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money stuffs
Jun. 21st, 2007 10:41 amFrom Get Rich Slowly comes a good explanation of an emergency fund: "[S]elf-funded insurance - insurance against Murphy’s Law." Sure, I have added up all my deductibles (house, cars, health) and set that as a minimum for the emergency fund - but really, it's about being financially ready to switch jobs or to cope with a car wreck or a broken leg.
And the P-I reprinted an editorial from The Economist on The Myth of the Rational Voter:
I've seen the "wisdom of crowds" at work. It's a hard thing to trust, because it seems so counterintuitive. In investing, for example, I am not into market timing. So it's not a great leap to think that it can fail in the political sphere...I may want to get that from the library.
And the P-I reprinted an editorial from The Economist on The Myth of the Rational Voter:
Anyone who follows an election campaign too closely will sometimes get the feeling that politicians think voters are idiots. A new book says they are. Or rather, Bryan Caplan, an economics professor at George Mason University, makes the slightly politer claim that voters systematically favor irrational policies.
[...]
Many political scientists think [ignorance] does not matter because of a phenomenon called the "miracle of aggregation" or, more poetically, the "wisdom of crowds." If ignorant voters vote randomly, the candidate who wins a majority of well-informed voters will win.
The principle yields good results in other fields. On "Who Wants to Be a Millionaire?," the answer most popular with the studio audience is correct 91 percent of the time. Financial markets, too, show how a huge number of guesses, aggregated, can value a stock or bond more accurately than any individual expert could. But Caplan says politics is different because ignorant voters do not vote randomly.
Instead, he identifies four biases that prompt voters systematically to demand policies that make them worse off.
I've seen the "wisdom of crowds" at work. It's a hard thing to trust, because it seems so counterintuitive. In investing, for example, I am not into market timing. So it's not a great leap to think that it can fail in the political sphere...I may want to get that from the library.
