Professor John Dinsmore (2:40)

Thanks for having me, Joel.

Joel (2:41)

Of course. Okay, first question is, what do you like to splurge on. I love a good craft beer, but they can be expensive. And so, you know, we're trying to do the smart thing with our money. Save and invest for the future. But, hey, you got to spend some money and live life in the here and now. What. What's that splurge look like for you?

Professor John Dinsmore (2:56)

It's probably concert tickets. I never splurge for, like, the really good seats, but I like to go. I mean, it's probably my favorite thing to do. And now I have a son who's. He just started playing music, and he's very into singing live music. So now I can, you know, excuse my splurging by saying it's for the boy, but really it's, you know, I try to go to as many concerts as I can go to without, you know, missing a mortgage payment.

Joel (3:26)

I was talking to someone the other night about in certain towns or in certain spots like those concerts start later then, do you. How do you stay awake for it? Man, that's the problem. I find these days. If it's like 9 o', clock, doors open, the band starts at 10. I'm asleep by then.

Professor John Dinsmore (3:40)

Right, right. Well, I mean, so I'm 53, so a lot of the bands that I grew up going to and I still check back in on, you know, I was the youngest person in the audience when I was a kid seeing them, and I feel like I'm still the youngest person in the audience for a lot of these shows at 53. So, you know, a lot of times the shows maybe will end earlier, but, you know, I'm with you. Especially, like, you know, doing it on any workday is especially tough.

Joel (4:11)

Like Friday or Saturday night. Yeah, for sure. Okay. Last show that you went to, what was it?

Professor John Dinsmore (4:15)

Actually, the last show we went to? So my son is a big Bob Dylan fan, and he was on the Outlaw tour with.

Joel (4:22)

There's some. That tour.

Professor John Dinsmore (4:24)

Yeah, yeah. Nathaniel Ratliff, who I had heard of but had never heard. He was unbelievable.

Joel (4:30)

Okay.

Professor John Dinsmore (4:31)

But it was about 150 degrees outside, and we were literally just hiding under a spot of shade because we had lawn tickets. And then some guy who I'm pretty sure didn't get, he. He was probably given these tickets by a client, just came up to us and was like, it's too hot for me. You know, here are my VIP passes. Why don't you and the boys go in? And so was. That was awesome once we got out of the. The heat. But it was. Up until then, it was kind of touch and Go.

Joel (4:57)

Yeah. Oh, my gosh. Those outdoor concerts can be like that. The festivals, I just don't have the stomach for them anymore. But I do love a good show. I don't get out as much as I'd like, but I'd love to hear that's your splurge. Okay, let's talk about debt and marketing. And your book is kind of at the intersection of these two things, both of which have become kind of more precarious in our society. It seems like in the last dozen years or so. I hear a lot of people say, well, marketing, advertising doesn't impact me. Like, I see the advertisements, they don't have any effect. Is that just wishful thinking on their part or there really some people who are impervious to advertising actually impacting how they think about things and their purchasing decisions.

Interjecting Speaker (5:40)

Right.

Professor John Dinsmore (5:40)

I think most people think marketing works on other people, but not on me.

Joel (5:44)

Yeah, my brain, it's a lockbox, man. No one's getting in here.

Professor John Dinsmore (5:47)

Absolutely. But I mean, the data does not back that up at all.

Interjecting Speaker (5:50)

Right.

Professor John Dinsmore (5:51)

You may think that you've completely rationally and consciously arrived at the choice of judgment that you've made, but there's just reams of research to show that, you know, people, our preferences are not that set. And a lot of times, because we can't be experts in something we're making a decision about, a lot of times we'll lock on to a thing, even if it's an irrelevant thing, and to make our decision. So, yeah, marketing, you know, advertising, it does work. That's why people, companies pump billions of dollars into it.

Joel (6:23)

Is that because it's more like subtle and long term than we give it credit for? Like, I don't see the billboard for a Coke. And then I'm like, yeah, I want one right now. But is it like just how we view the brand and how we view the acceptability of drinking a soft drink or something like that? Is it all those subtle things that are impacting us over time?

Professor John Dinsmore (6:42)

There's a lot of things. So in advertising, you say it's recency versus repetition. So the high, the best week for selling TVs in the United States is the week before the Super Bowl. So if you're Samsung, you're probably planning more ads for your TVs in that week than you would at other times of the year. But if you sell a bunch of TVs that week, it's probably not just because the ads that you ran that week, I mean, I think they helped, but they advertise year round, you know, all year, every year. And because of all of the frequent exposures to it, you start to develop a sense of comfort and familiarity with Samsung. And then of course you have all the other, you know, you have friends who have Samsungs and you know, maybe they've said good things about it. So it's all of these things. So there's stuff in the moment, but you're also bringing, you know, baggage, for lack of a better word with you, you know, your past experiences with you that also help shape your outlook.

Joel (7:43)

It's also fascinating to me that like when you see the stadium naming rights deals and I guess it's just because of like the perpetual mentions of the stadium name when during those TV broadcasts and stuff like that, it's. Yeah, it's more of that familiarity coming. It's like, oh, crypto, crypto.com arena. I guess like crypto.com is legit. Like, I don't know, man. There's all these subtle things happening inside of marketing in the ways that we're marketed to that we're honestly not even aware of. And I'm curious for you, why is consumer debt and the marketing of debt products, why is that like a particular fascination or an area of study that you've been pursuing?

Professor John Dinsmore (8:21)

You know, I think, you know, when I decided to go back to school to become a professor, you have to start researching things. What you find is when people are researching psychology, human behavior, a lot of times they're trying to figure themselves out.

Interjecting Speaker (8:34)

Right?

Professor John Dinsmore (8:35)

So it's, I think for me it was okay. I've, I've had so many finance classes, I should understand, I should be in the top whatever percent in terms of finance understanding and skill. And yet I will still fall on my face from time to time. And the truth is because a lot of it, it's not just knowing enough about finance. I mean for finance is complicated. People generally try and avoid learning about it if they can cause it's uncomfortable. But even if you know a lot, there's your knowledge base, but then there's also how are you feeling that day? What is the context of the decision you're making? What else is going on here? All of these things. And then what is the lender telling you or how are they presenting it?

Interjecting Speaker (9:22)

Right.

