November 24, 2014

The Good and Bad of Social Capital

Social Capital

As I've grown older, I find myself fascinated by the power of social capital; specifically, how it encircles the person who possesses it with a halo that sets them apart from society even when they are far from the only snowflake.  People often mistake fame with competency or ability.  This tendency is part of human nature so it shows up in every field and across every discipline. Take social capital in investing.  While Warren Buffett is constantly called the greatest investor alive by the ma … [Read more...]

Roughly 44% of American Households Have Less Than 3 Months’ Savings

Treading Water In the Deep End Short Term Liquidity Households American

The Corporation for Enterprise Development has released its findings on the state of American family's short-term liquidity reserves.  Short-term liquidity, which includes things that can be tapped in an emergency or in the event of job or income loss, is the margin of safety a household builds for itself to get through economic storms, which will inevitably happen.  (Truth be told, a recession should happen sooner rather than later as we're due for one sometime in the next year or two if histo … [Read more...]

Where Do the Top 5% of American Families Live?

Geographic Concentration of High Income Households United States Census Bureau

I just posted about the recent release of a long, in-depth paper by the U.S. Census Bureau on household income in the United States, but there is another report, which spans only a few pages, that is also a lot of fun.  It's called The Geographic Concentration of High-Income Households: 2007-2011. The U.S. Census Bureau looked at where high income households concentrate themselves, examining data from 2007-2011 to break down specific counties that have both a disproportionate share of, and a h … [Read more...]

Income and Poverty in the United States – 2013 Edition

Income and Poverty in the United States 2013 Census Bureau

The United States Census Bureau released a report this month called Income and Poverty in the United States: 2013 [PDF].  It is a treasure trove of data on household income by race, gender, age, quintile, and year (it goes back generations so you can compare over time).  You'll want to download it, save it, and go through the whole thing yourself to better understand how much the typical American family is earning each year before taxes. We talked about gamification in the comments of a post t … [Read more...]

The Federal Reserve Has Released the 2013 Tri-Annual Survey of Consumer Finances

Federal Reserve Survey of Consumer Finances

The Federal Reserve 2013 data detailing changes in household wealth, income, and other statistics is now public and you can go here to download the spreadsheet files and other resources or read the 41-page summary detailing the changes over the past three years since the last survey was released [PDF]. Here is a paraphrased summary of some of the highlights from the report: In the past 3 years, average family income rose by 4% inflation-adjusted but median family income declined 5% in real … [Read more...]

Why Does the Subsidized Hardware Model Bother Me So Much?

Amazon Kindle Fire HDX 7 inch.jpg

It's no secret I read a lot.  In the past seven days alone, I've finished 4 books totaling 1,067 pages, as well as worked on three other books which, between them, probably account for another 500+ pages finished but not in the tally.  (I only know this because, at least a few times a week, it seems like I get a request for a list of my books or what I'm working through at the time.  Back in June, I began building a spreadsheet to track my content consumption, figuring if I could stick with it lo … [Read more...]

Should Government Benefits Be Tied to Behavior and Decisions?

EBT Card

I don't talk about it very often, but one of the charitable organizations close to my heart are community food banks and soup kitchens.  These non-profits collect groceries for those who can't afford to feed themselves or their children, allowing them to avoid hunger.  They resonate with something very deep in my core, maybe because I love cooking so much, but it strikes me as morally inexcusable for an American child to starve while living among the greatest aggregation of wealth ever amassed by … [Read more...]

The Economics of the Movie Theater Industry Will Be Interesting Over the Next 25 Years

AMC Prime Theater Buildings

The economics of the movie theater industry are interesting.  In many cases, up to 70% of the ticket price goes to the movie studio that created the film and the distributor who sold the rights to it, leaving the remaining 30% for the owners.  This creates a situation where most of the profit comes from concession sales.  Without $8 popcorn and $5 beverages, the doors would close, the staff would be sent home, and you'd no longer have a cinema in your hometown.  (This is one of the reasons that w … [Read more...]

Lies, Damned Lies, and Statistics

Wal-Mart 401(k) Plan Adjustments

As an investor, you can make a lot of money if you are adept with numbers.  This skill can let you see what is really going on and create mathematical models that maximize your earnings.  There is a little known story that Warren Buffett was once in a meeting for Blockbuster, the movie rental chain that is now bankrupt.  During a presentation pitching the merits of the firm's value as an investment, growth rate projections were given.  Buffett was said to have flipped over an envelope, per … [Read more...]

My Quarterly Project: Studying Counter-Evidence in Economics and Sociology

Dow 36,000

During my free time for the next few months, I'm practicing "counter evidence" a la the John Stuart Mill school of thought.  This means reading some texts far outside of the mainstream on a wide range of topics, including a few of the most illogical, discredited, and frankly, unhinged, books, essays, and speeches you'll ever encounter. The purpose is three-fold.  First, it allows me to sift through the mess and find one or two good ideas, which are almost inevitably buried in there somewhere. … [Read more...]