Weekend Reading: Nobel Prize Edition

One of the most influential books I’ve ever read was Nudge by behavioural economist Richard Thaler and Cass Sunstein. The book is all about subtlety or gently steering people into making better choices to improve their health, wealth, and happiness. Policymakers around the world caught on to his groundbreaking research, which have been widely applied by business and government to get individuals to do a range of actions such as saving for retirement, paying parking tickets, and getting flu shots.

That’s why it was satisfying to see Thaler recognized as the winner of this year’s Nobel Prize in Economic Science. It’s a controversial choice because traditional economists operate on the theory that everyone is rational, while Thaler and others in his field use psychological research to argue that humans are quite irrational when it comes to the decisions we make.

“For some in the profession, the idea that psychological research should even be part of economics has generated hostility for years.”

Asked how he would spend the prize money of about $1.1 million, Professor Thaler replied, “This is quite a funny question.” He added, “I will try to spend it as irrationally as possible.”

Further reading:

• How Nobel Prize-winning Economists spent their winnings, by MarketWatch
• Another Nobel Surprise for Economics, by Robert Shiller.
• Richard Thaler, The People’s Economist, by Morningstar.

This Week’s Recap:

First up, happy anniversary to my beautiful wife! We’re celebrating 11 years of marriage this weekend – love you, babe!

Back to the blog, on Monday I explained exactly how (and when) to rebalance your portfolio.

On Wednesday Marie asked what hobbies are on your retirement bucket list?

And on Friday Marie answered a reader question about turning your LIRA into retirement income.

Weekend Reading:

A shocking piece in the New Yorker on how the elderly lose their rights:

“Guardians can sell the assets and control the lives of senior citizens without their consent—and reap a profit from it.”

Here’s Jason Heath of Objective Financial Partners discussing a recent piece on saving more because we’re living longer.

A disturbing story from CBC’s Go Public about an investment broker that ‘churned’ a client’s account to generate $250,000 in commissions.

As regulators continue to gather feedback about eliminating commissions embedded in investment products, industry veteran Dan Hallett says clients’ interests are being overlooked.

Meanwhile, here’s how Canadian fund managers performed vs. indexes through the first half of 2017. Not good.

The latest Canadian Couch Potato podcast is a good one, as Dan interviews Mike Foy from J.D. Power about the Canadian Self-Directed Investor Satisfaction Survey. The podcast goes on to tackle a question from a newbie investor who’s having trouble coping with a 2% loss in his index fund portfolio over the last six months.

Julie Cazzin at MoneySense explains how to shuffle a DIY portfolio to last to age 90.

Michael James looks at a tax saving strategy called ‘liberating your losers’ and shows why it doesn’t work.

An interesting study from the latest Census data reveals who are Canada’s 1 percent and highest paid workers.

A guest post on Million Dollar Journey looks at striving for financial independence in a high cost city.

Always controversial Des Odjick says you can buy a house even if it’s not a ‘good investment’.

Finally, here’s why 2017 will go down as the beginning of the end of the internal combustion engine.

Have a great weekend, everyone!