Author Topic: Overheard at Work 2  (Read 341618 times)

Kitsune

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Re: Overheard at Work 2
« Reply #800 on: May 24, 2019, 10:42:57 AM »

I don't think that's unfortunate, that sounds like a prime opportunity to be aware of mass psychology and use it to make the world a better place. Let's make 10% salary 401k participation and organ donation opt-out everywhere!

That is called "nudging", which is generally seen as very bad. Except of course you nudge people towards what you want.

Why is nudging seen as really bad? The British government actually set up a behavioral economics group that was colloquially called ďthe nudge unit.Ē Freakonomics talks about it a lot and I think itís a great thing.

I mean, government, advertising, marketing, and most healthcare practices basically rely on the principle, so... I'd really need a citation on 'seen as very bad'.
Letís take 401k as an example. You have to have a default position, so you can view it as nudging people either way you set it up. Either you set opt-in enroll, in which case you know participation will be lower and therefore you are effectively choosing to nudge people in a direction which is bad for their long-term prospects, or you choose to set it up with auto enroll, nudging people in the direction of helping their future selves.

I see this at work actually. Our cafes offer all sorts of drinks in little glass-fronted fridges. The top part of the glass is clear and shows all manner of flavored sparkling and still water. The bottom half is frosted glass which is where the sodas are hidden. :)

You also see that in home design - you want your house set-up to prompt you to do what you think you should be doing. So some people will put their TV in a piece of closed furniture but leave the books out in the open. People who want to eat as a family will keep space for a cleared-off kitchen table, people who don't care install a counter. People who want to go to the gym in the morning will pre-pack work clothes and lay out workout clothes - it's harder to avoid it when it's already set up.

It's self-nudging, sure, but it's the same concept, and it works as habit-forming.

LennStar

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Re: Overheard at Work 2
« Reply #801 on: May 24, 2019, 11:37:51 AM »
Now that is an interesting reaction. Maybe it's down to US / Europe difference?

When you say nudging here - and people actually know what you are talking about - than it generally bad things that comes to mind. The flashing red "click here" (and give me all your data) button compared to the barely visible "You can also click here" (but we won't get to sell your data damn!) for example.
All that stuff in the supermarket that makes you buy things that you either don't need, not even wanted (placing, light, artificial smells).
And of course, if you have a country where people decide out of your free will, nudging them is the opposite of that - you basically declare that they are too dumb to make a good decision.

That may be right or not, but a use of nudging is often seen as incombatible with democracy. (And I don't even have to point to China and their Social Credit system for the next step of nudging, right?)

Hirondelle

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Re: Overheard at Work 2
« Reply #802 on: May 24, 2019, 11:50:52 AM »
@LennStar I disagree with your opinion about the word nudging in Europe. Although I see where you're coming from with all the uses it has in promoting negative behavior, there's also plenty of nudging research towards positive behavior. E.g. at uni I had classes about how it could help to put fruits/veggies in more visible spots compared to let's say the chocolate bars. Another example is that many local governments and universities in my country have started shifting their catered lunches to vegetarian/vegan by default and people have to opt-in for a meat option (the opposite of what it used to be, where everything was meat/cheese and you had to request vegan food).

Now this may have been particularly related to my academic food/health environment and I don't talk with people about the pros and cons of nudging all day, but I am pretty sure it is not considered a universally bad thing.

I don't consider the Social Credit System a form of nudging btw, as actual nudging doesn't exclude you from any choices - it just changes the default choice. The Social Credit System literally gives you points for good/bad actions, it doesn't make the default choice any different.

Kitsune

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Re: Overheard at Work 2
« Reply #803 on: May 24, 2019, 11:58:46 AM »
Now that is an interesting reaction. Maybe it's down to US / Europe difference?

When you say nudging here - and people actually know what you are talking about - than it generally bad things that comes to mind. The flashing red "click here" (and give me all your data) button compared to the barely visible "You can also click here" (but we won't get to sell your data damn!) for example.
All that stuff in the supermarket that makes you buy things that you either don't need, not even wanted (placing, light, artificial smells).
And of course, if you have a country where people decide out of your free will, nudging them is the opposite of that - you basically declare that they are too dumb to make a good decision.

