Talking money with Dr Joe Gladstone

Image of Dr Joe Gladstone
Joe Gladstone, one of the world's top financial minds
“Whether you’re rich or poor you live life on the edge" Joe Gladstone
  • | by Kristian Dando

Have a browse through the Forbes 30 under 30 and you’ll see some very familiar names.

There’s Brit award-winning, multi-platinum singer Adele, for a start. How about the rapper Stormzy? Footballers Gareth Bale and Luis Suarez are there, and mixed martial arts fighter Conor McGregor gets a look-in too. It’s certainly esteemed company to be keeping.

In amongst the maddeningly youthful chief executives and hedge fund managers of its finance and business section you’ll find a talkative, dapperly dressed 28-year old who grew up in Brighton and is now assistant professor of consumer behaviour at University College London. He’s also a regular on BBC News, not to mention a serial collaborator with big financial services companies. His name is Joe Gladstone.

Joe has made a career of splicing the two disparate fields of psychology and economics. He studied psychology at Oxford University, topping his class, before doing his PhD at Cambridge. He then completed a hat trick of prestigous academic institutions by obtaining a fellowship at Yale in the United States.

He’s applied his considerable brain power to this field in order to find out why consumers behave in certain ways, using data and psychological disciplines to get to the bottom of financial behaviour. His ultimate goal is to help people make better decisions.

So, when GoCompare wanted to get more insight about the switching and saving habits of the UK in our recent #BeatTheBills study, he was the person we turned to.

“Economics can explain so much of the world with not a lot of theory – simple insights explain all behaviour,” he says. “Whereas psychology doesn’t just have one theory, it has thousands. But they’re better at explaining individual behaviour,” Joe tells us.

“I think the motivation behind (working with GoCompare) was firstly that ‘we don’t know much about this stuff’. And secondly, I think that it’s appalling how many of these markets are structured, the way they profiteer by only offering reasonable rates to new customers - that was what I wanted to find out about.”

Very British spending

Image of a purse

There’s one habit that unites most people in the UK according to Gladstone, save for perhaps the hyper-rich.

“Whether you’re rich or poor you live life on the edge – there’s always this thought that if you were 10% richer you’d have that bit extra to put away,” he explains. “But for most of us, we manage to find enough stuff to spend our money on to almost exactly meet or exceed our income.”

“It’s a mixture of optimism and myopia (short-sightedness),”  he continues. “We tend to project into the future, and think that it will be rosier than it actually will be. We miss out inconvenient truths.”

Joe’s own generation – the much discussed ‘millennial’ – differs from its forebearers quite significantly in its approach to money. “Younger people tend to spend more on experiences rather than ‘stuff',” he elaborates. “There’s been a lot of research into purchases, and what makes us happier. When people spend more on things like travel they’re happier – they’re making memories, they’re having social contact.”

But another factor of this behaviour is the housing market – something Joe believes lies at the root of many of the country’s problems. “These people aren’t even thinking about accumulating stuff as they have nowhere to put it,” he says.

“So much of the country’s capital is tied up in property, the least liquid form it could be in – you trap all of that money which could be spent on different things, like investment in new businesses,” he continues. "But it’s impossible to change that – if (the government) engaged in a policy to lower house prices, there’d be riots in the streets.”

Time to make a change

Image of people switching

Joe practices what he preaches – he’s recently jumped ship from the 'big six' for a smaller energy supplier. His financial vices include long taxi journeys (he spends a lot of his time on the road) and shopping sprees at House of Fraser - although he's sure to get Google alerts for deals.

He’s also excited about the prospect of the forthcoming Payment Directive Services 2 legislation - which is a lot more thrilling than it sounds.

“It’s going to change everything,” he says. “We’ll be able to move everything at the touch of a button. Other third parties can transact on your behalf. Imagine - you could tell Siri to put £300 in your pension this month instead of £200. It’ll be totally frictionless. But there are lots of important data protection considerations too.”

His one take-home point for consumers is simple – don’t count on yourself being good.

“Don’t rely that you’ll change next month, because you probably won’t,” he advises. “Change your environment now. With every decision we make, we have a reasonable opportunity to not make it very well. If we reduce the chances of that happening it could make a big improvement.”

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