Much of the choices we make require us to compare numbers. Which car is most fuel efficient? How is a stock performing relative to the market? How dangerous is one medication versus another? A problem arises when we stop working to make these comparisons in the right systems.

In this episode of Choiceology with Katy Milkman (), we look at the mistakes we make when we overweight absolute numbers and neglect their relative worth.

Damon Lesmeister () is a wildlife biologist in Oregon who studies an extremely special bird: the northern spotted owl. This renowned animal is having a hard time to make it through in the old development forests of the Pacific Northwest. Among other obstacles, the northern spotted owl is being crowded out of its environment by an intrusive types: the barred owl. Conservationists are now confronted with a difficult choice, but one that is made more clear by appropriately comparing the relative sizes of the 2 owl populations.

Damon Lesmeister is a research wildlife biologist with the United States Forest Service () and holds courtesy professors consultations with Oregon State University () in the Departments of Fisheries and Wildlife, and Forest Engineering, Resources and Management.

Next, Yale financing professor Kelly Shue () joins Katy to talk about locations where non-proportional thinking is likely to occur and why it" s such an easy error to make. She describes how the dollar worth modification of a share is much less important than the percentage change. Focusing solely on the dollar worth can cause consequential financier errors.

Kelly Shue is a finance teacher at Yale University () and functions as an associate editor at The Journal of Financing and Journal of Financial Economics She previously functioned as an editor at the Review of Financing.

You can find out more about non-proportional thinking in financial markets in Kelly Shue's term paper () co-authored with Rick Townsend.

Finally, Katy goes over how you can prevent these non-proportional mistakes by making calculations that think about the denominator in any decision including a ratio.

Choiceology is an original podcast from Charles Schwab () For more on the series, visit schwab.com/podcast ().

If you take pleasure in the show, please leave a ⭐ ⭐ ⭐ ⭐ ⭐ score or review on Apple Podcasts. ()

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