Weekend Reads for Advisers: Retirement, Poker, and Prime Numbers

Categories: Behavioral Finance, Private Wealth Management
Weekend Reads

While the world has been focused on Syria, I’ve had my head buried in research on mandatory retirement savings programs for an upcoming Branch.com discussion that we plan to host in October. (Stay tuned!) So this week’s roundup has more articles than usual on that topic, along with some other interesting reads from the past couple of weeks.


Financial History

Social Media and Wealth Management

Women in the Workplace

Behavioral Economics / Risk

  • Cass Sunstein has written a fascinating article on the new book Scarcity: Why Having Too Little Means So Much by Sendhil Mullainathan and Eldar Shafir. While economists focus on the problem of scarcity — that is, how people allocate their resources amid competing demands — the authors “explore something quite different, which is the feeling of scarcity, and the psychological and behavioral consequences of that feeling,” Sunstein writes. “They know that the feeling of scarcity differs across various kinds of experiences and that people can feel ‘poor’ with respect to money, time, or relationships with others.” He adds that the book’s “striking claim” is “that across all of those categories, the feeling of scarcity has quite similar effects. It puts people in a kind of cognitive tunnel, limiting what they are able to see.” (The New York Review of Books)
  • People Make the Same Basic Investment Decisions as Monkeys, Scientists Find” (Quartz)
  • Getting Schooled in Risk: The Lessons of Poker” (Inside Investing)
  • With the anniversary this week of 9/11, I was reminded of @RPSeawright‘s post from a couple of years ago — “9.11 and the Narrative Fallacy” — based on a photograph taken on the day the towers came down. In the foreground is a group of five people, while in background, smoke billows into the air. Seemingly relaxed, were they casually indifferent to what had just happened? That’s what one reporter concluded based only on the image. But soon it emerged that that was a false interpretation. “We like to think that we carefully gather and evaluate facts and data before coming to a conclusion,” writes Seawright. “Instead, we tend to suffer from confirmation bias and thus reach a conclusion first. Only thereafter do we gather facts and see those facts in such a way as to support our pre-conceived conclusion.” (Above the Market)

Ronald Coase R.I.P.

And Now For Something Completely Different

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Photo credit: ©iStockphoto.com/JLGutierrez

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