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Misbehaving: The Making of Behavioral Economics?
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I don't think you understand how money works, lmao.
You should checkout "Misbehaving" by Richard Thaler:
This may seem out of left field, but this book about the creation of the Behavioral Economics field really changed the way I think about my own behavior and other peoples. I really started paying attention to when I thought I was being consistent and thought that I was correct in my assumptions, but it turns out I'm much more reactive and inconsistent than I thought.
It's dense and academic, but I really got a lot out of the half I read (i can never finish a nonfiction book)
On average, you will be getting 115% vs 200% in my example, which I have carefully pulled out of my ass. The numbers are random, the point from which this discussion started.
And yes, Hollywood acts irrationally to the outside (btw this is better explained here ). But to them, they feel like they're making the good decision because that they estimate that probability at way lower than 10%, to a negligible value.
That probably wasn't explained clearly due to my poor English skills and the fact that I didn't really give a fuck.
Only as much as seatbelts and airbags encourage bad driving.
Seatbelts won’t stop your car from crashing but they will help you, the squishy human. Similarly having some % of your investments in bonds and CDs won’t stop the stock market from crashing, but will help human beings make it through without selling their stocks. Especially if they lose their job, get hit with a surprise expense, or they or a family member gets really sick.
You can try to take the emotion out of humans, or you can accept them as they are and give them appropriate advice. Check out the book by the economist who won the novel price last year, Richard Thaler, Misbehaving: The Making of Behavioral Economics for more about the differences between humans and rational robots.
It's a book about behavioral economics. I just got past a point where he argues against efficient market and price-is-right by looking at closed-end funds vs the sum of the positions in them. Long story short, efficient price-is-right would dictate the prices be the same, but you can often get a closed-end fund that is cheaper than the sum of its parts. Moreover over time the delta tends to decrease, so someone could reasonably point at a deeply-discounted closed end fund and expect it to rise closer to parity with the sum of its parts.
An ETF that does this for you would be a great way for me with no time to get in on that action.
I recommend you give this book a read:
It's a summary of the results of behavioral economics since the 1960s. The upshot is this: If you gave most people that money, they wouldn't prepare for retirement, as most human brains don't come wired for that sort of long term financial planning, and most people simply haven't had the sort of lifetime cultural experience required to overcome those evolved deviations from "rational" behavior.
This isn't about assuming people are "stupid". Very intelligent and sophisticated people often deviate from economically "rational" behavior without realizing it. Until we have a comprehensive system of education in place which gives people the tools to be individually rational, we need structures in place to compensate for perfectly normal "irrational" behavior. Social Security is one of those structures.
Hah yeah, exactly.
The book misbehaving by Richard Thaler kind of touches on this type of stuff. It's worth a read if you're interested.
https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X
On this topic Richard Thaler's book is awesome:
https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X
That said OP's original post seemed to be a request for an "objective comparison", it didn't seem like he was looking for: You're right, a Roth is "vastly superior" because you'll save less because you'll go on more vacations if you have a traditional...
about irrational markets https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X
also https://www.amazon.com/Misbehaving-Behavioral-Economics-Richard-Thaler/dp/039335279X and thinking fast and slow
Sorry for the misleading link label. Thanks for pointing that out!
About the job hopping and compensation paper: I've read the paper a few years back, yes. I used it to justify my job hopping for a few years. But, even if you consider the act of "finding your calling" science, to have that result you'd have to job hop between different professions. Most of the job hopping I'm seeing is between almost identical companies (IT firm making websites to another IT firm making websites, marketing agency to another marketing agency). Sure, if you're finding your calling by trying different jobs, this post doesn't apply to you.
Also, I'm writing about achievement and happiness. Not compensation. And money helps with happiness up to a certain point, which most smart people reach quite easily. After that, your compensation doesn't have any lasting effect on your happiness. The driving force, in that case, is a combination of Autonomy, Mastery, and Purpose (model from the amazing Drive book). This post is about your purpose and how you can build your way towards it.
Finally, consider the fact that this is an observational study that found a correlation between switching jobs and salary. There is also a high correlation between Nicolas Cage movies and Swimming Pool drawings. On a more serious note, economic papers create generalized models which are great for certain things (studying unemployment rate), but aren't good tools for making personal decisions (I suggest looking into behavioral economics for better advice on personal improvement) .
Don't take this the wrong way, though. I will on my argumentation so that my points are more compelling. Thanks for that, as well!
PS: The post is supposed to be my opinion. Most of psychology is not backed by actual trials. It's backed by observations and correlations aka informed opinion. Also, the rules clearly state that [Advice] posts are "where users want to share key information about what worked for them when getting disciplined."
I’m going to leave you sources, but since you are mostly interested in dismissing my arguments (as uncited as they may be) rather than engaging with them, I’m going to make this our last correspondence.
Although many people on this sub will take it at face value that minimum wage studies have proven minimum wage doesn’t increase unemployment, here is the best popular level analysis of it I usually reference. I’m sure others can do better. It is well cited and very thorough.
https://www.theatlantic.com/business/archive/2017/01/economism-and-the-minimum-wage/513155/
I also recommend the books Misbehaving and The Darwin Economy for good references on the unintuitive nature of economics in the real world, as opposed to its presentation in Econ 101. You’d basically have to ignore all the findings of Behavioral Economics (among others) to dispute that Econ is changing.
Further the ontological criticism of SD curves (and even economics as a whole, otherwise there wouldn’t be multiple political branches of econ) is neither new nor radical. There are even schools of Econ, such as the Austrian school, that explicitly declare themselves ontological in nature. Unfortunately these schools are not as widely criticized online or in the wider culture as they are for instance during the Nobel prize nominations.
People have coffee all the time and talk about radical things without bringing a binder full of papers citing their work. I am fully within my rights to expect a similar discussion on anonymous social networks. Other people who are willing to argue in good faith and without wasting my time may do so by DM.
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