That may be right or not, but a use of nudging is often seen as incombatible with democracy. (And I don't even have to point to China and their Social Credit system for the next step of nudging, right?)

I mean, some of that may definitely be cultural differences - the stuff in the supermarket, for example, is well-known and generally people roll their eyes about it. Kind of like how most people buy milk and eggs, so the supermarkets put it at the very back to make people walk by everything else and encourage more buying... it's annoying, but just how it is.

However, I just wanna address this: "a use of nudging is often seen as incombatible with democracy" - how things are set up fundamentally affect how people interact with it. It's basic social functionning. For example: do you legislate paid time off for people to go vote? You just encouraged people to go vote! (Do you make voting mandatory? Encouragement! Do you open voting booths for 5 hours during prime work hours? Cheaper, but massive discouragement/suppression. Etc.) Explicitly: we try to set up the society we want to live in, and how it's set up impacts how people behave within it, and the decisions people make.


LennStar

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Re: Overheard at Work 2
« Reply #804 on: May 24, 2019, 12:17:26 PM »
Now this may have been particularly related to my academic food/health environment and I don't talk with people about the pros and cons of nudging all day, but I am pretty sure it is not considered a universally bad thing.

I don't consider the Social Credit System a form of nudging btw, as actual nudging doesn't exclude you from any choices - it just changes the default choice. The Social Credit System literally gives you points for good/bad actions, it doesn't make the default choice any different.

Yeah the Social Credit is a bad example, sorry. It is often clad in nudging language, that is why I got on it.

I also don't go around asking people what they think about nudging. But when that topic comes up it is nearly always the bad things. I am certainly biased here, coming from a political background ;)

Yea, I know about that food thing you described. Placing fruits right at the start, in a nice display, and people get fruits 40% more or so.

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Re: Overheard at Work 2
« Reply #805 on: May 24, 2019, 01:01:59 PM »
I'll just add in that I like to "tax" myself.

For all you libertarians out there who consider taxation to be the same as theft, I'm doing it to my own dang self!

Isn't our key philosophy-- take a sizable chunk of our income and invest it, and voluntarily refrain from doing other things with it-- a form of self-taxation?

TheGrimSqueaker

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Re: Overheard at Work 2
« Reply #806 on: May 24, 2019, 01:06:27 PM »

I don't think that's unfortunate, that sounds like a prime opportunity to be aware of mass psychology and use it to make the world a better place. Let's make 10% salary 401k participation and organ donation opt-out everywhere!

That is called "nudging", which is generally seen as very bad. Except of course you nudge people towards what you want.

Why is nudging seen as really bad? The British government actually set up a behavioral economics group that was colloquially called ďthe nudge unit.Ē Freakonomics talks about it a lot and I think itís a great thing.

I mean, government, advertising, marketing, and most healthcare practices basically rely on the principle, so... I'd really need a citation on 'seen as very bad'.
Letís take 401k as an example. You have to have a default position, so you can view it as nudging people either way you set it up. Either you set opt-in enroll, in which case you know participation will be lower and therefore you are effectively choosing to nudge people in a direction which is bad for their long-term prospects, or you choose to set it up with auto enroll, nudging people in the direction of helping their future selves.

I see this at work actually. Our cafes offer all sorts of drinks in little glass-fronted fridges. The top part of the glass is clear and shows all manner of flavored sparkling and still water. The bottom half is frosted glass which is where the sodas are hidden. :)

Now I'm thirsty for sparkling water.

You nudged me.  And I liked it.  Maybe I'm just a bit of a freak that way.

ysette9

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Re: Overheard at Work 2
« Reply #807 on: May 24, 2019, 02:14:05 PM »
I adore sparkling water!! One of the best perks of work in my opinion is sparkling water on tap.

LennStar

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Re: Overheard at Work 2
« Reply #808 on: May 25, 2019, 12:21:01 AM »
I'll just add in that I like to "tax" myself.

For all you libertarians out there who consider taxation to be the same as theft, I'm doing it to my own dang self!

Isn't our key philosophy-- take a sizable chunk of our income and invest it, and voluntarily refrain from doing other things with it-- a form of self-taxation?

Yes, but it is you doing it!!!
If the government does the same investing, it is always bad because every government worker is a complete idiot that has no idea on what he is working!!!!!

