Category: finance
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Credit Card Customer Profiling and the Luhn Algorithm
From a Q&A with a VISA fraud prevention agent on reddit: Some years ago, someone wrote a paper claiming he could get the age, gender and race only from the credit card purchase history. It worked very well. Today, with your full purchase information, we can even “guess” your income range, number of dependants and…
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The Irrational Use of Credit Cards
Our irrationality toward money and inability to fully visualise the impact of distant events is how credit card companies thrive and many bank balances suffer. That’s the conclusion one draws after reading this article from Time that looks at a number of studies showing that we fail miserably in making logical decisions about money when…
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Optimum Starting Prices for Negotiations and Auctions (and Why)
A high initial offer in negotiations is more likely to lead to a high final price, yet in auctions a low start price is more likely to lead to a high final price. These are the findings of a recent study that attempted to find the optimal starting prices for negotiations and auctions. In negotiations…
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Homeowners and Civil Engagement
According to The Wall Street Journal, the home buyers’ tax credit initiative (U.S.) was “intended to help spur housing sales” by offering financial incentives to first time home-buyers and certain repeat buyers. However the initiative encourages “excess mobility”, suggests Edward Glaeser, a professor of economics at Harvard, and this is something we should not be…
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Want Happiness? Buy Memories, Not Objects
In one of my very first posts, I wrote about an article that noted how “money will make you happier, up to a point. After that, it makes no difference. That point is the wonderfully quantitative ‘point of comfort‘. That is, once we have enough money to feed, clothe and house ourselves, extra money makes…
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The Deadweight Loss of Gift Vouchers
Of the $92 billion spent on gift vouchers in the U.S. last year, $6 billion was lost to fees and unused cards. In response to this, the U.S. Credit Card Act now bans fees on vouchers that have been dormant for less than 12 months and expiration dates of less than five years from the…
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To Invest is to Aim
In the land of financial markets, the phrase too big to fail has been brought into a new light. Two physicists from the Swiss Federal Institute of Technology in Zurich did a physics-based analysis of the world economy, finding in numerous cases that 80% of a country’s market capital consisted of only a few shareholders.…
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Absolute and Relative Poverty
I’ve already mentioned the World Bank’s startling definition of extreme poverty: $1.25, adjusted for PPP. This is what is known as absolute poverty and it is seldom used by politicians—who prefer to look at poverty in relative terms. Relative poverty is slightly more involved, and the BBC weighs in with the internationally accepted definition of relative…
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The Point of Economists
Following Queen Elizabeth’s question to the economists—Why did no one see the crisis coming?—the Financial Times goes one further asking, What is the point of economists? If the economics profession could not warn the public about the credit crunch and the recession, what is the profession’s raison d’etre? Did this reflect, as some claim, that…
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I, Toaster and The Economies of Production
Doing away with the division of labour and most other economies of production, Thomas Thwaites’ Toaster Project is an experiment to “build a toaster, from scratch—beginning by mining the raw materials and ending with a product that Argos sells for only £3.99”. Many have mentioned this already (Jason Kottke, Tyler Cowen on Margin Revolution, Radley…