Tag: finance
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‘Locked’ Value, and Paying for Everything Twice
How to account for the true cost and value of our possessions? In the same vein as Thoreau, who wrote in Walden: “the cost of a thing is the amount of what I will call life which is required to be exchanged for it, immediately or in the long run”, David Cain suggests that everything…
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The (Edited) Latecomer’s Guide to Crypto
On March 20, 2022, the New York Times published a 14,000-word puff piece on cryptocurrencies, both online and as an entire section of the Sunday print edition. Though its author, Kevin Roose, wrote that it aimed to be a “sober, dispassionate explanation of what crypto actually is“, it was a thinly-veiled advertisement for cryptocurrency that…
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The ‘Bad Version’ and How to Tax the Rich
A ‘bad version’ is a technique used by television writers to inspire creativity when experiencing a creative block. The technique involves writing a purposefully awful section of plot as a way of helping the writer find creativity and, eventually, the ideal solution: it’s a way of “nudging your imagination to someplace better”. In The Wall…
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Building a Brand In a Recession
The recent recession saw sales of condoms, guns and burglar alarms soar. This is because, when fear enters our mind in terms of losing our job or of not being able to pay bills, we focus on two of our most basic drives: fear and sex. The key to selling and building a brand during…
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The Economically-(Im)Perfect World of Online Games
Kristian Segerstrale–owner of online games company Playfish (acquired by Electronic Arts for $400m in November 2009)–discusses why online game environments are exciting places for economics research (and specifically: “how social factors influence economic decision making”): When economists try to model behavior in the real world, they’re always dealing with imperfect information. “The data is always…
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Framing Financial Loses to Conservatives
In a series of novel framing experiments, researchers have shown that our self-identified political leanings correlate with how we perceive financial losses. Hundreds of online participants chose between various flights, computers and so on. In each case they could plump for a cheaper option or a more expensive, greener option, the latter including either a ‘tax’…
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Financial and Public Incentives to Perform: What Works
Large bonuses and salaries are in place to attract prime talent and as an incentive to improve performance, goes conventional wisdom and the bankers’ rhetoric. However recent research by Dan Ariely (author of Predictably Irrational) and colleagues suggests that while large pay will attract the best talent, large performance-based bonuses may hinder superior performance. Interestingly big…
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Optimism as Incentive
Much has been written on the (ir)rationality of purchasing lottery tickets (Eliezer Yudkowsky’s viewpoint is particularly fine), but little has been said on applications of these biases that could improve the finances of all of those who buy a ticket. Now behavioural economists are attempting to boost the historically poor household savings rate by using our…
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Charitable Donations: The Problem of Restricted Funds
By donating funds to disaster-specific charitable organisations and campaigns we restrict the use of our funds to the relief of that problem only. This can cause long-lasting issues for charities and worldwide disaster recovery efforts in the future. To ensure the charitable help best, the charitable should ensure they give unrestricted funds that are not…
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When Money Buys Happiness (or Not)
After discussing consumer signalling and Geoffrey Miller’s Spent in his Findings column (mentioned previously), readers of John Tierney’s Lab were asked, List the ten most expensive things (products, services or experiences) that you have ever paid for (including houses, cars, university degrees, marriage ceremonies, divorce settlements and taxes). Then, list the ten items that you have ever…