Imma

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Re: Overheard at Work 2
« Reply #809 on: May 25, 2019, 02:09:40 AM »
Now that is an interesting reaction. Maybe it's down to US / Europe difference?



In many other places in Europe nudging seems more acceptable: several countries have an opt-out organ donor system for example.
I can imagine that government social intervention programs might be more cintroversial in your country for historic reasons.

If a company is enrolled in a pension scheme, participation of the individual employees is mandatory and the contribution is automatically deducted from a person's wages. Technically there is a way to opt out, if people really truly want to, but that's not a widely known option and everyone in payroll tries to keep it that way. I would not lie if directly asked but I would never bring it up myself.

zolotiyeruki

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Re: Overheard at Work 2
« Reply #810 on: May 25, 2019, 04:52:36 AM »
If the government does the same investing, it is always bad because every government worker is a complete idiot that has no idea on what he is working!!!!!
Or maybe because the "ROI" of various mandatory "retirement" programs is dismal?

gaja

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Re: Overheard at Work 2
« Reply #811 on: May 25, 2019, 05:14:19 AM »
@LennStar I disagree with your opinion about the word nudging in Europe. Although I see where you're coming from with all the uses it has in promoting negative behavior, there's also plenty of nudging research towards positive behavior. E.g. at uni I had classes about how it could help to put fruits/veggies in more visible spots compared to let's say the chocolate bars. Another example is that many local governments and universities in my country have started shifting their catered lunches to vegetarian/vegan by default and people have to opt-in for a meat option (the opposite of what it used to be, where everything was meat/cheese and you had to request vegan food).

Now this may have been particularly related to my academic food/health environment and I don't talk with people about the pros and cons of nudging all day, but I am pretty sure it is not considered a universally bad thing.

I don't consider the Social Credit System a form of nudging btw, as actual nudging doesn't exclude you from any choices - it just changes the default choice. The Social Credit System literally gives you points for good/bad actions, it doesn't make the default choice any different.

Another datapoint: I work with environmental issues in the Nordics, and we provide classes training people in nudging. It is definetly seen as a positive thing. I guess the difference in perception might be that both we and the health people try to nugde people towards behaviour that everyone agrees is preferrable? (Bike racks closer to the door than parking places for cars, to make it easier to choose the bike. Smaller plates at buffees, to reduce food waste. Double sided printouts as the default option to reduce use of paper. etc.)

flipboard

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Re: Overheard at Work 2
« Reply #812 on: May 25, 2019, 10:52:40 AM »
Now that is an interesting reaction. Maybe it's down to US / Europe difference?

When you say nudging here - and people actually know what you are talking about - than it generally bad things that comes to mind. The flashing red "click here" (and give me all your data) button compared to the barely visible "You can also click here" (but we won't get to sell your data damn!) for example.
All that stuff in the supermarket that makes you buy things that you either don't need, not even wanted (placing, light, artificial smells).
And of course, if you have a country where people decide out of your free will, nudging them is the opposite of that - you basically declare that they are too dumb to make a good decision.

That may be right or not, but a use of nudging is often seen as incombatible with democracy. (And I don't even have to point to China and their Social Credit system for the next step of nudging, right?)

Not at all: the US is full of nudging, most people just don't choose to see it. Some of it is run by private companies - opinions seem to differ on whether letting non-democratically-controlled institutions have such power makes a country better or worse.

Credit Scores?
The way roads and neighbourhoods are designed?
Tax deductions for mortgages?
All the oil-related wars?

RetiredAt63

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Re: Overheard at Work 2
« Reply #813 on: May 25, 2019, 01:56:40 PM »

Not at all: the US is full of nudging, most people just don't choose to see it.

Tax deductions for mortgages?


I've always wondered about that.  Is it an incentive to buy?  Here (Canada) our mortgage interest is not tax-deductible, but houses are not eligible for capital gains or losses either. They are outside that part of the tax world.  They are seen (tax-wise) as homes, not investments.  A second home or cottage is not treated the same, it is subject to all the investment rules.

SwordGuy

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Re: Overheard at Work 2
« Reply #814 on: May 25, 2019, 04:05:55 PM »

Not at all: the US is full of nudging, most people just don't choose to see it.

