From Emotionality to Intentionality: Calm in a Costly World (Part 1 of 5)
Inspired by Justin Wolfers' Platypus Economics article, A User's Guide to Living With Inflation.
For the past several years following the Covid pandemic, inflation has been ever present in our lives. The necessities of life all have become noticeably more expensive. Since 2022, the cost of food has risen about 20.5% percent.
The substantial rise in rents and home prices has been even more dramatic and well publicized. In the last several months, the price of gasoline and almost anything made with oil has risen by double digits.
As inflation continues to affect so much of daily life, many people are searching for practical ways to adapt to these higher costs.
In a recent Platypus Economics substack post, A User’s Guide to Living With Inflation, Professor Justin Wolfers of the University of Michigan, offered five tools for managing the financial impact of inflation. With his gracious permission, I will bring a deeper psychological and emotional perspective to professor Wolfer’s tools in a five-part series—From Emotionality to Intentionality. This is Part 1.
Wolfers’ article discussed building better decision-making habits so that inflation has less influence over your finances. He highlighted the importance of thinking about your income and expenses in real (inflation-adjusted) terms instead of nominal (not inflation-adjusted) dollar amounts. By framing your finances in inflation-adjusted dollars, you’ll make better financial decisions because you can’t avoid inflation. Wolfers went on to share five ideas that will help you minimize the pain of inflation.
Here is idea #1 followed by my insight exploring it more deeply from a financial therapist lens.
✨ Idea #1: Translate everything into real terms before you act.
“Before you react to any dollar number, translate it into real terms, evaluating it in terms of what really matters — purchasing power and its opportunity costs — rather than nominal terms.”
But what gets in the way here? Why do so many of us impulsively react before translating our income and expenses into real terms?
Answer: Our brains don’t usually think in “real terms.” The nominal value of a dollar is obvious. The value is printed on the bill. We don’t need to think for even a second about the face value of the money. Assessing the real value of a dollar requires patience and effort.
Money and our personal finances carry and activate a lot of emotions. We react to dollar amounts because numbers carry meaning. Because we are emotional meaning-makers, we leap from a nominal dollar amount to the social and psychological meaning of those amounts, bypassing the “real value” assessment.
For example:
Every year, many people receive a tax refund. It feels like winning a prize. But in reality, that money was theirs all along, it simply means they gave the government an interest-free loan throughout the year. The large nominal refund creates excitement, even though their financial position hasn’t actually improved.
Imagine someone accepts a new job paying $90,000 instead of $80,000. They immediately experience the joy of feeling richer because they’re earning an extra $10,000. But the new job is in a city where rent, childcare, transportation, and taxes are all significantly higher. After paying those additional costs, they actually have less disposable income than before. The larger paycheck grabs their attention, while their actual purchasing power diminishes.
Inflation is especially good at activating the brain’s reflexive threat response system because it signals uncertainty, scarcity, and loss and creates a sense of powerlessness.
Kristen Duke, an assistant professor of marketing and research fellow at the Behavioural Economics in Action at Rotman (BEAR) center, explains that our emotional response to inflation is shaped by our attachment to what we previously could afford: “We have an attachment to what we could afford before. It is part of our beliefs and our expectations. And if we suddenly cannot afford what we could buy before, it feels like something is being taken away from us, and that can be really painful. It feels worse, even though we end up at the same position.”
So, while a higher price tag, a disappointing raise, or a larger bill can register as a threat before we have evaluated the broader context, we can practice slowing down the automatic story our minds create.
Our first emotional reaction doesn’t have to be the only interpretation.
The human brain will naturally focus on losing money or resources because it treats financial loss as a direct threat to survival. In evolutionary history, losing vital resources meant starvation or even death, so the brain evolved to prioritize avoiding loss over gaining rewards—a form of primal hardwiring.
Many of us have learned that worrying and hyper-focusing on the negative is how we stay protected and safe. For things to be okay we should worry or be anxious. As psychologist Rick Hanson wrote, “Your brain is like Velcro for negative experiences but Teflon for positive ones.”
We tend to focus on the negative….a lot.
It’s how our ancestors survived, scanning for threats because noticing danger was often more important than noticing what was going well.
To help shift your focus away from loss, instead of asking: “Why does this cost so much more?”
Try asking yourself:
“What percentage of my overall resources does this represent?”
“Is this a temporary increase or a long-term change?”
“What alternatives do I have that are similar?”
This helps move your focus away from threat detection and more into problem-solving mode. You become the agent of change, which helps reduce your immediate reaction to worry or panic.
When faced with rising prices, initial sticker shock can sound like:
“Everything is getting out of hand.”
“Prices are rising, time to panic.”
A price increase can activate worry about security, control, survival, and the future. While the price activates strong emotions, the panic often comes from the story we tell ourselves about it. Below are some examples of automatic thoughts people have when experiencing sticker shock:
Fear: “Will I have enough?”
Loss: “Life isn’t what it used to be.”
Uncertainty: “I don’t know how to plan for what comes next.”
Fairness: “This shouldn’t be happening.”
Frustration: “Every time I go shopping, I end up spending more.”
Identity: “I’m failing financially”
Inflation is inescapable and something that we cannot individually control. And even though we can’t choose whether prices rise, we can choose how we respond to those rising prices.
As Holocaust survivor and psychiatrist Viktor Frankl wrote in Man’s Search for Meaning, “Everything can be taken from a man but one thing; the last of the human freedoms — to choose one’s attitude in any given set of circumstances, to choose one’s own way.”
Frankl reminds us that in situations beyond our control, we retain the ability to intentionally pause, think, and choose our response. In the context of inflation, that might mean resisting the urge to panic, taking a moment to evaluate what has actually changed, and responding thoughtfully rather than reactively.
Notice → Evaluate → Choose
Going from “Prices are rising, time to panic.” to “Prices are rising, I notice how I feel, I understand the impact, and I can choose my next step.”
Not only does inflation require us to manage our money, it requires us to manage our emotions. Better financial decisions are made when we slow down, evaluate the facts, and choose our response instead of letting the first emotional reaction choose for us.
Inflation determines a lot of things, but it doesn’t have to determine how we think, feel, and act. So remember what Wolfers wrote, “before you react to any dollar amount, translate it into real terms.” But if your emotions step in first before logic don’t forget that you have the choice to stop, think, and decide how to respond.
If you’ve made it this far, thank you for reading!!!
I hope today you’re met with kindness, especially from yourself.
💚💚💚
References
Hanson, R., PhD. (2016). Hardwiring happiness: The New Brain Science of Contentment, Calm, and Confidence. Harmony.
Manthey, G., Kelly, J., & Johnston, T. (2026, April 7). CBS News price tracker. https://www.cbsnews.com/projects/2026/price-tracker/
The psychology of inflation: Why prices still feel high. (2025). Rotman Insights Hub. https://www-2.rotman.utoronto.ca/insightshub/behavioural-economics-marketing/inflation-perceptions
Frankl, V. E. (2006). Man’s search for meaning. Beacon Press.
Wolfers, J. (2026, July 1). A user’s guide to living with inflation. Platypus Economics. https://newsletter.platypuseconomics.com/p/a-users-guide-to-living-with-inflation
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