Money Quote by Peter L. Bernstein
““If the satisfaction to be derived from each successive increase in wealth is smaller than the satisfaction derived from the previous increase in wealth, then the disutility caused by a loss will always exceed the positive utility provided by a gain of equal size.””
About This Quote
Source Book: Capital Ideas, 1995
The marginal utility of wealth declines, so losing a given amount feels worse than gaining the same amount feels good.
In simple terms: Loss hurts more than gain feels good.
Key Takeaway
Beware loss aversion in decisions.
Themes
economics
behavioral finance
psychology
Mood
cautious
analytical
Type
advisory
educational
When to use this quote
- investment decisions
- budgeting
- pricing strategies
- risk management
Key Concepts
diminishing marginal utility
loss aversion
Questions to Reflect On
- How does loss aversion affect your daily choices?
- Can you quantify the pain of loss versus pleasure of gain?
A Different Perspective
People may overreact to small losses despite equal gains.
![“[The] utility resulting from any small increase in wealth will be inversely proportionate to the quantity of goods previously possessed.” quote by Peter L. Bernstein](https://sms4smile.com/quotes/img-quotes/d2e/peter-l-bernstein-27498_money_the-utility-resulting-from-any-small-inc_564346.jpg)
