by a friend
of his who'd made a killing by building and then
renting out a beach house in the Outer Banks. So
(35:06):
literally right before the two thousand and eight crash, my
dad built a beach house in the in the Outer
Banks and was like, this is gonna be an amazing
financial investment. Meanwhile, he had absolutely no idea how to
do that, like, regardless of what year it was, it
was like a half baked, like amphisted idea. But then,
of course you know what happened happened, and that was
(35:30):
not the financial win he thought it was going to be.
But same thing. He like saw this friend of his,
you know, make a killing, and he was like, Oh,
if he could do it, I can do it. It can't
be that hard. Now, I will say, we've been talking
about the pros and cons of all of these biases.
Over confidence bias sounds like truly a net negative sort
of phenomenon. But on the positive side, over confidence leads
(35:53):
to innovation. You know, like every time someone makes a
meaningful discovery or makes progue in any way, they unlock
a new level of knowledge they don't have, and those
gaps in understanding actually drive us forward. You know. It's
like if I had to know absolutely everything I wanted
to say perfectly in the book before putting pen to paper,
(36:16):
I would have never started. I would have never finished.
And so I do think that sometimes over confident delusions
give us the nerve to like keep moving forward and
keep sort of like gunning for progress in a better world.
But that over confidence is a double edged sword, for sure.
Speaker 3 (36:33):
So true, it just highlights the importance of being aware
of these biases, acknowledging them, and then making decisions rather
than relying on the biases to inform us about our
next decisions exactly. Okay, I'm going to take a hard
left turn because it's our podcast, in our journey. Yeah,
(36:53):
and this is really what we want to talk about.
So you know a lot about cults, sure, yep? Is
consumerism a cult?
Speaker 4 (37:03):
Yeah, dude, I think so. I keep unpacking my own
cultish affiliations every single day, even after all of these
years writing and talking about cults. I was just thinking
of this the other day. I was like, it is
really a massive false promise in our society that things objects,
(37:24):
even just like owning a house, will offer you some
kind of spiritual existential transcendence. Like I am so disturbed
by how I have fallen prey to this consumerist lie
that like acquiring materials, and my materials, I even mean
(37:44):
like your own how like your own home dwelling? How
nuts is this? It's like people weren't even as competitive
and as individualists and as sort of like selfish and
comparison oriented as we are now until we started living
in our own separate doma siles. Like as soon as
(38:06):
the agricultural revolution happened and people started settling in like
these stagnant communities and building homes that only their little
family lived in. That's when we started being like I
want to be richer than you, I want to have
better stuff than you. But it's not a natural or
innate human state, Like we can be more generous, we
(38:28):
can be more giving, Like it is not endemic to
us to like hoard, you know, but in combination with
just various advancements in the human species and also like
light stage capitalism. Sorry buzzwords, buzzwords, but truly, like this
combination of events has caused us to buy into this
(38:49):
cultish promise that like having stuff is not just going
to make life, you know, easier or more convenient, it's
going to make you feel like you literally want at life,
are existentially better than others and will even cheat death.
Like that's how it feels. And it's so it's such
a lie. It's such a cultish lie.
Speaker 1 (39:10):
Yes, And how can Jill and I who who is
the cult leader? And who do we have to fight?
Speaker 3 (39:17):
How can we start a Yeah?
Speaker 1 (39:19):
Who do we have to fight to be the cult leader?
Speaker 3 (39:22):
Yeah?
Speaker 4 (39:22):
Yeah, well I don't know. I mean I think it's
not that simple. Like that's what makes these really broad,
sort of more loosey goosey cults. So sinister is that
there isn't just one Keith Ranieri in the cult of consumerism.
It's like you got Jeff Bezos over there, you got
Elon Musk over there, You've got you know, Donald Trump
over here. Like but but those are just like some
(39:45):
really really big power players. But we're all sort of
perpetuating this cult. Uh, you know. Influencer culture certainly is
consumer culture in every shade and flavor is like self propelling.
This could And then the comfort is that when people
who are like radically on the other side, being like
(40:06):
relinquish all your possessions and live a monastic lifestyle, when
they come into the picture, they can start a cult too.
Speaker 1 (40:13):
They have so many cults they have in their own
they have so many yeah.
Speaker 3 (40:17):
Yeah, lace extremes, Yeah, extremes, extreme, extreme, Yeah extreme.
Speaker 1 (40:23):
I do love yeah, And we talk about that. I
do love your book Cultish that is already out, and
well when this releases, your new book will be out too.
But I do I love your where you like take
it at the end, like what are the cults of
our modern age? And really and thinking like, oh, we're
(40:44):
not like the sixties and seventies, like we don't have
stuff like that anymore, and and really diving into like
what what is where we're going and how financially like
how much money it will require of us if we
continue down the way totally.
Speaker 4 (41:03):
And there was like a direct line between those ideas
and the new book too, because for Coltish, I kind
of had to like stick to the thesis and framework
of Colds. But with this new book, I was kind
of able to apply those same ideas to everyday life
in a way that's a little bit more accessible and relatable.
And the whole, that whole transition from Cultish to this
(41:26):
project felt like really natural and really fun to me.
Speaker 3 (41:28):
Yeah, do you want to know another transition that is
really natural?
Speaker 1 (41:32):
And every week, Oh what great nice haway, really good
one the week.
Speaker 2 (41:50):
That's right, it's time for the best minute of your
entire week.
Speaker 1 (41:55):
Maybe a baby was born and his name is Williams.
Speaker 2 (41:58):
Maybe you paid off your mortgage, maybe your car died
and you're happy to not have to pay that bill anymore.
That's bills, butfalo bills, Bill Clinton, this is the bill
of the week.
Speaker 5 (42:11):
Whoa yeah, we said with you every yeah, Amanda, every
week we yell at our guests to share with us
their billy and we are so so here to hear yours.
Speaker 1 (42:25):
We've got a little taste of it before we hit record,
so excited to hear.
Speaker 4 (42:30):
Let me preface my bill of the week by saying
that in order to communicate it, I had to first
google the difference between a beak and a bill, and
a quickie Google search told me that they're synonyms. A
beak and a bill are the same, So.
Speaker 1 (42:45):
We said we'd allow it. Yes, we will allow synonyms.
Speaker 4 (42:49):
My bill of the week akaa. My beak of the week,
which is fun because it rhymes has to do with
the bills of the peacocks that run free at the
Hollywood Forever Cemetery near my house. So, this famous cemetery
in Hollywood where like Burt Reynolds is buried and Marilyn
(43:10):
Monroe is buried, is a very very beautiful place that
I will sometimes go to. Literally just like sunbathe or
chill out. You're surrounded by graves, but like there are
also ponds, maybe not too similar to your accountant's pond.
There are like beautiful buildings, there's a cafe. It's like
a lovely, lovely place to lie. Also during the summer,
(43:31):
they have movie screenings there, outdoor movie screenings, which is
a vibe. It's a very very trending thing to do
in LA. But my favorite thing.
Speaker 3 (43:39):
About parks you've got to hang out at the same ary.
Speaker 4 (43:43):
No.
Speaker 1 (43:43):
I love.
Speaker 4 (43:45):
As Macobb and Gallows humor filled as I can make
my life the better. But I my favorite thing about
the Hollywood Forever Cemetery is all of the peacocks that
run wild, because it feels so sort of surreal and
and peacocks are so beautiful and famously they have bills.
So that's my bill of the week going.
Speaker 1 (44:06):
Do you think do you think NBC planted those there?
Speaker 4 (44:10):
Like?
Speaker 1 (44:10):
Do you think that's marketing?
Speaker 4 (44:12):
No, they've been That's that's a I like that conspiracy theory.
But those peacocks have been there since long before any
of these dim a dozen streamers.
Speaker 3 (44:23):
We do love a good conspiracy theory, Yes, we do.
We do. We've got to do more spin off podcast.
Speaker 1 (44:31):
For us.
Speaker 3 (44:32):
We've not we've not peaked.
Speaker 1 (44:35):
But we peacocks, man, are so exotic, but they are
so many places. My son's daycare is in a neighborhood
where peacock peacocks just rome free in this neighborhood peacock
at the l Yeah, Like it's just that the neighborhoods
have peacocks, but they are so.
Speaker 4 (44:54):
Yeah okay, sorry, yeah, But I will relate this back
to the sub matter at hand, because one piece of
sort of more serviceable advice that I give in the
book for combating some of the more negative consequences of
the clash between these cognitive biases and the information age
is to prioritize feelings of awe whenever possible, awe, aw
(45:20):
aw aw on your accent and you know, being in
nature and like really appreciating the like marvels of a
peacock and a graveyard, or like roaming free through the streets,
like stopping to appreciate the novelty of that, sorry, stopping
to appreciate the novelty of that and the wonder of that,
(45:41):
and to sort of like connect with the physical world
is just such such a lovely way to reprioritize your
mental stresses. And so my, I guess my ultimate point
in like recommending the bills of Peacocks is that like it,
it can you know, very literally ground you amidst like
(46:04):
such a confusing.
