I Will Teach You To Be Rich » Be the expert http://www.iwillteachyoutoberich.com Personal finance blog for college students, recent graduates and everyone else -- including entrepreneurship -- for getting rich. Featured in the Wall Street Journal and New York Times. Fri, 10 Feb 2012 14:07:04 +0000 en hourly 1 http://wordpress.org/?v= Be the Expert: Spot the delusions in this real-estate ad http://www.iwillteachyoutoberich.com/blog/be-the-expert-spot-the-delusions-in-this-real-estate-ad/ http://www.iwillteachyoutoberich.com/blog/be-the-expert-spot-the-delusions-in-this-real-estate-ad/#comments Tue, 08 Mar 2011 04:54:34 +0000 Ramit Sethi http://www.iwillteachyoutoberich.com/?p=7302

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This is a “luxury real estate” newsletter I get every month. See how many logical disconnects/delusions you can spot in the copy.

Real Estate Delusion

Leave a comment with your findings.

Read more “Be the Expert” posts.

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I wanted to share something from the cutting-room floor of my New York Times article on the psychology of financial willpower, which didn’t make final print.

In the article, I shared some of the latest research on how extraordinarily difficult it is to change our behavior: Many of us think we’re in control of the decisions we make about money, but when we simply “try harder,” our willpower often fails us and we fall right back into our old spending habits.

One powerful solution for behavioral change starts by changing your defaults. It’s not sexy and it’s not a “magic pill” — but it works.

Now, let me show you another example that you didn’t see in that article.

How to reduce infant HIV in Sub-Saharan Africa

By changing the default from opt in to opt out, the pre-natal screening no longer required “willpower” to change behavior. The results: Testing rates skyrocketed from 65% to 99%.

The implications for changing pro-social behavior are profound.

Be the Expert: How would you engineer behavioral change?

Let’s say I hire you to change the following behaviors:

  1. Help a busy executive lose 10lbs
  2. Help a careless 26-year-old save $1,500 in his savings account by June
  3. Help someone feel measurably happier

How would you do it using defaults?

(If you’re not sure, refer to my NYT article, my bookmarks on psychology, and the superb book, Nudge.)

The BEST answer gets a phone call with me, where I’ll help you pinpoint and change, amplify, or eliminate one critical behavior.

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As you know, I have strong opinions on buying a house, and most people don’t know what they’re talking about when they talk about real estate being the “best” investment.

So when a Wharton professor wrote a Washington Post column pointing out common myths of homeownership, I laughed at some of the comments.

  • “Wow is this a poorly written and intentionally misleading piece of b.s. I wasted countless thousands renting apartments before wising up and buying a house. The author would rather have us all in housing collectives or government owned communes. Home ownership is still the American dream; don’t let this joker fool you.”
  • “…Housing is a great long-term investment. Yes, it is. Because what the author doesn’t mention is that you have to have a place to live. If you rent, you have a place to live but the return on your ‘investment’ when you pay rent is 0.”
  • “this guy gets paid for this s^^t?”

Newspaper sites have the worst commenters in the world.

But there was a comment that made my jaw drop. Can anyone spot the multiple problems with this comment?

“Another story: My father bought our family house in NJ for about $27k in 1964; sold it for $350k in 2000. Home ownership is terrific long-term investment.”

(Need a hint? This and this will help.)

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