michaelsullivan

So one of the major issues I've identified with why our gut feelings don't always match with good expected utility models is that we don't live in a hypothetical universe. I typically use log utility of end state wealth to judge bets where I am fairly confident of my probability distributions as per Vaniver in another comment.

But there are reasons that even this doesn't really match with our gut.

Our "gut" has evolved to like truly sure things, and we have sayings like "a bird in the hand is worth two in the bush" partly because we ar... (read more)

Of course, but in relative terms he's still right, it's just easier to see when you are thinking from the point of the hungry hobo (or peasant in the developing world).

Standing from the point of view of a middle class person in a rich country looking at hypothetical bets where the potential loss is usually tiny relative to our large net worth+human capital value of >4-500k, then of course we don't feel like we can mostly dismiss utility over a few hundred thousand k, because we're already there.

Consider a bet with the following characteristics: You are... (read more)

I think you're downplaying the chances that a singularity does happen in my lifetime. 90% of experts seem to think it will.

I don't. (Edit: I meant this as "I don't think I am downplaying the chances", not "I don't think the singularity will happen")

It's true that I disagree with your experts here, and Lumifer speaks to some of my reasons. I even disagree with the LW consensus which is much more conservative than the one you quote.

That said, even taking your predictions for granted, there are still two huge concerns with the singul... (read more)

thanks for the links -- although I think some of the people in Millionaire Next Door skirt closer to what OP was referring to -- people who never spend money, not to retire early or do something interesting with their money, but just to hoard it.

I have known a few people who I considered pathological savers -- people who, like the fictional Scrooge, seem to save for the sake of saving, and do not ever enjoy the wealth they have created, nor do they turn it to a useful purpose in the world via large charitable donations. This is very rare in my experience, however. The only people i have known like this are in the generation that grew up during or shortly after the Great Depression.

Agreed that inflation adjustment is important -- it usually makes sense to annuitize a portion of your portfolio to reduce longevity and market risk. The ballpark I was using is based on a 1% per year increase. hedging more against inflation with a higher escalator or CPI adjustment would be more expensive. Not adjusting at all would be less.

On housing -- it doesn't always make the most sense from a financial standpoint to pay off your mortgage. If you do, on the one hand, that's less money that you need for living expenses, on the other hand, it's ... (read more)

To answer your specific question, there are a bunch of potential alternatives.

You can use a Roth IRA to have access at least to your contributions without penalty, and have tax deferral and tax free earnings.

You should probably put enough to get the full match into your 401k no matter what, as long as you expect to become vested for the company contribution, since taking that out early and paying penalties is still a win versus forgoing the free money your employer is offering.

You can invest in plain old retail investment accounts. You will pay tax every ... (read more)

In a relatively healthy economy, to a first approximation in the medium and long term, the amount of money you make approximates how much good you are doing. As a liberal, I'll be the first to say that this has a lot of flaws as a benchmark, but in general, if you cannot find people willing to pay for, or donate to support what you are doing without you having to live on ramen forever, there has to be some question about whether what you are doing is providing value to the world comparable to a standard job in tech, finance, sales or a professional discipline, as long as you are moderately careful about who you work for in the latter cases.

Outside view of your 1 2, 3 and 4: most people end up in trajectory number 4, so thinking this is the least likely scenario needs some really good evidence.

In particular let's look at 1: How do you plan on an event that has a reasonable probability of not happening in your lifetime, and about which you know relatively nothing (if we could well predict what will happen on the other side, it won't be anything like a singularity).

