Your guide to The Economist: Week of July 14, 2007

Ageing: The long and the short of it70 and just now having kids? –they’ll probably live longer than the rest of us…
Law firms: City magicLondon lawyers’ salaries catch up to NY, along with their dissatisfaction with the profession…
Financial education: Poor young thingspublic education to blame for generation’s inability to balance a checkbook?…   

Ageing: The long and short of it
Recent medical attention on ageing has prompted medical researchers to the far reaches of the globe in search of…the Amish. The group is considered an anomalous population for too many reasons to list here, but foremost to Wen-Chi Hsueh of UCSF is the gender-neutral average age span of the population. According to existing theories of ageing and causes of natural death, structures called telomeres that cap the end of our chromosomes get shorter as cells in our body divide. Eventually, telomeres shrink to a biologically negligible point, cells are then rendered unable to divide, and we pass to other realms of consciousness.

With regard to the Amish, Hseuh found that the telomeres of men and women were the same length, whereas outside of Amish territory men generally sport shorter telomeres than women (aside: consider, the Amish don’t consume alcohol; men on average consume more alcohol than women, they also have shorter telomeres –and shorter lifespans on average; maybe men are drinking themselves to early graves). The relevant hereditary effects: 1) the length of daughter’s telomeres and their lifespans were correlated with those of their fathers, and 2) the older the age at which the father became a parent, the longer the offspring’s telomeres.

Law firms: City magic
London lawyers are ecstatic that their salaries are finally catching up to –and overtaking at the equity partner level at some firms– those of their NY counterparts. However, they’ve still one glaring problem to contend with: upwards of 25% of the profession is disgruntled and would like to leave the profession altogether. “So why don’t they quit? Because, say three-quarters, of the pay.” The problem is rooted much deeper, and for light on the origins I direct you to this post from BankersBall.

Financial education: Poor young things
I know plenty of people who leave school w/o the faintest notion of how to budget, many most of them graduate students. To be fair, the people I know that currently have only an undergraduate degree mostly work in finance, and generally understand the abstract notion of a budget as it lives in the income statements they pore through most days. On the other hand, the graduate students still have yet to work a day in their lives, and buy iPhones with their student loans. Go figure. According to a survey commissioned by the British Financial Services Authority, half of the country’s “population had no savings at all…” and, “
younger respondents turned out to be worse at budgeting and basic arithmetic than older ones….they were particularly over-represented among the four in ten who agreed that they tended to live for today and let tomorrow take care of itself (it’s amazing that anyone would use this as a basis for criticism, we should all live for today, though unfortunaltey only realize this in the presence of death, precisely when a robust retirement account balance means absolutely nothing).

In addition to statistics (1 in 10 people in the UK can’t surmise the difference between a 10% discount on 250 and a discount of 30), the author presents a recent effort made by secondary schools to incorporate a subject called ‘economic well-being’ into curriculums though remains skeptical: “[teenagers] will probably dismiss such matters as irrelevant to immortal beings such as themselves (ironically, immortality is an argument to save profusely, not to blow fiscal caution to the wind).

It isn’t the case that teaching ‘economic well-being’ is a waste of resources because the students won’t care to learn it, it’s that ‘economic well-being’ is subjective, and by teaching a regimented schedule we might be making future generations less well-off. Enjoyment, and by extension well-being, is a function of both the utility received by attaining the object/goal and the utility recived through the process by which one goes about attaining that object/goal. The danger in cementing a curriculum for ‘economic well-being’ is that the system would turn the subjective process of attaining a good into an objective one, the nature of which would remove the pleasure component and undermine the original premise. For example, I derive pleasure from aggressively trading stocks/options, at the expense of having a bigger position in fixed income securities.

How would I have been graded –and by extension with what attitude would I approach investing at least in the years after secondary school– by the average 11th grade economics teacher regarding my choice to invest in the stock of an Israeli supermarket chain during the Israeli-Lebanon crisis of 1Q07 versus a safer alternative? I’d have been stripped of the joy and the windfall, and the same could be said of other prevailing ‘wise’ attitudes, such as saving for graduate school, where the prudent (in the traditional sense) choice is to save as much as one can. Unfortunately for the savers, the students with zero in the bank are the ones who most often make off with free-rides on the basis of financial need, while those with a quarter of the tuition socked away in the bank –often due to the fact that they sacrificed innumerable joules of joy in order to save on that starting salary– in the bank are left with loans at 7%. 

Kids need to grow up learning to adopt a contrarian attitude in order to succeed ‘economically.’ The ones who make out ahead are more often than not those who find a way to take advantage of the herd mentality. My guess is that the masses, and most immediate decendants of ancestors’ whose survival depended on outrunning lions, will be Darwined out towards the end of the information age –and only then, when it becomes immensely difficult to make a buck, will it be necessary to obsess over saving. 

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