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I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear. Those are the two basic emotional responses to

by akadien 17y ago

I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear. Those are the two basic emotional responses to finance, and the basic question is how do you not fall prey to mental errors because of them. And in too many cases, people use numeracy to force others into making mental errors because of those two basic human emotions, not to mitigate against them. I've started an open blog at financialpreparedness.com to rant and rave about this and other sorts of things.

hga 17y ago
Could you give us 1-5 paragraphs on your thesis that "people use numeracy to force others into making mental errors" based on greed and fear? I've not heard of that concept before.
- nazgulnarsil 17y ago
  I think the gist of it is that people use difficult to understand things as a way of both signaling competence and of intimidating others into not questioning them. think mutual funds who leech off their clients with worse returns than the S&P500. over time the best ways of doing this have been refined, think of the way media outlets use statistics that, while not exactly lies, are at best not the whole truth. and not 1 person in 100 has the competence to debunk the nonsense.
  - akadien 17y ago
    That's exactly what I meant! Thanks for saying it so well.
  - hga 17y ago
    You'll need to give me another example. Year to year returns after fees from a mutual fund vs. S&P500 is too trivial as long as there are no tax implications (and you can get the latter from your CPA if it isn't a retirement investment). We're not talking complicated statistics where everything starting with the assumptions must be suspected, we're talking N% return in X year.
    - nazgulnarsil 17y ago
      that was a simple example where even though the numbers are trivial to interpret people still make gross errors. now look at the mortgage market for instance, where people basically have no idea how home financing works. I hear all the time about how some couple "discovered' that you could avoid brokerage fees by getting a license yourself at trivial time and money investment.
anamax 17y ago
>I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear. Lots of things are manifested as greed, many good. You also forgot envy. I'm being greedy when I'm worrying about what I've got. I'm being envious when I'm worrying about what you've got. I claim that envy causes far more problems than greed.
anamax 17y ago
>I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear. Lots of things are manifested as greed, many good. You also forgot envy. I'm being greedy when I'm worrying about what I've got. I'm being envious when I'm worrying about what you've got. I claim that envy causes far more problems than greed.
- hga 17y ago
  You need to go further: Jealousy is where you're thinking of what the other has and you want it. Envy is the same except you know you can't get it. Since envy gives no one a (material) benefit, whereas greed gives one or both sides benefits, yep, it's absolutely the worst. Of the 7 deadly sins, envy is the only one without any direct reward.

by akadien 17y ago

hga 17y ago

Could you give us 1-5 paragraphs on your thesis that "people use numeracy to force others into making mental errors" based on greed and fear? I've not heard of that concept before.

nazgulnarsil 17y ago
I think the gist of it is that people use difficult to understand things as a way of both signaling competence and of intimidating others into not questioning them. think mutual funds who leech off their clients with worse returns than the S&P500. over time the best ways of doing this have been refined, think of the way media outlets use statistics that, while not exactly lies, are at best not the whole truth. and not 1 person in 100 has the competence to debunk the nonsense.
- akadien 17y ago
  That's exactly what I meant! Thanks for saying it so well.
- hga 17y ago
  You'll need to give me another example. Year to year returns after fees from a mutual fund vs. S&P500 is too trivial as long as there are no tax implications (and you can get the latter from your CPA if it isn't a retirement investment). We're not talking complicated statistics where everything starting with the assumptions must be suspected, we're talking N% return in X year.
  - nazgulnarsil 17y ago
    that was a simple example where even though the numbers are trivial to interpret people still make gross errors. now look at the mortgage market for instance, where people basically have no idea how home financing works. I hear all the time about how some couple "discovered' that you could avoid brokerage fees by getting a license yourself at trivial time and money investment.

anamax 17y ago

>I'll go even further: all economic systems are based on greed, of which corruption is a manifestation, and fear. Lots of things are manifested as greed, many good. You also forgot envy. I'm being greedy when I'm worrying about what I've got. I'm being envious when I'm worrying about what you've got. I claim that envy causes far more problems than greed.

anamax 17y ago

hga 17y ago
You need to go further: Jealousy is where you're thinking of what the other has and you want it. Envy is the same except you know you can't get it. Since envy gives no one a (material) benefit, whereas greed gives one or both sides benefits, yep, it's absolutely the worst. Of the 7 deadly sins, envy is the only one without any direct reward.