Freakonomics Radio 140. How to Think About Money, Choose Your Hometown, and Buy an Electric Toothbrush
Oct 3, 2013
Tips on managing money, choosing a hometown, and buying an electric toothbrush for better dental health. Impact of credit cards on spending habits, exploring rational behavior and youth spending habits. Meaning of being 'rich' beyond money, financial strategies for life. Location preferences, teaching kids about money, and shaping social interactions. Deterrence tactics, foreskin correlation, generosity in donations, and upcoming episode on fundraising motivators.
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Cash vs. Credit for Young People
- A 22-year-old listener, Steve, finds that cash feels like "spare money" unlike credit card spending.
- He questions the assumption that credit cards make his generation irresponsible with money.
Delayed Pain of Credit
- Steve Levitt argues that credit card spending, by delaying pain, likely encourages more spending than cash.
- He believes mental accounting plays a significant role in how we perceive and use money.
Credit Card Effect on Willingness to Pay
- Studies show people's willingness to pay increases when using credit cards compared to cash, sometimes up to 100%.
- This "credit card effect" isn't solely due to having more available funds.