Ask the grumpies: How best to give?

First Gen American asks:

When giving, is it better to give one large lump sum or more frequent smaller quantities. I have opinions about this if the lump sum covers a big portion of a not for profit’s annual operating expenses.

Well, this depends on what your purpose in donating is for, and whose utility you are trying to optimize.

If you ask charities– they would like you to take the lump sum and turn it into a monthly payment that they know for sure they’re going to get each month.  They say they would rather have a predictable monthly stream than unpredictable lumps of the same amount.  I’ve seen an academic presentation on the topic.  (I can’t remember the details though.  It had something to do with spending and endowments and how to know how much to spend vs. save as a non-profit.)  That said, some fundraisers don’t even bother with small donors because small donations are more expensive to process than are large lump sums.

If you’re talking about what is optimal for *you*, then if you’re donating to get a warm glow, frequent small quantities are going to give you more dopamine hits than just one will.

You also get to keep money longer and any interest that accrues on it if you do smaller frequent quantities.  That said, you have to actually *remember* to donate and that you’re donating so if you have trouble balancing a monthly checkbook one lump sum is probably safer.

If you want to have a bigger say in what the non-profit does, a larger lump sum is more likely to attract their attention and their willingness to serve your wishes than are smaller quantities.

Grumpy Nation:  Do you think it’s better to give one lump sum or prorated monthly amounts?

Related posts:

Why do people give to charity?

How much should one give to charity?

Where should I donate?

Books

Overall I liked A Summer for Scandal by Lydia San Andres.  I think it’s underrated, but still a library book for me rather than a reread.  I especially love the setting and the heroine and her sister.  If your library has a copy, check it out.

DNF Four funerals and maybe a wedding by Rhys Bowen.  I just couldn’t handle the bright young things who have no money and don’t work but still need servants, so their rich friends provide.  There was just this sense of entitlement I couldn’t handle. Like of *course* someone vaguely related to royalty shouldn’t have to get a typist/reporter/sales job like all the other bright young things beggared by the inheritance tax (or unhappily living with a rich soon-to-be-murder victim relative) in the books actually written between WWI and WWII do.

DNF The love that split the world by Emily Henry.  Boring and pretentious.  I’m glad her later books had her loosening up and going for humor instead of “beauty.”

DNF People We Meet on Vacation by Emily Henry.  It had obnoxiously twee characters — after finding it irritating, I looked on goodreads and found that it got worse AND has some of my least favorite tropes (why didn’t they just have a conversation/denying they should have a relationship for no good reason after deciding they love each other/etc.)  I did read the last chapter and found it dumb and the epilogue and found it both boring and annoying.  So… yeah, let me tell you how I really feel.  I think Emily Henry is just going to be hit or miss for me.  (DC2 also tried some of her JV fiction and found it very hit or miss– some of it was great and some of it was 100% stupid teenage angst with supernatural elements, IIRC.)

SPOILERS: Nora Goes Off Script by Annabel Monaghan was ok, but I was never really sold on the hero and the “boy loses girl” is incredibly stupid (I think starts at 40% as one goodreads comment noted) and lasts months and then as soon as the misunderstanding is cleared up, they get engaged.  So I think they met and dated like a month and then were apart because they didn’t know each other well enough for the hero to say, “hey is this thing I was told actually true?” and then suddenly after months apart they’re married.  It might have been a better book without the hero in it at all?  And it would have been a much much better book if they’d spent more time together, gotten to know each other’s families etc. etc. etc. instead of the lengthy stupid separation.  But hey, it’s a best seller, so what do I know?

The Banishment by M. C. Beaton was ok.  I tried some other M. C. Beaton romances, one of the finishing school ones, I think, and the key plot point was about the heroine scaring off multiple suiters by claiming not to be a virgin even though she actually was and ::vomiting emoji::

I tried reading The Duke’s Gambit by Tracy Grant.  It dragged.  A lot.  And there’s tons of couples where it seems like the woman first slept with the son and then married the father or vice versa in previous books in the series.  And now everyone is having new babies.  Lots of half-siblings in this book.  Like, I do want to know why Giselle left her husband and infant to go off to London with a British spy and why the other British spy was framed for the murder of the prostitute… but it takes a long long time to get to either one of those.