Who is to say that a singularity results in happiness for everyone -- even for a positive one? From the standpoint of someone ... (read more)

I think it is partly about mixup, and partly because many people don't think clearly about their financial planning until forced to. If someone who makes 100k+ and spends most of it wants to retire in the same style they are used to living, they may well need 2-4M to do so comfortably and safely if retiring early. Social security is progressive, the max you can get as a single person is around 42,000/year. To get that, you must work for 35 years at a high income level and wait to draw your check until age 70. Then you still need to produce another 58... (read more)

I think the biggest thing people who haven't thought about this deeply miss is how large the potential liability exposure is if you don't carry property and casualty insurance. As your wealth rises, and the financial hit from losing your house becomes small enough that you could realistically self-insure (say net worth 10-20x home value), it starts to be pretty much mandatory to carry some kind of umbrella policy to insure against crazy liabilities, and nobody will sell you an umbrella if you don't also have house/auto/etc. insurance. Like all insuranc... (read more)

On personal assistant, I think the 3% of wealth value will not transfer to different people simply.

For many people, the value of a personal assistant is that they can accomplish so much more with their own time. I know a number of people who have taken this approach and report that it was an investment that paid off financially for them.

If you think of it as a pure cost, then yes, you would try to pay 30k ish and not be interested until you had a very large income.

For those people I know who actually use this, they employ people who are quite skilled an... (read more)

So I agree 100% with 1 and 3, primarily because the profit margins on those insurances are huge, and the losses are so small.

Renters insurance and homeowners insurance on the other hand is quite inexpensive relative to what they cover, and the typical loss rates for insurers are a high percentage of premiums + float, what you are paying in premiums beyond your expected loss rate is very small but reduces the potential volatility of your wealth dramatically.

I guess it depends on what you mean by "rich", if you mean merely "financially indepen... (read more)

The biggest problem I have with outsourcing housecleaning is that it is not only fairly expensive, but also very hard to find someone who does a good job.

We currently pay $90 every two weeks for a cleaner who comes and does about 2-3 hours worth of work. It is 2-3 hours worth of work that my wife or I could do about as fast if we chose to, and either one of us would generally do as good or better a job.

It's still probably worth it, because most of the time we didn't have a cleaner, we didn't choose to do it, even though it made us happier to have a clea... (read more)

Look to see if there are food or cooking clubs in your area -- a lot of times members will have information classes or get togethers.

I also had a great experience taking some classes in turkish cooking at a turkish cultural center where I used to live. Here's a link if you live near west haven ct:

http://turkishculturalcenterct.com/turkish-cooking-classes-go-ahead-full-speed/

I grabbed a 3 year old item because that's me rolling out some bread dough in the picture, but they still do these.

If you live anywhere near a decent sized city or college town, ... (read more)

Honestly, most kitchens do not need more than 4 knives. I own and use more, but I cook a lot, and have very good knife skills. I can do almost anything I need with a single large knife (ideally a santoku, but a chef's knife or chinese cleaver would do ok as well). One serrated knife for bread.

The most important thing is that whatever knife you use is good enough to hold an edge, and kept sharp. Have your knives professionally sharpened at least once a year (or learn how to do it yourself) and use a steel to hone them once a week or before/after any h... (read more)

On MIlky Way vs. Observable universe, I would expect a very high correlation between the results of different galaxies. So simple multiplication is misleading.

That said, even with a very high correlation anything over 1% for Milky way should get you to 99+ for universe.

I admit that I did not seriously consider the number of galaxies in the universe, or realize off the cuff that it was that high and give that enough consideration. I estimated a fairly high number for Milky way but gave only 95% to the universe, which was clearly a mistake.

It seems that very few people considered the bad nanotech scenario obviously impossible, merely less likely to cause a near extinction event than uFAI.

Don't most people who report IQ scores do the same thing if they have taken multiple tests?

Some of us took the SAT before 1995, so it's hard to disentangle those scores. A pre-1995 1474 would be at 99.9x percentile, in line with an IQ score around 150-155. If you really want to compare, you should probably assume anyone age 38 or older took the old test and use the recentering adjustment for them.

I'm also not sure how well the SAT distinguishes at the high end. It's apparently good enough for some high IQ societies, who are willing to use the tests for certification. I was shown my results and I had about 25 points off perfect per question m... (read more)

taken.