Too much choice; too little help

That even smart people make dumb money mistakes is now fairly well established. We are not the Econ 101 textbook perfect economic agents who maximize utility with perfect calm, using all the perfectly disclosed information to make the most logical decision. Notice how you spend the next time you go to a mall and the textbook version of yourself goes out of the window. Look at your investment portfolio and the picture looks less and less perfect. Hammering away at this notion of perfect markets with perfect economic agents has been behavioural finance, which has used experiments to bring real life into economics. One of the tenets of economics that has got turned upside down has to do with choice. Is more choice always good?

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Gift a pension this festival season

The mass affluent Indian home is run on the steam of its band of domestic help—garbage collector, cleaner, housekeeper, cook, driver, gardener, guard, car cleaner, and more—which provides direct services to the household. Then there are the vendors—presswallah, newspaperwallah, flowerwallah. As the wealth level rises, so do the number of people working to make the lives of the rich healthier—add on now the yoga teacher, and the physical fitness trainer. As a mean aside, I can’t help but remember my yoga teacher, who said that the rich homes he went to had fat and unhealthy masters and trim and healthy household help! Their collective salary bill will be a fraction of the monthly income of the mass affluent household.

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