Speaker 3 (46:05):
Time lovely tie in beautiful segue. If any of you
all listening have a bill about peacocks roaming in a cemetery,
it inspires, or your name is Bill, you own a peacock.
Speaker 1 (46:26):
Or just any don't do the show. I don't know
if you're allowed to own a peacock.
Speaker 3 (46:31):
Visits podcast dot com slash bill leave us your bill.
We already and waiting for it. And now it's time
for the lighting around pew.
Speaker 4 (46:45):
I love these segments. I really appreciate a segment.
Speaker 1 (46:48):
Yeah, we we do too, And we do all of
our own voice sound effect as realistic as they sound.
Speaker 3 (46:56):
Believe it or not. It's just our mouths on the mike.
Speaker 1 (47:00):
You would think that we were professionals in LA right, Like.
Speaker 4 (47:03):
Yeah, I thought that was the sound designer. I thought
it was this real spaceship and a real explosion.
Speaker 1 (47:08):
Yeah, well so we're not. We're just here in St. Petersburg, Florida.
You know, nobody's called us out there. Yeah all right,
So for the lightning round, this is our vulnerability round.
What's a purchase that you've made, or you make whatever,
but it stems from a cognitive bias. Maybe you still
choose to make it or you've chosen to stop.
Speaker 4 (47:26):
Yeah. I recently bought this one hundred and thirty dollars
led candlestick lamp type thing. It looks like the type
of candlestick that a tuberculosis ridden Victorian child would carry
around at night. But it's led, and so you can
(47:49):
like touch the wick and it will illuminate or de illuminate,
if that's a word accordingly, And I'm obsessed with this thing.
It was so overpriced, but it really allows me to
live out a nostalgic fantasy of the eighteen hundreds of
time that I certainly would not prefer to live in.
But I do like to sort of delulu about that.
(48:11):
And that relates to a cognitive bias called declinism, which
is associated with nostalgia. Declinism describes our false perception that
life is just getting irreversibly worse and worse and worse,
and it's all downhill from there.
Speaker 3 (48:27):
I did not know about that one. You have diagnosed me.
You have diagnosed me, Oh my.
Speaker 1 (48:33):
Gosh, are you going to take it to the cemetery?
Speaker 4 (48:38):
That is a genius idea.
Speaker 1 (48:42):
I hope that pictures That.
Speaker 4 (48:44):
Is the full starter pack. Like me, a cognitive bias
text my led Wick lamp and a graveyard obsessed.
Speaker 1 (48:53):
I am looking forward to seeing that, Jill.
Speaker 3 (48:58):
So mine is something that causes me to not spend.
I'm not a super spending person, but status quo bias
leads me to not buy because I think the current
state of affairs is fine. It's okay that our door
scratches the floor every time we open it. We've lived
(49:19):
this long. Why spend five hundred dollars on a new door?
Speaker 1 (49:24):
Fine floor scratch there's everywhere.
Speaker 4 (49:28):
I am completely with you. I am like so miserly
when it comes to necessities and spendy when it comes
to these like delusional fantasy items.
Speaker 1 (49:41):
Yeah that's I mean, that's all of us. I mean
the things that cost a couple hundred dollars that would
literally improve the quality of our lives. Can't afford that.
Speaker 3 (49:50):
Yeah, but we don't want to pay the dentist. We
don't want to change the oil, we don't want to
pay taxes.
Speaker 1 (49:56):
But I love event expects on a latte? Fully, can I.
Speaker 4 (50:00):
Just went to the dentist for the first time in
five years.
Speaker 3 (50:03):
Yeah, well I got you beat?
Speaker 4 (50:06):
Oh really? Wow? Yeah? Okay, So let's say this. I
went in there and I was like, I am so ashamed.
I haven't been here since before the pandemic. I know
that I'm going to need a mouth replacement. I am
so sorry because because yes, yeah, honestly, but like she
looked in my mouth and she was like, you have
four tiny cavities that like barely need to be filled
(50:29):
low key, and I was like, oh slick, yes, so that.
Speaker 3 (50:33):
Kind of I mean, maybe it's a myth, because you know,
we love a good conspiracy theory. Maybe dentists or a myth.
But also hardly anybody goes anymore because apparently medical insurance
stams our eyes and our mouths not worthy. Okay, so
we'll cover everything else but teeth.
Speaker 4 (50:54):
That is That is the medical system trying to dull
our senses. They want to have unhealthy eyes and unhealthy mouth.
Speaker 3 (51:02):
Stop eating and you know a slow decline.
Speaker 1 (51:05):
No, not just soup soup, it's big soup. I think
it's big soup.
Speaker 4 (51:09):
Okay, No, I actually do think that the dentist is
a giant scam. Everyone's constantly trying to get me to
take out my wisdom teeth. I'm like, yeah, the way
that we all once had to take out our tonsiles
for no reason, or appendix for no reason. I'm only
taking it out if it's a problem. You ding dong,
that's not happening.
Speaker 1 (51:28):
Yeah, so much passion, so much passion. Okay, for me,
it is the overconfidence bias by a mile, so I
would always and I don't do this as much anymore,
just mostly because I don't have time. But I used
to think that I could do any craft, like if
(51:50):
somebody else can do it, I can do it. It's
so funny because you're not craft I'm not craftzy, so
I'm not a DII wire. I am not. But I
would see calligraphy and macromay and I bought the things
to do both of them. And guess what I can't.
I can't do it, and I definitely don't enjoy it
even if I could do it. Almost and this is
(52:12):
most recent, I've been getting ads for adult paint by number,
and it's been like if this woman in this ad
can do it, And it turns like I can't paint,
but I can follow directions and maybe that's all I need,
you know, Like I can follow directions, And then I
remind myself, you are not crafty. You do not enjoy it,
(52:37):
and even if you could, you wouldn't want to, you
wouldn't finish it.
Speaker 3 (52:41):
So that.
Speaker 4 (52:43):
I couldn't relate to that more. I'm basically Edward sisar hands.
Speaker 1 (52:49):
Yes, that's me just cutting things up, and they don't.
They don't look like the or goat me they're supposed to,
though treads.
Speaker 3 (52:58):
Oh, this has been some goodnerability and such an amazing
episode of Miranda. Thanks for being here with us. If
people want my work from you, where can they find it?
Speaker 4 (53:06):
Can I ask when this is coming out, because depending
on that, I'm gonna plug different things.
Speaker 1 (53:11):
It is on April twelve.
Speaker 4 (53:13):
Okay, perfection amazing.
Speaker 3 (53:16):
Well.
Speaker 4 (53:16):
My book The Age of Magical Overthinking, Notes on Modern
Irrationality is now available wherever books are sold, even in audiobook.
I recorded my own audiobook which was so much fun
and actually fun. Fact, the little cue of like beautiful
music that plays during the introduction of the audiobook, I
(53:37):
hate the word fiance, but my engaged betrothed partner person
composed yeah film a TV composer, so it's gotta check
it out. And then I'm also on tour right now
at the time that this is airing. I'm on this
really over the top book tour. My inner theater Kid
emerged in full force, and so if you live in Brooklyn, Boston, Philly, Portland,
(54:04):
you gotta go to Amanda montel dot com slash events
because I'm throwing this extravagant variety show called the Big
Magical Cult Show, which is like magical like the new
book and culty like the old book. And there are podcasters,
special guests like Kelsey from Normal Gossip and it's just
it's gonna be a hoot. So yeah, definitely get tickets
a Manamaan Hilda cop such events.
Speaker 1 (54:25):
That's so sass. Thank you so much, Amanda, and uh yeah,
go get that book. I had so so much fun
geeking out over cognitive biases.
Speaker 3 (54:39):
Yeah, this interview just makes me smile. I think Amanda
is so articulate, so wise in her own right with
the things that she's expert on, and I think really
highlighted for me just areas that I've never thought about
before and how that can play into our spending and
(55:02):
just all of life, the things that we can be
aware of and how it can help us financially. I'm
just excited and it's just fun.
Speaker 1 (55:09):
Yeah, love to have we make so many assumptions about life,
and yes, that's our brain protecting us from making too
many decisions and making us far more tired than we
already are.
Speaker 3 (55:21):
But it is.