More mediocre Emily Hendrickson novels.

At this point I decided I needed to remember that excellent books do exist and reread The Gentle Art of Fortune Hunting by KJ Charles.  I love her so much.  I hope her latest comes out soon.  There keep being tantalizing hints on her twitter, but no announcements, not even for pre-order.

If you like feminist memoirs about toxic misogyny and fat-shaming, you will probably like Shrill by Lindy West.

I’ve been really loving the Miss Silver Mysteries by Patricia Wentworth.  As of this writing I have read the first 11. They are remarkably neither racist nor anti-Semitic.  So far I’ve come across two definitely Jewish people (if you include people with Jewish first/last names, there are more, but their religion/ethnicity is not mentioned).  One of them was a jeweler, but like, not an evil jeweler or anything, just a random jeweler and it’s not clear why his Judiasm was mentioned.  The other was a very sweet and brilliant scientist who fled the Nazis and was beloved by everyone (sadly he was working on an important government project to defeat the Nazis and was killed).  One unnecessary mention of a person getting so much soot/dust on her face that she looked like a [old fashioned word for Black person that ends in o].  But nothing like what you see in any random Agatha Christie.  (Not as forward thinking as the previous century’s Conan Doyle, who actually addresses racial stereotypes and comes out against them, though.)  Also, even though they’re set in the UK, they are nowhere near as classist as Christies are, and death duties are treated more as a matter-of-fact and it isn’t a huge tragedy that someone has to sell a giant mostly-unused manor house supporting relatives who could work but choose not to.  People are happier in smaller homes.  There’s no shame on servants being unavailable because they have better jobs now, or for women of a certain class taking jobs.  Much more pragmatic.  And the servants are fully realized people and not just accessories/plot points/etc, particularly as the series goes on.  (Whereas in Christie’s the servants go from unnoticed and silent except when questioned to “you can’t find good help these days” stupid as time goes on.)

I think the Miss Silvers are more like Hercule Poirots than they are like Miss Marples, even though the comparison is usually made with Miss Marple because Miss Silver is an older lady who knits.  Wentworth does a much better job of characterization of the people in the stories, especially as she matures as an author.  These are also less dark than a lot of Agatha Christies, though #10 has some unexpected (to me!) darkness (I didn’t like #10 as much as the others I’ve read).

The Wedding Crasher by Mia Sosa was a good library read.  Not perfect, particularly in the characterization, but very readable.

I liked Constance Verity Destroys the Universe by A. Lee Martinez.  If you liked the first two books in the trilogy, this is very much the same (I don’t think you need to read the first two to read the third).

A Tangle of Serpents by Andrea Penrose was fine.

What have you been reading lately?

Making fun of people for (rationally) picking and choosing covid/monkeypox risks

There’s a lot of people who complain about how we have to mask at conferences, except during meals when we’re all eating at the same time.  Why mask at all?  Or why mask at the grocery store but not at a wedding?  Or why go to parties at all if you’re worried about covid?  Or why not go to parties if you’re not going to mask at work or if you have a child in daycare?  Why don’t people take the same level of caution at every moment of their lives?

Some of the argument is the same as when people make fun of people who order big macs and supersized fries along with a diet soda. From an economics standpoint that makes sense– they get utility from the fries and big mac that justify the extra calories but not from the soda. (Ignoring that from a health standpoint diet sodas may mess with how your body deals with sweet things.)