Professor John Dinsmore (9:23)

That also is going to affect your understanding or lack thereof of what you're doing.

Joel (9:27)

You're right. It's amazing. My psychological state can impact my willingness to buy something or to go on a walk or not. I mean it's all these things yeah, you're right. There's all these things at play, which makes this a fascinating topic. I'm curious, too, to hear your take as someone who studied this for a while. Marketing tactics around debt products have improved significantly over the decades and even to the point of making.

Professor John Dinsmore (9:54)

Improved in what sense?

Joel (9:55)

Like, as far as in the gotcha.

Professor John Dinsmore (9:57)

Sense, better for us, the consumer. Okay, so they're improved. They get great at a higher rate of conversions.

Joel (10:01)

They're great at it, and they're great at making us feel like. Like I was. You're the exception to the rule. If you think I'd like to avoid debt. I don't necessarily think that, you know, more debt in my life is a good thing. We've normalized it completely. So I'm curious, from your perspective, how good has debt marketing gotten and how has that changed what people see as, like, acceptable practice? And again, it's made. This is like that frog in the, in the, in the water, and it just, like we're slowly turning up the temperature and then it just starts to seem normal after a while.

Professor John Dinsmore (10:32)

I mean, I think, yeah, the tactics continue to get better. I mean, also the tools of marketers, not just for debt, but everywhere.

Interjecting Speaker (10:38)

Right.

Professor John Dinsmore (10:38)

Continue to improve with, you know, all of our digital footprints being left everywhere. You know, so we subscribe to Google TV at home, and there's lots of commercials that I'm like, well, this is obviously served just for us.

Interjecting Speaker (10:53)

Right.

Professor John Dinsmore (10:55)

And I mean, it got so bad that the other week it kept showing me commercials for a drug for ulcerative colitis. And I started to worry, like, do I have ulcerative colitis? Right. Because marketers know so much about us that everything is, you know, there's very little that's random about the ads and the messages that you receive now.

Interjecting Speaker (11:18)

Right.

Joel (11:18)

It's like that famous Target story where they sent some marketing materials to that young lady's house because of what she had been buying at Target. And they were like, you're pregnant. You're going to want some baby stuff. And they knew before she knew that she was pregnant, like insane. You can't make it up.

Interjecting Speaker (11:33)

Right, Right.

Professor John Dinsmore (11:34)

I mean, and that was because I, in my classes, I talk about the Target example all the time. And that was 13 years ago.

Interjecting Speaker (11:41)

Right?

Joel (11:42)

Yeah.

Professor John Dinsmore (11:42)

So whatever they were doing is now considered, like, archaic.

Interjecting Speaker (11:46)

Right.

Professor John Dinsmore (11:47)

So their tactics are probably not. Probably. They are so much better now. So they can even. Especially when people are shopping digitally. Because I, with my classes, we run lots of digital campaigns all the time. I mean, you can optimize for the right word, the right image, all of this, everything is completely quantified and then optimized to get certain types of buyers, certain types of messages and images. And that's definitely going to apply to finance as well.

Joel (12:21)

So we're going to talk a lot about bad marketing, deceptive marketing, sinister marketing even. But you say that when marketing is done right, it creates a virtuous cycle. So what does good marketing look like on the front end? And how can we maybe, maybe pointing to what good marketing looks like can help us to identify the difference and maybe avoid some of the worst kinds.

Interjecting Speaker (12:40)

Right.

Professor John Dinsmore (12:40)

I mean, I think you can. You know, in my mind, when marketing is a force for good, it's taking something that has real value to people, clearly and honestly communicates what that value is, and then the person can make an informed decision and hopefully buy it. And that person gets something that they really like and enhances their life in some way.

Interjecting Speaker (13:03)

Right.

Professor John Dinsmore (13:03)

And there are even players in finance and I wish I could, their name's escaping me. But there's a few companies that are really specializing in trying to create good financial habits and get people be more clear in their marketing so that people can trust their source of financing. Then I think it's very much a source for good. I mean, we need loans, we need credit. I mean, you can't live in a modern life without it. But the problem is when people commit to things that they don't understand, maybe because they lack understanding or maybe they didn't put as much effort into their search as maybe they should have. But a lot of times it's also because things are communicated in a, you know, to be nice, ambiguous way.

Interjecting Speaker (13:50)

Right?

Joel (13:50)

Yeah. And some of those products can be complex, Right. They can be difficult to understand. So I guess is a lack of personal finance education part of the problem too is, would, would that help? Are we basically like failing the next generation of young folks, feeding them to the marketing sharks? Because we haven't really set them up to understand even just the basic concepts of personal finance very well.

Interjecting Speaker (14:13)

Right.

Professor John Dinsmore (14:14)

I mean, you know, there's, I think culturally in the U.S. you know, we do feel like, well, you know, buyer beware, like you are responsible for your own decisions and to a degree that's true. But on the other hand, you know, you will have 17 and 18 year old kids signing on for things like student loans or their first credit card. And a lot of times it's not just being a kid. A lot of times we don't learn about things we should learn about until We've had some sort of mishap.

Interjecting Speaker (14:41)

Right.

Professor John Dinsmore (14:42)

And if you're talking about something like student loans or credit cards, that can be a mishap that follows them around for years, right.

Joel (14:50)

And we've sold them the idea of something that's. That's normal, right. Like student loans are good because you're going to get the degree and you're going to get a good job. And what you don't realize is, yeah, maybe within reason. Right. A certain amount of student loans could be a solid idea, but when you're 17 or 18 years old, you're not well equipped to understand if someone's willing to lend you the money, you must think they know better and then it's a good idea for you to take out the full amount.

Professor John Dinsmore (15:16)

No, I think that's an excellent point. I think most of us think of lenders as kind of this omniscient institutional power that, you know, the rate you get is just the rate.

Interjecting Speaker (15:29)

Right.

Professor John Dinsmore (15:29)

Based on your credit score and all these different things. But the truth is, you know, we actually, as consumers, we do have power to shop around. You know, research shows the what determines our cost of debt is not. What is a bigger factor than even credit scores is the amount of effort that we put into shopping for and selecting these types of products. But again, when we're talking about people who are just coming into it at 18 years of age, they don't know that. They haven't been taught it. I am encouraged that I think 25 of our states have made financial literacy a requirement in high schools, including here in Ohio. And you're definitely going to need that more than you're probably going to need some of the other classes that you take. I mean, you can't get away from personal finance.