Speaker 1 (55:23):
Required for us to question our assumptions and see if
they are due to some of these cognitive biases. So
I hope that you'll continue to think about and rethink
about the assumptions you make in your life.
Speaker 3 (55:39):
Thank you everyone so much for listening. We are really
loving to read your kind reviews. So some of you
keep giving us reviews, which we love and we welcome
and we ask for and we want to highlight this one.
It comes from I love t dowg with a W.
It says amazing, it's five stars, very helpful podcast, completely
(56:02):
changed lives financially. Thank you exclamation work exclamation mark.
Speaker 1 (56:08):
I mean congratulate you and tea dog for making the
changes you needed to make. And yeah, thank you, and
please please leave us a rating and review. It helps
us look legit, it makes us feel good, It gives
us overconfidence bias like all all these good things that
(56:28):
we need in our lives.
Speaker 3 (56:30):
Yeah and yeah, please leave us those reviews. Then we'll
see you next time.
Speaker 1 (56:35):
Bye. Gorugle Friends is produced by Eric sirianni.
Speaker 3 (56:50):
Okay. I noticed my cognitive bias at play again yesterday.
What did I say? Mine was status quo bias. Not
wanting to change or disrupt anything.
Speaker 1 (57:03):
You were about to disrupt some things this morning. But
we'll talk about another episode.
Speaker 3 (57:09):
So Eric and I usually do our grocery shopping at Walmart.
You heard it, hear, folks not sponsored, because we can
get our other toilet tree items that we need there.
Like I love all the but oftentimes it's every two
weeks at Walmart. And one of the things that we
(57:29):
do only when we have to go to more so
the toilet tree section, which we did. We needed more toothpaste,
Eric needed face wash. That is where the clearance section
is for all of Walmart. So we will often do
around at the clearance section. This is about a once
a month tradish for us. And you know, I guess
(57:50):
just to like tempt yourself a little bit with a
little yellow sticker, But I also, as you know, keep
a running list of the things that I want to
be purchasing, things that I need, and so if there
happens to be anything in the clearance section, great, well
there wasn't at least for me. Eric doesn't keep it
running less, but he's like, there's so much stuff here
that I want. They had all kinds of stuff for boats,
(58:13):
like a new boat cover that could work for the
boat that we have, new liner for the inside, like
hatches that he wants to eventually redo. I think the
boat trailer, the covers that the boat sits on needs
to be recovered. But none of it people be done.
That's so there's a saying the greatest day of your
(58:35):
life is the day you buy your boat and the
day you sell your boat. And like it's just the truth.
We don't have anything fancy. Don't get it twisted. Don't
be picturing like a yacht. We've got a small fishing
boat that.
Speaker 1 (58:47):
Does the job they might row yacht.
Speaker 3 (58:50):
I think it costs, like anyways, it costs so much
to maintain, especially with this one who wants to just
keep doing stuff to it. We didn't because I'm just like,
is the cover we have currently broken? Nope, but we
are going to need one eventually in like two years
something like that out savings, you know, we need to
(59:16):
redo this and that it's just like all it really
is going to do is take up space in the
garage that he just cleaned out and we didn't. I mean,
it wasn't like he was begging for it either, But
that was my status quo bias, just it's not broken,
don't fix it.
Speaker 1 (59:31):
Well, that's a great bias.
Speaker 3 (59:33):
It does help me, but it does It doesn't necessarily
mean that we're always fixing and maintaining things to the
highest degree.
Speaker 1 (59:42):
Yeah, I mean, but it's it helped you with the
boat person, with the boat guy. We help you with
the boat.
Speaker 3 (59:49):
Guy status quo, even if it's broken
Speaker 1 (59:54):
Keeping it unremarkable, under promise, under deliver,
Episode three ninety seven, How cognitive biases cause us to
overspend with Amanda Montel.
Speaker 2 (00:10):
Welcome to the Frugal Friends podcast, where you'll learn to
save money, embrace simplicity, and live your life. Here your
hosts Jen and Jill.
Speaker 1 (00:26):
Welcome to the Frugal Friends podcast. My name is Jen,
my name is Jill, and we are bringing you a
guest interview a little early. I know it shouldn't be
till next episode, but our friend Amanda has a book
coming out this week, and I don't know if you know,
but the first week of publishing for authors is super important,
(00:48):
and so we wanted you to hear about her book
and her in the week it comes out.
Speaker 3 (00:55):
Yeah, and this is another good one. I you all
know that my favorite is guest interviews, and lately we've
been doing a lot of interviews with people who aren't
specifically in the personal finance space, but have really rich
stuff to say pun intended that can absolutely positively impact
(01:16):
our personal finances and the rest of our lives. Because again,
we think we're whole people, so if we can improve
ourselves in one area, it will by proxy eventually approve
our financial situation as well. So this is another one
of those, and I think really really helpful and kind
of getting deep down into some of our mindsets that
(01:38):
can help us rain in impulse spending.
Speaker 1 (01:41):
Yeah, but first, this episode is brought to you by
complexity bias, thinking that earning money on your money must
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you just leave it in your checking account. Stop that
right now. A highild saving the account, like the one
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(02:02):
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It's not complex, so stop thinking that.
Speaker 3 (02:09):
It is.
Speaker 1 (02:10):
Let your money make money. Frugal Friends podcast dot com
slash cit do it.
Speaker 3 (02:16):
Yes, it's the best hack.
Speaker 1 (02:18):
So we are writing a book if you haven't already heard,
And one of the things that I was specifically writing
in my part of the book we kind of like
Divided and Conquered, was cognitive biases. How these and we'll
get into what cognitive biases are in the interview. But
(02:39):
when I found out Amanda was writing a book on it,
I was flabbergasted because she wrote one of my favorite books,
Cultish The Language of fanaticism, and if you haven't read it,
highly recommend reading it. It is so fun and it
talks about what modern day cults look like. So maybe
(03:03):
we're not in the era of the Mansons and stuff
like that, but it does not mean we are any
less prone to a joining a cult like that or
be our own modern day takes on cults. And she
also hosts the hit podcast Sounds Like a Cult. And
so this book that she has out, now, the Age
(03:27):
of Magical Overthinking, is about all of these cognitive biases
that we have that impact the way we make decisions,
and that is all over our lives and so many
spending decisions. So if you want to talk more, if
you want to hear more about like spending decisions, some
(03:49):
episodes like episode three fifteen, how to Build and Break
habits that cause you to overspend, in episode two seventy four,
how to Align your spending with your values, those are
some good ones to up for after this. But I'm
so excited for you guys to hear this interview with Amanda.
Speaker 3 (04:05):
Let's get with her.
Speaker 1 (04:10):
Amanda, Welcome to the Frugal Friends podcast. We are super
excited and if anybody knows us and knows you, then
they'll know why we're so excited.
Speaker 3 (04:22):
Just welcome.
Speaker 4 (04:23):
Yes, I've been looking forward to this. I've been on
my finance curly game recently. I have a new accountant.
Speaker 1 (04:31):
I know. We love an accountant. We love an accountant.
Speaker 3 (04:35):
I love being a finance Gurly means you've hired somebody.
Speaker 1 (04:40):
I mean we haven't. We joke about being the same person.
We do actually have the same accountant. I mean, that's beautiful.
Speaker 4 (04:48):
I love that.
Speaker 1 (04:49):
Well.
Speaker 4 (04:49):
Actually, my partner and I now have the same accountant,
and we like love to gossip about him.
Speaker 1 (04:55):
We love ours. He like has a little lake in
the back, and he takes so few clients so that
he can have more time to like fish between clients.
He I've never met somebody who has so much disdain
for the I R s as as our accountant and
oh that's.
Speaker 4 (05:13):
In an accountant.
Speaker 1 (05:14):
Love him for this.
Speaker 4 (05:15):
Yeah, you said that he had a pond and takes
few clients. I thought you meant he'll only take as
many clients as he can fit in his late bond.
Speaker 3 (05:27):
No opposite, and that would be a fun constraint.
Speaker 1 (05:30):
He doesn't want people around. He wants to see people
around as possible, and I love that for him.
Speaker 3 (05:36):
Well, Amanda, you've got so much that you are an
expert on your wealth of knowledge and wisdom, and I
mean we know that we're excited because you do know
a lot about cults and your podcast is about that
and we eventually, Jenna and I would love to start
a cult, but I can be able to tie it
(05:57):
into personal finance real quick. You talk about cognitive biases
and just curious to hear your thoughts on what are they?
Why should we care about them?
Speaker 4 (06:10):
Yeah? Absolutely? Okay, So my new book is called The
Age of Magical Overthinking, and it connects to cults actually
because so much of the research that I was doing
while writing that book, which is about the language of cults,
from scientology to soul cycle, so the full spectrum of influence.
