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It’s (almost) all about emotions
Economics sometimes has a reputation of being a cold science, in which humanity has no part to play. But in many of our economic decisions, emotions are the prime influence
In business, economic decisions appear to be devoid of emotions. The upsides and downsides of decisions are almost always exclusively expressed in money. Whether it is building a new plant, expanding a store, training staff or even hiring, firing and promoting — often the overarching aim is to manage scarce resources and maximize long-term return on investment. That this happens within legal and ethical boundaries does not detract from this central principle.
At an individual, personal level, it seems different (we don’t normally consciously think in these terms), but it is more similar than it seems.
The quid pro quo
When we make a purchase, we sacrifice money, and we expect something in return that gives us more value than the amount paid. That value can be material, because it gives us a better return than cash in the bank (like a bond), because it reduces our exposure to risk (like insurance), or saves us time (like a washing machine). It can be partially immaterial (a boring and a cool T-shirt both cover our…
