I have always been an ardent fan of solar power, ever since that balsa wood solar powered toy boat I built in elementary school. Free, unlimited and clean power would change the world if and when it can made practical. As I was preparing for a series of lectures on Cost-Benefit Analysis (CBA) for the … Continue reading Solar Power in New York: A Foggy View?
Many of the most important decisions we make involve trade-offs between the present and future. How much of my income should I save today for my retirement? What costs should governments incur today to reduce the risk of catastrophic climate change in the (hopefully) distant future? How should businesses allocate investments that pay off in … Continue reading Future & Present: Where Brains, Math and Ethics Collide
My family recently faced a bit of drama when my daughter was accepted to both a great state school and a wonderful, but much more expensive, private school . Naturally, my daughter strongly preferred the latter. As a finance guy with what I’d like to think is a disciplined approach to decision-making, how could I … Continue reading Why We Chose a College With Massively Negative Return on Investment
Rationality is supposed to be integral to our humanity. Indeed, the “sapiens” in homo sapiens is from the new Latin sapere, meaning know, learn and know how. As a matter of fact, our subspecies is actually homo sapiens sapiens. Does this mean we have twice the intellectual capacity of our extinct ancestors from the Pleistocene? … Continue reading Rationality: Our Humanity, Our Planet
One of the most important and surprising things I’ve learned about decision-making is that we rely on, even require gut feelings to make important decisions about the future. Naqiv, et. al. (2006) write about findings in neuroscience that support the somatic-marker hypothesis, which suggests that when we make decisions under uncertainty, we choose among different … Continue reading We Use Feelings to Make Decisions, and that’s OK
Can we design decision tools to offset or even leverage the hurdles that our brains put in front the most important decisions that we face? Take planning and saving for a comfortable retirement. How much and in what one invests are two of the most important decisions any adult needs to make and take responsibility for. “Do your … Continue reading Can Robots Save Us?
There are three things we need to make wise and rational decisions with confidence: time, information and smarts. Unfortunately, as mere humans, we know that these resources are in short supply. Indeed, the vast range of choices we have to make daily and the overwhelming influx of information and stimuli can limit or confuse all … Continue reading Push the Limits on Rational Decision-Making
Cognitive biases, prejudices and short-cuts, are bad, right? Anything that gets in the way of making rational decisions necessarily reduces our welfare. Our natural inclination towards the current moment, aversion to loss, inattention and procrastination leads many of us to under-save for retirement, with potentially disastrous consequences for ourselves and society. Do these self-sabotaging biases … Continue reading Cognitive Biases: Flaw or Feature?
A bias is an unconscious, natural and immediate prejudice or tendency to a particular action. Bias-driven decisions may or may not be consistent with that which may result from a more deliberative or thoughtful process. Biases can be harmful: think of prejudices in employment, housing and education. They can be helpful as when we slam on … Continue reading Bias Among Us: How to Influence Others & Ourselves
My college-era friends enjoy reminding me of the time decades ago when I sent the waiter at a fancy restaurant away several times as I struggled to select an entrée from the menu. It was an important decision for me: the dinner out was a rare splurge to celebrate graduation with close friends who were about … Continue reading Your Decision-Making Personality: Myers-Briggs & TAIS