Tag Archives: wisdom

Idea Soup

Past Experience is Good; Random Decision-Making is Better

We all know that making decisions from past experience is wise. We learn from the benefit of hindsight. We learn to make small improvements or radical shifts in our thinking and behaviors based on history and previous empirical evidence. Stock market gurus and investment mavens will tell you time after time that they have a proven method — based on empirical evidence and a lengthy, illustrious track record — for picking the next great stock or investing your hard-earned retirement funds.

Yet, empirical evidence shows that chimpanzees throwing darts at the WSJ stock pages are just as good at stock market tips as we humans (and the “masters of the universe”). So, it seems that random decision-making can be just as good, if not better, than wisdom and experience.

From the Guardian:

No matter how much time you spend reading the recent crop of books on How To Decide or How To Think Clearly, you’re unlikely to encounter glowing references to a decision-making system formerly used by the Azande of central Africa. Faced with a dilemma, tribespeople would force poison down the neck of a chicken while asking questions of the “poison oracle”; the chicken answered by surviving (“yes”) or expiring (“no”). Clearly, this was cruel to chickens. That aside, was it such a terrible way to choose among options? The anthropologist EE Evans-Pritchard, who lived with the Azande in the 1920s, didn’t think so. “I always kept a supply of poison [and] we regulated our affairs in accordance with the oracle’s decisions,” he wrote, adding drily: “I found this as satisfactory a way of running my home and affairs as any other I know of.” You could dismiss that as a joke. After all, chicken-poisoning is plainly superstition, delivering random results. But what if random results are sometimes exactly what you need?

The other day, US neuroscientists published details of experiments on rats, showing that in certain unpredictable situations, they stop trying to make decisions based on past experience. Instead, a circuit in their brains switches to “random mode”. The researchers’ hunch is that this serves a purpose: past experience is usually helpful, but when uncertainty levels are high, it can mislead, so randomness is in the rats’ best interests. When we’re faced with the unfamiliar, experience can mislead humans, too, partly because we filter it through various irrational biases. According to those books on thinking clearly, we should strive to overcome these biases, thus making more rational calculations. But there’s another way to bypass our biased brains: copy the rats, and choose randomly.

In certain walks of life, the usefulness of randomness is old news: the stock market, say, is so unpredictable that, to quote the economist Burton Malkiel, “a blindfolded monkey throwing darts at a newspaper’s financial pages could select a portfolio that would do as well as one carefully selected by experts”. (This has been tried, with simulated monkeys, andthey beat the market.) But, generally, as Michael Schulson put it recentlyin an Aeon magazine essay, “We take it for granted that the best decisions stem from empirical analysis and informed choice.” Yet consider, he suggests, the ancient Greek tradition of filling some government positions by lottery. Randomness disinfects a process that might be dirtied by corruption.

Randomness can be similarly useful in everyday life. For tiny choices, it’s a time-saver: pick randomly from a menu, and you can get back to chatting with friends. For bigger ones, it’s an acknowledgment of how little one can ever know about the complex implications of a decision. Let’s be realistic: for the biggest decisions, such as whom to marry, trusting to randomness feels absurd. But if you can up the randomness quotient for marginally less weighty choices, especially when uncertainty prevails, you may find it pays off. Though kindly refrain from poisoning any chickens.

Read the entire article here.

Technica

You Can Check Out Anytime You Like…

“… But You Can Never Leave”. So goes one of the most memorable of lyrical phrases from The Eagles (Hotel California).

Of late, it seems that this state of affairs also applies to a vast collection of people on Facebook; many wish to leave but lack the social capital or wisdom or backbone to do so.

From the Washington Post:

Bad news, everyone. We’re trapped. We may well be stuck here for the rest of our lives. I hope you brought canned goods.

A dreary line of tagged pictures and status updates stretches before us from here to the tomb.

Like life, Facebook seems to get less exciting the longer we spend there. And now everyone hates Facebook, officially.

Last week, Pew reported that 94 percent of teenagers are on Facebook, but that they are miserable about it. Then again, when are teenagers anything else? Pew’s focus groups of teens complained about the drama, said Twitter felt more natural, said that it seemed like a lot of effort to keep up with everyone you’d ever met, found the cliques and competition for friends offputting –

All right, teenagers. You have a point. And it doesn’t get better.

The trouble with Facebook is that 94 percent of people are there. Anything with 94 Percent of People involved ceases to have a personality and becomes a kind of public utility. There’s no broad generalization you can make about people who use flush toilets. Sure, toilets are a little odd, and they become quickly ridiculous when you stare at them long enough, the way a word used too often falls apart into meaningless letters under scrutiny, but we don’t think of them as peculiar. Everyone’s got one. The only thing weirder than having one of those funny porcelain thrones in your home would be not having one.

