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>It's unclear what exactly it means to "not understand" the tradeoff - presumably if you said the words to them they would repeat them back and tell you they "u
by lotu 11y ago
>It's unclear what exactly it means to "not understand" the tradeoff - presumably if you said the words to them they would repeat them back and tell you they "understand" that this will happen in the future; it's not exactly a difficult calculation, just an if-then.
I think the mean these people don't understand they are giving up +70% of the present value of the settlement. They probably don't understand what present value means, and figuring out 70% of a large number might not be something they could do even with a calculator. They do know this is bad and embarrassing so they will try to cover up their ignorance by saying, "Yes I understand" even if they do not. I would expect they would be unable to correctly explain un-assited, and un-promted, why they got a structured settlement in the first place, how the structured stealement plays into their everyday finances, why they now think a structured settlement was a bad idea, and how the plan to make up for the loss of monthly checks in their day-to-day expensies.
As I side note I feel you could make a convincing argument that alcoholics should lack legal competency when dealing with matters that involve them getting alcohol. They routinely do things that I don't think can be called competent (much less legal) for example putting people they care about at risk of death by driving while very drunk. We even have special rules for these people related to drinking and driving namely ignition interlocks, that we don't require non-alcoholics to use.
- fiatmoney 11y ago"Present value" is definitionally what you can trade the income stream for in the present, which amongst other things depends on your discount rate or time preference. It begs the question to say that they sold it for "less than the present value (to them)".
- brandonmenc 11y ago> I think the mean these people don't understand they are giving up +70% of the present value of the settlement. They probably don't understand what present value means, and figuring out 70% of a large number might not be something they could do even with a calculator. Cripes, they probably don't even know what the word "percent" means. These people need far greater protection from the law than they're receiving.
- Lawtonfogle 11y agoAt what point must they receive protections stronger than that a child gets? Many 17 year olds know what a percent is. Say the 17 year olds in an honors math class. Yet we restrict them to the extent they cannot vote nor sign contracts (with very few exceptions that require parental signatures). So if we need to apply the same level of protections, does that not also justify taking away rights like voting (assuming taking it away from educated 17 year olds is justified)?
- brandonmenc 11y ago> So if we need to apply the same level of protections, does that not also justify taking away rights like voting In my opinion, yes, though in practice this restriction would probably be impossible.
- annnnd 11y agoWhat you describe is actually a pretty good test if someone should be allowed to strike a deal - "can they describe it unassisted"?