If you have a little time and interest in some life realizations, then check out this lecture from a Harvard professor covering aspects such as statistics and how our brains do the math to determine risk. It is decently eye opening as one becomes a bit more aware of the processes our brains use when making a determination.
A key example would involve the lottery. Apparently because we have happy pictures in our minds of winners with the their door-sized checks and huge smiles, then we're likely to buy into the lottery system. This is because there are no interviews of the losers, just those happy winners. If there was a law that the losers and winners each were to have equal air time on TV, then the first 30 seconds would be of the happy winner and then the next 9.4 years (with no bathroom breaks or sleep) would be of the losers. If you were asked to buy a lottery ticket after watching 9.4 years of people not winning, would you then do it? The ease if which you can imagine winning or losing is what determines if you play.
The question an economist considers important is, 'what else can I do with that money?' A psychologist would say that fear is an irrational pathology. The instance of being killed in an earthquake, terrorist attack, or plane crash is extremely rare but the chance of you or your children drowning in a swimming pool is greater than all the other risks combined and then and then multiplied by a factor of ten. But because there is no media coverage of common drownings, you don't assign as much risk to that.
Here is the audio. I think it is pretty interesting and recommend checking it out. http://server1.sxsw.com/2006/coverage/SXSW06.INT.20060311.DanielGilbert.mp3
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1 comment:
I don't play the lotto... seems like a waste of my buck. I could buy a candy bar with that!
Have you read Freakonomics?
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