As I was doing that research, I came across all
this really fascinating psychology and behavioral economics research that made
(06:32):
mention of cognitive biases and how things like confirmation bias
and the sunk cost fallacy could explain so much of
the cult behavior that I was looking into. But more urgently,
I felt like these biases could also explain so many
of my everyday irrational choices, and so many of the
irrationalities that I was noticing that I was noticing in
the zegeist at large. So a cognitive bias is basically
(06:56):
this deep rooted mental magic trick that we play on
ourselves in order to help us make efficient decisions as
human beings. So we have limited mental capacity, we have
limited time, we have limited memory, we have limited psychological resources.
We need to be able to jump to conclusions sometimes
in order to make everyday decisions, and in early human brains,
(07:20):
these shortcuts developed to help us make sense of the
world enough to describe it. But in my new book,
I kind of make this argument that are ingrained mysticisms
and irrationalities that were once so useful to us net
positive and almost every capacity, are now disserving us because
they're clashing with the overwhelm of information that we now
(07:42):
are exposed to in the digital age.
Speaker 3 (07:45):
That was a really helpful and succinct definition. I think
that's one of the things that has stood out to
me about cognitive biases as well, is I think there
can be this negative connotation to it, which they can
certainly be proper, but they first exist as a way
to kind of help us move through the world and
(08:06):
make quick decisions and be able to kind of operate
as a highly functioning human. But then they really can
get in the way. How are you seeing this as
being really important then to be aware of like what
stood out to you in your research and in writing
this book as the reason to well, let's really focus
(08:28):
in on this. Why are they important?
Speaker 4 (08:31):
Yeah, Well, they help us make decisions that are sometimes
not the best in today's society in a way that
is completely unnoticed and unconscious by us. Cognitive biases were
once purely helpful or at least mostly helpful, and now
in our ever complicating, ever technologically driven world, they're not
(08:53):
serving us so much, but they're doing that unconsciously, so
we don't realize that these men any cognitive biases are
at play. I mentioned confirmation bias in sunt cost fallacy.
These are two of the most famous biases that get
the most airplay and headlines and things like that when
talking about politics or cults, but there have been hundreds
(09:15):
described by psychologists and behaviorally economists. In my book, I
basically chose my eleven faves, like the eleven that I
found to be the most relevant. The most urgent for
modern society, and I contextualize them to make them feel
more personal, because these can feel like kind of abstract,
heady concepts when you just read about them in an
academic article or something like that. But the truth is
(09:38):
that the sunt cost fallacy doesn't just apply to finances. This,
by the way, describes our fallacious pensions to believe that
resources already spent on an endeavor, whether it's money, time,
or even emotional resources like hope, justify spending even more.
And you could easily see how that would have a
financial tie, but it also has a personal tie. And
(10:00):
so the way that I chose to approach this sun
cost fallacy in my book was from the position of
this very sort of vulnerable story where I talk about
this cult of one toxic relationship that I was in
in my early twenties, actually from my late teens to
mid twenties, so many of my formative years were spent
(10:21):
in this relationship that I kept just sinking costs into,
unable to accept that a win wasn't just around the corner.
And so I was kind of treating this relationship in
a way that you might treat a poker hand, where
you've put so much on the table you can't foold now,
or you know, in keeping, like doubling down on a
(10:43):
bad stock because you've been investing in it for so long.
There are so many parallels to be made, and so
these cognitive biases are really important to be aware of
and to understand because that awareness can drive your behavior
and improve your decision making, whether you're talking about money
or love.
Speaker 1 (11:02):
Yeah, I read the book and I really appreciated how
you use that example for sunt costs because I've like
read hundreds of articles, and anytime sunt costs comes in,
it is always something financial, something money related, and so
I thought it was really refreshing to hear like and obviously,
like all of our relational you know, you know, decisions
(11:25):
also have a money factor to them. So yeah, I
really appreciated that that example.
Speaker 4 (11:32):
Thank you. Yeah, that chapter was challenging to write, as
you can imagine, because it's vulnerable, more vulnerable than talking
about money in a way. But also money is, as
you know, better than anyone, like, such a touchy subject,
and so it was cool to be able to in
a way like personalize conversations that would ordinarily be seen
(11:53):
as kind of crass and kind of like use the
personal and the more practical in tandem to make a point.
Speaker 1 (12:00):
Yeah, so let's talk about some of these biases that
affect our money. Which ones do you believe have the
most significant influence on overspending? Oh my gosh, or it
can be all of them, but like fa choose how
to choose?
Speaker 4 (12:18):
I mean, certainly the ones that come to mind are
overconfidence bias, zero sum bias, the sun cost fallacy for sure,
and related relatedly, this bias toward additive solutions, which I
would love to talk about because becoming aware of that bias,
which is similar or at least connected to the sun
(12:38):
cost fallacy, Becoming aware of that one has really informed
my decision making regarding spending. Those are and obviously confirmation
bias is something that we can't avoid. It is like
the invisible star of all our decision making. But yeah,
I would love to talk about additive solution bias because
(12:59):
that that one probably has had the most direct practical
effect on my own spending.
Speaker 1 (13:05):
Okay, yeah, let's start with that one.
Speaker 4 (13:07):
Okay. So, as I was writing that sun cost fallacy chapter,
I came across this fascinating study that spoke about how
we as human beings, but specifically those of us who
grow up in consumerist society have this inclination toward solving
a problem by adding things to the equation, even though
a more simple solution might involve just taking one little
(13:31):
thing away. So the study involved presenting people with a
spatial puzzle involving colored blocks, and the study participants were
invited to solve the spatial problem by either adding colored
blocks or taking away colored blocks. What they didn't know
is that this block problem could have been solved in
one move by taking one single colored block away, But
(13:54):
the vast majority of these study participants went for an
additive solution. They decided to add all of these colored blocks,
and it's very like cumbersome. You could see how the
consumerist parallels come into play. This like over the top,
extravagant spendee solution. They were just spending blocks that they
didn't have to pay money for. But the point is
the vast majority of people decided to solve this problem
(14:17):
in an overcomplicated, additive way. Now I was like mind
plone when I came across the study, because first of all,
it applied to my relationship. I was like, all I
need to solve my miseries in this partnership that is
not good for me. All I need is to add,
you know, another vacation. We just need to go on
(14:37):
another splashy vacation that'll solve everything. Or we need to
get another cat. I don't regret any of my cats.
What they do help you. Yeah, yeah, no, the more
cats the better.
Speaker 3 (14:51):
That is my.
Speaker 4 (14:51):
Additive solution bias. But but what they put those cats
did not do was solve my relationship problems. I thought,
you know, we just need to add more and more
and more and more variables to this equation and surely
that will heal all of our woes, when really what
we probably needed to do was just break up. And
of course, not every relational problem should be solved by
(15:11):
cutting the person out of your life, Like I do
not believe in that whatsoever, and I think that actually
there's too much cutting of people out of lives in
today's society. Meet me on my soapbox. But I do
think that that subtractive solution versus additive solution disparity has
been really informative because now when I make smaller, lower
(15:34):
stakes decisions in my everyday life I'm aware of it,
and it can help me from making an irrational choice. So,
for example, this is a really low stakes example, but
I was recently looking at my junk drawer and I
was like, oh my god, this junk drawer is such
a mess, so embarrassing. If someone were to come over
and look at this, they would think I was deranged.
What I need to do is go online and order
(15:56):
some really cute for organizers, like that will help me
to act. I would tell you that, yes, yes, I
need to go to the container store, you know, like
that's going to solve my problem. Same thing with my office,
Like you can't see my office right now, but there's
a lot of chotchkeys going on. I was like, I
need like a beautiful acrylic like desk organizer like some drawers. No,
(16:16):
you know what the better solution is, throw the junk
away pair down, scale back. And I find again that
that awareness can help me make decisions, whether they're financial, consumerist,
or more spiritual.
Speaker 3 (16:34):
It's such a good example, and I think ties into
one of the things we briefly touched on before we
hit the record button about the way parameters can create
increased creativity, like untethered, no limits, no holds barred, we
usually aren't as productive, efficient, creative as when we have
(16:57):
some reasonable, realistic boundary is around us. And it seems
like this is kind of touching on that where no,
we don't have to add. In fact, maybe even taking
away makes this whole problem simpler, more easy to solve,
and provides better boundaries for us to play within and
be creative within.
