You’re not as tolerant for risk as you think

October 16, 2010
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Do you feel lucky? A few years ago, Federal Trade Commission economist Patrick McAlvanah sought to understand how the opposite sex influences our tolerance of risk. It was already well known how other spheres of decision-making were influenced: Seeing attractive photos of a woman makes men more impatient, for example. As he was studying at [...]

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Why revenge is so sweet

October 9, 2010
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Yet another reason we’re not rational beings A few years ago, Swiss researcher Ernst Fehr ran an experiment to see how far we’re willing to go to punish bad behavior. The game went like this. Player A and Player B were given $10 each. Player A was given the option of giving his money to [...]

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New job market survival skill: Turning a part-time job into a full-time job

October 9, 2010
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Temp work is the new normal. Today, the Bureau of Labor Statistics told us how bad the job market was in September. The economy shed 95,000 jobs, many of which were temporary Census jobs that we expected to lose all along. But local governments, which are struggling to balance their budgets, also shed 76,000 people. [...]

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Should we be worried about inflation?

October 2, 2010
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If you have debt, inflation is actually good for you. Americans hate inflation. Past studies have shown that our happiness is inversely related to how high the inflation rate is. Yale economist Robert Shiller, in a study of Americans, Germans, and Brazilians, found that non-economists almost universally believe that inflation lowers their standard of living. [...]

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How to keep yourself from retiring broke

October 1, 2010
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Or maybe we should be forced to contribute to retirement accounts? We’re bad savers. There’s been much ado about the seemingly dramatic reversal of the personal savings rate—from about 2% to more than 6% in the last five years. But as Boston University economist Laurence Kotlikoff points out, you can make Americans’ savings look really [...]

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Will the psychological impact of the recession last?

September 25, 2010
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Somehow, Sept. 15, 2008 seems scarier in retrospect. I went to the movies to see Wall Street: Money Never Sleeps today. I actually enjoyed it more than the first one. It takes place during the financial crisis of 2008 and includes several goings on that roughly mimic the collapse of Lehman Bros. and subsequent fallout. [...]

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Can frugality be learned?

September 23, 2010
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“Today” is important, too. I read a comment on a popular personal finance blog a week or so ago that went something like this: “My philosophy is that you can never save enough for retirement.” It pains me to see someone write something like that. I’d guess that the commenter is in his late 20s [...]

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The “lost decade” you should really be afraid of

September 18, 2010
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Hello The Simple Dollar visitors! I’m flattered Trent sent you here, and I’d be even more thrilled if you stopped by on your own! Here are a few reasons why you should:   1. This ain’t your typical personal finance blog. I don’t often tackle the basics of a Roth IRA or how to choose [...]

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The diminishing returns of a college education

September 17, 2010
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And yet, you should still get one. “In a society of Einsteins, Einsteins take out the garbage, scrub floors, and wash dishes.” That was a recent sentence written by George Mason economist Bryan Caplan. He was talking about eugenics, but the quote got me to thinking about the college education and its recent role as [...]

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Why it’s so hard to change your mind, and anyone else’s

September 11, 2010
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We all say we’re open-minded… One of the more fascinating areas I’ve studied is “self-affirmation.” We all think of ourselves as good people. But in turn, when something challenges that identity, we put up psychological roadblocks to combat the threat. That makes it really hard to change your beliefs. This is important to pretty much [...]

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