Joel (16:18)

You're speaking. Speaking my language, John. I totally agree. It's like a. It's a shame that there. This thing that we use every day moving forward, you know, physics was great my junior year of high school, but I haven't used it again. And I would, I would just. Yeah. Having at least a modicum of personal finance education in high schools, and you're right, half of states now require it, is at least setting us up to start to ask the right questions or know enough to make us a little bit dangerous on that front to protect ourselves. Just in regards to debt in general, do you think that we have failed to question the basic premise of whether debt makes sense? We've just made, in so many ways, right. Debt has greased the wheels of our economy both Personal on a micro and a macro level. But then we've normalized it to such an extreme, especially in the United States, that so many people suffer dramatically from debt overload and not having saved enough for retirement because they're paying off all the different debts that they've taken out. Is that marketing at work to really get us to take on more debt or is it like, I don't know, lax political infrastructure?

Professor John Dinsmore (17:30)

I would say all of the above.

Interjecting Speaker (17:31)

Right.

Professor John Dinsmore (17:32)

I mean, I don't begrudge a marketer of a finance company trying to get more business for the company they work for. Right. That's their job. They're going to lose their job if they don't do that. But the devil is in, you know. Are you being clear with people? Are you doing some things that intentionally mislead folks?

Interjecting Speaker (17:51)

Right.

Professor John Dinsmore (17:52)

I do think culturally in the United States we, you know, we tend to be as hands off as we can be. We don't want to infringe on a company's ability to, you know, conduct business. But at the same time, if we have a society that is too encumbered with debt, long term, it's going to be a long term drag on the productivity of this country. And I think if you look at research on, you know, most people don't really understand how interest rates work and yet it doesn't matter. These people have to go out there and take out loans and negotiate interest rates anyways. I mean, it would be all right, Put a bunch of six year olds behind the wheel of a car and see what happens.

Interjecting Speaker (18:38)

Right.

Professor John Dinsmore (18:39)

Usually we want to make sure people know what they're doing before they engage with it. So I personally think there's more room for some common sense rules to make sure that people really understand what they're getting into.

Joel (18:54)

Yeah, I think you're right. People don't understand it in the positive direction, compounding returns. Like if I start investing even just a little bit when I'm young, how much I can grow into. And they don't understand it from the negative perspective of a 22% interest rate on a credit card and having that revolving $10,000 balance and how that impacts them either or something as simple as shopping with multiple lenders for a home loan. Right. And now, you know, the, the, the federal government has released statistics and they show just how much the average person saves just by shopping with three lenders versus one. And it's significant. And so like to the tune of tens of thousands of dollars over the life of the loan. Oh yeah, you were talking about some of the worst debt products to there. You call them in your book, you call them booby traps. And gosh, man, some of them are seem so incredibly nefarious. And in some states, for instance, they've like outlawed loans above a certain interest rate.

Interjecting Speaker (19:46)

Right.

Joel (19:46)

Payday loans, for instance, which trap people perpetually in debt that they just can't get away from because it's almost impossible because of the way the terms are set up. So how do you think about the credit card versus like the scale of badness, I guess in some of these debt products in the way that they get marketed?

Interjecting Speaker (20:05)

Right.

Professor John Dinsmore (20:05)

I mean there's so many credit cards and they have so many different provisions in them it's hard to point to because there's some good credit cards out there. But you were talking about, you had mentioned things like payday loans and things like that. And those are products that almost exclusively target people in low income areas. And this is both low income urban centers as well as more rural areas. And so they prey on people's lack of sophistication but also lack of options.

Interjecting Speaker (20:39)

Right.

Professor John Dinsmore (20:40)

There's a study that came out like two years ago that showed in impoverished neighborhoods, if there was a blood donation center where you could sell your plasma, it reduced usage of payday loans in that area by whatever percent. It was a significant number. I forget the exact number.

Interjecting Speaker (20:59)

Right.

Professor John Dinsmore (20:59)

So it suggests that even if folks aren't a master of if they can't come up with an amortization table or their masters of finance, they still understand that a lot of these places are really pretty rough and overly expensive because they will sell their plasma rather than have to go, you know, just to save themselves, you know, another trip to one of these predatory places. So, you know, there have been debates that have come up about, you know, obviously we want banks to be able to locate where they think makes the most sense for their business. But maybe there are opportunities where the free market can't provide. Maybe there's opportunities for kind of a public private partnership where, you know, post offices, Social Security offices, DMVs, places that have locations everywhere, including impoverished areas. Maybe these can be storefronts for market rate banking services for a lot of folks. I think it's really just getting them some options because a lot of folks know, hey, I'd rather not go to a payday lender, but at the same time, you know, there's not a Bank of America in my neighborhood, so what.

Joel (22:13)

Am I going to do? No, I think it's very true and especially you're Right. It's urban and rural. Some of the smaller rural towns I drive through. I'm shocked at how many title loan payday loan kind of places there are. It feels like There as many McDonald's as there are title loans places or something like that. Yeah. Which again, that's part of normalization. It feels like that's the place you turn when you need money. All right, we've got more questions to get to with you, John, including want to talk about status and how we think about status. Status, whatever. How we think about that in terms of our financial decisions and how that impacts some of those important decisions we make. We'll get to more with Professor John Densmore right after this.

Matt (22:59)

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Matt (25:23)

How can I forget, Joel? Nothing screams spooky season like driving through the Irish countryside in the dark while it's raining, visiting abandoned castles.

Joel (25:32)

The best part is that we got couple of amazing Airbnbs along the way. Like one in a tiny village right off the coast. Something about walking right out your door into the fresh Irish countryside that just makes a trip spectacular. It was beautiful.

Matt (25:45)

And if I remember correctly, that was the house that also had amazing folk art, but it was Irish folk art. So I feel like it was hitting you on like on all cylinders. All the fields, the one we shared with the host and her kids to save some money, I actually remember that one. I still remember sitting around her wood burning stove while she shared some of her favorite local spots for us to check out the next day. That trip was unforgettable and and it was super affordable, which as you know, we love.

