The Debt Trap
4/6/20261 hr 40 min
We like to think that good financial decisions come down to discipline and basic math. But the psychology of money turns out to be deeply complicated. Researcher John Dinsmore explains the hidden mental biases that shape how we think about spending, borrowing, and the future. We explore how these forces can steer us toward costly mistakes — and how to guard against them. Then, on Your Questions Answered, researcher Bobby Parmar returns to consider the upsides of embracing uncertainty.
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Episode art by Andania Humaira for Unsplash+
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Clips
Transcript preview
First 90 secondsShankar Vedantam· Host0:00
This is Hidden Brain. I'm Shankar Vedantam. [music] It happens all the time. The lovely couple with the nice house, beautiful family, and gainful careers unexpectedly find themselves drowning in tens of thousands of dollars of credit card debt.
Speaker 1· Soundbite0:17
Debt grew by ninety-three billion dollars at the end of twenty twenty-four, and half of that increase came from new credit card debt. Now, New York Federal Reserve research- Or maybe it's the fresh college graduate who, rather than looking forward to a bright future and a sense of freedom, finds himself trying to pay back a series of compounding loans, only to watch the balance grow year after year after year. One out of every four Americans with student loans is delinquent. That's nearly triple the pre-pandemic delinquency rates seen.
Shankar Vedantam· Host0:50
[music] And then there's the retiree who thought she had enough saved until one medical emergency wiped out her nest egg.
Speaker 2· Soundbite1:00
And so you just start chipping away at your savings, chipping away at everything you have and, and ultimately chipping away at retirement.
Shankar Vedantam· Host1:08
It's easy to believe this would never happen to me. I would be smarter, savvier, better at saving. And yet, hundreds of millions of people around the world find themselves enmeshed in debt. Some of this has to do with reckless spending, of course. But even when you do everything