Tax deductions for mortgages?


I've always wondered about that.  Is it an incentive to buy?  Here (Canada) our mortgage interest is not tax-deductible, but houses are not eligible for capital gains or losses either. They are outside that part of the tax world.  They are seen (tax-wise) as homes, not investments.  A second home or cottage is not treated the same, it is subject to all the investment rules.

The mortgage tax deduction, as written for many years, had the following two purposes:


1) To give people who could afford very expensive homes a very nice tax break and,

2) To convince middle class people who did not understand they wouldn't actually get to use the deduction that they could afford a more expensive house, so the bankers would make more money on interest.


Very few regular folks could take advantage of it.   

RetiredAt63

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Re: Overheard at Work 2
« Reply #815 on: May 25, 2019, 04:41:21 PM »

Not at all: the US is full of nudging, most people just don't choose to see it.

Tax deductions for mortgages?


I've always wondered about that.  Is it an incentive to buy?  Here (Canada) our mortgage interest is not tax-deductible, but houses are not eligible for capital gains or losses either. They are outside that part of the tax world.  They are seen (tax-wise) as homes, not investments.  A second home or cottage is not treated the same, it is subject to all the investment rules.

The mortgage tax deduction, as written for many years, had the following two purposes:


1) To give people who could afford very expensive homes a very nice tax break and,

2) To convince middle class people who did not understand they wouldn't actually get to use the deduction that they could afford a more expensive house, so the bankers would make more money on interest.


Very few regular folks could take advantage of it.   

Given this, I think I prefer Canadian tax policy on houses and mortgages. We can't declare interest*, we can't declare a capital gain or a capital loss.  A house as principal residence is n ot an investment.

People sure do want to own one anyway.


*Well, technically.  You can borrow based on home equity to invest, and then declare that interest.

zolotiyeruki

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Re: Overheard at Work 2
« Reply #816 on: May 26, 2019, 11:26:29 AM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

SwordGuy

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Re: Overheard at Work 2
« Reply #817 on: May 26, 2019, 11:48:08 AM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

Yep, by middle class folks who can't do math and don't understand tax law, who have been brainwashed into thinking it's a good deal for all of them.   


a286

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Re: Overheard at Work 2
« Reply #818 on: May 26, 2019, 01:28:06 PM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

Yep, by middle class folks who can't do math and don't understand tax law, who have been brainwashed into thinking it's a good deal for all of them.
My husband has a coworker who keeps telling him we need to buy because it will save us money on taxes...

zolotiyeruki

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Re: Overheard at Work 2
« Reply #819 on: May 26, 2019, 11:21:13 PM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

Yep, by middle class folks who can't do math and don't understand tax law, who have been brainwashed into thinking it's a good deal for all of them.
My husband has a coworker who keeps telling him we need to buy because it will save us money on taxes...
Well, if renting is the same cost as PITI, he's right.  But I doubt it is.

MoseyingAlong

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Re: Overheard at Work 2
« Reply #820 on: May 26, 2019, 11:41:03 PM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

Yep, by middle class folks who can't do math and don't understand tax law, who have been brainwashed into thinking it's a good deal for all of them.
My husband has a coworker who keeps telling him we need to buy because it will save us money on taxes...
Well, if renting is the same cost as PITI, he's right.  But I doubt it is.

And that's one of the huge misunderstandings in the US. For most (no, I don't have the exact statistic at hand but it's on the IRS website) people in the US, the mortgage interest and property tax deductions do NOT help them at all in reducing their income taxes. The standard deduction is higher than their itemized deductions. That was true under the "old" tax law and is even more true under the "new" tax law with the higher standard deductions.

The HCOL/VHCOL areas have a slightly different issue but most people don't live in those areas. I really wish more people understood how deductions work.

Kitsune

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Re: Overheard at Work 2
« Reply #821 on: May 27, 2019, 11:55:35 AM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

Yep, by middle class folks who can't do math and don't understand tax law, who have been brainwashed into thinking it's a good deal for all of them.
My husband has a coworker who keeps telling him we need to buy because it will save us money on taxes...
Well, if renting is the same cost as PITI, he's right.  But I doubt it is.

