Subscribe to Dollars & Sense magazine. Recent articles related to the financial crisis. Econamici: Stumbling on Happiness, by Daniel GilbertMy mother is eighty-six. Other than needing a walker, she's in good shape. Two months ago my father fell, confining him to bed on the top floor of their three-story townhouse. With my encouragement, my parents put a deposit on an apartment in Grand Oaks, a posh "assisted living" complex for well-to-do Washingtonians. But as the move approaches, my mother grows increasingly miserable, convinced she will be wretched in the new place. Daniel Gilbert begins Stumbling on Happiness with the question: Given how much energy and thought we put into ensuring the happiness of our future selves, how come we do such a lousy job? From this he jumps into a vastly entertaining review of what psychologists have learned in recent years about how the human mind functions. Basically, we live an illusion. Our brain weaves from scraps and hints what seems a seamless fabric of "reality," past, present and future. We don't remember past events as they actually happened. Rather, our brain effortlessly reconstructs the past from a few salient details, filling in the rest with, often, what should have happened, or what happened on another occasion, or what's happening now. That's what makes eyewitness testimony so notoriously unreliable. That's why some people distinctly remember encounters with space aliens. That's why we consider land the best investment for the long run. In the present, context "frames" our opinions and choices. Pollsters know that people will volunteer very different opinions depending on the phrasing and order of the questions. We set a much higher value on something if we already own it, than if we had to buy it. After spending forty years grousing over the drawbacks of her house, my mother weeps at the prospect of giving it up. In his famous One Hundred Years of Land Values in Chicago, Homer Hoyt documented how, after a bubble bursts, owners' tenacious grip on overvalued property gums up real estate markets and slows recovery. We fabricate images of our future from whole cloth, unconsciously extrapolating from the present. We all know we shouldn't shop while hungry, lest we load up on chips and chocolates. But that applies to serious decisions, about marriage, careers and investments. Seventy years ago, J. M. Keynes proposed that "animal spirits" drive business investments more than rational calculations of profit. Today, the thriving field of behavioral economics confirms his hypothesis. Forget "rational expectations" and the "efficient-market hypothesis." Now we have Robert Shiller's "irrational exuberance" and the rediscovery of "value investing" as practiced most famously by Warren Buffett. Gilbert asks, how can we gain perspective on our future selves in order to make better decisions? Simple, in theory. Instead of just imagining ourselves in a future situation, we should consult people currently in that situation (or contemporary records of people who were in that situation). Yet usually we don't. Why not? Alas, Gilbert says, we each consider ourselves unique. We can't believe others might think or feel like us. I try to reason with my mother about moving to Grand Oaks. "In the new place Daddy can get help without having aides watching TV all day in the next room. He won't be trapped on the top floor. You can play bridge with friends every day, see a movie, listen to a live concert, get your hair done--just by wheeling down a corridor. You'll have restaurant meals instead of TV dinners." Brick wall. "I need time," she moans. "I'm just not ready to go live with a bunch of old fuddy-duddies!" So, following Gilbert's theory, I ask her to seek advice from current Grand Oaks residents. "Call up your friend Peta and ask her to invite you to meet with her and her friends. You can find out firsthand how they like the place." "Oh no," she says. "I don't need to do that. I know what they'd say. They'd all say it's great here--you'll love it. But that's just because they're stuck and making the best of a bad deal." Last week my parents decided to stay in their townhouse. &&&&&&&&&&&&&&&&& More Econamici I send Econamici--occasional emails with interesting attachments or links--to friends who are economists or care about economic issues. Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). It's the lawsuit rebate scam!And the beneficiary isn't necessarily who you'd expect.Over at LiveJournal, schlomoseamus explains just who benefits from class action lawsuits. It's not consumers—the corporations that are sued are allowed to compensate consumers "through substitution of services that they already provide." And it's not corporations, who get off easy that way. Who wins, then? Visit schlomoseamus for the answer. NOTE: Just in case schlomoseamus decides to get litigious on us, we've offered him the chance to give gift subscriptions to Dollars & Sense for only $10. You, too can take advantage of this offer. Just don't tell our lawyers. Also, if you're a LiveJournal regular, our blog is LJ syndicated. Labels: class action lawsuits Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). D&S author Robert Drago guest-blogging at Washington Post
Read the rest at the Washington Post's work-life blog, On Balance, where Robert Drago is today's guest blogger. Drago is the author of Dollars & Sense's new book, Striking a Balance. Look for more from Drago in the next issue of Dollars & Sense, or learn more about his book here. Labels: Robert Drago, Striking a Balance, work life balance Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). More on news quality and media profitsIn print in Mother Jones this month, more on the realization that newsroom staffing is good for the mainstream media's profits as well as content:It's not the Internet that's killing newspapers. It's the equity-chasing investors and their friends at the FCC who have put outsize profits before a free press. The blogs have been all over this one for a few weeks (Dollars & Sense, Bob Harris), but MJ's print coverage is, of course, quite a bit more extensive. Labels: media Please consider donating to Dollars & Sense and/or subscribing to the magazine (both print and e-subscriptions now available!). |
