Nomological Net

Stray thoughts from here and there. The occasional concern for construct validity. No more logic. Fish.


faults in the clouds of delusion

Sunday, July 30, 2006

Odd sods and even stevens

As often happens, the combination of old friend + alcohol produces things worth thinking about.

I've had conversations with friends who dabble in economic psychology and/or behavioral finance, and one question that keeps coming up is -- why do people simultaneously hold savings / investment accounts and credit card / other debt? The larger questions of rationality and time-consistency are naturally relevant here, but the crux is that no one's really figured out a simple answer. So in the meanwhile, out of left field, comes this perspective -- an old friend's (supposedly) alcohol-ridden musing on personal debt in the context of a life's progression.



Blogger GhostOfTomJoad said...

Well, you asked for our thoughts...

If I had friends who indulged in economic psychology & behavioural finance, I'd need alcohol to deal with them too.

Lord, TR, what kind of people have you been mixing around with! :-)

7/30/2006 7:46 PM  
Blogger km said...

Does a drug dealer want people to stop buying drugs? Does Philip Morris really want you to stop smoking?

Not to go all new-agey, but I do believe the more things we own, the more those things own us.

Call me a dirty commie-hippie, but the consumption levels in America are scary at times. And Mera Desh is now proudly marching to the same tune.

7/30/2006 11:49 PM  
Blogger socket32 said...

much much worse than psychologists. architects.
we aren't a dying breed. we're a dead breed. which is why random hypotheses strike me with no idea how to proceed.

unfortunately i can't approach this one with a napkin sketch

7/31/2006 7:19 AM  
Blogger wildflower seed said...

No go, but this :

you will like. :)

7/31/2006 11:04 AM  
Blogger wildflower seed said...

Oh, add a word of caution - may want to listen to audio on headphones for that video.

7/31/2006 12:07 PM  
Blogger Tabula Rasa said...

yup, you need some alcohol now :-D

welcome to gurgaon.

ask the mathematician to write you out a model ;-)

been talking to movers again, have we? (talk about a pprasang-sahit vyakhya!)

7/31/2006 9:26 PM  
Blogger MockTurtle said...

@VB: Can't believe you did not take the bait. Isn't this right up your alley?

As for selling your soul to the bank at an early age: The American dream is all about the never-ending pursuit of 'happiness'. And it's that thrill of the chase that makes legions of optimistic youth get up early and get to work every morning. They absolutely KNOW that they will eventually make it big and make the huge tuition/home/car loans all worthwhile.
If they had to save before they spent, they would live like our parents' generation in semi-socialist India. Limited spending (well settled older folk don't spend like an 18 year old with a credit card) so limited production of goods. Nothing to buy, so nothing to borrow for, leading to a lack of enthusiasm to work and a dour economy.
And all that money that should have gone into buying a flashy lifestyle was instead dillingently put away in "Jeevan Jala Nigham" funds that went up about 0.2% in 20 years. You might as well have kept it under your mattress.
I guess I'm saying that spending money you don't have may be irresponsible, but hey, it's fun! And you live only once, right?
My personal plan is to start up a 4-pack a day smoking habbit at the age of 45 and then stick my middle finger up at my creditors from my hospital bed.

8/01/2006 4:07 AM  
Blogger MockTurtle said...

Oops, did I just say 'habbit'? I meant Hobbit of course.

8/01/2006 8:52 AM  
Blogger MockTurtle said...

Here's another smoking hobbit!

8/01/2006 8:57 AM  
Blogger Tabula Rasa said...

... and he doesn't look 45. which kind of reinforces the original point, right?

8/01/2006 1:28 PM  
Blogger socket32 said...

i live with debt and theoretically could 'cash in' into my savings/assets to fund it. relying on fixed APR for life of debt...
which is what led me to think. the credit card company would be devastated if i repaid it in a month. there's also the monthly usage of the card on expenses - usage #2. the sooner i repay that, the better in the long run for the lender. he gets a commission per transaction, so the more i consume, the more security for him.
with a fixed loan however... *fizz* after that the rest smells of beer

8/01/2006 11:07 PM  
Blogger Tabula Rasa said...

i see you found the solution :-D

8/02/2006 1:02 AM  

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