Page 172 - Psychology of Money - Timeless Lessons on Wealth, Greed, and Happiness-Harriman House Limited (2020)

The question is, why? And how does it impact how we think about money?

COBACOBA

Let’s repeat the premise that no one is crazy.

There are valid reasons why pessimism is seductive when dealing with
money. It just helps to know what they are to ensure we don’t take them too
far.

Part of it is instinctual and unavoidable. Kahneman says the asymmetric

aversion to loss is an evolutionary shield. He writes:

When directly compared or weighted against each other, losses loom larger

than gains. This asymmetry between the power of positive and negative
expectations or experiences has an evolutionary history. Organisms that
treat threats as more urgent than opportunities have a better chance to
survive and reproduce.

But a few other things make financial pessimism easy, common, and more
persuasive than optimism.

One is that money is ubiquitous, so something bad happening tends to
affect everyone and captures everyone’s attention.

That isn’t true of, say, weather. A hurricane barreling down on Florida
poses no direct risk to 92% of Americans. But a recession barreling down
on the economy could impact every single person—including you, so pay
attention.