From Irrational to Expressive and Emotional

Are typical investors persistently irrational in pursuit of wealth, or pursuing more than wealth? In his December 2019 book entitled Behavioral Finance: The Second Generation, Meir Statman describes and discusses second-generation behavioral finance, which replaces (1) pursuit of wealth persistently retarded by cognitive shortcuts and emotional biases with (2) pursuit of normal wants including financial security, success for children and families, adherence to values, high social status, inclusion, respect and fairness (with some shortcuts and errors). These normal wants, even more than cognitive shortcuts and emotional biases, explain saving and spending, portfolio construction, asset pricing and market efficiency. Based on the body of research and his long experience in behavioral finance, he concludes that:

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