Optimal Behavior

My personal views only, not those of my employer, government, family, or dog. The title is meant to be ironic.

Underestimating compound growth, implications for savings rates

The Economist on using “nudges” and other behavioral economics tricks for improving pension and retirement savings: ALBERT EINSTEIN IS said to have described compound interest as the eighth wonder of the world. It should also be a boon for workers planning their retirement. Start saving early enough and a pension becomes much more affordable. Unfortunately young people are often unable or unwilling to take advantage of this miracle. Their wages are low and their main priority may be to pay off their student debts or to save for a deposit on a house.

April 17, 2011

Financial advisors make us dumb? Not so fast...

Full disclosure: I work for a firm that provides financial advice. I wouldn’t do it if I didn’t think we were helping our clients, but I still cannot pretend to be an impartial party. But, I hope this also makes my opinion a little more informed. A recent paper on how we use expert financial advice has been grabbing a bit of attention lately – Dan Ariely called the results “troublesome, perhaps even frightening” .

July 29, 2009

Will intuitive graphics enabling probabilistic reasoning become more common?

Dan Goldstein notes the intuitiveness of using graphical representations of probability, especially in Bayesian settings. High-quality , sometimes even interactive, graphics and charts, have increased greatly in recent years as news and other information have migrated to the web. The New York Times has a dedicated staff of graphical artists well versed in information design, and many digital graphical artists are becoming better versed in statistics and displaying ideas and results.

July 29, 2009

Learning curves

This is the first (brief) official post of this blog. And perhaps a good intro to talk about learning curves. In March, I went snowboarding for the first time (I was 27 at the time). It was painful and humbling. Nothing prepares you for having to balance and manoeuvre on a completely new surface. By the end of the third day, I was ready to quit – every fall was like feeling all previous falls again at once.

July 19, 2009