And that's one of the huge misunderstandings in the US. For most (no, I don't have the exact statistic at hand but it's on the IRS website) people in the US, the mortgage interest and property tax deductions do NOT help them at all in reducing their income taxes. The standard deduction is higher than their itemized deductions. That was true under the "old" tax law and is even more true under the "new" tax law with the higher standard deductions.

The HCOL/VHCOL areas have a slightly different issue but most people don't live in those areas. I really wish more people understood how deductions work.

I mean, at a baseline, I really wish more people understood how MONEY works.

techwiz

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Re: Overheard at Work 2
« Reply #822 on: May 27, 2019, 12:41:43 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car. 

cloudsail

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Re: Overheard at Work 2
« Reply #823 on: May 27, 2019, 12:47:50 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car.

$240 bi-weekly is $480 a month! That's like, our family's monthly grocery bill!

SpeedReader

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Re: Overheard at Work 2
« Reply #824 on: May 27, 2019, 12:55:22 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car.

$240 bi-weekly is $480 a month! That's like, our family's monthly grocery bill!

The monthly payment on my first house was only just over $500. 

techwiz

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Re: Overheard at Work 2
« Reply #825 on: May 27, 2019, 01:05:25 PM »

The monthly payment on my first house was only just over $500. 

I didn't have the energy or time to try to explain to my co-worker that paying for the first two years of depreciation on a car every two years is a bad economical decision.

SpeedReader

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Re: Overheard at Work 2
« Reply #826 on: May 27, 2019, 01:10:14 PM »

The monthly payment on my first house was only just over $500. 

I didn't have the energy or time to try to explain to my co-worker that paying for the first two years of depreciation on a car every two years is a bad economical decision.

Hey, you tried to help.  And once it was clear the help wasn't wanted, you gracefully stopped.  Sometimes that's the best you can do. 

bluebelle

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Re: Overheard at Work 2
« Reply #827 on: May 27, 2019, 01:24:00 PM »

The monthly payment on my first house was only just over $500. 

I didn't have the energy or time to try to explain to my co-worker that paying for the first two years of depreciation on a car every two years is a bad economical decision.

Hey, you tried to help.  And once it was clear the help wasn't wanted, you gracefully stopped.  Sometimes that's the best you can do.


LennStar

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Re: Overheard at Work 2
« Reply #828 on: May 27, 2019, 01:31:34 PM »
$240 bi-weekly is $480 a month! That's like, our family's monthly grocery bill!

That's like 10 times of my payments (calculatory depreciation) if my car holds itself as good as I hope (and tests say it should)!

redbird

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Re: Overheard at Work 2
« Reply #829 on: May 27, 2019, 03:22:06 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car.

$240 bi-weekly is $480 a month! That's like, our family's monthly grocery bill!

What's really scary is comparing it directly to a car. I bought a 2010 Prius approximately 4 years ago. I paid about $11k for it in cash. 48 months x $480 = $23,040. So in 4 years of owning my Prius, I've saved over $12k compared to that guy. For every year I keep my Prius, I'm saving over $5700/year compared to him.

He may be (probably is) driving a nicer car than me, but still. That $$ adds up really fast. Also, a Prius may be boring, but the gas efficiency, the cheap maintenance (it's a reliable Toyota, hasn't had any issues, just pay for regular expected maintenance), and the surprising amount of carrying capacity thanks to the hatchback is amazing. I love my "boring" and "old" car. And I get to keep $480/month too! Wow. ;)

ixtap

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Re: Overheard at Work 2
« Reply #830 on: May 27, 2019, 04:09:02 PM »
I am so far gone I don't even understand wanting a new car every two years. I actually like being familiar with my car!

OtherJen

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Re: Overheard at Work 2
« Reply #831 on: May 27, 2019, 07:24:05 PM »

The monthly payment on my first house was only just over $500. 

I didn't have the energy or time to try to explain to my co-worker that paying for the first two years of depreciation on a car every two years is a bad economical decision.

I don't even bother trying to explain this to my parents and in-laws.

js82

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Re: Overheard at Work 2
« Reply #832 on: May 27, 2019, 07:28:01 PM »
Now this may have been particularly related to my academic food/health environment and I don't talk with people about the pros and cons of nudging all day, but I am pretty sure it is not considered a universally bad thing.