Joel (26:08)

If you're thinking of traveling this spooky season, you can hire a high quality local co host to handle everything from creating your listing to designing and styling things while you're away too. Find a co host@airbnb.com host. We're back. We're still talking about the hidden forces behind debt and marketing. The marketing that happens behind debt and how it catches us in the web. We make decisions maybe we wouldn't otherwise make with Professor John Dinsmore. I was so interested when you were writing about prediction bias. That was super interesting because in your book you cover a lot of kind of some of those behavioral elements, some of the ways that marketing impacts us or even just like that, we're wired to make decisions and so yeah, there's that intersection of marketing tactics and our own human insufficiencies and realities that, like, gosh, it feels like a right place for us to get taken advantage of.

Professor John Dinsmore (27:09)

Yeah, for sure. I mean, well, inherent in taking out any debt or credit is you have to think about what your future circumstances are going to be. And we are, as a species, very optimistic.

Interjecting Speaker (27:22)

Right.

Professor John Dinsmore (27:22)

We always, we tend to think. When we think about the future, we're not thinking about, oh, I'm going to get passed over for this promotion, and then, you know, my car is going to die. When we think about the future, it's, we're getting the promotion, things are working out, we're making more. So a lot of people are less cautious about taking on debt because they're very optimistic about the future. But if you live long enough, you understand that even if things go up, it's not a straight ride up.

Interjecting Speaker (27:53)

Right.

Professor John Dinsmore (27:54)

There's going to be some stumbles and some mishaps along the way.

Joel (27:57)

It's like how long I tell my wife it's going to take me to fix something around the house. And she knows to 5x that.

Professor John Dinsmore (28:03)

Yes, no, no, absolutely. Like, I definitely resemble that remark as well. So people tend to borrow on how much they think they're gonna be making rather than how much they make. And that, you know, that can be a mistake.

Joel (28:17)

Are there ways in which we're allowing the marketers into our lives more than we should? And maybe that's also wearing us down. I'm just thinking about who we follow on Instagram, the newsletters we sign up for, the ways in which we're just like, come on in, and I'm gonna be wise enough and sane enough to make the decision I want to make at the right moment. But maybe marketers are wearing us down in a way that's hard for us to see on the front end.

Professor John Dinsmore (28:46)

Yeah, I mean, I think, right. I mean, these devices we have with us all the time, they're supposed to make us more productive and more informed, but for the most part, they make us more stressed and more overwhelmed. And when we're stressed or overwhelmed, we're just not thinking as clearly about things. So we're more susceptible. If you are old enough to remember kind of the heyday of infomercials, so, you know, if you wanted to see, like, the Ronco Pocket fishermen, well, they, you know, these oddball devices, you would see them on infomercials usually in the middle of the night, like two in the morning, when it's pretty much only Insomniacs or people who have, you know, been drinking a lot are up. And there's a reason for that.

Interjecting Speaker (29:28)

Right.

Professor John Dinsmore (29:28)

That they. Your inhibitions are down, your reasoning is diminished. And so it's a bit easier to get someone to, you know, to commit to something under those conditions than they would if they had all of their faculties about them.

Joel (29:44)

Yeah. And we're. And we're almost signing up for faculty diminishment on our own, of our own volition, by just allowing these marketers more freewheeling access to us. I'm curious, too, to hear your thoughts on the balance. And I feel like you've done a good job on this so far. But when you're buying a home, you take on a mortgage typically, right. Eventually. I mean, there's surprising amount of percentage of people in the United States who own their home with no mortgage. Something like 30% of people. It boggles my mind.

Professor John Dinsmore (30:16)

It's very different frame of reference from my own life, but. Yes.

Joel (30:21)

Yeah. But I, for one, am thankful that when it came to buying a home that there was a debt product available so that I could buy a home before I saved up the cash. Because if I had to save up the cash, yeah, I don't know if I'd own a home yet. It's like one of those things where the decision would get delayed forever, the can would get kicked down the road. How do you think about that intersection where some of these debt products really do allow us within solid parameters to live a better life?

Professor John Dinsmore (30:47)

Oh, absolutely. Some of them are very kind of nobly created. If you think about things like special Veterans Administration loans for people to. For veterans to buy a house. I mean, this is a. It's a class of people who we value highly, but maybe they haven't been compensated, you know, a lot.

Interjecting Speaker (31:07)

Right.

Professor John Dinsmore (31:09)

So creating programs to make sure that people who have, you know, done this thing that we value highly will still have access to, you know, the American dream, buying a home, going to college, all of these things. These are all things that are still worthwhile ventures now you can get into trouble with. If it's not the financial products, then, you know, there are some colleges out there that aren't accredited and are really just after your student loan money and things like that. So you need credit and debt to. Most of us do to accomplish some very key things in our life. But the trick is to not fall into a product that we don't understand, and then it might ultimately eat us.

Joel (31:55)

One of the other psychological realities that you talk about in your book is Loss Aversion and how you talk about how marketers kind of prey on that basic human instinct. Can you, can you share a little.

Professor John Dinsmore (32:08)

Bit about that, the example that pops to mind? So, you know, my wife's car a couple years ago rather spectacularly just died. Like, we went out to lunch and we looked out the window. We were about to leave, and we could see just this huge pool of oil laying under the car. And, you know, then we, it was officially pronounced dead at the shop an hour later. So we had to go get a car. And so we, we bought a car new that had a, you know, a strong reputation for reliability. And, you know, the whole sales pitch was this thing, you're going to drive this thing, you know, forever, and it's super safe, it's super reliable. And then as soon as you commit, then they start telling you, but, you know, even reliable cars fail, right? So you're going to want to get this extended warranty or you're going to want to pay 1000 bucks for the coating of all these things.

Joel (33:03)

Nothing's going to happen, but it could, right?

Professor John Dinsmore (33:06)

I mean, and so that's part of that is loss aversion, right? We're afraid of losing more than we love winning. So when we're in a position to say we don't want to make a bad decision, sometimes we end up taking on things that, you know, objectively aren't in our best interest, right? So paying the extent, you know, buying the extended warranty on the car or paying for these other things because you don't want to buy this car and then have a low probability thing happen to you down the line, right? So, yeah, I, I think there is, I mean, you could. A lot of credit and insurance is based on that kind of fear appeal, right, that, you know, you don't want to look like you made a bad decision here. So let's, you know, give us a bunch of money and we'll make sure that doesn't happen.

