I’ll just say that indeed you do fit the stereotype.
Just for information: Are you deliberately trying to be unpleasant?
You think that your saving ratio is constant as a function of the derivative of your income
First of all, a terminological question: when you say “the derivative of your income” do you actually mean “your income within a short period”? -- i.e., the derivative w.r.t. time of “total income so far” or something of the kind? It sounds as if you do, and I’ll assume that’s what you mean in what follows.
So, anyway, I’m not quite sure whether you’re trying to describe my opinions about (1) the population at large and/or (2) me in particular. My opinion about #1 is that most people spend almost all that their income; maybe their savings:income ratio is approximately constant, or maybe it’s nearer the truth to say that their savings in absolute terms are constant, or maybe something else. But the relevant point (I think) is that most people are, roughly, in the habit of spending until they start running out of money. My opinion about #2 (for which I have pretty good evidence) is that, at least within the range of income I’ve experienced to date, my spending is approximately constant in absolute terms and doesn’t go up much with increasing income or increasing wealth. In particular, I have strong evidence that (1) many people basically execute the algorithm “while I have money: spend some” and (2) I don’t.
(I should maybe add that I don’t think this indicates any particular virtue or brilliance on my part, though of course it’s possible that my undoubted virtue and brilliance are factors. It’s more that most of the things I like to do are fairly cheap, and that I’m strongly motivated to reduce the risk of Bad Things in the future like running out of money.)
I think that there are breakdown threshold at large value of the derivative
Always possible (for people in general, for people-like-me, for me-in-particular). Though, at the risk of repeating myself, I think the failure of sudden influxes of money to make people richer in the long term is probably more a matter of executing that “spend until you run out” algorithm. Do you know whether any of the research on this stuff resolves that question?
I, using the outside view, [...]; you, using the inside view, [...]
I try to use both, and so far as I can tell I’m using both here. I’m not just looking at my model of the insides of my mind and saying “I can see I wouldn’t do anything so stupid” (I certainly don’t trust my introspection that much); so far as I can tell, I would make the same predictions about anyone else with a financial history resembling mine.
Now, for sure, I could be badly wrong. I might be fooling myself when I say I’m judging my likely behaviour in this hypothetical situation on the basis of my (somewhat visible externally) track record, rather than my introspective confidence in my mental processes. I might be wrong about how much evidence that track record is. I might be wrong in my model of why so many people end up in money trouble even if they suddenly acquire a pile of money; maybe it’s a matter of those “breakpoints” rather than of a habit of spending until one runs out. Etc. So I’m certainly not saying I know that me-10-years-ago would have been helped rather than harmed by a sudden windfall. Only that, so far as I can tell, I most likely would have been.
even if the prior is skewed towards incompetence, that is not much of an effect.
I suggest that people who play the lottery a lot are probably, on balance, exceptionally incompetent, and that those people are probably overrepresented among windfall recipients.
I had a quick look for more information about the effects of suddenly getting money.
This article on Yahoo!!!!! Finance describes a study showing that lottery winners are more likely to end up bankrupt if they win more. That seems to fit with my theory that big lottery wins are correlated with buying a lot of lottery tickets, hence with incompetence. It quotes another study saying that people spend more money on lottery tickets if they’re invited to do it in small increments (which is maybe very weak evidence against the “breakpoint” theory, which has the size-of-delta → tendency-to-spend relationship going the other way—except that the quantities involved here are tiny). And it speculates (without citing any sort of evidence) that what’s going on with bankrupt lottery winners is that they keep spending until they run out, which is also my model.
This paper (PDF) finds that people in Germany are more likely to become entrepreneurs if they have made “windfall gains” (inheritance, donations, lottery winnings, payments from things like life insurance), suggesting that at least some people do more productive things with windfalls than just spend them all.
This paper [EDITED to add: ungated version]looks at an unusual lottery in 1832, and according to ]this blog post finds that on balance winners did better, with those who were already better off improving and those who were worse off being largely unaffected.
