Regular readers of BMA, and I know there are dozens of you out there, know that there is nothing I like more than science. Particularly science extrapolated from a single experimental result and recounted in blogs.
For example, just last week the NYT’s Economix blog asked Do Hungry People Take Bigger Financial Risks? According to some scientists in the UK, hungry people, or at least 19 guys in their mid-20’s who hadn’t eaten lately, tend to take more risks. What’s more, the blog post describes an experiment different than the one in the paper that it links to, which tells me that there must be two scientific studies out there supporting this exciting new finding.
It is exciting because it confirms a previously held belief of mine, that the problem we have in this country is too much food and not enough risk taking.
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Last week WalletPop brought us Worrying about debt costs you an average of three and a half hours a day.
Harrumph.
The data is from a survey carried out by an outfit called Survey Sampling International. I’ll give them credit for having one of the more intriguing taglines I’ve seen in a while: “Superior data wrapped in an engaging experience.” I’ve no idea what that means. Which makes it intriguing.
The survey, conducted on-line with a sweepstakes entry as compensation, was done on behalf of DebtPlan.com, a site that appears to provide basic on-line debt management tools for $14.95 a month.
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I’m still on hiatus (and still unemployed) but I spent some of what was a glorious holiday weekend in New England indoors, surfing the web and reminding myself why I started Bad Money Advice.
WalletPop had a post that caught my eye. Poor people spend 9% of income on lottery tickets; here’s why. It discusses a theory about why “poor households, with annual take-home incomes under $13,000, on average, spend $645 a year on lottery tickets, which comes to about 9% of their yearly income.”
I am not going to express an opinion on the theory, because I didn’t have the patience to read the whole post. I couldn’t get past the first paragraph. 645 divided by 13,000 is 4.96%. That confused me until I realized the statistic refers to households with incomes of at most $13,000, and not an average of $13,000. It was that phrase “which comes to” that threw me off.
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I think the folks at WalletPop must be running some kind of obvious headline contest. Yesterday they carried Airlines Rake in Billions from Extra Fees and Majority of Social Network Users Share Too Much. And today we get Study: Longer Life Can Bring Pension Money Woes.
I’m willing to forgive WalletPop some for that last one. They are a bunch of kids who probably have not thought much about retirement. They do not yet realize that one of the biggest challenges in retirement planning, maybe even the single biggest one, is the somewhat counter-intuitive fear of living too long.
If you are retiring on an old-school pension or annuity, which will pay you a certain amount every month as long as you are around to cash the checks, then living a long time is not much of a fiscal danger. Social Security works the same way.
But if you reach that golden moment of retirement with a pile of money that needs to last as long as you do, longevity risk is a tough problem. Interestingly, it has a fairly tidy solution, but nobody likes it.
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I like Wallet Pop. Just thought I’d throw that out at the start before I got into today’s topic.
The other week Wallet Pop ran one of those lists-with-stock-photos features that are popular on sites with a lot more production value than this one. The subject was 10 Bad Habits and What They Cost You. It is a list of minor vices and what they will set you back over the course of the year. The feature does not actually say that if you didn’t do these things you’d be rich, but we know that’s what they mean.
This is, of course, the latte thing again. The idea is that your budget is leaking cash on a daily basis to pay for little luxuries and conveniences. Plug those holes and all will be well. And Wallet Pop gets a total annual cost for its collection of indulgences of $12,289, which is real money for many people. The difference between saving and spending that amount over many years could translate into a significant difference in retirement lifestyle.
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Government, Musings, PF Blogs | Frank Curmudgeon | 
July 9, 2010 5:59 pm | 
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