Speaker 4 (17:17):
One hundred percent. Like it really highlights how the term
behavioral economics is kind of like the perfect term to
describe this field of study, because all of these biases
are as applicable to finances and this play pertend economics
system that we've created in society as they are to
our interpersonal relationships and our social lives, and especially in
(17:40):
the digital age, so much currency isn't actually monetary, it's cloud,
its followers, it's you know, social relationships, it's these things
that are more abstract, and so I think actually, now
more than ever, as economics and capital become more abstract,
more hazy, more confusing, learning about these biases is. Yeah,
(18:02):
it's just more helpful than ever. I think.
Speaker 1 (18:04):
Yeah, this isn't a business podcast, but I can't tell
you how many times I've thought the solution to our
business was adding more things to it, Like right, yes,
the real things that have moved the needle have been simplifying.
When we simplify the takeaway, that's when we're able to
move faster.
Speaker 4 (18:22):
Oh yeah, Like businesses have gone bankrupt by people adding
too many cooks to the kitchens, scaling too quickly, and
in capitalist society, like we are taught that growth is
you know, the ultimate goal, and you should be growing
as quickly as possible. But then I always think of
that quote, and I forget who said it. Was it
Edward Albie, I don't know. I heard of this quote
(18:44):
in the movie Triangle of Sadness when Woody Harrelson and
that Russian capitalist are having their quote off. But the
Woody Harrelson's character says, growth for growth's sake is the
ideology of a cancer cell.
Speaker 1 (18:56):
Oo.
Speaker 4 (18:59):
Wow, yeah, I wish i'd coin to that.
Speaker 1 (19:03):
All right, there we have, yeah it take that one.
That's a nugget.
Speaker 4 (19:08):
Yeah, slap that on a quote gram merchant by.
Speaker 1 (19:12):
It, Yes, exactly, and then we'll sell it perfect. Okay,
So yes, additive bias such a good one. What was
another one that you mentioned that we can dive into well.
Speaker 4 (19:25):
Zero sum bias for sure, and this describes our proclivity
to believe that another person's gain directly means your loss.
So if another person is thriving, successful, wealthy, attractive, this
mental magic trick that we play on ourselves tells us
that their wealth, their coolness, their beauty threatens our wealth,
(19:48):
our coolness, our beauty, even though that's not how it works.
Those things are not in limited quantities. But this bias
stems from a time in human history where resources like
food and mates really were zero. Some there really were
only so many in a community, and so someone who
was similar to you, similar in age, similar in build
(20:11):
really was like a material survival threat to you. But
because we don't live in those types of communities anymore,
that zero sum bias no longer applies, is no longer helpful,
doesn't you know? Inspire us to compete in ways that
help us, it can actually set us up for psychological
failure because we're applying that deep rooted shortcut to our
(20:33):
social media feeds to like endless comparisons that we're making socially,
and we're also comparing it to the broader economy. This
modern economy, and so during times of socio political turbulence,
when we start to feel more scarcity minded, that zero
sum bias really kicks in, and that causes people across
(20:54):
the political spectrum to oppose immigration more strictly. It's really
fascinating to see how zero some bias applies to our lives,
whether we're talking about like feeling threatened by another woman
because she's attractive, or feeling like we want to close
our borders because there's societal tumult.
Speaker 3 (21:15):
I could see this impacting our finances in two ways,
one being you know, for the example you gave of, Okay,
this woman's more beautiful than me, it could propel us
to now I've got to spend more. That's exactly where
I feel more attractive and feel better about myself. But
what I also think can happen with this zero sum
(21:36):
bias that you've just described, as we could pull back,
we might not pursue the job, the goal that we
wanted to because it feels like someone else did it.
So now it's taken away from me and I'm not
going to achieve what I'm actually capable of. This happened
to me. I want to say, like two months before
(21:56):
and we've not done this yet, but here's an example.
About two months before remeat Sati's Netflix series came out,
I was describing to Jen, how I want to have
a TV show that is about personal finance where we
get into the lives of people and kind of do
this whole person look at what are some of the
(22:18):
financial moves that can happen, but how does it touch
on all the rest of life? And I'm so excited
and I'm ramping up and I'm talking to a lot
of people about wanting to do this someday. Jen's like,
I'm never going to do that. But then that's how
I know it's gonna happen, because she loves to say
never and then do that never thing. We might need
to dive into whatever that bias that's attached to. And
(22:38):
then this re meet say tea thing came out and
I'm like, he took it, he already did it, And
I have to remind myself that just that only feels
that way because no one else is doing this. There's
a ton of organization shows, there's a ton of home
renovation shows. There should be room then for a ton
of financial shows, but they're just aren't. And because one
(23:01):
person did it, it feels like, well, now we would
never be able to do it.
Speaker 1 (23:05):
I told her I'd do it if it could be
a financial dating show, and we were the laches of
the of the.
Speaker 4 (23:13):
I love that which mat.
Speaker 3 (23:17):
Me, not it.
Speaker 4 (23:21):
Yeah, you know, I'm glad we're talking about this because
I also want to make the point that the dare
I say, the patriarchy sets up a very purposeful, intentional
zero sum game for women in particular. I'll say this.
Studies reflect that women make more upward social comparisons and
(23:43):
downward identifications, so women wage their social bets differently than
men based on conditioning. Of course, But when a woman,
for example, scrolls through her social media feed or enters
a room and you know, surveys everyone in it, she
will only clock the perceived threats. She will only be
(24:04):
comparing herself to the people that she perceives as wealthier,
more attractive, superior in some way, whereas a man might
scroll through his feed or enter a room and only
identify the people that he perceives as inferior. And so
that style of social comparison has a massive effect on
(24:24):
your self esteem and on your ability to pursue opportunities
or to make connections. So zero sum bias really plays
into this reality and this narrative that like women are
always pitted against each other. It's because we are conditioned
by a society that only has say, one spot in
the c suite for a woman, or only one spot
(24:47):
or a couple of spots on the Supreme Court. And
thus we view women, specifically women who we perceive as superior,
as our competition because we're competing for these limited resources,
and that really inhibits collaboration. I took great comfort in
this notion called shine theory, which was coined in a
(25:07):
viral piece in The Cut about ten years ago by
Amy Natuso and Ann Friedman, which describes this sort of
counter strategy to these really debilitating social comparisons, where when
we see a woman who we admire, who we think
is really cool or industrious or successful, don't get competitive,
befriend her, align yourself with her. And it's called the
(25:29):
shine theory because it's countering this idea that another person's
light dims yours. If you can combine the light, it
doesn't take it away anyone's light. Everyone burns brighter, and
that's kind of corny, but I think it's a really
helpful exercise and something that I've applied to my own life.
You know, when I see another woman on social media
who is, say, you know, doing something in her career
(25:50):
that's similar to mine and is doing it well, my
impulse is to feel threatened. She'll live rent free in
my She'll live rent free in my head, or like
scroll to see, like what are her accolades, Like what
has she done that I haven't? As if those things
would diminish what I've done, They haven't. They haven't diminished
me at all. And like making that enemy when I
could be making a friend is not helping anyone. So
(26:13):
I have tried to combat those impulses by instead of
like feeling threatened and you know, making an enemy in
my mind too, instead like slide into that person's DMS,
congratulate them, sincerely, make a connection. And I've actually forged
a lot of friendships that way, like real, genuine friendships
that I can't imagine not being in my life. And
(26:35):
it was because I pushed past the zero sum bias
that is in a way innate but is also encouraged
and exacerbated by being a woman. In this society.
Speaker 1 (26:47):
Yeah, I've thought about this so much in the past
years and like really had to retrain myself to do this.
But and then now something I'm coming across is having
a bias like for women who are slightly more successful
than me and feeling inferior and not wanting to reach
out to them. So not even like they're an enemy,
(27:11):
but that like that I can't reach out to them,
and that yeah, that there's just like not enough of
their time to go around, so I shouldn't even try.
And so I've been like trying to take it a
step further now. And I don't know if this is
directly related to the bias, but like it was this.
(27:31):
It was overcoming this and making more connections with women
in the financial field that led me to like reach
out to more women who are like just a little
bit ahead of me in the road and trying to
connect with them and appreciate them and glean their wisdom
like not in a like clinging like muture sort of way.
(27:53):
But and that's that's my biggest fear, right, is I
don't want to be a burden and or respect right, Yes,
So yeah, that's I've been like working through this bias
like in this journey, in this path, it's.
Speaker 4 (28:08):
Yeah, it's such a hopeful Oh sorry, go ahead.
Speaker 3 (28:11):
I just think it's such a helpful reframe that you've described, Amanda,
to be able to say, here's the bias. Here's why
it's important to be aware of biases, so that we
can identify that the bias is at play, and then
I and then see is it helping us or is
it hurting us? Is the bias helping me to come
to quick conclusions, make efficient decisions, get at the things
(28:32):
that I want in life? Or is this diminishing me?
