- Scott Sumner on monetary offset: Understanding the implications of monetary offset is one of the prerequisites for intelligent conversation of economics.
There are so many fallacies here one hardly knows where to begin. The central banks have not done any “heavy lifting”. They can print money at virtually zero cost and their massive portfolio of bonds is generating enormous profits, more than twice as large as before the recession.
- NYT article on Uber drivers becoming more homo economicus-ish: I know there are a million economists who would kill to get their hands on the data that Uber has, I’m sure there are many more behavioral theories that could be tested.
Henry Farber, a Princeton economist and author of several studiesaffirming the traditional view, echoed this sentiment, saying even his papers suggest that beginners frequently do not drive enough when business is brisk. “New drivers who can’t figure it out leave the business,” he said. “The ones who stay tend to learn.”
- WCI on investing a lump sum in your 80s: good analysis and one of the classic examples of the potential usefulness of immediate annuities. Though of course the point is well made that he could simply live off of the cash for 17 years. The common mistake people make in this spot that I see is trying to protect the principal, stretching for excess dividend/interest yield to meet their 6% need.
While the income need/portfolio size ratio (6%) might not seem large to a 60 year old, it is quite good for an 83 year old.
- Your monthly ‘fails to replicate’ post: this time, that one about smiling making you happier. Have those studies on ‘power poses’ failed to replicate yet?
But now an attempt to replicate this modern classic of psychology research, involving 17 labs around the world and a collective subject pool of 1894 students, has failed. “Overall, the results were inconsistent with the original result,” the researchers said.
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