I was browsing youtube and stumbled across this video titled " 5 Ways People Are Dumb With Money"
God damn the beginning hit close to home
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Hahaha they could have at least used the right card…
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Behavioral economics has always fascinated me. Interesting video and I liked how they brought a “1st edition charizard” into it.
My wife and I are the closest people I know to Penny and it pains me sometimes to see close friends and family be so bad with money. Consumer debt catches so many people up in a vicious cycle where they spend so much money simply maintaining bad debt that prevents them from consuming to the levels that they would be able to had they never built the debt up to begin with.
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I think I got the gist of it, you have to be an ancient cosmic evil which preys upon the children roughly every 27 years, using a variety of powers that include the ability to shapeshift, manipulate, and go unnoticed by adults all the while being dressed up like a somewhat friendly clown. On a more serious note: solid video, a lot of nice information and great examples to go with them.
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I am finding psychology more and more interesting each day. I like to read how behave, why we do it… How we are been persuaded with and without realising it… It fascinates me.
I have read the book mentioned on the video couple months ago, and although it is tedious and sometimes boring to read, it offers the reality that it is better to know. I think that the video has made a really good work to define the main points in an interesting way. Congrats to them!
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Kinda of a weird example to use a 1st edition Charizard in that scenario lol.
I think they are missing the point.
This was really insightful. I think one area where mental accounting occurs for most collectors who use eBay is ebay bucks.
When I get $100 in ebay bucks I immediately think, heck yeah I can
get another card for my collection!!! Even if i wasn’t planning to add another card anytime soon.
Really, that $100 is fungible, I could use it to stock up on shipping supplies if I acted like Penny.
I don’t think they’re missing the point, but I do think you’re highlighting a missing consideration they don’t address in that example.
First just to elucidate their point, they are just expressing an example of the endowment effect.
If it’s your own charizard, you are reluctant to sell it in that it has the $3000 value in addition to some added sentimental value since you pulled it. I do this all the time when I pull a card I already have graded. Then I grade the card and get the same grade, i usually sell the copy I originally purchased because I prefer to keep copies that I graded myself (one added value is that I get to tell friends I graded it myself).
Say instead of pulling one, you see charizard in a store for $3000, but decide not to purchase because it doesn’t have the added value of you having pulled the card yourself. That’s the endowment effect in that you won’t spend $3000 to buy one, but you’ll pass on a gain of $3000 to keep one you pulled instead of selling it.
I feel what they do miss is the fact that a person may have their heart set on getting a 1st edition charizard some day, but presently don’t have $3000 to spend. So if you don’t have it to spend, of course you won’t buy it. But if you get home from the store and pull one from a pack and decide to keep it and not sell it, is that really the endowment effect? Or is it just the, “yay I don’t have to save $3000 now” effect?
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Props for properly placing the market value on a PSA 8 1st edition Charizard.
I like that that was your take away from all of that. 
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Yes, I agree 100%. That’s what I was thinking when I watched the video, just because you pass on it at the present time doesn’t mean its something you don’t want eventually.
I would love to pull a 1st Ed Zard one day lol
Good analysis.
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Wow this is funny to see on eFour! It’s a PBS Digital Studios video, which is actually produced in my office 
(I work in PBS fundraising)
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Everytime I hear that PBS intro I think of the Bob Ross remix
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Have you met people?
Credit cards, payment plans. Some people will not only buy it, they’ll buy it with someone else’s money and pay interest on the purchase adding hundreds if not thousands to the total purchase price.
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Nope, never met people. 
I was refuting the presence of the endowment effect from the example they give if it is the case that the person actually wants the card, but doesn’t have $3000 to spend. Certainly many people will buy things on credit, but many people only spend money they have. I only said, “if you don’t have it to spend, of course you won’t buy it”, in the sense that it’s not a big mystery why someone wouldn’t buy one from a store for $3000, but would keep one they found/pulled.
It’s not the endowment effect if you really want the card, but don’t have $3000, but then you happen to find the card in your basement and decide to keep it. That’s just you keeping what you would have bought once you saved $3000.
idk I just think they leave out the intent, desire, and purchasing power of the individual in the example that doesn’t give a totally accurate account of the endowment effect.
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OMG
Everything they said makes perfect sense.
And none of it applies to me.
Thanks Mom Thanks Dad
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Some has applied to me in the past, but none does anymore. Good info and post though.
The Charizard example does seem a little off as @teraz said. In one scenario you get it for free and in the other you have to pay $3000. Cards also can have emotional and nostalgic value. I have a beat up Jungle Vaporeon I received for Christmas when I was kid. It’s probably worth $2 on eBay but to me it’s priceless.
Also, mistakes and failures can be your greatest teacher.
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That is a good point! Being fiscally responsible or minimal ≠being a miser. Everything in life is a balance!
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The Charizard example is a really bad one.
As Charizandrew said, on one hand, you are literally finding the card for free and don’t have to pay anything for it. You can choose to sell it or choose to keep it. If you choose to sell it, you profit $3,000. If you keep it, you literally lose nothing, not to mention the fact that you can always sell it down the road for an even greater price.
In the other scenario, you literally have to pay $3,000 out of pocket for the card, which is something that you either a.) may not have at the time, or b.) don’t want to do because you will then have a $3,000 hole in your bank account. You also will not profit if you sell the card for that same price.
I understand the premise. The example is just terrible.
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