Talk “Predictably Irrational: The psychology behind money”
Behavioral economics expert Dan Ariely gives lecture as part of the international tour of SURA Asset Management The James B. Duke Professor and author of numerous best sellers explains that we think we make intelligent and rational decisions, but it is quite the opposite. This morning, he was in Chile to conduct a talk as part of a tour in Latin America organized by SURA Asset Management. Friday 14 October 2016.- Although people deal with money many times a day, they often make impulsive or wrong decisions when investing. How can you explain that? That's one of the questions that the Professor of Psychology and Economics at Duke University (USA) Dan Ariely cleared in his talk "Predictably Irrational: The psychology behind money," organized by SURA Asset Management. What the expert in behavioral economics suggests is that when it comes to making decisions in our lives, we think we have everything under control, we are making intelligent and rational decisions, but actually it would be quite the opposite. "Every time we do something with money, we are giving up something else, i.e., the opportunity cost. That's one of the reasons why it is so difficult to deal with it, "Ariely said to the more than 1,000 attendees. This also explains why saving is so hard for people. About the author of the best seller'Predeciblemente Irrational, he explained that "every time we commit to save means that we are giving up something now in pursuit of the future, but the future is something about which we do not think much and, therefore, we usually make mistakes". The second reason why money and savings are so difficult, he added, is that by saving people should give up something concrete, like a motorcycle, for something abstract, which makes saving less attractive. Another premise of Ariely's is that people do not manage their money well because today, instead of competing for savings with their peers – neighbors, friends or family – people compete in expenses. "When a person wins the lottery, his neighbors begin to spend more money and sometimes go bankrupt," exemplified Ariely. The researcher came to the concept Behavioral Economics by combining economics and psychology, disciplines that have framed his studies, and according to which there is a significant gap between the ideal model of rational behavior, which conveys the standard economy, and the actual behavior of humans in their daily lives. The tour organized by SURA Asset Management includes Mexico, Peru, Colombia and Chile, and endorses the commitment of the company to foster saving habits and discipline to face the difficulties that could arise in the future. Francisco Murillo, CEO of SURA Asset Management Chile, explained that "The objective of this seminar is to learn to accept that irrationality and incorporate it as a variable in our decision-making; thus, strengthening the main commitment of SURA Asset Management which is to help our customers save more, and so achieve the future they dream of." Murillo noted that Ariely is a reference to understand how our economic and financial reasoning works. About Dan Ariely Dan Ariely was born in New York but grew up in Israel. When he was 18, he suffered third degree burns on 70% of his body, which meant he had to spend three long years in the hospital recovering. During that time, he devoted himself to observe the activities of his family and friends from the distance. So, he could develop the ability to look at the daily routine with a critical eye and question the simplest decisions made by humans. He was a professor of physics and mathematics at the University of Tel Aviv, but he could not continue because it meant a too strong physical effort and so he was transferred to philosophy and psychology department. In his last year there, he devoted himself exclusively to psychology and got his PhD. He also holds a PhD's and a master's degree in cognitive psychology at the University of North Carolina and a PhD in Business at Duke University. After those years of study he worked at the Massachusetts Institute of Technology (1998-2008) and then returned to Duke as a professor of psychology of economic behavior. In addition to his academic writings, he has published two famous books "Las trampas del deseo» y «Las ventajas del deseo". "The Honest Truth About Dishonesty" is Ariely's book that in 2015 inspired the film (Dis)Honesty: The truth about Lies, currently on Netflix. Through various testimonies, the film addresses the reasons leading people to lie and to take this practice to a repeated and contagious behavior. About SURA Asset Management Chile SURA Asset Management Chile is part of the Latin SURA Asset Management company; with a presence in six countries in the region. In Chile, it operates in the market of mutual funds, life insurance, stocks and the pension industry through AFP Capital, totaling USD 36.8 billion in AUM owned by 1.9 million customers. About SURA Asset Management SURA Asset Management is a Latin American company with operations in Pensions, Savings and Investments in Mexico, Peru, Chile, Colombia, Uruguay and El Salvador. It is a subsidiary of SURA Group and four minority shareholders: Bolivar Group, International Financial Corporation (IFC), member of the World Bank Group, Bancolombia and Wiese Group As of June 2016, SURA Asset Management's AUM amounts to USD$111,3 billion, which belong to 17,7 million customers. * Customers and AUM include AFP Protection in Colombia and AFP Crecer in El Salvador, although not controlled companies, SURA AM has a significant stake.