Facebook is like that, and not just because we deposit the same sort of thing in both. It used to define a particular crowd. But it’s no longer the bastion of college students and high schoolers avoiding parental scrutiny. Mom’s there. Heck, Velveeta Cheesy Skillets are there.

It’s just another space in which all the daily drama of actual life plays out. All the interactions that used only to be annoying to the people in the room with you at the time are now played out indelibly in text and pictures that can be seen from great distances by anyone who wants to take an afternoon and stalk you. Oscar Wilde complained about married couples who flirted with each other, saying that it was like washing clean linen in public. Well, just look at the wall exchanges of You Know The Couple I Mean. “Nothing is more irritating than not being invited to a party you wouldn’t be seen dead at,” Bill Vaughan said. On Facebook, that’s magnified to parties in entirely different states.

Facebook has been doing its best to approximate our actual social experience — that creepy foray into chairs aside. But what it forgot was that our actual social experience leaves much to be desired. After spending time with Other People smiling politely at news of what their sonograms are doing, we often want to rush from the room screaming wordlessly and bang our heads into something.

Hell is other people, updating their statuses with news that Yay The Strange Growth Checked Out Just Fine.

This is the point where someone says, “Well, if it’s that annoying, why don’t you unsubscribe?”

But you can’t.

Read the entire article here.

Image: Facebook logo courtesy of Mirror / Facebook.

Idea Soup

Retire at 30

No tricks. No Ponzi scheme. No lottery win. No grand inheritance. It’s rather simple; it’s about simple lifestyle choices made at an early age. We excerpt part of Mister Money Moustache’s fascinating story below.

From the Washington Post:

To hundreds of thousands of devotees, he is Mister Money Mustache. And he is here to tell you that early retirement doesn’t only happen to Powerball winners and those who luck into a big inheritance. He and his wife retired from middle-income jobs before they had their son. Exasperated, as he puts it, by “a barrage of skeptical questions from high-income peers who were still in debt years after we were free from work,” he created a no-nonsense personal finance blog and started spilling his secrets. I was eager to know more. He is Pete (just Pete, for the sake of his family’s privacy). He lives in Longmont, Colo. He is ridiculously happy. And he’s sure his life could be yours. Our conversation was edited for length and clarity..

…

 

So you retired at 30. How did that happen?

I was probably born with a desire for efficiency — the desire to get the most fun out of any possible situation, with no resources being wasted. This applied to money too, and by age 10, I was ironing my 20 dollar bills and keeping them in a photo album, just because they seemed like such powerful and intriguing little rectangles.

But I didn’t start saving and investing particularly early, I just maintained this desire not to waste anything. So I got through my engineering degree debt-free — by working a lot and not owning a car — and worked pretty hard early on to move up a bit in the career, relocating from Canada to the United States, attracted by the higher salaries and lower cost of living.

Then my future wife and I moved in together and DIY-renovated a junky house into a nice one, kept old cars while our friends drove fancy ones, biked to work instead of driving, cooked at home and went out to restaurants less, and it all just added up to saving more than half of what we earned. We invested this surplus as we went, never inflating our already-luxurious lives, and eventually the passive income from stock dividends and a rental house was more than enough to pay for our needs (about $25,000 per year for our family of three, with a paid-off house and no other debt).

What sort of retirement income do you have?

Our bread-and-butter living expenses are paid for by a single rental house we own, which generates about $25,000 per year after expenses. We also have stock index funds and 401(k) plans, which could boost that by about 50 percent without depleting principal if we ever needed it, but, so far, we can’t seem to spend more than $25,000 no matter how much we let loose. So the dividends just keep reinvesting.

…

You describe the typical middle-class life as an “exploding volcano of wastefulness.” Seems like lots of personal finance folks obsess about lattes. Are you just talking about the lattes here?

The latte is just the foamy figurehead of an entire spectrum of sloppy “I deserve it” luxury spending that consumes most of our gross domestic product these days. Among my favorite targets: commuting to an office job in an F-150 pickup truck, anything involving a drive-through, paying $100 per month for the privilege of wasting four hours a night watching cable TV and the whole yoga industry. There are better, and free, ways to meet these needs, but everyone always chooses the expensive ones and then complains that life is hard these days.

Read the entire article following the jump or visit Mr. Money Moustache’s blog.

Image courtesy of Google Search.

