tag:blogger.com,1999:blog-9142693222570302126.post1770645267220304713..comments2019-07-16T13:17:57.914+01:00Comments on The Angry Bureaucrat: The Money Value of Time, Or, Why Almost Everyone Undervalues Their Own TimeUnknownnoreply@blogger.comBlogger3125tag:blogger.com,1999:blog-9142693222570302126.post-74637685711676439822012-01-27T22:46:25.338+00:002012-01-27T22:46:25.338+00:00Joe:
Ah, but the rub is that your money and finan...Joe:<br /><br />Ah, but the rub is that your money and finances don't actually work that way - if you only had $500 to your name, you'd probably be rather poor and have a much different outlook on risk and happiness.<br /><br />To get at my point, look at it this way (taken from this paper - http://www.powdthavee.co.uk/resources/Behavioural_Economics_and_Public_Policy.pdf):<br /><br />'Randomly selected individuals in the control group were asked the following question:<br /><br />"Imagine that your country is preparing for an outbreak of a disease which is expected to kill 600 people. Given the choice between two vaccination schedules, Program A which will save 200 and Program B which will save all 600 with probability 1/3 - which program would you choose?"<br /> <br />On the other hand, people in the treated group were asked the following question: "Imagine that your country is preparing for an outbreak of a disease which is expected to kill 600 people. Given the choice between two vaccination schedules, Program C which will allow 400 people to die and Program D which will let no one die with probability 1/3 and all 600 will die with probability 2/3 - which program would you choose?"<br /><br />According to standard economic theory, because the outcomes of two sets of choices (A and C or B and D) are the same, the split between randomly selected individuals choosing either A or B and C or D should be roughly the same. However, as it turns out, more people in the control group chose option A than option B. Conversely, more people in the treatment group chose option D than option C. This is simply because, in our brain, the first question which had been asked on the control group generates a 'gain' frame for us (i.e. we are framed to think of things in terms of what we could gain), whereas the second question was phrased so that people in the treatment group were framed to think of things in terms of what they could lose.'<br /><br />Joe, my point is simply that, on the margin, this is irrational behavior that leads to sub-optimal decision-making and economic inefficiencies. Of course, people can rationalize this behavior - that's why we all engage in it so often. Nevertheless, it leads to poorer outcomes for all of us, both personally and collectively.<br /><br />Andrew: Thanks for the additional calculation - and for the sideways confirmation that we (unconsciously) are willing to waste our time constantly, as you left time out of your original calculation ;)<br /><br />-The Angry BureaucratThe Angry Bureaucrathttps://www.blogger.com/profile/00504642786312062352noreply@blogger.comtag:blogger.com,1999:blog-9142693222570302126.post-71835208043452138382012-01-27T14:17:04.943+00:002012-01-27T14:17:04.943+00:00Another useful calculation is gas per mile in cent...Another useful calculation is gas per mile in cents... at 15 mpg, a 30-mile round trip (from the suburb to the city, for instance) costs 2 gallons, which is about 7 bucks. <br /><br />When I was younger I did the math on gas hunting, since the news would put on a station with super low prices somewhere in OKC (area: 645 sq mi). I did a calculation by which when you're gas hunting, anything over a mile out of your way generally means you're spending more than you save. The less mpg your car gets, the smaller that radius is. <br /><br />I didn't even count time, though.<br /><br />--andrewAnonymousnoreply@blogger.comtag:blogger.com,1999:blog-9142693222570302126.post-63639911140286697392012-01-27T13:58:10.050+00:002012-01-27T13:58:10.050+00:00Why is it irrational to fear losses more than I va...Why is it irrational to fear losses more than I value gains? Suppose my rent bill is $500, and I have $510 in my pocket. Losing $20 will make my life very bad. Gaining $20 would be nice, but the increase in my well-being is not on the same order of magnitude.Joenoreply@blogger.com