How would you advise her to think about it?

Uh, I would probably say to Anna, uh, a couple things.

One, it sounds like she and her husband took a very thoughtful approach to things, uh, and were doing things the right way, or at least in a careful and thoughtful way, and then she ran into a once-in-a-century event like COVID-19.

Um, it's probably cold comfort, but, uh, if you're familiar with the Sphere in Las Vegas, so James Dolan, who owns the New York Knicks and Madison Square Garden, uh, he planned to build the Sphere at the exact same time that Anna was building her house and ran into, to the same challenges, and, uh, it doubled the cost of that venue.

Now, James Dolan is a super rich guy, uh, and so he can afford to have probably more financial pitfalls than the rest of us, but it's just a way of demonstrating that, you know, they didn't do anything wrong, right? Um, in terms of, you know, it feels like the system isn't built for them, uh, you know, the one part where I would agree is that financial theory requires that if someone is a riskier borrower, they have to be charged higher interest rates.

Well, who's considered a risky borrower? Well, probably someone with less money.

So this means that someone with less money is typically paying more for their loans than someone with lots of money.

We have sort of internal norms and rules about how we think money should operate, how debt should operate, and it really pains us when those rules are broken.

What are these and how can they ensnare us?

Drip pricing is where you encounter a price for a good and you think that it's all that one price represents all that the good is going to cost you but as you go through the purchasing price there are all these little add-on costs a popular example of drip pricing would be airline tickets right you you get the airfare you go through the work to figure out here's the route and the time and the price and then once you select that flight and start going through the purchasing price well then you get hit with do you want to choose your seat Do you want to have priority boarding? Do you all of these add on things, but since people have already committed to the initial purchase, they usually absorb these extra prices as they go.

Typically when you're looking at how, uh, certain forms of debt say credit cards are advertised you usually just see one interest rate up front the interest rate being the price for the debt but there are usually lots of kickers whether it's late fees or maybe the rate goes up over time but you know we we bite into that initial price that we encounter and as we go through the purchasing uh process and we see all these escalators and added fees We just kind of take them on since we've already committed to the purchase.

How would you advise her to think about

it? I would probably say to Anna a couple of things.

One, it sounds like she and her husband took a very thoughtful approach to things.

And we're doing... things the right way, or at least in a careful and thoughtful way.

And then she ran into a once in a century event like COVID-19.

Do you think most people have a good sense of how their own minds are working when it comes to debt and money, John?

Probably not, right? There's lots of things that we-- that influence us without our knowing it.

I mean, as someone who does research on marketing and reads lots of research on marketing, you see things that, l- you know, tiny influences that change people's preferences and choices without them being willing to acknowledge that it does affect them.

So, uh, you know, if you look at, well, when we talked about intertemporal, uh, discounting, you know, how you time things can lead to what you call a preference reversal.

In scenario A, people want the first choice, but you take that same person, and you put them in a different context, and they, they want different things.

Uh, if you ask people to choose the best option versus eliminate the worst options, they end up making different choices.

Um, you know, what is the default choice within, uh, an array of options usually carries a lot of power.

Uh, how so?