Freakonomics Radio Are Personal Finance Gurus Giving You Bad Advice? (Update)
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Jan 2, 2026 
James Choi, a Yale finance professor, and Morgan Housel, a renowned author, delve into the pitfalls of popular personal finance advice. Choi critiques the disparity between academic recommendations and mainstream guidance, particularly around debt strategies and mortgage choices. Housel emphasizes the psychological aspects influencing financial decisions, arguing that human emotions often derail sound strategies. Together, they explore the complexities of household finance, the significance of mental accounting, and the value of low-cost index funds.
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Household Finance Was Academic Afterthought
- Economists long ignored household finance because the field lacked established journals, grants, and academic momentum.
- James Choi says household finance became a named field only in the last ~15 years, explaining limited prior attention.
Consumption Smoothing Over Saving Smoothing
- Economic theory recommends smoothing consumption over the life cycle rather than smoothing savings rates year to year.
- Choi explains consumption smoothing avoids large swings in happiness from unequal yearly spending.
Consider Adjustable-Rate Mortgages
- Consider adjustable-rate mortgages unless fixed rates are historically low or you are budget-stretched.
- Choi notes adjustable rates often have lower average rates and insensitivity to inflation-driven real-payment volatility.