Going to Walmart because the cost/benefit ratio makes sense but not going to a wedding because it doesn’t *is* reasonable. There’s a lot more things besides risk that go into a cost/benefit ratio. I mean, I avoid amazon when it’s easy and I use it when it’s not easy to avoid. I boycott Nestle when it is easy but sometimes still buy Haagen dazs because it’s actually good and one of our grocery stores only has Ben and Jerry’s as an alternative, which we like, but sometimes you need something they don’t have. That is rational, not hypocritical. (And yes, I know my individual boycott means nothing to Nestle… but bigger boycotts do matter, and *I* care.  Just… not always enough.)

Maybe it is that people don’t understand risk, but maybe some of it is that risk is only part of the cost-benefit ratio but the most acceptable of the social excuses these days. Or that going to the gym is the only way to force yourself to exercise and you wear gloves to remind you not to touch your face after touching the equipment even if you know that the air is more likely to spread covid than surfaces. (And to be fair, I stopped touching doorknobs without sanitizing back when I was on the job market decades ago because I realized I no longer came back from travel sick! Covid isn’t the only bug out there.)

Are there rational choices that you make that seem wrong to people who don’t understand your cost-benefit calculus?

Link Love

Gender Bias, Burnout and Digital Overwhelm in Female Physicians

Bardiac talks retirement plans.

Chanda Prescod-Weinstein talks post-Covid rehabilitation exercises

Traveling during the pandemic by res cogitatae

1 politician and GOP pressure is responsible for the vast majority of banning book efforts in Texas (not parents)

Why Republicans are willing to ruin people’s lives to maintain a hierarchy, an explanation for non-sociopaths.  One of my colleagues (not an economist) also has a book on this– she says it all boils down to men’s need to have someone willing/forced to have sex with them even when they’re terrible people.

Help an Arkansas teacher.  (I did!)

What a week in America.  Remember when August used to have slow news days?  Sadly Seth Meyers’ show is on vacation and I think Colbert is on vacation next week.  (Check out Colbert’s opening monologues all of this past week though– they have been spot on).  In case you missed it.  We passed not one but TWO bills to help reduce future climate change.  (This is good because it means my sister gets to keep her current position working on carbon capture instead of her usual one that actively hurts the environment.)  Then Alex Jones, Sandy Hook denier,’s lawyer accidentally sent full transcripts of his cell phone texts to the lawyer representing the Sandy Hook parents suing him, texts which showed that he lied under oath.  The January 6th commission has requested and obtained these texts.  Then Trump announced that the FBI was raiding Mar-a-Lago, which, it turns out they did because he had taken something like 27 boxes of classified documents from the White House and stored them in the basement in Mar-a-Lago (without a lock on the door).  In January the National Archives found out and asked for them back, but he only sent back like 15 of them.  Agents found 12 more.  The Washington Post reported that the reason was because he had nuclear secrets (with a strong hint about selling to Saudi Arabia).  Trump demanded that they unseal the warrant and the justice department obliged, and it said stuff about the espionage act.  Also Republicans voted against capping insulin prices in order to pwn the dems (this comes after them voting against allowing vets exposed to chemicals to get VA insurance, but Jon Stewart got on their cases and it passed).  Did I miss anything important?

Activisms:

$100 to donors choose both for trans stuff in red states and also for diverse books more generally (I donate $25 whenever I read something anti-trans or book banning– – there were both in the news this week).

Called my senator to thank him for supporting both climate bills.

Ask the grumpies: Where to put the extra money

First Gen American asks:

Once you’ve hit all your major savings milestones (paying off the house, no debt, etc), where do you put money then and why?

Disclaimer:  We are not financial planners.  Please consult with a fee-only certified financial planner and/or do your own research before making important money decisions.

We’re still working on the answer to this question.

Obviously you will want to max out your retirement savings in any way that you can.  That means maxing out what you can save at work, putting money into backdoor Roth IRAs, HSAs, self-employment plans if you’re eligible etc.  Retirement vehicles are great because you’re saving tax money either now or later on them.  Also, if you’re eligible for college financial aid, schools won’t look at what is hidden in retirement accounts like they do with regular accounts.

You may want to either beef up or cut down on your emergency fund depending on how you feel about drawing from taxable stocks during an emergency.

