I hope to get into this book written by two Nobel winners (Shiller and Akerlof) “Phishing for Fools” while on my way to JumpStart conference next week (While on the topic of JumpStart, be sure to stop by Booth #16 to say hi to the NGPF team!).

Here are some snippets of the reviews I have seen:

• Princeton University Press: “Phishing for Phools therefore strikes a radically new direction in economics, based on the intuitive idea that markets both give and take away. Akerlof and Shiller bring this idea to life through dozens of stories that show how phishing affects everyone, in almost every walk of life. We spend our money up to the limit, and then worry about how to pay the next month’s bills. The financial system soars, then crashes. We are attracted, more than we know, by advertising. Our political system is distorted by money. We pay too much for gym memberships, cars, houses, and credit cards. Drug companies ingeniously market pharmaceuticals that do us little good, and sometimes are downright dangerous.”

• The Economist: “One section of the book discusses how credit cards are used to “phish” the unsuspecting. Why do shops accept cards when it is so costly? One study found that credit-card firms charge convenience shops fees that amount to over twice their profits. But cards also trick people into spending more than they really want to. Richard Feinberg of Purdue University demonstrated this in a psychological experiment. After putting MasterCard symbols nearby, subjects said they would pay significantly more for a basket of goods than the control group—in some cases about 200% more. You, the consumer, may think that credit cards make life more convenient. In fact they “phish” you on a daily basis.”

• Wall Street Journal interview with Shiller and Akerlof: “Investors should always remember that a profitable phish is to design investment pitches around their preconceptions. A search of the phrase “stocks have always outperformed” on Google Ngrams shows that the phrase first appeared around the bottom of the market in 1982; its use exploded until the market peak in 2000. Why? Because with a rising market it was advantageous for phishermen to suggest that this up market would continue forever.

Video resource (15 minute TedX talk with Robert Shiller):

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Here are a few NGPF Resources titled “What’s The Catch?”

• What’s the Catch? Reading Credit Card Fine Print
• What’s the Catch With These Investing Pitches?

About the Author

Tim Ranzetta

Tim's saving habits started at seven when a neighbor with a broken hip gave him a dog walking job. Her recovery, which took almost a year, resulted in Tim getting to know the bank tellers quite well (and accumulating a savings account balance of over $300!). His recent entrepreneurial adventures have included driving a shredding truck, analyzing executive compensation packages for Fortune 500 companies and helping families make better college financing decisions. After volunteering in 2010 to create and teach a personal finance program at Eastside College Prep in East Palo Alto, Tim saw firsthand the impact of an engaging and activity-based curriculum, which inspired him to start a new non-profit, Next Gen Personal Finance.