From the early days of research on decision-making it has become clear that we choose from among descriptions of various things, not from among the things themselves.

Money is fungible. Every dollar is the same. It doesn’t matter where money comes from—our job, an inheritance, a lottery ticket, a bank robbery, or our gig moonlighting as the bassist in a jazz quartet (dare to dream)—the money is all ours and it belongs, in fact, to the general “our money” account.

Fundamentally, when we value effort over outcome, we’re paying for incompetence. Although it is actually irrational, we feel more rational, and more comfortable, paying for incompetence.

Ownership changes our perspective. We adjust to our level of ownership and it becomes the baseline by which we judge gains and losses.

The fact that we don’t like to admit we’re wrong in this case is less about arrogance than laziness (it is not that arrogance is not an important driver of behavior in general; it’s just not in this particular case). We don’t want to have to make hard choices. We don’t want to challenge ourselves when we don’t have to, so we go for the easy,

When it comes to large, complex purchases, we can try to segregate our spending.

The theft had become a signal of the Mona Lisa’s worth. Surely, no one would steal a worthless painting. The crime brought long-term value to the Mona Lisa and the Louvre.

The first is the gap between the time when our money leaves our wallet and the time we consume the good for which we’ve paid. The second factor is the attention we give to the payment itself. The formula is: Pain of Paying = Time + Attention.

Relativity. That $5 tip George gave the server—on a free drink—and his $3.50 ATM fee don’t seem consequential compared to the stacks of chips surrounding him at the blackjack table or the $200 he was simultaneously taking out at the ATM. Those are relatively small amounts of money, and because he is thinking about them in relative terms, it is