Ariely spoke at the Carolina Science Cafe meeting at Top of the Hill Restaurant & Brewery Wednesday.
Ariely, who has a degree in Cognitive Psychology from UNC and has appeared on several TED Talk lectures, discussed the ways humans perceive money and how they actually do.
The professor, who has multiple New York Times Best Sellers, said common economics teach that consumers make rational decisions based on what they buy and the opportunity cost they give up to buy it, but that isn’t realistic.
“Thinking of money in the right way is thinking of opportunity costs in the right way, which is impossible,” he said.
Ariely said humans think of money in relative terms.
“Once you spend a lot of money, a few hundred more seems really cheap,” he said.
Other factors that influence economic decisions, he said, include what he called the pain of paying, the feeling one has when one gives money away.
“When we spend money we spend an extra pain of parting with it,” he said.