Is it not helpful? And to be even able to
describe some of these things that we can do instead
as a result of identifying the bias that it doesn't
have to even stop at identification. There can be next
steps and actions taken that work in contrast to the
(28:53):
bias that is actually now hurting us that hopefully you're
not saying this, this is where I'm taking it can
be come our own bias that we then begin to
land on, Like if I say enough there is space
for everybody here at the table because you're going to
bring your own perspective, then hopefully that'll just overtake the
(29:14):
bias that there's not enough space for everybody totally.
Speaker 4 (29:18):
I mean, yes, you're you're kind of referencing another bias
that I bring up in the book, This thing called
the illusory truth effect, which describes our proclivity to think
that something that we've heard repeated multiple times must be
true even if it's not. Like we mistake frequency for accuracy.
And this is a bias that a lot of like
(29:39):
political figures and you know, populists take advantage of, and
it's very important to be aware of during times like
election years and things like that. But you can also
use it to your advantage, you know, like if I
tell myself over and over again that you know, another
person's light does not dim me, then eventually you will
perceive that as accurate.
Speaker 1 (30:01):
Is there any other bias that you think has to
do with our or will help us make better spending decisions?
I think we have time for one more.
Speaker 4 (30:12):
Yeah, well, I would love to talk about overconfidence bias.
Speaker 1 (30:16):
Okay, I love that.
Speaker 4 (30:18):
Yeah, because hold on, let me, let me just make sure,
because this is actually the when I talk about this
bias is like not typically in the context of money.
So over confidence bias. It kind of tells on itself,
you can imagine what it means, but it's basically this
inclination that is defined by like three key features. Basically,
(30:39):
people overvalue their actual skills, express excessive certainty in their evaluations,
and overcredit themselves with positive outcomes. So altogether, this trifecta
is known as overconfidence bias, and there have been amazing
quotes stated about this. There's journalist named Roger Lowenstein who
(31:02):
wrote a book called When Genius Failed, and in it
he said, there is nothing like success to blind one
to the possibility of failure. And what he meant by
that is that if we just so happened to get
lucky in an endeavor, whether it's a financial endeavor or
something else, we will think that we're the exception and
we're just amazing, and that we're actually not lucky, but
(31:25):
instead the man and are going to continue succeeding over
and over and over again. And so we might continue
to make the same decisions even if they were not
the most rational, not the most prudent. And this type
of over confident bullishness is responsible for so many tragedies,
from the Challenger space disaster to massive corporate lawsuits, to
(31:51):
just feeling really smug when you scroll through your social
media feed or watch reality TV and think that person
is an idiot and I am brilliant and I would
never make a mistake the way that that person is
making a mistake. So over confidence bias shows up in
so many arenas of life, including how we set up
(32:11):
our lifestyle and spend our money.
Speaker 1 (32:13):
Yeah, I think this one's This one might get some
of our listeners. But I think over confidence bias comes
up in sales, sales shopping. When we get a sale,
we are conditioned to think that we are we're smarter,
like I got I did not pay as much for
this thing as it's worth. I got a great deal.
I'm so good, And so we keep shopping sales even
(32:37):
when we don't need the item that is on sale.
Most a because our dopamine release, you know, triggers us
to remember that smart feeling. But that can lead to
an over confidence bias.
Speaker 3 (32:49):
Oh, and I think this is one that could really
harm us. Beyond the clearance section. This is something where
we could make big, take big risks, and gamble a
lot with our big spending decisions, Like I'm thinking housing transportation,
like our big purchases. One of the things that Eric
and I noticed my husband, we used to live in
(33:12):
an RV and through that process, there were a lot
of people who were telling us I'd love to do that.
I would totally want to do that, And some people
then did just because well, you're doing it and it
looks easy, I'm going to do it, and they really
(33:33):
went all in. And we would try to advise people, hey,
rent an RV, go on a two week trip, just
to make sure that this is a lifestyle that you
would want to do. But a lot of people we
saw sold everything, broke off their lease, sold their house,
moved into this thing, and three weeks later discover that
(33:54):
this is not at all what I want to do,
and that's a massive amount of money lost. It overconfidence, Yes, oh.
Speaker 4 (34:02):
My god, your example is reminding me so much of
an example from my own life. First, I want to
make the disclaimer that, like overconveidence, bias is one of
these biases where you're like, no, no, no, no, no,
this does not apply to me. I'm a reasonable person.
I hate myself like I'm not overconfident. That can't possibly
be true. This is a bias that other people enjoy.
(34:23):
But with all of these biases that I write about
in the book, I really try to invite us all
to kind of like look in the mirror, and I
try to do that by example. Like every time in
that book that I really wanted to like apply over
confidence bias to someone else, I tried to look in
word and be like, no, I am completely susceptible to
this as well. And oh my god, Jill, your example
(34:45):
reminds me of my poor dad. I don't want to
put him on blast, but yeah, my dad. My dad
made a big overconfident financial decision. Get this. In two
thousand and eight, he was in spir by a friend
of his who'd made a killing by building and then
renting out a beach house in the Outer Banks. So
(35:06):
literally right before the two thousand and eight crash, my
dad built a beach house in the in the Outer
Banks and was like, this is gonna be an amazing
financial investment. Meanwhile, he had absolutely no idea how to
do that, like, regardless of what year it was, it
was like a half baked, like amphisted idea. But then,
of course you know what happened happened, and that was
(35:30):
not the financial win he thought it was going to be.
But same thing. He like saw this friend of his,
you know, make a killing, and he was like, Oh,
if he could do it, I can do it. It can't
be that hard. Now, I will say, we've been talking
about the pros and cons of all of these biases.
Over confidence bias sounds like truly a net negative sort
of phenomenon. But on the positive side, over confidence leads
(35:53):
to innovation. You know, like every time someone makes a
meaningful discovery or makes progue in any way, they unlock
a new level of knowledge they don't have, and those
gaps in understanding actually drive us forward. You know. It's
like if I had to know absolutely everything I wanted
to say perfectly in the book before putting pen to paper,
(36:16):
I would have never started. I would have never finished.
And so I do think that sometimes over confident delusions
give us the nerve to like keep moving forward and
keep sort of like gunning for progress in a better world.
But that over confidence is a double edged sword, for sure.
Speaker 3 (36:33):
So true, it just highlights the importance of being aware
of these biases, acknowledging them, and then making decisions rather
than relying on the biases to inform us about our
next decisions exactly. Okay, I'm going to take a hard
left turn because it's our podcast, in our journey. Yeah,
(36:53):
and this is really what we want to talk about.
So you know a lot about cults, sure, yep? Is
consumerism a cult?
Speaker 4 (37:03):
Yeah, dude, I think so. I keep unpacking my own
cultish affiliations every single day, even after all of these
years writing and talking about cults. I was just thinking
of this the other day. I was like, it is
really a massive false promise in our society that things objects,
(37:24):
even just like owning a house, will offer you some
kind of spiritual existential transcendence. Like I am so disturbed
by how I have fallen prey to this consumerist lie
that like acquiring materials, and my materials, I even mean
(37:44):
like your own how like your own home dwelling? How
nuts is this? It's like people weren't even as competitive
and as individualists and as sort of like selfish and
comparison oriented as we are now until we started living
in our own separate doma siles. Like as soon as
(38:06):
the agricultural revolution happened and people started settling in like
these stagnant communities and building homes that only their little
family lived in. That's when we started being like I
want to be richer than you, I want to have
better stuff than you. But it's not a natural or
innate human state, Like we can be more generous, we
(38:28):
can be more giving, Like it is not endemic to
us to like hoard, you know, but in combination with
just various advancements in the human species and also like
light stage capitalism. Sorry buzzwords, buzzwords, but truly, like this
combination of events has caused us to buy into this
(38:49):
cultish promise that like having stuff is not just going
to make life, you know, easier or more convenient, it's
going to make you feel like you literally want at life,
are existentially better than others and will even cheat death.
Like that's how it feels. And it's so it's such
a lie. It's such a cultish lie.
Speaker 1 (39:10):
Yes, And how can Jill and I who who is
the cult leader? And who do we have to fight?
Speaker 3 (39:17):
How can we start a Yeah?
Speaker 1 (39:19):
Who do we have to fight to be the cult leader?
Speaker 3 (39:22):
Yeah?
Speaker 4 (39:22):
Yeah, well I don't know. I mean I think it's
not that simple. Like that's what makes these really broad,
sort of more loosey goosey cults. So sinister is that
there isn't just one Keith Ranieri in the cult of consumerism.
