Behavioral-Economics

In the 1970s, the U.S. government mandated new safety features in cars: seatbelts, airbags, reinforced frames, and improved braking systems. The goal was simple: reduce traffic fatalities. Economist Sam Peltzman studied what actually happened. His findings were shocking: while driver deaths stayed roughly the same, pedestrian and cyclist deaths increased. Why? Because drivers felt safer—so they drove more recklessly. The Paradox The safer people feel, the more risks they take. ...

In the early 1900s, British colonial India faced a venomous problem: too many cobras slithering through the streets of Delhi. The British government, determined to reduce the cobra population, came up with what seemed like a brilliant solution—offer a bounty for every dead cobra brought in. Initially, the program worked. People killed cobras and collected their rewards. The cobra population appeared to decline. Success! Or so they thought. The Twist Enterprising locals quickly realized they could breed cobras specifically to kill them and collect the bounty. Why hunt dangerous snakes in the wild when you could farm them at home? ...

I once spent $299 on a course I never watched. Not because I needed it. Not because I researched it. Not because it fit my learning style. I bought it because I saw “47,329 students enrolled.” My brain did the math: “47,000 people can’t be wrong. This must be good.” Spoiler: It wasn’t good. For me, anyway. The content was basic, the pacing was wrong, and I could’ve learned the same material for free. ...

I once turned down a $40,000 freelance contract because I was afraid of losing my $80,000 salary. The math was simple: take the contract, it would take 3 months, that’s $160k annualized. Way better than my salary. But my brain didn’t see “$160k potential.” It saw “giving up the guaranteed $80k.” The fear of losing my steady paycheck was stronger than the excitement of potentially making more. I said no. The person who took the gig finished it in 2 months, got referred to three more clients, and now runs a six-figure freelance business. ...