Question; Have you Experienced the Same?
I was reading an article on one of the other blogs as written by an economist. In his article he discussed the 0.18% of total expenditures on one category. Then the blogger went on to describe the total expenditure as not being “18%, but rather a little less than one-fifth of 1 percent.” I asked the economist about the why of the additional explanation and whether this would be a legitimate fear that people might mistake 0.18% as being 18% and not less than 2 tenths of 1%. The answer was “yes,” he did not want the total expenditures in this category to be mistook as 18% as it was important. He went to greater length to explain it. He had experienced errors by others in misinterpreting a portion of a 1 percent as something greater than 1%.
Have you experienced the same innumeracy amongst others?
Yes. I’d also take care to write the first percentage as “0.18%” to help highlight the included decimal.
The writer did add the 0; but, I did not. So to be accurate, I added it. By the way, welcome to Angry Bear. First comments go to moderation.
I don’t know if it is innumeracy so much as sloppy reading. It is easy to miss that leading decimal point, so it might be better to write 0.18% which would make people slow down a second.
In fact, leading zeros are a good device to help people who read fast and might skip decimal points and punctuation.
I never do add the 0; however in this case, the writer did have the zero. I just added the zero to be accurate. Thanks Carol.
(1% – 0.82%)
1 part in 5.55 parts
Whoops… 1 part in 555.5 parts
Yes. Often. and add the leading zero; it helps.
but it’s not just careless (“fast”) reading. lots and lots of people don’t really know the difference.
what is even worse is people who can take 2% of wages and multiply it by 200 million people by 75 years and get Fifteen Trillion Dollars of Unfunded Deficit! ™ in Present Value.
of course, they say, it’s only 2%, but it’s two percent of a Very Big Number! so be afraid, be very afraid.
Who did that?
I think it’s a good idea to make it super clear, because people do skim. I made a similar mistake a few years back when I got a chunk of money and opened a “high interest” account at my bank. I got back to the motorhome and told my girlfriend the interest rate was laughably low for “high interest”: 2%. My girlfriend pointed out it was 0.2%. I’d just glanced at it and read it wrong because I was used to higher interest rates and my brain just didn’t want to accept it was actually far less than 1%.
“Have you experienced the same innumeracy amongst others?”
Seriously? From someone who posts on this blog and visits EV?
Think back to your answers as to what MLR is.
And there are many such examples.
Fractions. If you want to see it in action, ask people about fractions. Would someone rather have a hamburger with a patty that is either 1/3 lb, or 1/4 lb?
On a diet, so a quarter pounder would be better and without cheese.
Another example I found amazing was ordering lunch meat at a grocery store.
I asked for 3/8’s of a pound and got the strangest look I have ever seen, and a “How much is that?” response. I replied it was halfway between a 1/4 and 1/2. Another look. Ok, when the scale hits .375 you are there.
It has happened more than once at several different stores.
Next time ask for four sevenths of a pound.
As over a discussion from November last year innumeracy or dyscalculia?
almost everyone. but i first saw it in bald face in a book called “The Real Deal” by Scheiber and Shoven, who are taken seriously as “non partisan experts.”
as for the rest of the thread here, it’s an example of why we get lost, why we lose.
a simple question… do people mistake .18% for 18%… yields a simple answer… yes.
but there is something in the nervous system of bloggers that wants to wander off into space with words like “dyscalculia” or the failure of people in some situations to want to do arithmetic when they are used to dealing with simple quantities they can recognize (not calculate), weigh out, and put a price on. Seems people are more interested in demonstrating their own cleverness than in communicating with other people whose experience and needs (and maybe talents) leave them just a little short of understanding what they (“you”) are talking about.
which still leaves me with the frustration of why they…. including the rapid calculators among us… can’t understand the difference between “one dollar a week” and “not enough when you get old.”
expanding on that last a bit:
rather than thinking “these people are going to need something like 20 thousand a year to “get by” when they get old, and they can save that much simply by saving an extra dollar a week per year (never mind the details of this, they don’t change anything significant but they befuddle the minds of the people about whom i am trying to make the point)..
they prefer to lose themselves in abstractions…. that are not true, and certainly not significant, but they learned them in college and they want to show how smart they are… abstractions like “taxing the poor” “reducing gdp”
like i said,neither true nor significant if true, but “big concepts” so you (they) can speak from on high without having the slightest idea what either their words or mean or what the reality under discussion is.
rather than thinking “these people are going to need something like 20
thousand a year to “get by” when they get old, and they can save that
much simply by saving an extra dollar a week per year (never mind the
details of this, they don’t change anything significant but they befuddle
the minds of the people about whom i am trying to make the point).
If you save a dollar a week for 45 years (ages 20-65), that’s about $2100. Invested in the S&P500 (with no fees or taxes) gets you about 40k, on average. Taking 5% each year, that translates to $2000 per year, not $20,000.
Thank you warren.
Your analysis missed a coupe of points.
That 2 thousand would be the difference bettween 18k per year and 20k per year. A significant difference when that’s all you have to live on.
In fact the difference will be larger because the one dollar per week becomes two dollars per week next year (as wages rise about 10 dollars per week each year and so on.)
