The Bummer Economy

  • The basic law of economics is that people respond to incentives
  • Money doesn’t need to be “real” to be a real currency
    • Money is a mutual promise by a group of people to do things
    • Currency is the mechanism by which we keep track of these promises
  • Money works because people believe that promises to exchange to dollars for goods will be kept
  • Any group of people who trust each other can establish their own currency and it will be just as effective
  • Bummer points
    • Chores were assigned different amounts of ‘bummer points’
    • Bummer points were kept track of in a publicly visible table
    • If more than one person volunteers for a chore, the volunteer with the fewest BPs get the chore
    • If no one volunteers for a chore, the person with the least BPs was assigned the chore
    • The relative popularity of chores allowed for the establishment of effective pricing
      • If there are not enough volunteers, increase the payout
      • If there are more than one or two people volunteering, decrease the payout
  • The establishment of a leaderboard exerted social pressure on people to volunteer for chores
  • Allowed people to load balance their work - do extra chores now to bank points against e.g. exam weeks
  • Allowed people to leverage comparative advantage - people preferentially did the chores they hated the least
  • Free trade economy sprung up – people traded BPs in exchange for personal favors (like laundry)
  • The simple act of introducing a currency resulted in miraculous results
  • Money is magic and you don’t need to be a central banker to be a wizard

Familiar Finance

  • Most online financial advice is unanimous that loaning money to family or close friends is a bad idea
  • Don’t mention the downside of not borrowing from family
  • Example:
    • Jacob’s friend has $160,000 in student loans at 7% interest
    • His friend’s parents held a similar amount in US Treasury Bonds paying 2%
    • By not loaning that money to Jacob’s friend, his friend’s parents were giving up something like $8000 a month in potential income
  • When loaning money to people make it clear that it’s not a gift or a favor
  • Loans should always be a mutually beneficial arrangement
    • Always charge interest
    • Set a clear repayment schedule
    • Set provisions for early repayment and emergency deferral
  • The main fear is that if your friends fail to repay the loan, you lose the money and the friendship
    • Don’t treat lending money as a favor
    • Treat it as an investment and analyze the risk as if it were any other investment
    • Be prepared to lose the money the moment it’s loaned
  • Charging friends interests isn’t exploitative
    • The loan can only exist if it’s mutually benefical
    • Charging a non-zero interest rate doesn’t mean you have to charge the same rates as a financial institution
    • You can do this because you have more information about your friend than the bank
  • So does this mean that financial advice arguing against this practice is wrong?
    • Nope, it’s almost completely correct
    • Loaning friends and family money requires a certain level of honesty, emotional maturity and financial sensibility
    • Most people don’t have those pre-requisites
    • If you or your friends can’t treat money sanely, keeping money away from personal relationships is good advice

Time Well Spent

  • A popular topic among rationalist writers is akrasia
    • Akrasia is whatever in your head that prevents you from doing the stuff you wish you’d do
    • Catch-all term for:
      • Procrastination
      • Lack of willpower
      • Poor self-control
  • Productivity advice comes in two flavors:
    • Scientific research on human motivation that’s hard to turn into actual things to do to improve productivity
    • Anecdotal productivity tips that are often overcomplicated and contradictory
  • Beeminder
    • Model of akrasia is that it’s coordination between present-you and future-you
    • Beeminder tracks cumulative long-term goals and turns those into weekly sub-goals
    • Penalizes you financially if you fail to put a number on it
    • Prevents you from weaseling out of goals
      • The only way to avoid the penalty is to write an excuse note and send it to Beeminder
      • Automatic integration with other services (e.g. fitness trackers, Duolingo) to automatically maintain accountability
  • After using Beeminder for many habits, entering data into Beeminder became a chore itself
  • Create a single index that would track goals, fitness, education, social life and future plans
  • Categorized activites and assigned positive, zero, or negative points to each category
  • Established a goal of +30 points every week to force some productive activity every week
  • Goal also forces a weekly review (another common productivity hack)
  • Should you use this system? Not unless you’re the sort of person who enjoys keeping detailed time logs

Strong Men Are Socialist, Reports Study That Previously Reported The Opposite

  • Study claims that physically strong men are more right-leaning whereas physically weaker men are more likely to left-leaning
  • Sample group has issues:
    • Study claims that it sampled people between 18 and 40
    • In reality, 98% of the study was students between 18 and 21, with a single 40 year old male
  • Study shows signs of extreme p-hacking
    • Two models
    • Two outcome variables
    • Six predictors
    • Several interactions
    • Several controls
  • With that many hypotheses, it’s virtually inevitable that some of them will be statistically significant with p < 0.05
  • Authors don’t correct p-values for the multiplicity of hypotheses tested
  • In fact, with exactly the same data, it’s possible to rewrite the article to prove the opposite hypothesis - that physically strong men prefer left-wing politics
  • The power multiplicity is that it can “prove” any hypothesis you want it to