What are we reading?

Finished Damned Busters.


It was good and I look forward to the next two books, though I identify more with Henghis Hapthorn!

Black Sheep (sweet) [#1 reread this recently!  <3 Heyer!]

Three Men in a Boat (quite funny!) [free on kindle!]

Opening Up: The Healing Power of Expressing Emotions, by James W. Pennebaker — informative.

I really liked this one:

This one was powerful and recommended:

I love them:

Latest one I read in this series and it’s starting to get seriously weird as well as tying lots of insanely complex plot lines together across multiple books (#1 sent the author fan mail right before her death.. very sad):

Fair readers, got any good suggestions for more stuff? I’m far too lazy to read the new Hillary Mantel book because it will probably make me think. Other ideas?

Posted in Uncategorized. Tags: , . 5 Comments »

How much do you get to choose where you live?: A deliberately controversial post

A reader, in email, notes that sure, she gets to live near a Whole Foods, but she made that choice of where to live.  We could have made that choice, but we didn’t.  (Implicit:  so we should stop complaining.)  Indeed, one of us could commute a couple hours into work if she wanted to live in a city with a Whole Foods and the other would have to live in an entirely different state.  Seems as if the red state folk aren’t as into WF as those blue coastal cities.  (Which is weird, because isn’t WF from like Texas or someplace?)

Anyhow, that gets to the question:  How mobile are people?

Most of us are living constrained optimization problems.  Most of us aren’t quite qualified to be tenured professors at Stanford (we are ignoring people who would prefer Harvard or Columbia).  So we have to make trade-offs.

Currently the trade-off we’re making precludes us from walking to a Whole Foods (and don’t even get us started on the lack of Trader Joe’s).

It is true, we could re-optimize.  We *could* move.  But… making the trade off to be closer to a Whole Foods seems kind of the opposite of the advice to make the choices that make us happiest.

Many people have even more difficult choices and are even more constrained than we are.  In our optimization problems we generally have to balance:

Jobs– this is what our revealed preferences have put our strongest weight.  We’ve made most of our mobility sacrifices based on our ability to be tenure track professors at research universities.  We could have made the choice to have a more mobile career, but we didn’t want to.

Family– We’ve both asked our partners to make sub-optimal career and lifestyle choices in sacrifice to our jobs, and they have.  For a while #2 was living apart from her partner and that sucked more than anything.  With couples, often sacrifices have to be made for one or the other or both.  We don’t make choices in a vacuum.

Credit constraints– If we were independently wealthy, we could quit, pack up, and buy that house in the SF hills or Palo Alto or wherever.  We could walk to all sorts of fancy food places, and no longer care about our careers, finding fulfillment in high level charitable work instead.  Alas, we are not independently wealthy.  And many many families have it much worse than we do with our comparative privilege.  Rent for places near WF is generally not cheap.

Weather– I could very easily get a job in Boston or DC but I don’t want to live on the East Coast!  #2 likes the DC area, however.

Given that we’ve made choices that have these consequences… are we allowed to complain?  Well… yes and no.

Under constraints, rational actors try to find work-arounds that optimize their utility.  It’s easy to buy baby tomato plants at the grocery store to plant and get your tomatoes that way if the only tomatoes available at the stores are tasteless mush imported from the Netherlands.  So although we’d love to live closer to WF, and many other amenities, we’ve found some work-arounds.  We’re doing what we can.

Even though we complain about many red-state aspects of the culture here, it can be fulfilling to get students to see two sides of an issue that they once thought was only in black-and-white.  It’s still bad that homosexuality is thought of as a sin here, but that would be bad if we were living in the SF bay area (we just wouldn’t have to know about it because people wouldn’t talk about it in polite company).

And complaining about bad weather is totes fair game no matter where you live.  Even if you’re complaining about it being the short-lived rainy season in Santa Monica.

What do you think?  Have you managed to get everything you want in life (career, family, quality of life)?  If you haven’t, should you be allowed to complain about the trade-offs you’ve had to make?  And what tradeoffs have you made?

Binders full of link love

A couple who retired to be modern vagabonds.

Scalzi with an excellent article on why taking away a woman’s right to choose just helps the rapist.
(Caution:  triggers, really for real)

White coat investor explains the compulsion to max out your tax advantaged savings options and why maybe you shouldn’t do that.

Miser mom talks about money, love, and employment.

Oh man, this woman’s blog is so hilarious: Tweets from the bathroom, at Lorca Damon.

And another giggle-inducing article:  Filthy Jokes in old art.

The troubles of organizing one’s bookshelf.

We were in this week’s carnival of personal finance.

If you googled us a question

Q:  in pregnancy wheat allergy go away after pregnancy?

A:  It seems like it, but I’m still having a really difficult time deliberately eating wheat because of the revulsion factor.  So I haven’t ingested enough to see if the baby is truly ok with it or not.

Q:  how would you handle a crying baby child care interview answers

A:  PICK THE BABY UP.  Try to find out what is wrong.  Check baby’s diaper.  Check for hunger.  Burp.  Bounce.  Sing.  See if baby is bored.  If crying is inconsolable, ask if parents want to be contacted.