[EDITED to add more information about the 1832 lottery now that I can actually read the paper:] Some extracts from the paper: “Participation was nearly universal” (so, maybe, no selection-for-incompetence effect); “The prize in this lottery was a claim on a parcel of land” (so, different from lotteries with monetary prizes); “lottery losers look similar to lottery winners in a series of placebo checks” (so, again, maybe no selection for incompetence); “the poorest third of lottery winners were essentially as poor as the poorest third of lottery winners” (so the wins didn’t help the poorest, but don’t seem to have harmed them either).
Just for information: Are you deliberately trying to be unpleasant?
No, even though I speculated that the sentence you’re answering could have been interpreted that way. Just to be clear, the stereotype here is “People who, when said that the general population usually end up bankrupt after a big lottery win, says ‘I won’t, I know how to save’”. Now I ask you: do you think you don’t fit the stereotype?
Anyway, now I have a clearer picture of your model: you think that there are no threshold phoenomena whatsoever, not only for you, but for the general population. You believe that people execute the same algorithm regardless of the amount of money it is applied to. So your point is not
“I (probably) don’t have breakdown threshold”
but
“I (probably) don’t execute a bad financial algorithm”
That clarifies some more things.
Besides, I’m a little sad that you didn’t answered to the main point, which was “How well do you think you know the inside mechanism of your mind?”
That seems to fit with my theory that big lottery wins are correlated with buying a lot of lottery tickets, hence with incompetence.
That would be bad bayesian probability. The correct way to treat it is “That seems to fit with my theory better than your theory”. Do you think it does? Or that it supports my theory equally well?
I’m asking it because at the moment I’m behind my firm firewall and cannot access those links, if you care to discuss it further I could comment this evening.
I’ll just add that I have the impression that you’re taking things a little bit too personally, I don’t know why you care to such a degree, but pinpointing the exact source of disagreement seems to be a very good exercise in bayesian rationality, we could even promote it to a proper discussion post.
If that’s your definition of “the stereotype” then I approximately fit (though I wouldn’t quite paraphrase my response as “I know how to save”; it’s a matter of preferences as much as of knowledge, and about spending as much as about saving).
The stereotype I was suggesting I may not fit is that of “people who, in fact, if they got a sudden windfall would blow it all and end up no better off”.
now I have a clearer picture of your model
Except that you are (not, I think, for the first time) assuming my model is simpler than it actually is. I don’t claim that there are “no threshold phenomena whatsoever”. I think it’s possible that there are some. I don’t know just what (if any) there are, for me or for others. (My model is probabilistic.) I have not, looking back at my own financial behaviour, observed any dramatic threshold phenomena; it is of course possible that there are some but I don’t see good grounds for thinking there are.
the main point, which was “How well do you think you know the inside mechanism of your mind”
As I already said, my predictions about the behaviour of hypothetical-me are not based on thinking I know the inside mechanism of my mind well, so I’m not sure why that should be the main point. I did, however, say ‴I’m not just looking at my model of the insides of my mind and saying “I can see I wouldn’t do anything so stupid” (I certainly don’t trust my introspection that much)‴. I’m sorry if I made you sad, but I don’t quite understand how I did.
That would be bad bayesian probability.
No. It would be bad bayesian probability if I’d said “That seems to fit with my theory; therefore yours is wrong”. I did not say that. I wasn’t trying to make this a fight between your theory and mine; I was trying to assess my theory. I’m not even sure what your theory about lottery tickets, as such, is. I think the fact that people with larger lottery wins ended up bankrupt more often than people with smaller ones is probably about equally good evidence for “lottery winners tend to be heavy lottery players, who tend to be particularly incompetent” as for “there’s a threshold effect whereby gains above a certain size cause particularly stupid behaviour”.
you’re taking things a little bit too personally [...] I don’t know why you care to such a degree
Well, from where I’m sitting it looks as if we’ve had multiple iterations of the following pattern:
you tell me, with what seems to me like excessive confidence, that I probably have Bad Characteristic X because most people have Bad Characteristic X
I give you what seems to me to be evidence that I don’t
you reiterate your opinion that I probably have Bad Characteristic X because most people do.