Second, the tax increase is paid back in benefits adjusted to the inflated dollar. To keep up with inflation you would have to earn about 3% just to start with in a private investment. And while you might do that, there is no guarantee. The thing about SS is still that it can guarantee that you have that 20k to live on. With private funds you might do better… nice… or you might do worse…. disaster and misery and early death.
also, you seem to have invested the whole 45 years of one dollar per week at the beginning of the 45 year period and then compounded it for 45 years. this is not the way it works. and with SS you get that pension after about 35 years… plus or minus… with great variation because of the insurance benefit.
don’t mean to be mean here but if you are going to “analyze” something you need to take account of all the variables… and allow for a degree of misunterstanding of what i was saying in the first place.
we can fix the misunderstanding, but not in a “gothca” atmosphere.
for what it’s worth I have done the math pretty carefully and it has been checked by experts.
without remembering the exact details the expected loss of benefits if nothing is done is about 20%. The promised benefit is about 20k (varies greatly over time). That would leave you trying to get by on 16k (doable, but not much fun. and for lower earners the promised benefit might be only about 12k (also doable, but a lot less fun.. and impossible with a 20% cut.)
by raising the tax one dollar per week (one tenth of one percent) in todays terms, the benefit cut is avoided entirely.
that is demonstrable fact. demonstrable to people who can follow the math (not hard… you make a spreadsheet duplicating the Trustees Report, and then make another one with the tax increases)
of course you can do better on the market…maybe… if your luck doesn’t turn on you (which is does in more cases than you like to think), but a very large number of people can’t make enough to buy into the market… or absorb the “temporary” losses. those people would do to the economy what a lot of wrecks on the road would do to your travel time getting to work.
i think you should stop fighting me based on your very incomplete understanding of the problem.
here is a book for you “Empire of the Fund” by William Birdthistle. It discusses problems with mutual funds without any reference to Social Security.
For anyone watching
the tax increase needed would be one tenth of one percent per year if started next year (or even in the next five years).and run for about 20 years (not every year) reaching eventually 2% of wages.
one tenth of one percent of an average wage this year is about a dollar per week. lower earners would pay less.
yes, it would be another dollar next year, and the year after and so on. but each year the increase would be one tenth of onepercent and would “feel like” what a dollar a week feels like today.
eventually it would grow to about 20 dollars per week. begins to sound like a lot, but most people wouldn’t even notice it if it happened all at once today. and by the time they actually reach that 2% their wages will have grown considerable more than 200 dolars per week, so they will be richer after the tax than they are today, and they will get that 20 dollars per week back when they retire… with interest.
i suggest you either think this whole thing through very carefully or just stop sniping with your one-liner analyses which simply do not describe the situation you actually face.
OK — I missed that your $20k figure was the target, not the increment to get to the target.
As for an early death, that takes away almost everything from Social Security “investments,” where a real investment would go to one’s heirs.
if you die with dependents (heirs) they get your SS benefits.
so that’s something else you forgot to include in your calculations.
it’s insurance, not a get rich scheme. if you die “early” without dependents, you aren’t going to miss the money.
if you never have a fire, you don’t collect on your fire insurance.
if you never have an accident, you don’t collect on your car insurance.
SS is insurance in case you end up too old to work (or disabled or dead with dependents) without enough money to get by (or for yor “heirs” to get by).
you keep missing the point even after it has been explained to you.
and this is where i start getting crabby again.
read the book i suggested… it’s not about SS. it’s about mutual funds. there seems to be some problems with those.
No, they get some dependent benefits until they are 18, and your wife will also get a little something while the children are under 16.
in other words they get it when they need it.
social security is insurance, not an all purpose plan to enrich you and your heirs.
ask your heirs if they would rather count on you leaving them a bundle or on having to take care of you in your old age.
and please note, you are making at least twice what your grandparents made. so why is it so criminal that your country should require you to set aside 10% of your income so your neighbors won’t have to take care of you in your old age?
Then please do not peddle it as a retirement plan or an investment.
“[They] will be richer after the tax than they are today, and they will get that 20 dollars per week back when they retire… with interest.”
if this is supposed to be proof, or even just evidence, that i peddle SS as a retirement plan or an investment rather than insurance
you need to read it again very slowly and try to think a little more carefully
the demons you see are products of your own imagination.
Just got the book on Kindle. I recommend “Capital in the Twenty-First Century” by Thomas Picketty.
i have not read Picketty. I have been wondering if you ever read A Christmas Carol by Charles Dickens. or other stories and novels that give a convincing picture of what human life is like. There a movies that do much the same. Granted these are fiction… though there are some real life stories that do the same. And what I think I have noticed is there is almost universal sense by readers and audiences that these tell the “real” story, both in terms of the kinds of hardships and injustices people face and of the supreme value kindness… even heroic kindness.
Not that any of us (not most of us anyway) ever come close to actually doing heroic kindness, but we seem to know… feel deeply… that that is what is right, would make the world right.
I have, by the way, been trying to follow up on some leads you have given me. I am finding these interesting if not yet profitable. But it still leaves me with the conviction that for one reason or another most people cannot rely on “the market” to take care of them when their luck (or intelligence) runs out. Social Security was designed to meet the reality of people’s experience and not anyone’s “theory” about the miracle of enlightened self interest….. which never seems as enlightened as advertised. even “limited government” never turns out to be “limited” when it is in the interest of the people who have power to violate those limits.
hope you find Empire of the Fund valuable. I should say I don’t endorse all, or most, of his remedies, but find it interesting that he… who seems to be pretty much a believer in markets.. finds some kind of remedy to be needed. He does not address what is to become of people whose investments fail when it is too late for them to recover, or who never make enough money to make investments in the first place, or who are just not smart enough…. in your terms.
the poor are always with us. and the “not smart enough” are always with us. if “we” can’t find a way to make their lives less miserable and more productive, i am pretty sure our own wealth will suffer.
i thought this was the lesson of the fifty years following the New Deal. but some people never learn. pay attention and you will see the role of criminal greed behind the “free markets’ (and “limited government’) propaganda.
not only willl our own wealth suffer, i am pretty sure we will lose our chance for real happiness.
heck even the story of Midas tried to tell us this… long before Jesus. You’d have to make up your own mind whether you prefer the world of Jesus or the world of the Romans, whether or not you “believe in ” anything supernatural about Jesus.