I don't consider the Social Credit System a form of nudging btw, as actual nudging doesn't exclude you from any choices - it just changes the default choice. The Social Credit System literally gives you points for good/bad actions, it doesn't make the default choice any different.

Yeah the Social Credit is a bad example, sorry. It is often clad in nudging language, that is why I got on it.

I also don't go around asking people what they think about nudging. But when that topic comes up it is nearly always the bad things. I am certainly biased here, coming from a political background ;)

Yea, I know about that food thing you described. Placing fruits right at the start, in a nice display, and people get fruits 40% more or so.

Good nudging is not coercive - it still allows the individual to maintain their freedom of choice, but tends to steer them in the direction of the decision with the better long-term outcome

Most of the "good" examples of nudging take one of two forms:
-Make the "best" choice(subjective) the default choice - e.g. opt-out vs. opt-in systems
-Make it minimally burdensome to make the "good" decision - eliminate as many barriers as possible that might otherwise deter someone from the desired behavior.  (and conversely, potentially make it slightly more difficult to achieve the undesirable behavior)

A good "nudging" system isn't punitive - it preserves free will while generally improving outcomes for those who make the "lazy" choice (or non-choice), and makes good choices "easier" to make than bad ones.

For those in this thread unfamiliar with the subject, Richard Thaler's books ("Misbehaving" and "Nudge") are an excellent place to pick up the basics of behavioral economics and origin of the concept of nudging.

SwordGuy

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Re: Overheard at Work 2
« Reply #833 on: May 27, 2019, 07:31:55 PM »

The monthly payment on my first house was only just over $500. 

That was the principal and interest on our first house, at 9 3/8ths percent interest!   Yikes!   

Step37

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Re: Overheard at Work 2
« Reply #834 on: May 27, 2019, 10:24:09 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car.

$240 bi-weekly is $480 a month! That's like, our family's monthly grocery bill!

Actually, $520/month. (26 payments per year)

My god, I canít believe how commonly people make these astonishingly terrible decisions. And then complain about being broke.

Linea_Norway

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Re: Overheard at Work 2
« Reply #835 on: May 27, 2019, 11:48:13 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car.

$240 bi-weekly is $480 a month! That's like, our family's monthly grocery bill!

Actually, $520/month. (26 payments per year)

My god, I canít believe how commonly people make these astonishingly terrible decisions. And then complain about being broke.

I do agree that leasing a car is not profitable in the long run.

But if I calculate how much our main car has depreciated through the years, we have have also paid a pretty large sum for the car per year. In our case, we paid cash for a brand new car, so the money was fully spent at the time we bought it. Now we only pay for maintenance. But maybe it is first now, 10 years old, that the car has stopped depreciating so much per year.

SwordGuy

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Re: Overheard at Work 2
« Reply #836 on: May 28, 2019, 12:01:38 AM »
But if I calculate how much our main car has depreciated through the years, we have have also paid a pretty large sum for the car per year. In our case, we paid cash for a brand new car, so the money was fully spent at the time we bought it. Now we only pay for maintenance. But maybe it is first now, 10 years old, that the car has stopped depreciating so much per year.

Basically, when I buy a car I assume the resale value is $200, regardless of whether I paid $3500 for it or $16,000 for it.   

That's because I won't even consider selling it until it's worth that much or less.  I will drive that vehicle into the ground.   

So, for me, all depreciation comes on day 1.   I buy when I have to and not before, so, since I have to buy a car, I don't get bothered because it will lose value.  It has no monetary value to me.  It's an expense that provides transportation.

The only reason I would consider it for net worth purposes would be if I had a loan on it.   At that point it would be worth the lessor of 80% of what I paid for it or the balance of the loan.  That's because I could, in principle, sell it to discharge the car debt.  I now pay cash for the cars so I haven't had to do this calculation in 10 years.



jinga nation

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Re: Overheard at Work 2
« Reply #837 on: May 28, 2019, 05:51:30 AM »
doesn't matter if it's $480 or $520 per month.

It's $ X/month ONLY. Keyword ONLY.
 
That softens the blow and makes the swallowing/shafting palatable.