The particular values of X we’ve had include
financial incompetence;
predicting one’s own behaviour by naive introspection and neglecting the outside view;
overconfidence in one’s predictions.
In each case, for the avoidance of doubt, I agree that most people have Bad Characteristic X, and I agree that in the absence of other information it’s reasonable to guess that any given person probably has it too. However, it seems to me that
telling someone they probably have X is kinda rude, though possibly justified (not always; consider, e.g., the case where X is “not knowing anything about cognitive biases” and all you know about the person you’re talking to is that they’re a longstanding LW contributor)
continuing to do so when they’ve given you what they consider to be contrary evidence, and not offering a good counterargument, is very rude and probably severely unjustified.
So you’ve made a number of personal claims about me, albeit probabilistic ones; they have all been negative ones; they have all (as it seems to me) been under-supported by evidence; when I have offered contrary evidence you have largely ignored it.
It also seems to me that on each occasion when you’ve attempted to describe my own position, what you have actually described is a simplified version which happens to be clearly inferior to my actual position as I’ve tried to state it. For instance:
I say: I see … enough evidence that my spending habits are atypical of the population. You say: you, using the inside view, say “using my model of my mind, I say that the extension of the linear model in the far region is still reliable”.
I say, in response to your hypothesis about breakpoints: Always possible (for people in general, for people-like-me, for me-in-particular). and: I might be wrong in my model …; maybe it’s a matter of those “breakpoints” rather than of a habit of spending until one runs out. You say: you think that there are no threshold phoenomena whatsoever, not only for you, but for the general population.
So. From where I’m sitting, it looks as if you have made a bunch of negative claims about my thinking, not updated in any way in the face of disagreement (and, where appropriate, contrary evidence), and repeatedly offered purported summaries of my opinions that don’t match what I’ve actually said and are clearly stupider than what I’ve actually said.
Now, of course the negative claims began with statistical negative claims about the population at large, and I agree with those claims. But the starting point was my statement that “I would do X” and you chose to continue applying those negative claims to me personally.
I would much prefer a less personalized discussion. I do not enjoy defending myself; it feels too much like boasting.
[EDITED to fix a formatting screwup.]
[EDITED to add: Hi, downvoter! Would you care to tell me what you didn’t like so that I can, if appropriate, do less of it in future? Thanks.]
Just for information: Are you deliberately trying to be unpleasant?
First of all, a terminological question: when you say “the derivative of your income” do you actually mean “your income within a short period”? -- i.e., the derivative w.r.t. time of “total income so far” or something of the kind? It sounds as if you do, and I’ll assume that’s what you mean in what follows.
So, anyway, I’m not quite sure whether you’re trying to describe my opinions about (1) the population at large and/or (2) me in particular. My opinion about #1 is that most people spend almost all that their income; maybe their savings:income ratio is approximately constant, or maybe it’s nearer the truth to say that their savings in absolute terms are constant, or maybe something else. But the relevant point (I think) is that most people are, roughly, in the habit of spending until they start running out of money. My opinion about #2 (for which I have pretty good evidence) is that, at least within the range of income I’ve experienced to date, my spending is approximately constant in absolute terms and doesn’t go up much with increasing income or increasing wealth. In particular, I have strong evidence that (1) many people basically execute the algorithm “while I have money: spend some” and (2) I don’t.
(I should maybe add that I don’t think this indicates any particular virtue or brilliance on my part, though of course it’s possible that my undoubted virtue and brilliance are factors. It’s more that most of the things I like to do are fairly cheap, and that I’m strongly motivated to reduce the risk of Bad Things in the future like running out of money.)
Always possible (for people in general, for people-like-me, for me-in-particular). Though, at the risk of repeating myself, I think the failure of sudden influxes of money to make people richer in the long term is probably more a matter of executing that “spend until you run out” algorithm. Do you know whether any of the research on this stuff resolves that question?