Q:  interpretation for ngo field staff inside a parachute and management holding the parachute

A:  Not a question, but this sounds really unpleasant.

Q:  things kids don’t like to do

A:  clean their rooms. pointless  homework.

Q:  how much should i pay a graduate?

A:  of where?  for what?  If it’s me you’re talking about, you should pay me more.

Q:  where do sleepy student carry their book?

A:  You don’t want to know.  (Sadly, to class all too often… sleepy students need more sleep and more coffee.)

Q:  how to sell a house in a bad school district?

A:  Price it well.  Declutter, pre-pack, clean, and stage carefully.

Q:  can i change the name of the owner of a house before paying off mortgage

A:  Yes, in some states at least.  Talk to a lawyer about it.

Q:  can someone go to college and have a car under a minimum wage job

A:  Yes, if they have scholarships and/or debt (or, of course, someone else paying the bills).

Q:  what we should do when we don’t want to do something we are pushed to do

A:  cry.

When I am an old tenured woman

When I am an old tenured woman I shall dye my hair purple
With a green streak which doesn’t go, and doesn’t suit me.
And I shall spend my income on books and high-heeled boots
And horseback riding lessons, and say we’ve no time for meetings.

I shall show videos in the classroom when I’m tired
And drink in public and say what I mean
And tell students what I think of their attitude
And make up for the sobriety of my youth.

I shall wear sweatpants to the grocery store again
And pick the most interesting research projects
And give the grades that are earned.

You can wear terrible shirts and grow more fat
And speak about whatever issues are important
Or give the President a book to read that’s not about online edutainment
And hoard pens and plane tickets and writing time and things in boxes.

But now we must have clothes that keep us dry
And pay our rent and not be too feminist
And set a good example for the students.
We must not argue with the dean or the chair.

But maybe I ought to practice a little now?
So people who know me are not too shocked and surprised
When suddenly I am tenured, and have purple hair.

(with many apologies to Jenny Joseph)

#1: I think when I get tenure we should call the blog Grumpy Rumblings of the (formerly un-)Tenured

#2: When you get tenure you can change the name to whatever you want.

#1:  Spring Break is gonna be Epic.  My shit gonna ALL hang loose.

DCs’ favorite music

DC2

  • ABC song (especially Daddy’s)
  • Shiny Happy People (REM)
  • Stand (REM)
  • These boots were made for walking (Nancy Sinatra)
  • Love Shack (B52s)
  • Anything by the mamas and the papas

DC1

What do your children like to listen to?  What did you like to listen to as a child?

Sunk costs and moderating emotional upsets

One of the best things about being an economist is understanding sunk costs.

Sunk cost is the idea that you can’t change the past.  What’s done is done.  How much effort you put in or what you spent in the past shouldn’t matter in your decision making.  All that matters is where you are now at this point in time and what the costs and benefits are in the future.  Compare the future costs and benefits, not the future plus the past.

The canonical example given: It is raining and you had a hard day at work.  You have tickets for a basketball game that you were looking forward to, but now you’re not so sure.  Should your answer about whether to go or not depend on how much you paid for the tickets?

If you understand sunk costs, then the answer should be no.  The costs of driving in the rain and not going to bed early should be weighed only against the pleasure you get from going to the event.  Your answer should be no different if you paid $60 for the tickets or if your sister got them for you from her fancy corporate job (right before you were about to purchase them yourself).  Most people don’t understand sunk costs, not even rationally.  (In fact, some folks may want to argue with me in the comments– knock yourselves out!)

Even though I rationally understand sunk costs, sometimes I have to be reminded.  It’s like when I went into labor with DC1 and my mom said, “Shouldn’t you be breathing or something?”  Oh yeah, breathing.  That made things a lot less painful.

Most recently… I’ve been working on a paper off and on for an embarrassingly long time.  Finally someone else decided to scoop me on it.  I need to get the damn thing out before they get published.  Soon.  When I found out I was a mess… I have spent WAY too much time on the paper, much of it going down blocked alleyways.  And it was almost done two years ago and I put it down again.  It could have been out two years ago and then I wouldn’t be being scooped.

DH says magic phrase, “sunk costs.”

Oh yeah.  Sunk costs.  All that matters is what I do now, which is less work because I just need to incorporate the things from my (cough 2009 cough) power point into the paper, smooth it up, and send it out.  And hey, that’s less work on a paper that I’m frankly quite sick of than I would have to do if I wanted to get it into a better journal.

Truly understanding sunk costs can help a person stop being emotionally blocked, and enable a person to move forward.  Have no regrets, take what you can learn, and move on.

Not that I’m not kicking myself in t-1 (also t-3, and t-7), but what can you do?  Nothing.  Just move forward.

link love

It’s a good thing the fiscal year doesn’t match up with the academic year and IRAs were only 3K when we were first putting money away in them, because there were some academic years when all our income was stipend.  Though I think DH was paid the right way so maybe it would have been ok anyway given we were married.  Evolving PF explains what earned income is and how stipends are counted.

