Masters in Business Trust in Finance and Consumer Confidence With Meir Statman
Aug 9, 2024
Meir Statman, the Glenn Klimek Professor of Finance at Santa Clara University, shares his insights on behavioral finance and the importance of emotional well-being in financial decision-making. He discusses the evolution of finance education, emphasizing the shift from traditional views to a holistic understanding of wealth and happiness. Statman explores values-based investing, the impact of financial decisions on relationships, and the balance between saving and spending for younger generations. He ultimately argues that true fulfillment transcends mere wealth accumulation.
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Con Edison Dividend Suspension
- Con Edison suspended its dividend in 1974, causing outrage among investors who relied on the income.
- Investors didn't consider selling shares for "homemade dividends", challenging standard finance's rationality assumption.
Dividend Preference
- Investors often prioritize dividends over buybacks, even if less tax-efficient.
- This is driven by mental accounting, categorizing dividends as spendable "income" while preserving "capital".
Resistance to Spending
- Many struggle to transition from saving to spending in retirement.
- Statman's mother-in-law viewed a new sofa as "dipping into inheritance", highlighting difficulty changing spending habits.