Hal Hershfield: The Psychology of Long-term Decision Making (EP.141)

How do your perceptions of time influence your long-term decision-making and financial well-being? Today we speak with psychologist and UCLA Associate Professor Hal Hershfield to answer this abstract question. We open our conversation with Hal by exploring the concept of well-being. After chatting about the factors that impact financial well-being, Hal unpacks the balancing act that's required to live in the present while safeguarding your wealth to support your future self. Hal shares exercises that can help you develop a more vivid sense of your future self and we discuss how this can lead to better financial decisions. We then dive into the role that free time plays in determining your well-being, leading into a discussion on how financial advisors can steer their clients towards achieving their idea of well-being. Returning to the notion of your future self, Hal shares insight into the importance of self-compassion, dealing with life and preference changes, and how hitting age milestones lead to periods of personal reflection and financial reevaluation. Later, Hal gives listeners his take on annuities and how retirees perceive them. We wrap up another informative episode by looking into the link between perceived wealth and spending before touching on how Hal views success. Tune in to hear more about Hal's research and how it can give you a stronger and deeper conception of your financial future. Key Points From This Episode: Introducing today's guest, decision-making expert Hal Hershfield. [0:00:03] Exploring the definition of 'well-being.' [0:02:28] Ways that Hal measures well-being. [0:03:46] How financial behaviours and psychological factors impact financial well-being. [0:05:17] Hear how your relationship with your future self affects wealth savings. [0:06:52] Hal talks about how we can get closer to our future selves. [0:10:14] Reflecting on exercises that can help you imagine your future self. [0:13:14] We ask Hal when the present and the future begin. [0:17:01] The link between well-being and your perception of your present and future self. [0:20:32] Distinguishing between your present and future self versus having no distinction. [0:22:18] Whether not having little free time is detrimental to life satisfaction. [0:23:51] Hal discusses whether people would rather have more time or more money. [0:28:06] How financial advisors can help people achieve higher well-being. [0:30:59] How changes in your chronological age can trigger moments of reflection. [0:35:48] Differences in how retirees view lump sum and monthly income streams. [0:41:49] Helping people get a clearer idea of the value behind annuities. [0:44:42] How people can develop opposing ideas about when they'll die. [0:47:33] Hal's work on the relationship between meaning and spending. [0:49:21] Hear how Hal defines success in his life. [0:52:40]