Joel (33:52)

And some of those products make sense, right? Like term life insurance. Like, the truth is if you die and your income stops, like, that could significantly impact your family. But then when you're buying a $250 laptop and they're like, do you want this $50 extended warranty? Because that laptop could croak in the next two years and you want to be safe. Like, that's not a great product. And so I think for individuals trying to figure out, I think some of these products are helpful and they really do protect my family. They really do Give me peace of mind. Then there's others that are just, you know, a complete. You know, it could come out to benefit me. But if you look at the numbers, it's unlikely to be the kind of insurance that helps.

Professor John Dinsmore (34:30)

Yeah, I mean, these things are structured to guarantee a return. And the return is. We're not going to have to pay out that many claims on this, for sure.

Joel (34:39)

Talk about mental accounting. Because that's one of those things too, where I think we. You say in the book your internal bookkeeper is heavily concussed, and. Which is just a funny line, but it just makes me think. I think we think we're smarter than we are sometimes and that we can do some quick mental accounting. And we're like, yeah, I know, I know which way to go. But that maybe that's not true.

Interjecting Speaker (35:02)

Right.

Professor John Dinsmore (35:02)

I mean, the truth is, as smart as any of us may be, we are still probably more emotional than we are rational. And our feelings, we take our feelings as information in a lot of cases. So how does this apply to mental accounting and money? Well, different contexts or how we pay for things feels differently, right? So if you're paying cash for a bunch of things, there is some amount of internal conflict or pain. We'll say when you pay for something, right, you're pulling the cash out. You're acutely aware of how much you've put out, how much you have left. Maybe you have to go to the ATM again because you run out of cash. So psychologically, that's a more difficult thing to do than swiping a credit card, right? Studies have shown swiping a credit card, very little calculation that goes on. It does not hurt or create much conflict. And there's a recent study that just came out showing that paying by phone, right, just the tap to pay actually feels good. People get a little feeling of pleasure from it. I guess the same way like you would getting winning a bonus on a video game or something like that. You know, that probably spells trouble for some folks if you're actually deriving feelings of pleasure just by this particular method of payment.

Joel (36:21)

Yeah, that's scary. So does that change how. Like what, how you pay for stuff or how you talk to your students about paying for things? Because if there's a simple pleasure to the tap to pay, and I gotta say, it is nice and it's crazy convenient, right?

Professor John Dinsmore (36:36)

Not having to remember your wallet and.

Joel (36:38)

Yeah, yeah, it is. And sometimes, yeah, if I'm like, if I'm going for a run, I don't have my wal, like, and I need. I can. I can pop in somewhere and use my phone that's in my pocket, which is. Which is convenient, but convenience also costing us. And it seems like maybe that added convenience is like a marketer or a lender's dream, right?

Professor John Dinsmore (36:58)

I mean, they're watching these things, right? So they. If you're a marketer, you're going to look at, okay, is how people pay for things. Like, are they making different decisions based on this?

Interjecting Speaker (37:09)

Right.

Professor John Dinsmore (37:11)

And so they're definitely gonna ask that question, and they're definitely gonna see, oh, wow, through these methods. You know, you look at how when people have downloaded a retailing app for the retailer, they spend more than if they're in store or just buying through traditional web browser. So for people who offer credit, they're gonna look at the branding of cards.

Interjecting Speaker (37:36)

Right?

Professor John Dinsmore (37:36)

The method of cards is that a digital card or, you know, and all of these things. And so they're gonna. They're gonna have some sense of what gets them the best return.

Joel (37:44)

Well, Buy Now, Pay later is the perfect example of this, Right. Where it's like a new way to pay. And you would think as a business model, it doesn't really make that much sense. And as an individual, the only way it makes sense is because it allows me to get the thing I want in the most painless way without actually having to pay up front. And the studies do seem to point to the fact that when people buy things using Buy Now, Pay later at checkout, their carts are bigger, which is why the big retailers are like, sure, come on, we'll take Buy Now, Pay later on our site. And it's just because they make more sales.

Professor John Dinsmore (38:19)

Yeah, they're just optimizing, Right. For revenue, for sure. I mean, something else that plays into mental accounting and what you were talking about. If you look at things like tax refunds, okay, so the week before the super bowl is where you sell the most TVs. But one of the big times is, and you're gonna see lots of ads in April And May for TVs is because of tax refunds.

Interjecting Speaker (38:43)

Right?

Professor John Dinsmore (38:44)

Now we all look at our pay stub, and we probably complain bitterly about the taxes being taken out. I need that money to pay bills now. But you know what? You may file your taxes and then get that money back. Do you use it to pay bills? A lot of people don't.

Interjecting Speaker (38:58)

Right.

Professor John Dinsmore (38:58)

Because it feels like found money. It's like you've had this windfall, and so they go out and buy TVs and other things because the money Feels different.

Joel (39:06)

Right. It's the way the money comes to you. It feels different. It feels different too. I'm curious about status and status whatever. Like when people, you, you talk about kind of credit cards and how certain branding of certain cards can make people feel a certain way. I mean, there's a reason credit card companies have even made some of the credit cards like black and heavier. Right. Because then you feel like a baller. I guess. It doesn't, it doesn't feel the same way when you're tapping it because it's in your Apple wallet versus when you pull it out of, pull it out of your actual wallet. But how, how did they, these retailers, these marketers use status games to kind of get at us and get us into making financial decisions that might sound smart on the front end but really are against our own best interest.

Interjecting Speaker (39:48)

Right.

Professor John Dinsmore (39:48)

I mean, when you mentioned status, you know, I think of the American Express Gold card, which was a card that was when it came out in the 50s. I want to say it was legitimately targeted towards people with, you know, very high level incomes. But because of that, it quickly became a status symbol and everyone wanted one. And then after a while, other credit card offerors would start, would issue cards with these status branding, platinum, diamond, whatever. And what they, what studies have shown is people of lower incomes, when they have these status branded cards, they use them more and they use them more specifically in like publicly visible ways. People can see them using the card, then they want to use it more. Right now as a marketer, you're probably just thinking, well, I'm just here to get the most business possible. But this is something that is, once you've seen the behavior, you know, that this particular branding is getting lower income consumers into hot water.

