More information: Good or bad?

In the rational Economics 101 world, more information is always a good thing.  You can throw it away if you don’t need or want it.  You can even refuse to look at it.

As we go on in economics we learn about things like adverse selection and that insurance markets can’t exist in worlds of perfect information, meaning those who are about to get hit by bad shocks are SOL.  But everybody else lives risk free, so whatevs.

And then we get into behavioral economics… what people actually do.

More information can be a double-edged sword.

You probably noticed that credit card statements have more information on them these days than they did a few years ago.  You know know how long it’ll take to pay back that debt paying down the minimum, for example.

The improved information on the credit card bills is based on work done in an experiment on payday lenders by Marianne Bertrand at UChicago.  They find that people are less likely to take out stupid loans from payday loan companies if how bad those loans are is made more salient.  New evidence from Sumit Agarwal and coauthors shows that the credit card change worked.

On the other hand, there’s work done on calorie postings on drinks– it actually hasn’t shown much of an effect on calories in beverage consumption. People overestimate the number of calories in Starbucks drinks and are pleasantly surprised to find actual calorie counts, leading them to consume more of things they’d been overestimating. There’s also some concern that they don’t understand what the number of calories means in terms of their own diet.  (They do tend to eat lower calorie food items at Starbucks with the postings though.)

Cigarette box warnings don’t work for the same reason that calorie postings don’t work. People already overestimate their chance of getting lung cancer from smoking.  So the warnings don’t add new information.

The money information added to credit cards and check cashing places is different than the food posting information… people really do not know how many years it will take to pay off a balance if they’re only paying the minimum, or how much they will end up paying in interest at the end of that. That does provide new information to consumers.  There’s no pleasant surprise when that information is put in an easy to understand format.

Update:  Here’s another cool article: Paging Inspector Sands: The Costs of Public InformationSacha Kapoor and Arvind Magesan We exploit the introduction of pedestrian countdown signals—timers that indicate when traffic lights will change—to evaluate a policy that improves the information of all market participants. We find that although countdown signals reduce the number of pedestrians struck by automobiles, they increase the number of collisions between automobiles. They also cause more collisions overall, implying that welfare gains can be attained by hiding the information from drivers. Whereas most empirical studies on the role of information in markets suggest that asymmetric information reduces welfare, we conclude that asymmetric information can, in fact, improve it.

So information can help or hurt depending on how addictive the behavior is and whether we’re over- or under-estimating the badness of what we’re addicted to.

Have you ever been in a situation in which you would have been better off without more information?  Has getting more information ever transformed your actions?

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One-Line Book Summaries

The Secret Garden:  THE GARDEN IS A METAPHOR.

The Most Beautiful Libraries in the World:  Harrrrrrgle.

Anna Karenina:  Russians are angsty.  Also, agriculture.

The Honor Harrington series:  Spaceship makes slingshot maneuver around planet.  Also, shooting missles; military bureaucracy; treecats.

Heidi:  Fresh air and good food will cure all your problems.

Help us come up with more one line book summaries!

Signage memes I hate

Driving around this place sometimes makes me ragey about the things stores choose to put on their signs out front.

My number one most hated meme: your husband says it’s ok for you to make independent choices.  Or spend “his” money, I guess.  Wow, awesome.

Actual signs:  “Hubby called, says ok to get $30 manicure!”

“Your husband called, he said buy as many beads as you want!”

It’s so wrong I don’t even know where to start!  You can’t communicate in your relationship… the two of you have control issues… your husband has to send a note to the teacher because little you can’t be trusted… ew ew ew ew.

In addition, I got all ragey at V-day advertising and told my partner he is NOT ALLOWED to get me chocolate or flowers on or around Feb. 14th.  Any other time of year is fine, but not for Valentine’s day.  The expectation of it grosses me out more than usual this year.  I mean, I like flowers.  I like roses.  Of course I like dark chocolate.  I like getting gifts and cards.  But the one-day doing-it-cuz-I-have-to thing is grating on my nerves in an entirely sandpapery way right now.  [#2 does not celebrate v-day with her partner, but it also doesn’t particularly bother her either.  Christmas is really the only commercial holiday she celebrates.  Mostly it’s the benefit from celebrating these holidays doesn’t outweigh the costs for her.  #2 also hates cut flowers, so her partner is not allowed to get them ever, v-day or not.]

Grumpy readers, what makes you see red?

September Challenges! August Wrap-up!

September is an exploration in how to get more sleep.

August was money month!  How did we do?