Speaking of college saving, 529 plans are a good place to put money if you have kids who are likely to need post-secondary training.  How much to put in is less certain, though right now I’ve been thinking if either of our kids have kids maybe a 529 plan isn’t such a bad thing to pass down to the next generation if we have extra money leftover.  It seems like a tax loophole…

After that there’s spending and saving in taxable funds.  Some people buy real estate.  Some people buy municipal bonds (since these aren’t taxed).  Some people speculate in risky markets for fun.  Some people set up donor advised funds or just give extra to charity directly.

Here are some posts where we’ve covered similar topics.

Next stage financial advice.

Asset allocation. More on diversification.

Spending money can increase or decrease future expenses.  Invest in appreciating assets.

Where should a teenager put extra money

Spending suggestions.  More spending suggestions.  Personal assistants and catering.  Giving money to kids.

Windfalls.  More windfalls.

Saving for long-term priorities.

Grumpy Nation:  Where does extra money go once you’re debt free?

Things I don’t know how to do without DH or the kids around

Because of flight prices, the rest of the family and I didn’t completely overlap on their family vacation/my summer conference.  So I ended up spending several days at home by myself while they were still in the midwest enjoying cooler summer weather.  It turns out there are some things that I have never had to do for myself since getting settled and I don’t actually know how.

  • Making popcorn.  I grew up with an air popper.  DH prefers to make it on the stovetop.  My friend, hearing my plight, sent me instructions for how to make it in the microwave with a paper bag, but I haven’t tried it yet.
  • Making coffee.  I grew up with instant or one of those regular drip coffee pots that uses already ground coffee.  We only have whole beans at home and my choice of french press/siphon/mochapot/whoknows.  I don’t even know where to start on DH’s burr grinder.
  • Watching Netflix.  So… I haven’t had to set this up myself since before DC2 was born and that was at least a couple game systems ago (we use game systems to watch things on a projector).  Normally with DH home I would be able to just borrow his phone or get one of the kids to set it up for me on the projector.  Now we have two game systems and I’m not sure which one is connected to Netflix or how to get there.
  • Taking out the trash/recycling.  Um… I haven’t had to do this since we lived in an apartment.  No clue what the days are and I only have sort of a foggy idea of where we keep the bins (there’s a mysterious door on the other side of the garage that I suspect leads to the dog run).  I suspect the blue one is recycling and the green (? brown?) one trash, but :shrug emoji:
  • Picking up groceries from curbside.  For this one I know how to do it but I can’t actually do it.  I can order them but I can’t pick them up because the account is connected to DH’s phone.  I would have to make a new account connected to my phone.  This is not a problem with Target curbside where I can tell it which phone number to use and I think we can both login to the same app at the same time.

Are there things you ought to know how to do but don’t?