It's like you got Jeff Bezos over there, you got
Elon Musk over there, You've got you know, Donald Trump
over here. Like but but those are just like some
(39:45):
really really big power players. But we're all sort of
perpetuating this cult. Uh, you know. Influencer culture certainly is
consumer culture in every shade and flavor is like self propelling.
This could And then the comfort is that when people
who are like radically on the other side, being like
(40:06):
relinquish all your possessions and live a monastic lifestyle, when
they come into the picture, they can start a cult too.
Speaker 1 (40:13):
They have so many cults they have in their own
they have so many yeah.
Speaker 3 (40:17):
Yeah, lace extremes, Yeah, extremes, extreme, extreme, Yeah extreme.
Speaker 1 (40:23):
I do love yeah, And we talk about that. I
do love your book Cultish that is already out, and
well when this releases, your new book will be out too.
But I do I love your where you like take
it at the end, like what are the cults of
our modern age? And really and thinking like, oh, we're
(40:44):
not like the sixties and seventies, like we don't have
stuff like that anymore, and and really diving into like
what what is where we're going and how financially like
how much money it will require of us if we
continue down the way totally.
Speaker 4 (41:03):
And there was like a direct line between those ideas
and the new book too, because for Coltish, I kind
of had to like stick to the thesis and framework
of Colds. But with this new book, I was kind
of able to apply those same ideas to everyday life
in a way that's a little bit more accessible and relatable.
And the whole, that whole transition from Cultish to this
(41:26):
project felt like really natural and really fun to me.
Speaker 3 (41:28):
Yeah, do you want to know another transition that is
really natural?
Speaker 1 (41:32):
And every week, Oh what great nice haway, really good
one the week.
Speaker 2 (41:50):
That's right, it's time for the best minute of your
entire week.
Speaker 1 (41:55):
Maybe a baby was born and his name is Williams.
Speaker 2 (41:58):
Maybe you paid off your mortgage, maybe your car died
and you're happy to not have to pay that bill anymore.
That's bills, butfalo bills, Bill Clinton, this is the bill
of the week.
Speaker 5 (42:11):
Whoa yeah, we said with you every yeah, Amanda, every
week we yell at our guests to share with us
their billy and we are so so here to hear yours.
Speaker 1 (42:25):
We've got a little taste of it before we hit record,
so excited to hear.
Speaker 4 (42:30):
Let me preface my bill of the week by saying
that in order to communicate it, I had to first
google the difference between a beak and a bill, and
a quickie Google search told me that they're synonyms. A
beak and a bill are the same, So.
Speaker 1 (42:45):
We said we'd allow it. Yes, we will allow synonyms.
Speaker 4 (42:49):
My bill of the week akaa. My beak of the week,
which is fun because it rhymes has to do with
the bills of the peacocks that run free at the
Hollywood Forever Cemetery near my house. So, this famous cemetery
in Hollywood where like Burt Reynolds is buried and Marilyn
(43:10):
Monroe is buried, is a very very beautiful place that
I will sometimes go to. Literally just like sunbathe or
chill out. You're surrounded by graves, but like there are
also ponds, maybe not too similar to your accountant's pond.
There are like beautiful buildings, there's a cafe. It's like
a lovely, lovely place to lie. Also during the summer,
(43:31):
they have movie screenings there, outdoor movie screenings, which is
a vibe. It's a very very trending thing to do
in LA. But my favorite thing.
Speaker 3 (43:39):
About parks you've got to hang out at the same ary.
Speaker 4 (43:43):
No.
Speaker 1 (43:43):
I love.
Speaker 4 (43:45):
As Macobb and Gallows humor filled as I can make
my life the better. But I my favorite thing about
the Hollywood Forever Cemetery is all of the peacocks that
run wild, because it feels so sort of surreal and
and peacocks are so beautiful and famously they have bills.
So that's my bill of the week going.
Speaker 1 (44:06):
Do you think do you think NBC planted those there?
Speaker 4 (44:10):
Like?
Speaker 1 (44:10):
Do you think that's marketing?
Speaker 4 (44:12):
No, they've been That's that's a I like that conspiracy theory.
But those peacocks have been there since long before any
of these dim a dozen streamers.
Speaker 3 (44:23):
We do love a good conspiracy theory, Yes, we do.
We do. We've got to do more spin off podcast.
Speaker 1 (44:31):
For us.
Speaker 3 (44:32):
We've not we've not peaked.
Speaker 1 (44:35):
But we peacocks, man, are so exotic, but they are
so many places. My son's daycare is in a neighborhood
where peacock peacocks just rome free in this neighborhood peacock
at the l Yeah, Like it's just that the neighborhoods
have peacocks, but they are so.
Speaker 4 (44:54):
Yeah okay, sorry, yeah, But I will relate this back
to the sub matter at hand, because one piece of
sort of more serviceable advice that I give in the
book for combating some of the more negative consequences of
the clash between these cognitive biases and the information age
is to prioritize feelings of awe whenever possible, awe, aw
(45:20):
aw aw on your accent and you know, being in
nature and like really appreciating the like marvels of a
peacock and a graveyard, or like roaming free through the streets,
like stopping to appreciate the novelty of that, sorry, stopping
to appreciate the novelty of that and the wonder of that,
(45:41):
and to sort of like connect with the physical world
is just such such a lovely way to reprioritize your
mental stresses. And so my, I guess my ultimate point
in like recommending the bills of Peacocks is that like it,
it can you know, very literally ground you amidst like
(46:04):
such a confusing.
Speaker 3 (46:05):
Time lovely tie in beautiful segue. If any of you
all listening have a bill about peacocks roaming in a cemetery,
it inspires, or your name is Bill, you own a peacock.
Speaker 1 (46:26):
Or just any don't do the show. I don't know
if you're allowed to own a peacock.
Speaker 3 (46:31):
Visits podcast dot com slash bill leave us your bill.
We already and waiting for it. And now it's time
for the lighting around pew.
Speaker 4 (46:45):
I love these segments. I really appreciate a segment.
Speaker 1 (46:48):
Yeah, we we do too, And we do all of
our own voice sound effect as realistic as they sound.
Speaker 3 (46:56):
Believe it or not. It's just our mouths on the mike.
Speaker 1 (47:00):
You would think that we were professionals in LA right, Like.
Speaker 4 (47:03):
Yeah, I thought that was the sound designer. I thought
it was this real spaceship and a real explosion.
Speaker 1 (47:08):
Yeah, well so we're not. We're just here in St. Petersburg, Florida.
You know, nobody's called us out there. Yeah all right,
So for the lightning round, this is our vulnerability round.
What's a purchase that you've made, or you make whatever,
but it stems from a cognitive bias. Maybe you still
choose to make it or you've chosen to stop.
Speaker 4 (47:26):
Yeah. I recently bought this one hundred and thirty dollars
led candlestick lamp type thing. It looks like the type
of candlestick that a tuberculosis ridden Victorian child would carry
around at night. But it's led, and so you can
(47:49):
like touch the wick and it will illuminate or de illuminate,
if that's a word accordingly, And I'm obsessed with this thing.
It was so overpriced, but it really allows me to
live out a nostalgic fantasy of the eighteen hundreds of
time that I certainly would not prefer to live in.
But I do like to sort of delulu about that.
(48:11):
And that relates to a cognitive bias called declinism, which
is associated with nostalgia. Declinism describes our false perception that
life is just getting irreversibly worse and worse and worse,
and it's all downhill from there.
Speaker 3 (48:27):
I did not know about that one. You have diagnosed me.
You have diagnosed me, Oh my.
Speaker 1 (48:33):
Gosh, are you going to take it to the cemetery?
Speaker 4 (48:38):
That is a genius idea.
Speaker 1 (48:42):
I hope that pictures That.
Speaker 4 (48:44):
Is the full starter pack. Like me, a cognitive bias
text my led Wick lamp and a graveyard obsessed.
Speaker 1 (48:53):
I am looking forward to seeing that, Jill.
Speaker 3 (48:58):
So mine is something that causes me to not spend.
I'm not a super spending person, but status quo bias
leads me to not buy because I think the current
state of affairs is fine. It's okay that our door
scratches the floor every time we open it. We've lived
(49:19):
this long. Why spend five hundred dollars on a new door?
Speaker 1 (49:24):
Fine floor scratch there's everywhere.
Speaker 4 (49:28):
I am completely with you. I am like so miserly
when it comes to necessities and spendy when it comes
to these like delusional fantasy items.
Speaker 1 (49:41):
Yeah that's I mean, that's all of us. I mean
the things that cost a couple hundred dollars that would
literally improve the quality of our lives. Can't afford that.
