Category: Research Highlights (Page 1 of 3)

Anecdotes vs. Research (and the benefits of each)

Anecdotes vs. Research (and the benefits of each)

As a researcher, it is important to me that you know the difference between anecdotes and data (the stuff produced through primary research).

What is Research?

This is a broad question that has many different facets, I realize. And I could bore you with the specifics of randomized controlled trials vs. observational studies, but our purposes here, I consider data/research to be something that has been tested. Many subjects have been involved and conclusions have been drawn. Research is testing whether defaulting workers into contributing to retirement funds actually increases earnings and then finding out that it does.

The conclusions drawn from research mean that they’ve been tried and tested. Many, many people save way more money into retirement plans if you default them into contributing in the first place. What do we do with this information? If you default your contributions, you may not end up clawing them back at all!

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How to Choose a Fund Manager

How to Choose a Fund Manager

Over the past year, I’ve come across some pretty interesting studies about fund managers. Based on the research, let’s take a look at who the ideal fund manager is:

Top Performing Fund Managers:

  1. Drive “Practical but Unexciting” Cars – Fund managers who drive sports cars take on more risk… but the risk doesn’t translate into better returns. So, make sure you’re checking the parking lot before choosing your fund manager!
  2. Are from Poorer Backgrounds – It turns out privilege puts people in positions they don’t necessarily deserve to be in. Fund managers from poorer backgrounds may have to prove themselves more because of their lack of connections or status, so the ones that make it are smarter and have more grit than the ones that got a “leg up” to get there.
  3. Actually Do Very Little – This article is about Nevada’s 35 billion dollar fund manager. He describes his method as “bare-bones.” The article says: “The Nevada system’s stocks and bonds are all in low-cost funds that mimic indexes. Mr. Edmundson may make one change to the portfolio a year.”

Be Your Own Manager:

The key, as Mr. Edmundson from the Nevada fund would tell you, is low-fee index funds. Even if you don’t choose Vanguard funds, you can thank Vanguard for creating The Vanguard Effect – The combined savings of Vanguard’s low fees added to the driving down of prices in the industry leading to a savings of over $1 Trillion to the consumer!*

Maybe this is the end of investing as we know it if everyone jumps on the passive funds train. Or maybe you think index funds are communist (I don’t make this stuff up!). Then make up your own mind… but for now, I’m going to drive my sensible car and put my money in index funds and leave it alone!**


*This is similar to the “Costco Effect” in Anchorage. We’re told to be grateful we live in Anchorage after Costco came because before that, prices were much, much higher. 

**I can’t claim I don’t have the privilege card, because I do

Girls Are Brilliant (And Why That Matters)

Girls Are Brilliant (And Why That Matters)

In light of recent events, I’ve started hearing arguments (from both men and women) that women have achieved equality and need to “stop complaining.” Everyone apparently knows that girls are brilliant already. I’ve also been informed that “men controlling women” isn’t a common theme that exists outside of my own “echo chamber” and that women can officially do anything they want to. I realize that research has also lost popularity as of late, but as a researcher, I will continue to publish research-based information.

Gender Stereotypes Start Young

In the midst of the arguments this past week, a study was published looking at 6-year-olds. In the first part of the study, children were told a story about a character that was “really, really smart.” They were then shown pictures of 2 men and 2 women and told to identify which one they thought was the protagonist of the story. 5-year-old girls and boys (not yet school-aged) were just as likely to choose a boy or a girl as a protagonist to the story (and likely to lean toward identifying the protagonist as themselves–girls would choose a girl, boys would choose a boy). 6-year-olds, however, were not. The study states: “Despite [the] strong tendency to view one’s gender in a positive light, girls aged 6 and 7 were significantly less likely than boys to associate brilliance with their own gender.”

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Tracking Your Finances Won't Make You Rich

Tracking Your Finances Won’t Make You Rich

Tracking is the First Step

If you don’t know where your money is going, you don’t know how to make it go where you want. Simply having a budget or tracking your finances the right way isn’t going to change your behavior.

In Fall 2016, a study was published about activity trackers (ie: FitBits) and weight loss. It was a randomized controlled trial (the best kind of study there is!). 471 participants spent 6 months on a low calorie diet, group counseling, and physical fitness prescriptions. After 6 months, the group was randomized into 2 groups: “Self-monitoring” (ie: “you’re on your own, but here’s a website where you can enter your data”) or “Activity Tracker” (ie: “here’s a FitBit. It will capture your data.”) After 2 years (!), they all weighed in. Both groups had better levels of fitness, but the group without the FitBit lost significantly more weight!

You read that right… the ones that had the fancy trackers lost LESS weight than those that didn’t have them!

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The Money Moose Survey

The Money Moose Survey!

Alright, friends! The time has come! Drumroll, please….

Introducing, the Money Moose Survey!

