About the Wealth Gathering Approach

Traditional economics assumes that people make rational decisions in their own self interests. In contrast, behavioral economics draws on methods from social psychology to observe how we humans really make financial decisions. Just a bit of observation quickly reveals that we don't act very rationally at all. We don't save enough, we spend too much on things that don't make us happy, we don't plan for long-range goals like retirement, and the list goes on.

The insight that people get a bit nutty about money was no surprise to anyone except the economists. However, what is a surprising insight is that we are, in the words of the best-selling author and behavioral economist Dan Ariely, predictably irrational.

Predictably Irrational as an Advantage

The discovery that we humans are predictably irrational is the key to a solution. Rather than trying to force ourselves to do something unnatural—like become perfectly sensible about managing money—why not just work with our own human nature? Think of it like betting on a coin flip where the coin has been weighted to come up heads 75% of the time, not the typical 50%. Rather than trying to change the coin, why not just bet on it coming up heads? The coin's behavior is predictably different than you'd expect, so you can win more often by working with its true nature. It's the same with us: Working with our natural human tendencies is often more effective than trying to change them.

Applied Behavioral Economics 

Wealth Gathering is a financial fitness program based on insights from behavioral economics and the related field of behavioral finance. Behavioral economics is a relatively young academic field, but it's a bit of a child prodigy given its accomplishments in such a short time. Many view the 1979 publication of Prospect Theory: An Analysis of Decision Under Risk by two cognitive psychologists, Daniel Kahneman and Amos Tversky, as the beginning of the field. The theory brought Kahneman a Nobel Prize in Economics in 2002, which he shared with Vernon Smith for "having integrated insights from psychological research into economic science." Many business and finance professionals took note of the work of Yale University professor Robert Shiller when his book Irrational Exuberance accurately predicted the collapse of the stock market dot-com bubble and later the housing bubble. More recently, behavioral economics has come to broader public attention through bestselling books such as Predictably Irrational by Dan Ariely and Nudge by Richard Thaler and Cass Sunstein.

Wealth Gathering translates the academic research from behavioral economics and finance, as well as other areas of study, into practical and understandable techniques. The program helps you engineer your financial life so being human becomes an asset, or at least not a liability, to your financial health.