ONLY = salesman talk for "Let me gently bend you over. I'll throw in mats and pinstriping for free."

accountingteacher

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Re: Overheard at Work 2
« Reply #838 on: May 28, 2019, 06:33:14 AM »
I am so far gone I don't even understand wanting a new car every two years. I actually like being familiar with my car!

I feel that way about phones.  When most people are exchanging theirs, I've just finished setting mine up the way I like it!

zolotiyeruki

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Re: Overheard at Work 2
« Reply #839 on: May 28, 2019, 09:16:00 AM »
I am so far gone I don't even understand wanting a new car every two years. I actually like being familiar with my car!
Especially since I do 90% of my own car maintenance/repair, tenure is a huge benefit.  Not only do I know where everything is and how to get it on/off, I'm also the last person to remove and replace those nuts and bolts, which means they haven't been over-torqued, and likely have anti-seize on them!

a286

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Re: Overheard at Work 2
« Reply #840 on: May 28, 2019, 11:29:36 AM »
I've always wondered about that.  Is it an incentive to buy?
I'm not quite as cynical as SwordGuy and RetiredAt63, or at least not as outwardly cynical. :)

As I understand it, the "nominal" purpose of the mortgage interest deduction is to encourage homeownership in general, because homeownership rates are correlated with a better economy.  IMO, policymakers have it backwards (a robust economy leads to higher homeownership, not vice versa), but like many entitlements/giveaways/deductions/credits/etc has metastasized to the point that getting rid of it would cause a huge uproar.

Yep, by middle class folks who can't do math and don't understand tax law, who have been brainwashed into thinking it's a good deal for all of them.
My husband has a coworker who keeps telling him we need to buy because it will save us money on taxes...
Well, if renting is the same cost as PITI, he's right.  But I doubt it is.

And that's one of the huge misunderstandings in the US. For most (no, I don't have the exact statistic at hand but it's on the IRS website) people in the US, the mortgage interest and property tax deductions do NOT help them at all in reducing their income taxes. The standard deduction is higher than their itemized deductions. That was true under the "old" tax law and is even more true under the "new" tax law with the higher standard deductions.

The HCOL/VHCOL areas have a slightly different issue but most people don't live in those areas. I really wish more people understood how deductions work.

I mean, at a baseline, I really wish more people understood how MONEY works.
If only...

I left out the other half of what that coworker says, which is that the deductions also mean we can buy an even bigger house!

Were in the Denver metro,  so rent is high but houses are higher. Though weve gone with option 3, which is staying with my in laws. Obviously that's not an option for everyone. We pay them rent each month plus contribute to other things like groceries andsuch, and help them with projects around the house. In the mean time we have paid off student loans, two unmustachian vehicles, paid cash for our wedding, and now have a nice downpayment fund we keep adding to as we begin house hunting (or debate moving out of state which is on the table).

mm1970

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Re: Overheard at Work 2
« Reply #841 on: May 28, 2019, 02:27:22 PM »
Co-worker was ticked off at the dealership this morning. He had made a deal to renew his lease on a new CR-V and they just texted him that the red one he wanted was not available. As I talked with him I got the background of this story. His currently leased car had a recall and the dealership convinced him to just renew his lease and get a new one since he could keep the same payments.

Me: Sorry man, dealerships are the worse I would say if they don't have the red one you should just cancel the whole deal. The recall is free anyways just get them to fix it and keep your current one, don't rush into a new lease just because of a recall.
Co-worker: No way, it's also due for maintenance of about $200. Well I guess I will just settle for the sliver one.
Me: Have you ever thought about not leasing and own your car and drive it until it stops running.
Co-worker:  I will never own a car I like the fact that I get a new car every two years by leasing and besides my payments are only $240 bi-weekly and they aren't going up, why would anyone stay with a older car.
Me: (After giving up on changing his mind on leasing) I am sure you will like the sliver one, congrats on the new car.

I dunno, 10-15 years of no car payment?

Freedomin5

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Re: Overheard at Work 2
« Reply #842 on: May 29, 2019, 11:44:53 PM »
Overheard a guy telling his friends about his shoes. One friend asked him how much they cost. His response: ď•8000...Iím not really sure, I didnít really pay attention when I was paying.Ē

Thatís about $1300 USD. Thatís more than a typical personís monthly salary here.