I try to use both, and so far as I can tell I’m using both here. I’m not just looking at my model of the insides of my mind and saying “I can see I wouldn’t do anything so stupid” (I certainly don’t trust my introspection that much); so far as I can tell, I would make the same predictions about anyone else with a financial history resembling mine.
Now, for sure, I could be badly wrong. I might be fooling myself when I say I’m judging my likely behaviour in this hypothetical situation on the basis of my (somewhat visible externally) track record, rather than my introspective confidence in my mental processes. I might be wrong about how much evidence that track record is. I might be wrong in my model of why so many people end up in money trouble even if they suddenly acquire a pile of money; maybe it’s a matter of those “breakpoints” rather than of a habit of spending until one runs out. Etc. So I’m certainly not saying I know that me-10-years-ago would have been helped rather than harmed by a sudden windfall. Only that, so far as I can tell, I most likely would have been.
I suggest that people who play the lottery a lot are probably, on balance, exceptionally incompetent, and that those people are probably overrepresented among windfall recipients.
I had a quick look for more information about the effects of suddenly getting money.
This article on Yahoo!!!!! Finance describes a study showing that lottery winners are more likely to end up bankrupt if they win more. That seems to fit with my theory that big lottery wins are correlated with buying a lot of lottery tickets, hence with incompetence. It quotes another study saying that people spend more money on lottery tickets if they’re invited to do it in small increments (which is maybe very weak evidence against the “breakpoint” theory, which has the size-of-delta → tendency-to-spend relationship going the other way—except that the quantities involved here are tiny). And it speculates (without citing any sort of evidence) that what’s going on with bankrupt lottery winners is that they keep spending until they run out, which is also my model.
This paper (PDF) finds that people in Germany are more likely to become entrepreneurs if they have made “windfall gains” (inheritance, donations, lottery winnings, payments from things like life insurance), suggesting that at least some people do more productive things with windfalls than just spend them all.
This paper [EDITED to add: ungated version]looks at an unusual lottery in 1832, and according to ]this blog post finds that on balance winners did better, with those who were already better off improving and those who were worse off being largely unaffected.
[EDITED to add more information about the 1832 lottery now that I can actually read the paper:] Some extracts from the paper: “Participation was nearly universal” (so, maybe, no selection-for-incompetence effect); “The prize in this lottery was a claim on a parcel of land” (so, different from lotteries with monetary prizes); “lottery losers look similar to lottery winners in a series of placebo checks” (so, again, maybe no selection for incompetence); “the poorest third of lottery winners were essentially as poor as the poorest third of lottery winners” (so the wins didn’t help the poorest, but don’t seem to have harmed them either).
Make of all that what you will.
No, even though I speculated that the sentence you’re answering could have been interpreted that way. Just to be clear, the stereotype here is “People who, when said that the general population usually end up bankrupt after a big lottery win, says ‘I won’t, I know how to save’”. Now I ask you: do you think you don’t fit the stereotype?
Anyway, now I have a clearer picture of your model: you think that there are no threshold phoenomena whatsoever, not only for you, but for the general population. You believe that people execute the same algorithm regardless of the amount of money it is applied to. So your point is not “I (probably) don’t have breakdown threshold” but “I (probably) don’t execute a bad financial algorithm” That clarifies some more things. Besides, I’m a little sad that you didn’t answered to the main point, which was “How well do you think you know the inside mechanism of your mind?”
That would be bad bayesian probability. The correct way to treat it is “That seems to fit with my theory better than your theory”. Do you think it does? Or that it supports my theory equally well? I’m asking it because at the moment I’m behind my firm firewall and cannot access those links, if you care to discuss it further I could comment this evening.
I’ll just add that I have the impression that you’re taking things a little bit too personally, I don’t know why you care to such a degree, but pinpointing the exact source of disagreement seems to be a very good exercise in bayesian rationality, we could even promote it to a proper discussion post.
If that’s your definition of “the stereotype” then I approximately fit (though I wouldn’t quite paraphrase my response as “I know how to save”; it’s a matter of preferences as much as of knowledge, and about spending as much as about saving).
