Annamaria Lusardi, one of the leading academic lights of financial literacy, has begun a new Financial Literacy Center.
Via the Wall Street Journal, here’s further evidence that companies “tweak” quarterly earnings numbers. Joseph Grundfest and Nadya Malenko analyzed almost half a million earnings reports from 1980-2006. They discovered that when companies want to appear more successful than they are, they often massage their per-share earnings numbers upward by a tenth of one cent.
In today’s Wall Street Journal, E.S. Browning has written a quietly important article (gated) about the fact that stock-market returns are almost never adjusted for inflation. While most shrewd investors factor in this omission, my sense is that a great many people never think about it, and therefore significantly overestimate their investment gains.
There’s a strange view out there that with unemployment above ten percent, and inflation nascent, the Fed should be thinking about raising interest rates. Yesterday Philadelphia Fed President Charles Plosser attempted to explain his view:
We blogged a while back about the sad state of financial literacy in this country. This has been diligently investigated by Annamaria Lusardi and Olivia S. Mitchell, who insert a few financial questions in government longitudinal surveys. Here’s an example.
For college students and their parents, the steady spike in tuition prices in recent decades has been not only troubling but mysterious: why on earth is tuition inflation double the general inflation rate? What’s behind these huge tuition bills: Massive legacy costs? Less public funding? The cost of acquiring real estate? While none of those reasons are necessarily off the . . .
I wrote a book on the underground economy a few years ago. For about a decade, I observed activity in Chicago’s South Side — our current president’s backyard. I was surprised to learn about the importance of “creditors” — otherwise affectionately known as “loansharks” — who operated an informal lending network in the area. (These people are known for charging . . .
Some people invest in stocks, others invest in lobbyists. Still others, The Wall Street Journal reports, are investing in assault rifles. Just as Slate laments spring as the start of gun season, Freakonomics readers might find more to worry about with the start of swimming pool season. [%comments]
Aaron Zelinsky is a Yale law school student with a knack for coming up with interesting ideas. Last year, I blogged about his proposal for fighting steroid use in sports if the governing bodies really cared. Now, on the Huffington Post, he has an interesting angle on how the federal government might stop the A.I.G. bonuses that have everyone so . . .
University of Chicago Professors Douglas Diamond and Anil Kashyap, whose description of the causes of the financial crisis is the most widely circulated post ever to appear on this blog, are back to explain the Geithner Plan in simple-to-understand terms, along with what they do and don’t like about it. For this post, they’ve also drafted highly respected Chicago economist . . .
My former student Sean Harper has put together a nifty little web site, truecostofcredit.com, that allows you to see how much merchants are charged when you use your credit card. I was surprised at how high the fees were. For instance, in this example of a Mastercard, when you buy a $1.50 pack of gum at a convenience store, the . . .
Sudhir Venkatesh‘s book “Gang Leader for a Day,” originally published last January, is now out in paperback. You can read reviews of it here, here, and here; and The Economist named it a book of the year. Robert Rosenkranz has proposed means of financial market regulation. His Wall Street Journal op-ed offers redress for the abysmal behavior of credit agencies, . . .
In early December, I spoke at a Yale Law School breakfast on the current financial crisis — focusing on Robert Shiller‘s book, The Subprime Solution. (Several of my earlier posts — here and here — were actually preparation for my presentation.) The first question to Shiller from the audience began: “Lots of my investment-banker friends are saying: Dubai, Shanghai, Mumbai, . . .
I’m wondering if any blog readers can explain something to me. Back in the old days, banks didn’t package and resell the mortgages they wrote. So when a homeowner got into trouble, they could go down and talk with the bank about working out some solution other than foreclosure. For instance, the bank could allow the borrower to pay back . . .
Economic historian Price Fishback, who recently guest blogged about the original Home Owners’ Loan Corporation, is back for an encore. This time, he tackles the issue of whether the New Deal and World War II are good examples of Keynesian stimuli. If you want to see these sorts of issues tackled in greater detail, check out Newdeal2. I always thought . . .
In my last post, I focused on what we still don’t know about the causes of the subprime crisis. But here I’ll tell you about six solutions proposed by Robert Shiller in his book The Subprime Solution. (He has also recently published an op-ed in The Washington Post and an op-ed in The Wall Street Journal.) Shiller separates the short-term . . .
My friend who reviews New York City cafes came across this at Bouchon Bakery in the Time Warner Center: Photo: Ana Dane According to Bouchon’s website: “Some people wish for their pets to take as much pleasure in food as they themselves do.” But are excesses like this actually selling right now? A recent survey by American Express Publishing and . . .
The 8th installment in Bob Dylan‘s “bootleg” series is a two-disc set called Tell Tale Signs, and it is set to be released next Tuesday (October 7). But until then, you can listen to it for free on National Public Radio, here. Yep, free. But as I understand it, this only lasts until the official release next week. I just . . .
So the bailout proposal before Congress seems to have been rejected because legislators were worried that voters back home saw it as a bailout of Wall Street at the expense of Main Street. Is such a fear rational? It may be that voters simply don’t understand or believe that a broader Wall Street failure could quickly trickle down and harm . . .
A revised bailout plan has been announced, and President Bush has thrown his weight behind it. To my eye, the rewriting of Paulson‘s plan this past week has been worthwhile; and the final plan, while imperfect, is a useful step forward, and a clear improvement on the original plan in terms of likely effectiveness, cost to the taxpayers, accountability, fairness, . . .
Not long ago, I wrote about the sad state of financial literacy in the U.S., and how some people, like Annamaria Lusardi of Dartmouth, are proposing widespread education to fix the problem. But in a brief Money magazine Q&A, Lauren Willis, who teaches financial-products regulation at Loyola Law School, says that’s a waste of time. Excerpts: Q: What’s so bad . . .
As an economist, I am supposed to have something intelligent to say about the current financial crisis. To be honest, however, I haven’t got the foggiest idea what this all means. So I did what I always do when something related to banking arises: I knocked on the doors of my colleagues Doug Diamond and Anil Kashyap, and asked them . . .
Suze Orman If you’ve ever tried to give yourself a bit of financial literacy, you’ve probably come across something on the subject by Suze Orman. And if you’ve read some of Orman’s books, you may know about her first job as a waitress in Berkeley and how she got swindled out of an early investment, which made her want to . . .
Let’s begin with two questions: 1. Do you consider yourself financially literate? 2. If so, how did you get that way? And now, a third question: 3. How important is widespread financial literacy to the health of a modern society? Before you answer the first question, take this little quiz, borrowed from the website of Annamaria Lusardi, a professor of . . .
These days, many Americans — including Mike Bloomberg and Chuck Schumer — fear the answer to that question will soon be “no,” if it isn’t already; London is poised to take over. An article [gated] in today’s Wall Street Journal about the credit crunch’s effect on the U.K. economy offers this sobering fact: The financial sector accounts for more than . . .
I had the pleasure of visiting Dubai for the first time last week. The city is a wonderful example of unintended consequences; because it had the misfortune of almost running out of oil, it was forced to create other ways of generating income. It has since made huge investments in both tourism and the financial sector. Although I didn’t get . . .
Are performance-based pay structures partly to blame for the mortgage crisis? Do our tastes in entertainment correspond to our political views? Do behavioral problems in kindergarten affect future school performance? Are there hazards to washing your hands? (Earlier)
Easy credit also bad for bankruptcies. Gathering data on late adopters. (Earlier) Should people in poor health be allowed to donate organs? (Related)