2017-12-11 RRG Notes
- Doing any kind of work is kind of a bummer
- So why do people do any kind of work at all?
- The basic law upon which the science of economics is built is that people respond to incentives
- Money doesn't need to be "real" to be real currency
- Money isn't a tangible thing
- Money is a story
- Money is a mutual promise by a group of people to do things
- Currency is the way we keep track of these promises
- A $10 bill a promise for $10 of stuff
- That $10 is backed by the promise of the US Government allowing you pay your taxes in dollars
- David Graeber goes into much more detail on this in Debt: The First 5000 Years
- Money works because people believe that promises to exchange dollars for goods and services will be kept in the future
- Any group of people who trust each other can establish their own currency and it will be just as effective
- And they have! Again, from Graeber:
- On Macau, through the 1800s the casinos established an alternative currency consisting of their gambling chips
- In Medieval and Renaissance England, most people didn't transact in gold or silver - they used leather tokens issued by local shops
- In fact, standardized, universal, country-wide currency is a very recent invention and for the vast majority of human history, people used local ad-hoc currencies
- Bummer points:
- Chores were assigned differing amounts of "bummer points"
- Each person's bummer points were assigned in a publicly visible table
- Anyone could volunteer for a chore to earn bummer points
- If more than one person volunteers, the volunteer with least amount of BPs got the job
- If no one volunteered, the person with least amount of BPs was assigned the chore
- Couldn't opt-out because this was a military barracks
- The relative popularity of various chores allowed the establishment of effective pricing
- Increase the payout of the chore until one or two people volunteered for every chore
- The establishment of a leaderboard exerted social pressure on people to volunteer for chores
- Allowed people to load balance their work - if you had exams, you could do extra chores ahead of time to build up a buffer and skip chores
- Allowed people to leverage comparative advantage - people volunteered for the chores they enjoyed most relative to the payout they got
- Free-trade economy sprung up - people traded personal favors (like laundry work) in exchange for BPs
- The simple trick of introducing a currency resulted in miraculous results
- Every chore was done by the person who hated it the least
- People came up with new ways of helping each other
- Publishing the list of chores turned into a fun event
- Money is magic and you don't need to be a central banker to be a wizard
- Most online financial advice is unanimous that loaning money to family or close friends is a bad idea
- All the articles talk about the downsides of loaning money from or lending money to someone you know closely in an anecdotal way
- However, they don't mention the downside of not borrowing from family or close friends
- Example:
- Friend had $160,000 in student loans at 7% interest
- His parents had a similar amount in treasury bonds at 2% interest
- By not lending the money to their son, friend's parents were forgoing roughly $8000 in interest money every year
- Jacob's dad, meanwhile loaned him money at prevailing US treasury rates
- Jacob borrowed the money, graduated from business school, got a job and paid his parents back
- When loaning money to people, make it clear that it's not a gift
- A loan should be a mutually beneficial investment
- Always charge interest
- Set a clear repayment schedule
- Set provisions for early repayment and emergency deferral
- The main fear is that if your friends don't pay you back, you lose both 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
- Never loan money that you can't afford to lose
- Always be mentally prepared to lose the money the moment the loan is given
- Specify a clear contract to take the emotion out of it
- Charging friends interest isn't exploitative
- The loan can only exist if it's mutually beneficial
- Charge them a non-zero interest rate that's lower than the interest rate that they would be offered from a financial institution
- You can do this because you have more information about how trustworthy they are than a bank
- Do you? Most people aren't very open about their financial situations, even with their friends
- You know your friend's habits and plans, and you have a better sense of how motivated they would be to repay the loan
- So does this mean that internet financial advice is wrong?
- Nope, it's almost completely correct
- Lending money requires dealing with money in a way that's honest, emotionally mature and financially sensible
- Most people don't treat money this way
- If you or your friends can't treat money sanely, then keeping money away from personal relationships is good advice
- A popular topic among rationalist writers is akrasia
- Akrasia is whatever in your head that prevents you from doing the stuff that you wish you would do
- Procrastination
- Lack of willpower
- Poor self control
- With so many people thinking about and writing about akrasia, why does it still exist?
- Productivity advice comes in two flavors:
- Scientific research on human motivation
- Rigorous, but difficult to turn into actions or plans
- Tips that read like horoscopes
- Fun, but often impracticable or contradictory
- Beeminder
- Model of akrasia is that it's a coordination problem between current you and future-you
- Beeminder brings your future and current selves into alignment by tracking cumulative goals
- Tracks long-term progress with a medium-term buffer
- Example:
- Run 500 miles in a year
- Beeminder would break that up into 10 miles per week
- Gives you flexibility in how you break up your weekly goals
- Penalizes you financially if you forget your goals
- Penalties ramp up until they're painful enough to get you to do the thing
- Prevents you from weaseling out of goals by forcing you to write them with excuses in order to get out of the assessed penalty
- Also supports automatic data import from other apps, so that accountability can be maintained automatically
- Jacob started using Beeminder to track a multitude of habits
- But after a while logging things in Beeminder became a chore in itself
- So he decided to create a single index that would capture his goals, fitness, education, social life and future plans and hook that up to Beeminder
- Put down all of his activities on a spreadsheet, with the following categories
- -2 points: every 1/2 hour spent at a screen after midnight, or awake for any reason after 1am
- 0 points: filler activities (commute, sleep, reading blogs, etc)
- +1 point: reading books, walking (positive things that he'd be doing anyway)
- +2 points: important but things that would get done anyway because of outside pressure (job stuff, cooking) or because he enjoys them that much (time with fiancee and friends, sports)
- +3 points: important activities whose benefits are too long term to be immediately motivating (gym, self-study, writing blog)
- +4 points: 1/2 hour doing an activity that primary helps others (volunteering, helping friends)
- Baseline of 30 points per day forces him to spend some time productively every week
- Forces a weekly review (widely seen as a productivity hack)
- Should you use this system?
- Probably not
- You have to be the sort of person who enjoys keeping detailed time logs
- But you should keep mucking around until you find a system that works for you
- Study claims that strong men are more likely to be right-leaning, whereas weak men are more likely to be left-leaning
- Study claims that it sampled a range of people between 18-40
- In reality 98% of the study was students, with median age 21 and a single 40-year old male
- The problem with evo-psych stories is that it's easy to come up with a story that explains any conclusion
- Study shows signs of extreme p-hacking
- Two models
- Two outcome variables
- Six predictors
- Several controls
- Several interactions
- With that many hypotheses, it's virtually guaranteed that one of your hypotheses will be significant at p<0.05
- Authors don't correct p-value for the multiplicity of hypotheses tested
- In fact, it's possible to rewrite the article to prove the opposite of the researchers' hypothesis (that strong men are more likely to lean socialist) without editing any of the data
- The power of multiplicity is that it can "prove" any hypothesis you want it to prove