RBOC

  • DC2 has forgotten how to swim since the pandemic started.  Zie can still float and stuff, but zie had gotten to a pretty decent ability level with strokes previously.  DC1 doesn’t seem to have been affected.
  • I am concerned about monkeypox once colleges start. I think it is insane that the US isn’t moving heaven and earth to get more vaccine doses ready.  And it’s ridiculous that they haven’t learned from the Aids epidemic about branding things “gay diseases.”  If something isn’t done, college campuses are going to be hit really hard.
  • Talked to a former admissions officer from a top (but not top 10) SLAC and she said that yes, they are less likely to accept 16 year olds, but they do accept them if they’re good enough otherwise, or at least that was the case when she was working (admittedly before she got a PhD!).  I’m starting to be convinced that ED (early decision) to HMC (Harvey Mudd) is DC1’s best option (not that I have any say in the matter, and I’m trying to keep out of hir decision-making processes, but for my own peace of mind).
  • Told everybody I met at a recent conference that I want to move and that DC1 is graduating from high school.  One of them said, hey, I’d been thinking about you for this dream job because my dean wants more economists.  And everything about the job sounds perfect for me– lower teaching load, in one of my favorite cities, hard money but encourages grants, kicks back a large percentage of overhead as unrestricted research funds for the next year, lots of classes directly in my specialty (I haven’t been able to teach any classes in my specialty), tons of people working in my area across the entire university.  And it’s a private school.  I can’t get my hopes up though– I’m not sure I’m amazing enough for it.  But I sent in my cv and my grants chart.
  • Retire By 40 mentioned that he tells his kids that minor setbacks build character.  My mom used to say that a lot too.  DH and I really don’t say that much if at all.  I’m not sure why.  We both do a lot of solutions oriented stuff (though if it’s something like a cut finger, there’s sympathy, and an offer to kiss it and make it better which is invariably refused these days) and possibly some gentle teasing/reminders on how to avoid the situation next time.
  • In the end, the admissions office at our local university were awful and after giving us faulty or missing information several times, decided that DC1’s application was not complete (there was a waiver not in the instructions that needed to be on official outside letterhead rather than the form they gave us, so we would think the application was complete when it wasn’t and we got a lot of conflicting information from them), so DC1 will not be taking Calc 3 this coming semester.
  • The research teacher also basically said it was too late to do the research class, plus DC1 would need to find a lab and all the other students had started looking for a lab back Spring semester.  The email was kind of mean, so we’re thinking maybe a good idea to not get a rec letter from that particular teacher.  After some prodding DC1, zie revealed that this particular teacher also strongly suggested that DC1 not do the research class when zie asked her about it last Spring.  DC1 did get an A in her physics class, but the last six weeks grades were lower than the previous weeks.  I’m not sure what happened.
  • So DC1 is taking a study hall.  I can’t say I’m not relieved.  A little extra time will be helpful both with college apps and with DC1 being able to devote time to 5 AP classes, varsity orchestra, and who knows what else.
  • Hopefully DC1 can wow either the calc-based physics teacher or the AP chemistry teacher.  People say great things about AP Chemistry.  [Update:  Calc-based physics is the same teacher… hopefully DC1 can redeem hirself in her eyes.]
  • If you run out of scheduled posts on wordpress, it no longer shows the “scheduled” menu option.

Link Love

Time to boycott Amy’s https://twitter.com/prismreports/status/1555267401293479939

Apparently a lot of CO2 monitors are no good.  Here’s one that is recommended (not sponsored).

Some articles suggest that covid causes heavier periods post-covid.  That has definitely been my experience so far at t+2.  I hope it goes back down by t+3.

Anne Case on representation  “If you’re not at the table, you’re on the menu” (no link, just pulled it from a conference presentation)

This video is the opposite of me, but for those of you who are brilliant but wired differently:

Activisms:

Some good news:  That KS constitutional amendment I wrote postcards for that would make abortion illegal failed by a wide margin.  This is particularly impressive because it was during a primary election and only registered republicans and democrats can vote on primaries (more registered republicans in the state than registered democrats), so unaffiliated people got a ballot with just one question on it.  The prediction among likely voters was that it would pass by a small margin.  But turnout was much higher than expected.

$25 on donors choose to a red state that snuck a trans flag in with other school supplies.

 

Ask the grumpies: Inflation and the 4% rule

First Gen American asks:

Back to an earlier question, it seems like the 4% rule doesn’t account for cost of living inflation. Eg…if I need 100,000/year to live on, I need 2.5MM. But it’s unlikely as a 50 year old, that number is going to be the same in 30 years. Why are no PF people talking about this?

Disclaimer:  We are not professional financial planners.  Please consult a certified fee-only financial planner or do your own research before making important financial decisions.

The 4% rule does include inflation. It assumes that if inflation is happening, and it’s also happening to your savings.  You’re supposed to adjust the amount you draw after the first year “for inflation.”  You can’t do 4% with money you keep in your mattress — you have to follow the 4% rules about asset allocation as well.