The stereotype I was suggesting I may not fit is that of “people who, in fact, if they got a sudden windfall would blow it all and end up no better off”.
Except that you are (not, I think, for the first time) assuming my model is simpler than it actually is. I don’t claim that there are “no threshold phenomena whatsoever”. I think it’s possible that there are some. I don’t know just what (if any) there are, for me or for others. (My model is probabilistic.) I have not, looking back at my own financial behaviour, observed any dramatic threshold phenomena; it is of course possible that there are some but I don’t see good grounds for thinking there are.
As I already said, my predictions about the behaviour of hypothetical-me are not based on thinking I know the inside mechanism of my mind well, so I’m not sure why that should be the main point. I did, however, say ‴I’m not just looking at my model of the insides of my mind and saying “I can see I wouldn’t do anything so stupid” (I certainly don’t trust my introspection that much)‴. I’m sorry if I made you sad, but I don’t quite understand how I did.
No. It would be bad bayesian probability if I’d said “That seems to fit with my theory; therefore yours is wrong”. I did not say that. I wasn’t trying to make this a fight between your theory and mine; I was trying to assess my theory. I’m not even sure what your theory about lottery tickets, as such, is. I think the fact that people with larger lottery wins ended up bankrupt more often than people with smaller ones is probably about equally good evidence for “lottery winners tend to be heavy lottery players, who tend to be particularly incompetent” as for “there’s a threshold effect whereby gains above a certain size cause particularly stupid behaviour”.
Well, from where I’m sitting it looks as if we’ve had multiple iterations of the following pattern:
you tell me, with what seems to me like excessive confidence, that I probably have Bad Characteristic X because most people have Bad Characteristic X
I give you what seems to me to be evidence that I don’t
you reiterate your opinion that I probably have Bad Characteristic X because most people do.
The particular values of X we’ve had include
financial incompetence;
predicting one’s own behaviour by naive introspection and neglecting the outside view;
overconfidence in one’s predictions.
In each case, for the avoidance of doubt, I agree that most people have Bad Characteristic X, and I agree that in the absence of other information it’s reasonable to guess that any given person probably has it too. However, it seems to me that
telling someone they probably have X is kinda rude, though possibly justified (not always; consider, e.g., the case where X is “not knowing anything about cognitive biases” and all you know about the person you’re talking to is that they’re a longstanding LW contributor)
continuing to do so when they’ve given you what they consider to be contrary evidence, and not offering a good counterargument, is very rude and probably severely unjustified.
So you’ve made a number of personal claims about me, albeit probabilistic ones; they have all been negative ones; they have all (as it seems to me) been under-supported by evidence; when I have offered contrary evidence you have largely ignored it.
It also seems to me that on each occasion when you’ve attempted to describe my own position, what you have actually described is a simplified version which happens to be clearly inferior to my actual position as I’ve tried to state it. For instance:
I say: I see … enough evidence that my spending habits are atypical of the population. You say: you, using the inside view, say “using my model of my mind, I say that the extension of the linear model in the far region is still reliable”.
I say, in response to your hypothesis about breakpoints: Always possible (for people in general, for people-like-me, for me-in-particular). and: I might be wrong in my model …; maybe it’s a matter of those “breakpoints” rather than of a habit of spending until one runs out. You say: you think that there are no threshold phoenomena whatsoever, not only for you, but for the general population.
So. From where I’m sitting, it looks as if you have made a bunch of negative claims about my thinking, not updated in any way in the face of disagreement (and, where appropriate, contrary evidence), and repeatedly offered purported summaries of my opinions that don’t match what I’ve actually said and are clearly stupider than what I’ve actually said.
Now, of course the negative claims began with statistical negative claims about the population at large, and I agree with those claims. But the starting point was my statement that “I would do X” and you chose to continue applying those negative claims to me personally.
I would much prefer a less personalized discussion. I do not enjoy defending myself; it feels too much like boasting.
[EDITED to fix a formatting screwup.]
[EDITED to add: Hi, downvoter! Would you care to tell me what you didn’t like so that I can, if appropriate, do less of it in future? Thanks.]