search

The Importance on Financial Literacy Emphasised in Rich Dad, Poor Dad

Essay details

Please note! This essay has been submitted by a student.

The financial decisions of consumers have been a growing topic of debate in recent years; attempts to counter the consumers’ poor financial decisions have shown that the issue may not be solved just by increasing the financial literacy of the consumer. It is instead suggested that this irrational behavior is linked to the operation of the cognitive system itself. This study details specific decision patterns that account for a majority of the poor financial decisions made by consumers, and in doing so, provides possible ways that these decision patters can be countered with the implementation of financial literacy programs. The identified decision patterns and suggested recourse can be analyzed using the dual-process theory presented by Kahneman and contrasted to the economic advice presented by Kiyosaki.

Essay due? We'll write it for you!

Any subject

Min. 3-hour delivery

Pay if satisfied

Get your price

Daniel Kahneman, a psychologist, and recipient of the Nobel Prize in Economics presents his interpretation of a bi-systematic approach to judgment and choice known as the dual-process theory. This bi-systematic theory is indeed comprised of two different systems: System 1 and System 2. System 1 functions autonomously while employing little to no effort and is primarily responsible for what could be considered “instinctual” actions. On the contrary, the operation of System 2 requires intentional effort to be allocated to the stimulus and is responsible for conducting numerous functions that surpass the methodical and logical capabilities of System 1. The operations of System 1 and System 2 are exemplified in the standpoints presented by Kiyosaki.

This book, by Robert Kiyosaki, has now accumulated over twenty years as the number one personal finance book of all time; as the title insinuates, Kiyosaki imparts upon his audience the insight and knowledge gained by comparing and contrasting the opposing viewpoints of his “rich dad” and “poor dad.” This work disproves many common financial misconceptions, redefines what it means to be rich, poor, and broke, all while providing extremely valuable information regarding financial education that is non-existent in our current education system. The opposing thought processes of rich dad and poor dad as well as the lessons that Kiyosaki is intending to transmit both exemplify the workings of System 1 and System 2 in Kahneman’s presentation of the dual-processing mind. The economic lessons and insight presented in this work can provide a benchmark of comparison to how Estelami suggests financial literacy programs can combat the irrational financial decisions being made by consumers.

The authors, researchers at the University of Chicago, the University of British Columbia, Harvard, and Princeton, considered previous studies that found a positive correlation between monetary scarcity and cognitive load. However, they felt the need to take this one step further by specifically answering the question of how monetary scarcity alters the content of cognition. The researchers found that individuals who experience monetary scarcity are likely to develop an economic dimension to everyday experiences that most individuals would not register as economic; furthermore, it has been scientifically proven that this scarcity can alter ones’ mental associations. This study emphasizes the psychological analysis of the subject, creating a two-way street to compare and contrast concepts between the findings of this study and the dual-process theory presented by Kahneman and elaborated on by Stanovich.

The author, a researcher at the University of Toronto, discusses his suggested additions and proposed complications to dual-process theory. Identifying the differences and alterations that Stanovich wished to research further was only the first step, for the following steps were aimed at, “working through the implications of these ideas for our view of human rationality,” as stated by Stanovich. This study can prove to be extremely useful by providing somewhat of a checks-and-balances system to Kahneman’s interpretation of dual-process theory that can be used to provide an alternate standpoint regarding System 1, System 2, and the possibly lacking System 3. 

Get quality help now

Sir. Ken

Verified writer

Proficient in: Literature

4.8 (192 reviews)
“This is an exceptional writer. Listened to instructions very well and produced paper before the deadline. ”

+75 relevant experts are online

More Book Review Related Essays

banner clock
Clock is ticking and inspiration doesn't come?
We`ll do boring work for you. No plagiarism guarantee. Deadline from 3 hours.

We use cookies to offer you the best experience. By continuing, we’ll assume you agree with our Cookies policy.