This Forbes article says:

Beginning in year two of retirement, you adjust this amount by the rate of inflation. If inflation were 2%, for example, you could withdraw $40,800 ($40,000 x 1.02). In the rare case where prices went down by say 2%, you would withdraw less than the previous year—$39,200 in our example ($40,000 x 0.98). In year three, you’d take the prior year’s allowed withdrawal, and then adjust that amount for inflation.

The actual numbers bloggers use in their examples don’t generally assume inflation.  PF bloggers that mention it just say they’re assuming no inflation to make the math easier and you’d actually need to account for inflation.  Or they will pick a number they say accounts for inflation.

That said, big stagflation like we saw in the 70s and are seeing now can make it less likely that a portfolio will survive 50 years for retirees that retire a unlucky times.  For these groups, a more conservative 3% rule might be better.  Alternatively, that same Forbes article recommends dynamic withdrawals– basically, withdrawing less during bear markets (to do so, I guess one must have a nice emergency fund– in a Bear market, 4% is going to be less money than during a Bull market!):

For example, a retiree might reduce their annual withdrawal by 5% in the midst of a bear market or unexpectedly high inflation. While a 5% reduction may not seem significant, it can substantially improve a portfolio’s longevity.

So, tl:dr:  The 4% rule does take into account inflation, but big inflation means you should withdraw less during bad times or you should assume a 3% rule before you start.

Data and bias

This tweet recently made the rounds of twitter:

Justin Wolfers has since deleted his defense.

But… here’s my 2 cents as someone who isn’t bringing in over half a million per year in salary from the University of Michigan (Justin Wolfers and Betsey Stevenson’s salary info is available online as state employees):

1.  100K is a lot, and if you don’t think it’s a lot, there’s a problem.  To speak in terms that the top 2% can understand, that’s a whole new personal assistant.

2.  The motivation of 100K is not really as big a deal as getting stunning data. Just the data by themselves are incentive to not bite the hand that feeds the researcher (in this case Uber).  And the Uber data are stunning.  They’ve helped us learn a lot about human behavior and contingent labor markets, and probably lots of other stuff that’s more industrial organization.

Does that mean that you can’t trust anything that comes out of the Uber data, or any other study where the company has generously provided data?

No.

But it does mean that you need to think really hard about the studies that do come out of the data (and the studies that don’t come out as well).

Ask yourself:

Does the company (or in some cases, government agency) benefit from the study results?  If not, then it’s probably ok.

There are plenty of amazing studies using the Uber data that tell us about the type of employee who uses the contingent labor market and what their preferences are.  Uber has no reason to benefit from or to suppress this information.  The studies are orthogonal to influences that Uber might be giving (purposefully or not) to grateful researchers.  These results are probably trustworthy, that is, they can be evaluated on the merits of their own internal validity.

If the company would have cause to benefit from the results– then you might be more cautious.  Not that a good economist would purposefully fudge data or results.  They don’t need to.  With any research project there are a lot of decisions that need to be made about specifications and samples and data cleaning.  Researchers just have to unconsciously feel grateful to the company to bias themselves with these choices, particularly if they don’t have a pre-analysis plan.  (And even if they do have a pre-analysis plan, they might still choose what they unconsciously think will benefit, or at least not hurt, the company).

On top of that, there’s selection bias in the choice of research question.  Even excellent economists will choose to just not go places that might make the company look bad when said company has provided data.

Similarly, negative results can be suppressed by the data provider.  I know of a case where the US government suppressed one of my colleague’s research findings that made their agency look bad after providing him with data (though they did allow someone else to publish the same negative findings later under a new, less fascist, government regime).  Any time that clearance is required to share results, that can be a problem.

To sum:

Just data provision is enough to bias research results.  If a company provides data, then results that show the company in a positive light will be shown and results that show the company in a negative light will not be shown to the public.  Results that don’t affect the company one way or the other are probably fine and can be evaluated on their own merits.

There’s a lot to be said for data that come from legal requirements (ex. FOIA), are available from third parties, or from internet leaks.

It is important to know who provided the data, not just who provided the funding, when doing disclosures.