Finally, an article on what the political BOYS are wearing for a change.

Recently I’ve given up a few hundred dollars from textbook companies because they were ethically dubious transactions (one of them I even asked the University ethics office about, but alas, they said no go), but good financial cents gave up $198000 in exchange for freedom.

Lotta great discussion on why the Romney binder comment (and the rest of his comments on women) were harmful.  Here’s isis, hush, and historiann.  They all make great and different points, so read them all!

Miser-mom says she’s got 30 posts left.  Convince her she’s an academic blogger and thus should update sporadically but longer-term.  Also her post today on the freeing aspects of frugality is excellent.  (She takes on the “live today for you may die tomorrow” meme.)

Not a link, but an update:  I got another grant so now I have (3 grants and) 3 months summer salary.  Looks like we’ll be funding those Roths next year!  Or visiting my sister at her (not yet set in stone) overseas job…

We were in this week’s carnival of personal finance.

Ask the grumpies: When to buy vs. rent

rented life:

When do you know it’s the right time to buy a house instead of renting? Is it better to rent until you have a sizable downpayment? (Let’s assume the plan is to stay in area so buying to have to sell right away isn’t likely.)

There are some good generally agreed upon heuristics for when not to buy.

#1.  (As you point out in your question…) Don’t buy unless you’re planning on sticking in the same place for at least 5 years.  Housing markets bounce up and down, with a general upward slope overall, and you’re less likely to be underwater if you hold onto the house for a while (note:  this is the same heuristic as the one for investing in the stock market!).  Being underwater when you’re living in a house isn’t a big deal (and may mean your property tax drops), but it’s a huge hassle and can be very expensive when you’re trying to sell.  (If you’re willing and able to take the loss of the price of the house, this rule can be relaxed– if houses are under 100K and you have much more than that in savings and a large income, you’ll probably be ok even if you only stick around a couple years and take a loss.)

#2.  Don’t buy unless you have at least 20% down (and no other major consumer debt).  Being able to save that 20% means you have discipline, that you are used to living on less than your earnings, that you are more likely to be able to handle a regular monthly payment that you cannot miss.  It also means that you avoid expensive mortgage insurance and you aren’t doing risky double mortgages in order to avoid said insurance.  Finally, it gives you more breathing room so if you do have to move and the housing  market shrinks or you need to unload the house quickly, you’ll have that flexibility.

#3.  There are a lot of other heuristics about how much of your income etc. to spend.  That’s more about *what* to buy rather than *when* to buy, so I’ll leave a nice link to No Trust Fund on the topic here.  But obviously if there are no housing units in your area in your price range but there are rentals, renting is what you should be doing rather than violating #1 and #2.  (You will still want to think hard about putting down 20% on a million dollar house if you aren’t sure you’ll always be able to make the monthly payments.  Maybe waiting until you have 40% will provide more peace of mind.)

Ok, so that’s when not to buy… how about when to buy?  When is buying better than renting?

Luckily there’s a calculator for everything on the internet, and this calculator from the NYTimes is teh awesome.  It will tell you which is a better deal in your circumstances, renting or buying.  (Think of mortgage interest as equivalent to rent– if the mortgage interest is greater than rent for the same house, you’re losing money by owning and would be better off with that down payment in the stock market or other investments.  Well, mortgage interest and property taxes and HOA/Condo fees and upkeep.  Even with a paid off house there’s still annual expenses.)

However, there are also intangibles to home ownership.  Some people want to paint their own walls.  Some people hate having to deal with maintenance.  And so on.  These intangibles will tip people one way or the other even if the money doesn’t work out that direction.  Note that if you decide to become a permanent renter, you need to increase your retirement savings to make up for future housing costs and the lack of forced savings that is the mortgage principal.

Note that the when *not* to buy is there to guard you against really heavy negative shocks.  It’s about how to guard yourself from what can be a pretty bad risk.  The when *to* buy is less about risk and more about getting a better deal.  So if the intangibles are important to you, then you can put a price on them and even if the rent vs. buy calculator comes out against you, so long as you can safely handle the payments etc. you can still buy and be better off.  But you should still follow the when not to buy heuristics in order to stay safe– if the intangibles are important, then you need to save more money.

So readers, when did you know it was time to buy or to keep renting?  How do you make these decisions?

We love ice cream

LOVE IT.

Also gelato.

#1′s favorite is anything chocolate with nuts.  Though she loves many many other kinds of ice cream.

#2′s favorite is coffee ice cream, with kahlua and chocolate syrup on top.

#1 notes also that she loves real whipped cream.  And chocolate syrup.  Ooh, and she’s been jonesing for a turtle sundae since she left the midwest… at some point she’s just going to have to roast and salt her own pecans.  (Update:  partner is a dream boat and I am the luckiest woman in the world.  Happy satisfied #1.  Sticky syrupy kitchen…)

Do you like ice cream?  What’s your favorite kind?

Posted in Uncategorized. Tags: , . 47 Comments »
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