Joel (40:53)

Yeah. Well, luxury goods have kind of a similar element too. Right. It's where the branding or even if it's not, and sometimes they are superior products, but sometimes they're not. And it's literally just signaling and we're spending money that we don't necessarily have to signal to people that we are. Whether it's the car you drive or the shirts you wear or the handbag you carry, like that we are somebody or are trying to be. To be somebody maybe is a better way to put it.

Interjecting Speaker (41:26)

Right.

Professor John Dinsmore (41:27)

Yeah. I mean, and it goes back to, I mean, when we were in caves. Right. I mean, if you think of cave people, you don't think of being socially conscious. But the truth is these were people who had to band together to, you know, not get eaten by dinosaurs. To find food and all of these things. So the group dynamics quickly would confer status onto people back then, probably mostly based on physical stature, strength, and to that person resources would flow. Right. So maybe you don't have to go out and pick or kill your own food like people are bringing it to you. Well, in today's age, money is behind all of these signals of status that we want to, that we want to demonstrate to people. So we take on similar behaviors to achieve status with others, whether it's, you know, the things we own or just doing things that are conspicuous signs of status or wealth.

Joel (42:27)

We've all heard you get what you pay for. And sometimes that's true, Right. I have fallen victim to the deal mentality. It's like, oh yeah, I think it's the best price possible. And you know, the quality, quality be damned. I just don't care that much because this is, I'm all about paying the least amount. But how do we maybe determine when we're being marketed to, hey, this thing is superior. This is the thing you want. There is some truth to that. On occasion the quality might be superior. How do we know and do our own due diligence? I just think of something like Consumer Reports when buying a car, right. That would help you say, well, the branding says this, but the data says this. But how in the moment do we make better decisions about the purchases we make when we're being told a story that might or might not be true?

Interjecting Speaker (43:17)

Right.

Professor John Dinsmore (43:17)

It's tough. I mean, we typically have to find something that we can trust, whether it's Consumer Reports or a good friend's advice or things like that. When it comes to debt, there's, you know, there's the advertised up front price or interest rate, but usually in the fine print there's a lot of other things like escalation causes or clauses, excuse me, or you know, finance charges that. Come on, if you don't behave in certain ways. So what's really difficult is, and because math and finance makes people anxious, so they, it's hard for them to embrace. Diving into the details is, yeah, you have to read the fine print. If you have a friend who works in finance, obviously that would be great too, because financial literacy is important. But you know, if you're not doing it all the time is dealing with credit and finance. That knowledge does fade over time. So you, you need to reacquaint yourself with these things and you also need to, if you have a friend who is an expert who's living and breathing that stuff, get help, maybe crowdsource.

Joel (44:32)

I don't know. How do you feel about Reddit as a place? I feel like Reddit is a decent place to turn. Although I did see recently that there's companies paying for people to post on Reddit because that's the last bastion of kind of company free advice that people have where it's literally just humans talking about the product or the service or whatever and there's no company intrusion or advertising. But it seems like companies are trying to infiltrate that. Almost like what happened with Amazon reviews back in the day. Or interviews on Yelp reviews get people paying people for certain positive reviews to make yourself look better.

Professor John Dinsmore (45:08)

Yeah, no, I mean they absolutely are right. And same with. I don't know if you go on Quora Cora is bigger outside the US than inside, which is supposed to be the expert only kind of version of Reddit. But you know, there's still plenty of things that are being posted on there that are clearly promotional or clearly have an agenda. Yeah, I mean, if someone's too overtly commercial, I think you can tell that, you know, it's a biased message. But the trouble with Reddit is not that there aren't knowledgeable and well intentioned people on there. I think it's, there are so many people on a varying levels of expertise or intent that it's hard to tell who, you know, who are the knowledgeable, well intentioned people and who are the people who are just trying to get me to, to, you know, buy something.

Joel (45:55)

I think that's a great point. I've got a few more questions to get to with you with you, John. Including kind of AI's impact on all this. It seems to be muddying the waters even more. We'll, we'll get to a few more questions with Professor John Dinsmore right after this.

Matt (46:13)

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Matt (47:19)

How can I forget Joel? Nothing screams sp spooky season like driving through the Irish countryside in the dark while it's raining, visiting abandoned castles.

Joel (47:27)

The best part is that we got to experience a couple of amazing Airbnbs along the way. Like one in a tiny village right off the coast. Something about walking right out your door into the fresh Irish countryside that just makes a trip spectacular. It was beautiful.

Matt (47:40)

And if I remember correctly, that was the house that also had amazing folk art, but it was Irish folk art, so I feel like it was hitting you on like on all cylinders.

Joel (47:48)

All the fields.

Matt (47:49)

The one we shared with the host and her kids to save some money. I actually remember that. I still remember sitting around her wood burning stove while she shared some of her favorite local spots for us to check out the next day. That trip was unforgettable and it was super affordable, which as you know, we love.

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Get control of your overall finances with Monarch Money. Use code howtomoneyonarchmoney.com in your browser for half off your first year. That's 50% off your first year at monarchmoney.com with code howtomoney. All right, we're back. Still talking with Professor John Dinsmore about debt and marketing, the nefarious forces that get us to sign up for products that might not be the best for us. I want to talk about AI in just a second, John, but when we're talking about the Internet, the Internet, it certainly seemed like, oh, this is going to demystify pricing. This is going to take some power out of the marketer's hands. I can comparison shop in an instant, but that hasn't quite, quite been the case. Like, how have companies been able to actually see, almost make it more difficult for us to make good decisions in the Internet age?

Interjecting Speaker (50:02)

Right.

Professor John Dinsmore (50:02)

I mean, when it comes to AI, I mean, what I'm saying today may, may not apply tomorrow because it is moving so fast. But I mean, as someone who's a heavy user of these platforms, yes, AI is different than what we know as traditional computing, but it seems to, as a form of intelligence, struggle with the same thing that we struggle with as humans, which is what sources should we believe, you know, what is valid information? You know, so all that I've seen really on AI, it is, and you can see in like analytics on websites that, you know, ChatGPT and similar services are replacing Google when you're looking at referral sources for traffic.

Interjecting Speaker (50:42)

Right.

