Latest / Behavioral Economics with Fexingo: Decision Making, Bias, and How People Really Spend
The Insulation Effect Why a Big Bill Feels Smaller
Why does a $10,000 roof feel less painful than a $400 car repair? Because your brain spreads large, infrequent costs over time, making them feel smaller than they are. In episode 162 of Behavioral Economics, Lucas and Luna dig into the 'insulation effect' — the mental accounting trick that lets us stomach big-ticket purchases by distancing them from daily spending. They explore how this bias shapes everything from home renovations to healthcare deductibles, and why it can lead to overspending on items we barely use. Using real-world examples like a family's decision to finance…
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