A couple of items from my favorite behavioral economist, Dan Ariely.
In today’s Wall Street Journal, Dan was asked the following question:
I live in a city with mediocre public transportation, so I’m thinking of buying a car to help me get around. Should I buy a car with a stick shift or an automatic transmission?
My first thought (well to be honest, my only thought) was to go with the automatic, since driving in the city with a stick shift would require a lot of work because of all the stopping and starting.
But Dan saw all that stopping and starting and shifting as a perfect way to avoid texting while driving. Since people have a greater tendency to check their phones when they are stopped, city driving may encourage lots of phone checking. However, if you are driving a stick shift, both of your hands are going to be occupied, one on the wheel and one on the shift. Problem solved.
I guess coming up with clever solutions like this is why Dan has several best selling books and a popular TED video. I’ve got a blog with 55 followers…
Another letter to Dan in today’s paper was the following:
Three years ago, my youngest son was given a bitcoin as a gift for his bar mitzvah. Since then, he has seen the bitcoin’s value climb a few thousand dollars in a week and then go down again. He is considering selling, but he is afraid the digital currency will keep going up—or that it will soon go down and he will lose a bunch of money. What should he do? How can I teach him about being a wise investor?
I wasn’t all that interested in Dan’s response to this one, since I couldn’t get past the first sentence:
Three years ago, my youngest son was given a bitcoin as a gift for his bar mitzvah.
My first thought when I read that opening sentence was that someone had given this young man a bar mitvah gift that was worth several thousand dollars.
But then I went back and checked the value of a bitcoin from three years ago, and it was around $200-400. Now that is still a very generous gift, and perhaps has taught the young man a lesson in valuation.
I also thought about what might have happened if all the boy’s friends (assume 50) at the bar mitzvah had given him a bitcoin. Just last month, those bitcoins would have been worth close to $1,000,000.
Not too shabby for a 16-year old. If he got out at bitcoin’s peak, he’d be able to buy all his 50 of his bar mitvzah friends a car.
Just make sure it was a stick shift. Maybe he could even splurge on a Hurst.