sometimes absurdity can only be expressed using graphs

[rinue]

When I got an Econ BS, the joke went that it was a rebellion against my dad, an internal auditor, so as to become his nemesis. Pithy explanation: Internal auditors find people who are falsifying numbers to embezzle or cover up misdeeds. Economists have an unsettling tendency to make up numbers for things that aren't easily quantified, and to hold that you'd be a fool not to cheat if you could get away with it.

I am not that kind of economist; I remain more temperamentally like an auditor. But the reason the joke works (or doesn't work at all) is that I doubt very many people would draw a distinction between what Dad and I do if you hand us a sheet of numbers and ask us to find trends and patterns. (Along similar lines, I tend to identify as a white-hat hacker, or used to, and Dad worked in network security. NEMESIS I TELL YOU, although again we'd pretty much be using the same tools and trying to acheive the same ends.)

However it seems to me my natural enemy as an economist is not actually auditors but dudes who give personal finance advice. I say dudes because they have an extra layer of unexamined privilege on top of the other glaring oversights that characterize personal finance advisors. I imagine personal finance advisors are very helpful when they have wealthy, individualized clients, but when they try to talk about what the average person should do, they tend to enter a fantasy land where tradeoffs don't exist and human beings aren't rational actors. (Central tenet of microeconomics: the average human being is a rational actor and makes purchasing decisions based on what they believe will most benefit them, although not always with perfect information).

Today on NPR, I heard one of them literally say it should be easy for someone to save $600 a month by cutting out lattes.

WHAT KIND OF LATTES ARE YOU DRINKING

But also maybe I need those lattes to stay awake and do my job, without which I have no income to save? Or if I don't buy those lattes, I can't hang out at the coffee shop and use the free wifi, or meet with business associates? Or maybe I'm counting on that daily serving of calcium in a form that is easily absorbed, without which I would develop costly osteoporosis? I'm just spitballing, here.

Also, man, your definition of investment as deferred consumption . . . I don't even know where to start with that. The extent to which that is a preposterous definition of investment rapidly approaches infinity.

Comments

[knaveofstaves]

Maybe he actually drinks seven lattes a day? How much is a venti anymore? Whatever. Six or seven without any flavors or anything.

Or maybe he's arguing that each latte produces a bunch of peripheral purchases including like lost time or something?

It's funny. I'm not trying to defend the statement, nor do I care to try, but it's intriguing just trying to figure out how to make it make sense at the most basic level.

Ooo! Ooo! He buys them for potential clients as a form of self-aggrandizement! His strategy is based on turning "Hey, my treat." into "Nope. Buy your own freakin' latte!"

[rinue]

To give you a bit more context, he was saying that in order to save for retirement, everybody (regardless of age or family composition) should be saving 13% of their paycheck (because in his world everyone has a steady paycheck). The interviewer said, approximately, "well, but what if someone is living paycheck to paycheck and can't even cover all their bills?" His answer: well, assume they're making $50,000 a year. They need to save $625 a month. So cut out lattes, maybe drop cable.

Yes you have solved it, sir. You have solved elder poverty and the retirement crisis.

Note how politely I am not going into the difficulty of projecting how long someone will live or what their costs will be 30 years in the future, even when one is A Futurist somewhat professionally (ahem), and how impractical it is from an actual investment perspective to not enter into some kind of risk pool (a la insurance rather than personal savings), because hey benefit of the doubt, right?

[knaveofstaves]

At this point I feel more failed by the people who gave this guy a mic than by the guy himself.

[rinue]

This stuff is sadly par for the course with male financial advisors speaking in public. "Maybe you don't need the newest Lexus" is an example that jumps instantly to mind.

[liquidmorpheme.livejournal.com]

Not to mention the gob-smacking absurdity of assuming that $50k/year paints a reasonable picture of someone living paycheck-to-paycheck. Lord.

[movingfinger]

What I really, really hate about these so-called advisors is that they terrify people into a state of helplessness, so they don't save anything. And who can blame them? Why shove money into a bank that pays an effectively negative interest rate or a rigged, volatile stock market mutual fund, when you need it to keep yourself afloat now?

As for his lattes, perhaps he was phoning it in from Oslo. I don't get lattes, I get drip coffee from Charbucks when I'm there (funny how "get a smaller cheaper drip coffee" is never an option wit these people, they want to reform your immoral latte habit right out of your life). I think the biggest fanciest ones are heading into the $6 range though, aren't they?

The latte as a standard item of unnecessary consumption is overdone.

[rinue]

Yes; lattes always come up, lattes and smartphones. Both of which have traditionally been linked with higher productivity.

[movingfinger]

Having a smartphone with internet access can allow workers all kinds of communications power, of course, including that of browsing job sites. Perhaps even as radical an act as filling out an application or preparing and sending documents around!

How uppity of them.