How You Can Help Me:

  1. Go and Take the Survey. It will take 5-10 minutes. Be honest in your responses.
  2. Make all spouse/significant others/random dinner guests take the survey. Don’t discuss its contents, just set it in front of them and say: “While I whip up dessert, I have an important study I would like you to participate in.”
  3. Share with your blogger and personal audiences. If you are a blogger, share the link and say something like: “A large-scale study about money! Help a sister out!” When you post it on your personal Facebook/Twitter feed say: “My good friend Maggie [because I consider you a friend if you are here reading this blog… I mean, you know more about me than most of my Facebook friends!] is doing a large-scale research project. Please take 5-10 minutes of your time to participate.”
  4. Post the link in public bathrooms. Bribe people. Withhold Christmas cookies until they take the survey. *Ahem* I’m sorry. I got a bit carried away there… I don’t want anyone to be forced… (am I coming off as desperate?)

The link to share is:

http://www.moneymoose.space

(please note it is .space, not .com … who wouldn’t want to click on that?!) Again, please don’t discuss the survey contents. You can say it’s about money (I put it right in the title!) but please leave the rest hidden. I don’t want to skew results by having people think about the answers before they take the survey.

Challenge: Share it far. Share it wide. Can we get 500 responses before I return on January 9? I’ll let you know how many we have when I return.

HAPPY HAPPY HOLIDAYS FRIENDS! You are all the greatest. Seriously. I’m thankful for you! And I’ll see you Next Year!

Kindness

On Kindness

Did you know that the incidence of psychopathy in CEOs is 4 times that of the general population? Apparently a lack of empathy and kindness is great material for climbing the ladder all the way to the top!

I’m a firm believer that your selfish vs. altruistic mindsets are firmly cemented the more actions you make. For example, if we spend all of our working years actively chasing early retirement and choosing not to give (after all, one donation could mean 2 weeks/months/years more work!), we’re not going to one day wake up and decide the time is right to start giving. On the flip side, if we get into the habit now of charitable giving, it will become a habit and doing good with money won’t be difficult later.

Just as I think giving money is a habit, kindness is also a habit. Kindness may not make you rich, but it will definitely enrich your journey. Today, I want to make a case for being kind. There is enough rhetoric in the world about how to be cut-throat, ruthless, step on the little guy to get a leg-up, and not looking down on your way to the top. The world doesn’t need more of that. And if that’s the requirement for being successful, I’m happy to be a failure.

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retire now

The State of Retirement in the U.S. in 2016

It’s sad.

<End of post.>

Alright, alright. I’ll get into details if I must. First, the good news:

According to the 2016 Retirement Confidence Survey published by the Employee Benefit Research Institute, people are starting to move out of their recession fears. The percentage of workers “very confident” in having enough to retire, went up from 13% in 2013 to 22% in 2015. This year it went down slightly to 21%, but overall, people are feeling a bit more confident in these insane market days.

The question is: Should they feel this confident?

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Status quo coin flip

Status Quo Bias and the Coin Flip

I have had the same haircut forever (a simple, A-line bob if you really wanted to know). When I go to cut my hair, I think: “I’m going to do something different!” but then I go do the exact same thing. This is an example of status quo bias. We like things to be the same and any deviation from that point is considered a loss. What if I hate my hair? What if the guy who is running against the incumbent is going to be worse than that guy? What if I quit my job and regret it? It’s easier to stay the same. 

Flashback 12 years ago: I’m on a study abroad in London and the Vidal Sassoon Salon is offering free haircuts if you’re willing to get anything. YES! This is my chance to be crazy! I walk in. Every single person has crazy hair. My own guy has a tight Afro with ringlets hanging off of it like a disco ball. It was amazing. I wonder what I’ll get!

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Our brains think brand names taste better than generics

The Brand Name Deception

You should avoid most name brands and go straight for the generic.

There, I said it. Post over.  …If only it were that easy. The fact is, we all know that we are deceived by a name brand. We know we shouldn’t get addicted to the brand, but we do anyway!

Penny’s annual science fair was this month. As I was perusing the other boards, I came across this one:

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money and death

Breaking Research: Live Rich or Die Young

You’ve probably already seen the news about this study, but as a behavioral economics researcher by day and a personal finance blogger by night, I can’t ignore it here. Published on Monday in the Journal of the American Medical Association was the paper titled The Association Between Income and Life Expectancy in the United States, 2001-2014. First off, let me address the large scale of this study. It’s amazing. I mean, how does one go about getting “tax records for every individual [with a social security number] for every year from 1999 through 2014”?! That’s crazy! The sample size: 1, 408, 287, 218 person-year observations – no that’s not a typo! They also looked at specific geographic areas and if someone moved after 63, they counted their area as the place they were living at age 61 while working (they’ve seemingly thought of everything!). So let’s get to the findings:

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