#1:

  • go through all my TIAA-Cref paperwork, discard the outdated stuff, file the new stuff, and sign up for paperless statements
    1. at least it’s all in one place now, in the same box, even if most of the stuff isn’t opened and none is organized.  That’s progress, right?
    2. Take everything out, open envelopes.  Recycle envelopes and outdated inserts.  Tell TIAA-CREF my new address.  Put things in piles by organization (TIAA-Cref, Vanguard, etc.).  Then put the papers in each pile in order by date.
    3. Do stuff: possibly make appointment with the advisor guy.  Find out more about this annuity thing I have.
    4. Get form from HR to transfer my raise to retirement account.
  • track my spending all month, as suggested by Your Money or Your Life
  • finally get rid of my lingering retirement accounts from 2 employers ago, which have like $87 total, and roll them into my current accounts.  Done!  Accidentally.  I found a check — they liquidated the account and cashed it out to me when they didn’t hear from me for a while.  I don’t mind the tax hit on $82 or whatever, because that was my original plan anyway.  Win.
  • find out WTF is up with my Vanguard accounts and fix my address with them.  And maybe move to TIAA-CREF.
  • call my credit card companies and ask them to stop sending me those checks
  • consider how much of my emergency fund I need to have liquid, and possibly invest some.  (Treasury bonds?)
  • only sort of related: back up, patch, and otherwise maintain *all* computers
    1. Lab computer main (back up, uninstall, install, patch)
    2. lab computer backup (uninstall, install, patch)
    3. office computer (back up, uninstall, install, patch, organize)
    4. home computer (back up, install, patch)

As of Aug. 1, I have started by making a shared googledoc with my partner.  It’s a spreadsheet where we can track all our household expenses (rent, cable, water, gas, power, etc.) as well as who paid what to whom.  This is very useful now that we are living together once more, and splitting expenses but not exactly evenly; there are formulae and everything.  Also I know where the YMOYL book is but mean to reread it.

Update, Aug. 2: I re-read important parts of the book and skimmed the rest.  Also I discussed finances with my partner a little bit.  Look at me go!

Update, Sept 1:

#2:

  • Sell all individual stocks and sucky mutual funds (except the one).  Reinvest.  Chase IRA moved to Vanguard, reinvested in Target date 2050 fund.  Requested full control of American Century.  Remaining movements will have to wait until the markets settle down.
  • Check numbers to see if IRA possible this year.:  Yes:  Roth eligible.
  • Force Ing to let go.:  Forms are filled out, put in addressed envelope… waiting for the stock market to settle down a bit.  (This may take a year…)
  • Check out 457 plan.  Forms sent off.
  • Make the etrade margin account not a margin account!  Done.
  • Look into moving from etrade to vanguard.  Or just open new vanguard account:  Vanguard account opened. Decided to hold on to etrade a while longer.
  • Or just open new vanguard account.  
  • Call credit card companies and ask them to stop sending checks (good idea!):  Was waiting for CC company to send checks… they didn’t, so I haven’t called.  But if they do, I will be ready!
  • Figure out how much to deduct for dependent daycare account ~3500
  • Cash in last DDA for the year  Done.
  • Sign up for annual benefits (easier this year… there are fewer choices…) Done.

#2 was hampered by the stockmarket suddenly deciding to go bat-excrement crazy.  #2 dislikes moving money when the market is swinging wildly.  She could lose big (or win big) and she doesn’t like that kind of volatility.  Chase got moved right before the big dip happened, but American Century and Ing are staying put.  Keeping Ing with Ing is losing about $300/year, but the American Century account doesn’t cost nearly so much (because there’s not much in it!), and these wild fluctuations could permanently take a big bite out of it if buying and selling are mistimed.  Other than that, #2 feels pretty good about the exercise and will probably do a money month next summer too.

Sept.: Get at least 7 hours of sleep every night!

This goal is really important.  If you recall, #1 has problems with tiredness that no doctor has been able to figure out.  So this month will be an experiment in sleep control– if #1 does all the non-invasive things the internet says to do to help sleep, will that help her sleep?

This includes but is not limited to:

  • avoid unplanned nap behaviors; sleep in few large chunks
  • Use commitment devices
  • manage hydration to reduce sleepiness
  • develop alternate methods of mood regulation / stress reduction besides sleep (sex!)
  • set realistic alarm times and then get out of bed immediately when alarm goes off
  • stay away from monitor a planned time before bedtime

Do you have any more non-invasive suggestions on how #1 can sleep better (apart from say, taking melatonin or other drugz)?