Boll weevil

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Re: Overheard at Work 2
« Reply #843 on: May 30, 2019, 08:39:17 AM »
Overheard a guy telling his friends about his shoes. One friend asked him how much they cost. His response: ď•8000...Iím not really sure, I didnít really pay attention when I was paying.Ē

Thatís about $1300 USD. Thatís more than a typical personís monthly salary here.

I'm assuming that's Chinese Yuan? The same symbol is used for Japanese Yen, which at today's exchange rates comes out to less than $75

LennStar

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Re: Overheard at Work 2
« Reply #844 on: May 30, 2019, 08:55:18 AM »
Overheard a guy telling his friends about his shoes. One friend asked him how much they cost. His response: ď•8000...Iím not really sure, I didnít really pay attention when I was paying.Ē

Thatís about $1300 USD. Thatís more than a typical personís monthly salary here.

I'm assuming that's Chinese Yuan? The same symbol is used for Japanese Yen, which at today's exchange rates comes out to less than $75

I guess that's it, it means Yuan. I ran into the same trap ^^ and did a hah??? until I realized.

Freedomin5

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Re: Overheard at Work 2
« Reply #845 on: May 30, 2019, 09:27:25 AM »
Overheard a guy telling his friends about his shoes. One friend asked him how much they cost. His response: ď•8000...Iím not really sure, I didnít really pay attention when I was paying.Ē

Thatís about $1300 USD. Thatís more than a typical personís monthly salary here.

I'm assuming that's Chinese Yuan? The same symbol is used for Japanese Yen, which at today's exchange rates comes out to less than $75

I guess that's it, it means Yuan. I ran into the same trap ^^ and did a hah??? until I realized.

Yes, yuan/kuai/RMB. Thatís why I included the conversion to USD as well. Though $75 for a pair of sneakers is still quite a lot.

cloudsail

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Re: Overheard at Work 2
« Reply #846 on: May 30, 2019, 11:53:05 AM »
Overheard a guy telling his friends about his shoes. One friend asked him how much they cost. His response: ď•8000...Iím not really sure, I didnít really pay attention when I was paying.Ē

Thatís about $1300 USD. Thatís more than a typical personís monthly salary here.

I'm assuming that's Chinese Yuan? The same symbol is used for Japanese Yen, which at today's exchange rates comes out to less than $75

I guess that's it, it means Yuan. I ran into the same trap ^^ and did a hah??? until I realized.

Yes, yuan/kuai/RMB. Thatís why I included the conversion to USD as well. Though $75 for a pair of sneakers is still quite a lot.

The way that the Chinese middle class and younger generation spend on consumer goods is just insane. Sadly, they've really bought into that aspect of American culture with a vengeance. Living above your means and taking consumer loans is now considered normal :(

nouveauRiche

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Re: Overheard at Work 2
« Reply #847 on: June 01, 2019, 06:47:42 PM »
I am so far gone I don't even understand wanting a new car every two years. I actually like being familiar with my car!

+1 

I dread getting something with a !#$% touch screen and I don't want to worry about dents and scratches.  We buy our cars "pre-dented".

I kept my last two cars for 10+ years each (after purchasing used).

Also haven't had a car payment since 1997 and *that* was $115 / month.

nouveauRiche

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Re: Overheard at Work 2
« Reply #848 on: June 01, 2019, 08:38:54 PM »
On topic: 

I know someone who was let go from a job.  He told me that they closed his 401k and gave him a check.  I said, "Did you roll it into an IRA?"  Nope.  "I needed the money."  Facepalm.

six-car-habit

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Re: Overheard at Work 2
« Reply #849 on: June 01, 2019, 09:41:40 PM »
On topic: 

I know someone who was let go from a job.  He told me that they closed his 401k and gave him a check.  I said, "Did you roll it into an IRA?"  Nope.  "I needed the money."  Facepalm.

April 15th 2020 - Big tax bill due - did you mention this to him ? .
   Co-workers relative cashed in a $100K+   / 401K balance, when he got frustrated with his job and quit. Had a grand 'ol time for a few months, Big truck, party everyday.  Got hired back at the same employer, he was a good worker.  They recently fired him [ was on "new hire" probabtion ]  - His $30K outstanding debt to the IRS was one of the reasons cited. [security clearance] . Big truck is long gone as well.