Franklin’s words articulate an inherent human shortcoming that has only been described and quantified in the past 25 years: people do not consider a loss as equal to a gain of the same magnitude. In fact, researchers (Tversky & Kahneman, 1991, p. 1053) have found that the pain of losing (or not "saving”) money is twice as strong as the joy of gaining the same amount of money, the precise ratio that Franklin observed nearly 250 years ago. The imbalance of emotions between making and losing money leads to a cognitive bias called Loss Aversion.
You need to be a member of inter-market-analysis.com to add comments!
Comments