Professor John Dinsmore (50:42)

So search traffic is slowly evolving into AI traffic. So AI is going to be really powerful for that reason. But at the same time it struggles with, as far as I've seen, separating good information from misinformation. And then it's also for phishing scammers and other forms of cybercrime. It's been this major blessing for people who want to misrepresent themselves as being from your bank or being a lender and things like that. So, I mean, right now I haven't seen it as a big force for good, but you know, hopefully as the platforms get better and we get more sophisticated about using those platforms, hopefully it will become that.

Joel (51:31)

I'm not against dynamic pricing for the most part, although it's gotten more sophisticated. But it is interesting that, you know, you might try to buy an airplane ticket in the morning and then you go, you're like, yeah, I'll do it later. And then you go back the afternoon and you're like, it's $150 more for the same flight. Like, how did that change so quickly and by that much? But that's, that's dynamic pricing. And guess what? The price might be cheaper again the next day. So you have to be a thoughtful consumer. But it seems like with artificial intelligence, those decisions are going to become even more fraught and maybe more individually targeted. So how do you think people can or should protect themselves when it comes to marketing of products where pricing is even more ambiguous than it is now?

Professor John Dinsmore (52:16)

I think you have to. And it's tough, right? Because I know people, people have accused, like Amazon serving different prices to people and other online retailers because they have a search history and they'll say, okay, well, Joel, you know, he's this big deal podcaster, so we think he'll pay 20% more.

Interjecting Speaker (52:33)

Right.

Professor John Dinsmore (52:34)

So how do you protect against that? I mean, I think again, it goes into the amount of effort you're willing to do and all the different sources you're willing to check, you know, on these things. You know, airlines insist that they aren't jamming you when you search for an airfare and you come back and it's gone up a little bit, which not only makes them more money, but it's going to increase your sense of urgency to buy that ticket.

Joel (52:55)

Oh, man, prices are going up. Better get it now.

Interjecting Speaker (52:57)

Right, right.

Professor John Dinsmore (52:58)

But I mean, so it is again, it comes in, you check multiple sources for everything. You know, I remember the CEO of Wendy's randomly in an earnings call said, well, we're going to play with dynamic pricing. And people lost their minds.

Joel (53:14)

Right.

Professor John Dinsmore (53:15)

And I think mostly because, you know, it's food, right? And this is not, you know, this isn't going to some, you know, Michelin starred, whatever. It's. These are working people who go to Wendy's for food, and now they're gonna have to pay however much more because they want to eat lunch at lunchtime. So I think that's part of it too, which is being able to just go across the street to someone who's not doing that.

Joel (53:39)

That's a good point. Be willing to walk. And I think that's part of what's changing. Some of the policies that these companies have is they're getting the pushback and they're realizing that it's unpopular with the masses.

Interjecting Speaker (53:52)

Right.

Professor John Dinsmore (53:52)

I don't know if you're one of the most famous examples of dynamic pricing. Coca Cola experimented with vending machines that would charge more for sodas the hotter it was outside and people were furious. I mean, they quickly pulled the plug on it because people got so angry.

Joel (54:09)

Yeah.

Professor John Dinsmore (54:09)

So, yeah, yeah. So it's, you know, your business is valuable. Don't be afraid to take it elsewhere if someone is misbehaving.

Joel (54:17)

Do you think individuals should be responsible for their own behavioral shortcomings? Like, hey, hey, you signed on the dotted line, you pay the price. You should have done more due diligence. Or do you think that the government should step in to eliminate some of the more vile marketing approaches? I'm even thinking of recent attempts to rein in junk fees. There's different people who think different things. And in some ways, like one person's junk fee is another person's opportunity to save the way part of it. You know, sometimes the airlines annoy me by how they charge for everything, but I also can fly Frontier with a backpack and get the place I want to go way cheaper than I could if everything was all included. So, yeah. What's your take on individual choice versus government involvement on this stuff?

Professor John Dinsmore (55:07)

You know, there's a balance in there. And of course, probably most people think there is a balance, but we're all probably going to disagree on where that line is. So alluding to things like baggage fees, I mean, actually there was what on tickets? There was an executive order that took effect recently where now you're seeing all in prices for tickets, for concert tickets, which I really like as a consumer, because once you commit to buying something and then you start having these fees come in, small enough fees to where they're making good money off of you, but not so big that you walk.

Interjecting Speaker (55:50)

Away.

Professor John Dinsmore (55:53)

I personally think it's more ethical to have all of the fees up front because studies have shown that the further people go through the process, the less likely they're willing to walk away, regardless of how many fees come in. There was a study about baggage fees in airlines, and they gave consumers a chance to say, hey, look, look, this other option here that you passed up actually is going to have a lower total cost. And people refuse to consider it just because I think they were kind of resigned to getting jammed by the airlines. But I think also they were just. They were committed. They didn't want to dedicate any more energy to it.

Joel (56:32)

No, that makes sense. Yeah. There is a line somewhere. And at some point selling snake oil becomes not okay, and people get held accountable. Accountable for that. Or the Bernie Madoff's of this world selling investment products that aren't real. Like there's a problem there and we hold those people accountable. So you're right. I'm curious, too. As someone who's dug into these sorts of debt marketing practices, how has that changed your approach to debt in your life? And how do you think differently when you're considering taking out a mortgage or considering a credit card in your life and how you use that credit card? How has all the research you've done and everything that's in that incredible brain of yours, Shawn, how's that impacted your actions?

Interjecting Speaker (57:18)

Oh, wow.

Professor John Dinsmore (57:19)

Shining my apples here. So the. I think what I do differently, it's probably two things. Well, one, you know, the first house that my wife and I bought together, you know, we were referred to mortgage broker through my boss, and the guy had us all set up. We were all ready to close on the house, and about a week before closing, he calls up and says, well, there's a problem. You know, you can't get a regular loan. We have to do what you call like a no doc loan, if you're familiar with those. So the much higher interest rate and all these things. Well, you know, we needed a place to live and felt like, you know, at this point we couldn't walk from it. So we took on the bad mortgage and refinanced a couple years later, actually ended up getting a check from the state because some of the fees they were charging were actually against the law. But, you know, some years later, we were refinancing our house here in Ohio and, you know, went to LendingTree or a site like it. And a lot of those folks, it's really about getting to someone first, get them to commit first, and then, you know, you're gonna get the business. So this guy got to us. We said, you know what sounds good? We're going to do it. And then he would say, oh, there's this thing about your background. So there's going to be an extra charge. It's just going to be like 1500 bucks. Don't worry, we'll roll it into the loan.