Idea Soup

Anxiety, Fear and Wisdom

In a recent essay author Jana Richman weaves her personal stories about anxiety with Bertrand Russell’s salient observations on fear, and the desert Southwest is her colorful backdrop.

[div class=attrib]From the New York Times:[end-div]

On a cold, sunny day in early March, my husband, Steve, and I layered up and took ourselves out to our backyard: Grand Staircase Escalante National Monument. For a few days we had been spiraling downward through a series of miscommunications and tensions — the culmination of my rigorous dedication to fear, or what Bertrand Russell aptly coined “the tyranny of the habit of fear.”  A fresh storm had dropped 10 inches of snow with little moisture giving it an airy, crystallized texture that sprayed out in an arc with each footstep and made a shushing sound, as if it were speaking directly to me. Shush. Shush. Shush.

Moving into the elegant world of white-draped red rock is usually enough to strip our minds of the qualms that harass us, but on this particular day, Steve and I both stomped into the desert bearing a commitment to hang onto the somber roles we had adopted. Solemnity is difficult, however, when one is tumbling down hills of snow-covered, deep sand and slipping off steep angles of slickrock on one’s backside. Still, it took a good half-mile before we were convinced of our absurdity.

Such is the nature of the desert. If you persist in your gravity, the desert will take full advantage — it will have you falling over yourself as you trudge along carrying your blame and angst and fear; it will mock you until you literally and figuratively lighten up and conform to the place. The place will never conform to you. We knew that; that’s why we went. That’s why we always go to the desert when we’re stuck in a cycle of self-induced wretchedness.

“Fear,” Russell writes, “makes man unwise in the three great departments of human conduct: his dealings with nature, his dealings with other men, and his dealings with himself.”

I can attest to the truth of Russell’s words. I’ve spent many lifetime hours processing fear, and I’ve brought fear’s oppression into my marriage. Because fear is the natural state of my mind, I often don’t realize I’m spewing it into the atmosphere with my words and actions. The incident that drove us into the desert on that particular day was, in my mind, a simple expression of concern, a few “what will happen ifs”; in Steve’s mind, a paranoid rant. Upon reflection, I have to agree with his version.

A few months prior, Steve and I had decided upon a change in our lives: certainty in the form of a bi-weekly paycheck was traded for joy in the form writing time. It wasn’t a rash decision; it was five years in the making. Yet, from the moment the last check was cashed, my fear began roiling, slowly at first, but soon popping and splashing out of its shallow container. My voiced concerns regarding homelessness and insolvency went considerably beyond probable, falling to the far side of remotely possible. In my world, that’s enough for worry, discussion, obsession, more discussion, and several nights of insomnia.

We had parked the truck at the “head of the rocks,” an understated description of a spot that allows a 360-degree view of red and white slickrock cut with deep gulches and painted with the sweeping wear of wind and water. The Grand Staircase Escalante National Monument is 1.9 million acres of land, much of it devoid of human intrusion on any given day. Before we moved to the small town of Escalante on the Monument’s border, we came here from our city home five hours away — alone or together — whenever life threatened to shut us down.

From the head of the rocks, we followed the old cream cellar road, a wagon trail of switchbacks carved into stone in the early 1900s. We could see our destination about two miles out — a smooth, jutting wall with a level run of sand at its base that would allow us to sit with our faces to the sun and our backs against the wall — a fitting spot.

Steve walked behind me in silence, but I knew his thoughts. My fear perplexes and disparages him. His acts of heroism should dispel my anxiety, but it persists beyond the reach of his love.  Yet, his love, too, persists.

Knowing I’ll pick up and read anything placed in my path, Steve had left on the butcher block where I eat breakfast Russell’s timeless collection of essays, “New Hopes for a Changing World,” published in 1951, five years before I was born. I skimmed the table of contents until I reached three essays entitled, “Fear,” “Fortitude,” and “Life Without Fear,” in which Russell writes about the pervasive and destructive nature of fear. One of the significant fears Russell writes about — a fear close to his own heart — is the fear of being unlovable, which, he writes, is self-fulfilling unless one gets out from under fear’s dominion.  I’ve been testing Russell’s theory for the past eight years.

I’ve heard it said that all fear stems from the knowledge of our own mortality, and indeed, many of our social systems thrive by exploiting our fear of death and our desire to thwart it. But fear of death has never been my problem. To me, life, not death, holds the promise of misery.  When life is lived as a problem to be solved, death offers the ultimate resolution, the release of all fears, the moment of pure peace.

[div class=attrib]Read the entire article following the jump.[end-div]