Speaker 3 (49:50):
Yeah, but we don't want to pay the dentist. We
don't want to change the oil, we don't want to
pay taxes.
Speaker 1 (49:56):
But I love event expects on a latte? Fully, can I.
Speaker 4 (50:00):
Just went to the dentist for the first time in
five years.
Speaker 3 (50:03):
Yeah, well I got you beat?
Speaker 4 (50:06):
Oh really? Wow? Yeah? Okay, So let's say this. I
went in there and I was like, I am so ashamed.
I haven't been here since before the pandemic. I know
that I'm going to need a mouth replacement. I am
so sorry because because yes, yeah, honestly, but like she
looked in my mouth and she was like, you have
four tiny cavities that like barely need to be filled
(50:29):
low key, and I was like, oh slick, yes, so that.
Speaker 3 (50:33):
Kind of I mean, maybe it's a myth, because you know,
we love a good conspiracy theory. Maybe dentists or a myth.
But also hardly anybody goes anymore because apparently medical insurance
stams our eyes and our mouths not worthy. Okay, so
we'll cover everything else but teeth.
Speaker 4 (50:54):
That is That is the medical system trying to dull
our senses. They want to have unhealthy eyes and unhealthy mouth.
Speaker 3 (51:02):
Stop eating and you know a slow decline.
Speaker 1 (51:05):
No, not just soup soup, it's big soup. I think
it's big soup.
Speaker 4 (51:09):
Okay, No, I actually do think that the dentist is
a giant scam. Everyone's constantly trying to get me to
take out my wisdom teeth. I'm like, yeah, the way
that we all once had to take out our tonsiles
for no reason, or appendix for no reason. I'm only
taking it out if it's a problem. You ding dong,
that's not happening.
Speaker 1 (51:28):
Yeah, so much passion, so much passion. Okay, for me,
it is the overconfidence bias by a mile, so I
would always and I don't do this as much anymore,
just mostly because I don't have time. But I used
to think that I could do any craft, like if
(51:50):
somebody else can do it, I can do it. It's
so funny because you're not craft I'm not craftzy, so
I'm not a DII wire. I am not. But I
would see calligraphy and macromay and I bought the things
to do both of them. And guess what I can't.
I can't do it, and I definitely don't enjoy it
even if I could do it. Almost and this is
(52:12):
most recent, I've been getting ads for adult paint by number,
and it's been like if this woman in this ad
can do it, And it turns like I can't paint,
but I can follow directions and maybe that's all I need,
you know, Like I can follow directions, And then I
remind myself, you are not crafty. You do not enjoy it,
(52:37):
and even if you could, you wouldn't want to, you
wouldn't finish it.
Speaker 3 (52:41):
So that.
Speaker 4 (52:43):
I couldn't relate to that more. I'm basically Edward sisar hands.
Speaker 1 (52:49):
Yes, that's me just cutting things up, and they don't.
They don't look like the or goat me they're supposed to,
though treads.
Speaker 3 (52:58):
Oh, this has been some goodnerability and such an amazing
episode of Miranda. Thanks for being here with us. If
people want my work from you, where can they find it?
Speaker 4 (53:06):
Can I ask when this is coming out, because depending
on that, I'm gonna plug different things.
Speaker 1 (53:11):
It is on April twelve.
Speaker 4 (53:13):
Okay, perfection amazing.
Speaker 3 (53:16):
Well.
Speaker 4 (53:16):
My book The Age of Magical Overthinking, Notes on Modern
Irrationality is now available wherever books are sold, even in audiobook.
I recorded my own audiobook which was so much fun
and actually fun. Fact, the little cue of like beautiful
music that plays during the introduction of the audiobook, I
(53:37):
hate the word fiance, but my engaged betrothed partner person
composed yeah film a TV composer, so it's gotta check
it out. And then I'm also on tour right now
at the time that this is airing. I'm on this
really over the top book tour. My inner theater Kid
emerged in full force, and so if you live in Brooklyn, Boston, Philly, Portland,
(54:04):
you gotta go to Amanda montel dot com slash events
because I'm throwing this extravagant variety show called the Big
Magical Cult Show, which is like magical like the new
book and culty like the old book. And there are podcasters,
special guests like Kelsey from Normal Gossip and it's just
it's gonna be a hoot. So yeah, definitely get tickets
a Manamaan Hilda cop such events.
Speaker 1 (54:25):
That's so sass. Thank you so much, Amanda, and uh yeah,
go get that book. I had so so much fun
geeking out over cognitive biases.
Speaker 3 (54:39):
Yeah, this interview just makes me smile. I think Amanda
is so articulate, so wise in her own right with
the things that she's expert on, and I think really
highlighted for me just areas that I've never thought about
before and how that can play into our spending and
(55:02):
just all of life, the things that we can be
aware of and how it can help us financially. I'm
just excited and it's just fun.
Speaker 1 (55:09):
Yeah, love to have we make so many assumptions about life,
and yes, that's our brain protecting us from making too
many decisions and making us far more tired than we
already are.
Speaker 3 (55:21):
But it is.
Speaker 1 (55:23):
Required for us to question our assumptions and see if
they are due to some of these cognitive biases. So
I hope that you'll continue to think about and rethink
about the assumptions you make in your life.
Speaker 3 (55:39):
Thank you everyone so much for listening. We are really
loving to read your kind reviews. So some of you
keep giving us reviews, which we love and we welcome
and we ask for and we want to highlight this one.
It comes from I love t dowg with a W.
It says amazing, it's five stars, very helpful podcast, completely
(56:02):
changed lives financially. Thank you exclamation work exclamation mark.
Speaker 1 (56:08):
I mean congratulate you and tea dog for making the
changes you needed to make. And yeah, thank you, and
please please leave us a rating and review. It helps
us look legit, it makes us feel good, It gives
us overconfidence bias like all all these good things that
(56:28):
we need in our lives.
Speaker 3 (56:30):
Yeah and yeah, please leave us those reviews. Then we'll
see you next time.
Speaker 1 (56:35):
Bye. Gorugle Friends is produced by Eric sirianni.
Speaker 3 (56:50):
Okay. I noticed my cognitive bias at play again yesterday.
What did I say? Mine was status quo bias. Not
wanting to change or disrupt anything.
Speaker 1 (57:03):
You were about to disrupt some things this morning. But
we'll talk about another episode.
Speaker 3 (57:09):
So Eric and I usually do our grocery shopping at Walmart.
You heard it, hear, folks not sponsored, because we can
get our other toilet tree items that we need there.
Like I love all the but oftentimes it's every two
weeks at Walmart. And one of the things that we
(57:29):
do only when we have to go to more so
the toilet tree section, which we did. We needed more toothpaste,
Eric needed face wash. That is where the clearance section
is for all of Walmart. So we will often do
around at the clearance section. This is about a once
a month tradish for us. And you know, I guess
(57:50):
just to like tempt yourself a little bit with a
little yellow sticker, But I also, as you know, keep
a running list of the things that I want to
be purchasing, things that I need, and so if there
happens to be anything in the clearance section, great, well
there wasn't at least for me. Eric doesn't keep it
running less, but he's like, there's so much stuff here
that I want. They had all kinds of stuff for boats,
(58:13):
like a new boat cover that could work for the
boat that we have, new liner for the inside, like
hatches that he wants to eventually redo. I think the
boat trailer, the covers that the boat sits on needs
to be recovered. But none of it people be done.
That's so there's a saying the greatest day of your
(58:35):
life is the day you buy your boat and the
day you sell your boat. And like it's just the truth.
We don't have anything fancy. Don't get it twisted. Don't
be picturing like a yacht. We've got a small fishing
boat that.
Speaker 1 (58:47):
Does the job they might row yacht.
Speaker 3 (58:50):
I think it costs, like anyways, it costs so much
to maintain, especially with this one who wants to just
keep doing stuff to it. We didn't because I'm just like,
is the cover we have currently broken? Nope, but we
are going to need one eventually in like two years
something like that out savings, you know, we need to
(59:16):
redo this and that it's just like all it really
is going to do is take up space in the
garage that he just cleaned out and we didn't. I mean,
it wasn't like he was begging for it either, But
that was my status quo bias, just it's not broken,
don't fix it.
Speaker 1 (59:31):
Well, that's a great bias.
Speaker 3 (59:33):
It does help me, but it does It doesn't necessarily
mean that we're always fixing and maintaining things to the
highest degree.
Speaker 1 (59:42):
Yeah, I mean, but it's it helped you with the
boat person, with the boat guy. We help you with
the boat.
Speaker 3 (59:49):
Guy status quo, even if it's broken
Speaker 1 (59:54):
Keeping it unremarkable, under promise, under deliver,
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