Interjecting Speaker (58:41)

Right.

Professor John Dinsmore (58:43)

Regardless of the fact that you're paying the 1500 bucks at one point or another. So if you're not paying it up front here, you're, well, probably paying interest on it in the loan, and then you're also probably paying it when you sell your house, taking it out of the proceeds.

Joel (58:56)

But that initial quote that sounded great wasn't so great after he baked in some other fees as.

Professor John Dinsmore (59:00)

And this time we, you know, we walked very easily.

Interjecting Speaker (59:03)

Right.

Professor John Dinsmore (59:04)

Because it's easy to think sometimes you don't have options or that, you know, we're too far along now or that sort of thing. But usually if you start to walk, either that person will come into line with what you're looking for or, I mean, in our case, you know, we found an even better deal. So, you know, that's the biggest thing I think. I think shopping around and being willing to walk if you have to.

Joel (59:28)

Okay. Love it. Professor John Dinsmore, thank you so much for joining me. Where can how do money listeners find out more about you and about your new book?

Professor John Dinsmore (59:38)

The book is the Marketing of Debt How they get yout. So you can find it on any kind of online outlet or you can go to my website, Dinsmore Research, and you'll find links there as well as I guess if you need anyone needs a market research consultant, you know, you can find information there too. But thanks very much, Joel.

Joel (60:00)

Of course. Yeah. Thanks for joining me. Appreciate it.

Professor John Dinsmore (60:02)

All right. Take care.

Joel (60:04)

Oh, man. All right. That was a great combo with Professor John Dinsmore and just enlightening, just enlightening. I think so many of us tend to think that we are we're not as susceptible as others to the traps of marketing and specifically marketing in the form of debt products that are tossed our way. And we're just in a modern environment where it feels like we're being pelted, we're being assaulted from all sides, and at some point we relent, whether it is just a purchase, whether it's a retailer coming after us or whether it's more nefarious types of debt. What Professor John called booby traps, even for that were aimed at low income consumers. There are small booby traps, there are bigger booby traps out there for us. And if we are not careful, we can fall prey. And so there is, you know, I don't want to weigh in necessarily on the political what I think makes sense from a political perspective, although maybe we talk about that on Friday flights on occasion. But there's little ability we have in the political sphere. What we have the ability is over our own personal actions and how much time we shop around and what sort of buffer periods we include in our lives so that we're not knee jerk making decisions that are not in our best interest. And this makes me think, I think my big takeaway from this conversation was when John was talking about being overly optimistic and how that leads us to being less cautious. And the first thing that popped into my mind is one of my favorite quotes from Morgan Housel which is to save like a pessimist and to invest like an Optimist. The reason we save like pessimists is because you don't know what's coming down the pike. And you know, hopefully life is better tomorrow for you than it is today. But none of us are guaranteed that. And I think the same is true here. If we are looking at our future through rose colored glasses, just even talking to my parents about how they made some decisions when it came to buying a house or buying a car and some of the advice they were given, well, it's like, well, you're going to get that promotion eventually. So yeah, you can afford to stretch your budget just a little bit. And it's those, those little things that we do that maybe or yeah, that $1,500 extra fee that John referenced. Sure, tack that into the loan. It'll be okay. And it seems like small potatoes because over the life of the loan, it's $4 a month on your payment. But when we're not paying strict attention to those things and we allow for people to pull the wool over our eyes or we are just too positive in our thoughts about what the future holds for us, it can cause us to take on financial products, to take on debt that becomes like a millstone around our necks. Especially, especially if things in our life do worsen. Boy, it's nice if you do get the promotion and then the mortgage feels like pretty reasonable. But what if you don't? And actually what if you get laid off? And so going through, I think not letting those feelings act as data, which is I think another thing he said, like the we have feelings and there's no way around it, but don't let it act as this data to help us make a decision. And in fact, we want to kind of step away from those in the moment feelings, at least to a certain extent, so that we can make wise decisions. So yeah, I hope this episode was helpful. And please do pick up John's book. As a professor, I was telling him before we started that his book to me felt very approachable even though it was written by an academic. And there's a lot of, if you're a behavioral finance enthusiast, there's a lot of really interesting stuff in there as well. So thanks as always for listening to the show. Hope to see you back here on Friday for a fresh Friday flight episode. Until next time, best friend out. Oh, what you eating? The new banana split cookie from AM pm. All freshly baked with real butter with banana, chocolate and strawberry flavors. Wow, that sounds amazing. Can I have a bite?

Professor John Dinsmore (64:34)

I'm sorry, but no but you can't split the banana. Split?

Joel (64:38)

Not even a little? Not even a crumb. What if no, please.

Interjecting Speaker (64:42)

Mine.

Joel (64:43)

When it's too legit to split, that's craving.

Matt (64:46)

Get a 3 pack for 99 cents.

Joel (64:48)

With our app ampm.

Matt (64:49)

Too much good stuff plus tax where applicable.

Professor John Dinsmore (64:51)

Prices and participation may vary.

Joel (64:52)

Terms and conditions apply.

iHeart Radio Announcer (64:53)

Have you ever wished for a change but weren't sure how to make it? Maybe you felt stuck in a job, a place, or even a relationship? I'm Emily Tish Sussman, and on she Pivots I dive into the inspiring pivots of women who have taken big leaps in their lives and careers.

Professor John Dinsmore (65:07)

I'm Gretchen Whitmer.

iHeart Radio Announcer (65:09)

Jody Sweetin, Monica Patton, Elaine Welteroth. Learn how to get comfortable pivoting because your life is going to be full of them. Listen to these women and more on she Pivots now on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts.

Interjecting Speaker (65:24)

Smokey the Bear Then you know why Smokey tells you when he sees you passing through. Remember, please be careful.

Joel (65:33)

It's the least that you can do.

iHeart Radio Announcer (65:41)

After 80 years of learning his wildfire prevention tips, Smokey Bear lives within us all. Learn more@smokeybear.com and remember, only you can prevent wildfires. Brought to you by the USDA Forest Service, your state forester, and the Ad Council, this is an iHeart podcast.