WHAT IS ECONOMIC BIAS

In short, economic bias is a conflict-of-interest in which money is involved.

One party may have the motivation to alter its behavior for the reason that it will benefit financially based on the action or nonaction of another. Some economic biases are obvious; when we purchase a new or used car, we understand that the selling agent (a) wants us to purchase a car and( b) would prefer that we purchase it for a higher, rather than lower, price. When we purchase life insurance, we expect that the agent wants to sell us more so that he or she can make a larger commission. But many economic biases are not so easy to spot. Did you know, for example, that the economic bias of a home and auto insurance agent is actually to sell you less insurance?

We are well-served to recognize that economic bias exists in every service or transaction, corporation, or nonprofit. Car salesmen and insurance agents exhibit it, but so do financial advisors, lawyers, universities, authors, pastors and doctors. Economic bias in and of itself is not bad, and it is not our objective to make you paranoid or judgmental of every interaction involving money. But you are a better-educated consumer if you know how to spot it, bring it to the forefront of your business dealings and minimize it to the greatest degree possible.

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