Risk off: Why some people are more cautious with their finances than others

One of the feature articles in the current issue of The Economist is entitled “Risk off: Why some people are more cautious with their finances than others”. Here are some key takeaways from this article:

1. Economists have long known that people are risk-averse; yet the willingness to run risks varies enormously among individuals and over time.

2. Genetics explains a third of the difference in risk-taking; e.g., a Swedish study of twins finds that identical twins had “… a closer propensity to invest in shares” than fraternal ones.

3. Upbringing, environment and experience also matter; e.g., . “…the educated and the rich are more daring financially. So are men, but apparently not for genetic reasons”.

4. People’s financial history has a strong impact on their taste for risk; e.g., “… people who experienced high (low) returns on the stockmarket earlier in life were, years later, likelier to report a higher (lower) tolerance for risk, to own (not own) shares and to invest a bigger (smaller) slice of their assets in shares.”

5. “Exposure to economic turmoil appears to dampen people’s appetite for risk irrespective of their personal financial losses.” Furthermore, a low tolerance for risk is linked to past emotional trauma.

Assorted Links (1/11/2014)

Here’s a list of articles that I have been reading and videos that I have been viewing lately:

Defend Christendom

nationalreview.com

“Conrad Black writes that the West needs to stand up and defend its history and traditions — including Christianity — against the Islamic world and its apologists.”

Even the Establishment Media Is Now Admitting the French Economic Model Is Fatally Flawed

www.cato.org

“France is turning Atlas Shrugged from fiction to reality.”

Surprise! Walmart health plan is cheaper, offers more coverage than Obamacare

washingtonexaminer.com

“New Obamacare health insurance enrollees may feel a pang of envy when they eye the coverage plans offered by Walmart to its employees.”

Obama vs. the Little Sisters

www.nationalreview.com

“By the bizarre logic of the White House, the nuns are part of the “war on women.””

50 Years of the War on Poverty

catoinstitute.tumblr.com

“Fifty years ago, President Lyndon Johnson delivered his first State of the Union address, promising an “unconditional war on poverty in America.” Looking at the wreckage since, it’s not hard to conclude that poverty won.”

Millennial Communists

www.nationalreview.com

“To the young and idealistic, this time is always different.”

Procrastinators, take note: If willpower isn’t working for you, look to the new science of mood repair

online.wsj.com

“A new approach to procrastination focuses on helping people recognize and regulate their emotions.”

Obama’s 2014 War on the Poor

www.cato.org

Excellent tutorial on the economics of unemployment insurance and the minimum wage: “Democrats are preparing to push policies that are likely to hurt struggling low- and middle-income Americans.”

Economists Spar Over U.S. Recovery

blogs.wsj.com

“Economists John Taylor and Larry Summers exchanged pointed words about the best approach to spurring the economic recovery.

Nobel Laureate Says We’ve Lost Our Pioneering Spirit

www.inc.com

“A money culture has diminished our ability to innovate.”

About Those Income Inequality Statistics

online.wsj.com

“An answer to Paul Krugman.”

What drives us to do the right thing? A look at new brain research

online.wsj.com

“Recent brain research shows that doing the right thing voluntarily is very different from doing it to avoid punishment.”

Degrees of Value: Making College Pay Off

online.wsj.com

Very interesting article by Glenn Reynolds, who is a law professor at University of Tennessee and also blogs at instapundit.com. Tuition for U.S. universities increased from 1978 to 2011 at an annual rate of 7.45%. At the same time, 4 in 10 college graduates end up in jobs that don’t require a college degree.

Infographic of the day: America’s 2013 migration patterns

www.aei-ideas.org

“The infographic shown here is from Atlas Van Lines, which released its 20th annual migration patterns study for the US, based on 77,308 interstate and cross-border household relocations in 2013 that help identify trends in nationwide migration.”

The Economics of Religion

www.econtalk.org

“Larry Iannaccone of George Mason University talks with EconTalk’s Russ Roberts about the economics of religion. Iannaccone explains why Americans are more religious than Europeans, why Americans became more religious after the colonies became the United States and why it can be rational and rewarding to make religious sacrifices.”

Why Economics Is Really Called ‘the Dismal Science’

www.theatlantic.com

“The (not-so-dismal) origin myth of a ubiquitous term.”

Obamacare’s War on Civil Society: It Is Big Government or Nothing

www.cato.org

“Barack Obama and his allies have the world backwards.”

Gloomy Americans foresee a downhill slide to 2050

www.philly.com

WASHINGTON (AP) – Ask people to imagine American life in 2050, and you’ll get some dreary visions.

The Online Education Revolution Drifts Off Course

www.npr.org

“Some of the largest online course providers say there will be big changes to their products in 2014.”

To commemorate the first commercial flight, St. Petersburg organizers plan a re-enactment Wednesday

online.wsj.com

“Fliers frustrated with discomforts of modern air travel might spare a thought this week for what flying was like a century ago when the first scheduled commercial airline launched its inaugural flight from a Florida yacht basin. St. Petersburg organizers plan a re-enactment Wednesday.

Codecademy Chief Says Computer Programming Holds the Key

online.wsj.com

“Codecademy’s Zach Sims says he created his online instructional startup in the belief that computer-programming skills can be a ticket to upward mobility.”

Tom Coburn: The Year Washington Fled Reality

online.wsj.com

“In The Wall Street Journal, Sen. Tom Coburn writes that “message discipline” can win elections but is not a healthy way to run a country.”

The Constitution’s Vanishing Act

www.hoover.org

“The United States Constitution is at its core a classical liberal document. But over the last hundred years, much of it has turned into a progressive text thanks in large part to Supreme Court justices who interpret it creatively, thereby skirting the laborious amendment process of Article V.”

The Death of the Bedside Manner

online.wsj.com

“In The Wall Street Journal, Dr. Marc Siegel writes that ObamaCare is speeding the decline in the quality of medical practice.”