Posts Tagged ‘Personal Well-Being’

Is Health Insurance Really Insurance – Or Something Else?

Sunday, May 23rd, 2010

Recent passage of the Obama administration’s health-care “reform” package prompts reflection on the underlying meaning of health insurance. This leads to a better understanding of the causes of health-care inflation and proposed remedies.
What is Insurance?
Insurance is a process for the transfer and amelioration of risk. Risk is transferred from risk-averse people to risk managers. The managers are qualified professionals who either bear the risk or reduce it to manageable dimensions by pooling large numbers of risks.
Risk is defined by the variability of possible outcomes. An insurable risk is unpredictable at the individual level but predictable in the aggregate. That distinction [...]

A Worthwhile Economic Indicator

Saturday, May 15th, 2010

The April, 2010, issue of Kiplinger’s Personal Finance magazine contains an article that is useful on several levels. “Should You Buy or Rent?” is intended as a primer for readers in the market for a home. It does that job well. It may be worth more, however, for something that its author did not intend – providing a leading economic indicator for our time.
Buy or Rent?
The article’s basic purpose is to dampen the ardor of would-be home buyers attracted by the promise of low prices, low interest rates, and a first-time home-buyer tax credit. The fundamental choice faced by potential [...]

The Best Possible Result, or the Best Result Possible?

Sunday, April 18th, 2010

The British bridge expert, S. J. Simon, drew a distinction that is just as valuable to investors as it is to bridge players. Simon criticized players who sought to achieve the “best possible result” on every hand. This was too unrealistic, he contended; they should strive instead for the “best result possible” under the circumstances. Now is the season for reviewing last year’s market results and looking ahead to this year. That makes it the ideal time to recall Simon’s dictum.
 Simon’s “best possible result” (BPR) corresponds to what economists would call a global optimum. It is analogous to the highest [...]

Managing Retirement Withdrawals

Friday, April 2nd, 2010

Retirement finance has an accumulation stage and a decumulation stage. Accumulation gestates, hatches, and cooks your retirement nest egg; decumulation allows you to eat it. Accumulation commands the lion’s share of attention in popular finance, but decumulation, or distribution, is equally important. Understanding how to disburse wealth is just as important as understanding how to build it.
 The Basic Problem
On retirement day, you possess a store of wealth built up throughout your working life. Stretched out before you is the rest of your life, of uncertain duration. You want to withdraw a sufficient quantity of wealth to finance a comfortable lifestyle, [...]

Stocking Up On Food: Kooky, Clever, or Just Plain Clunky?

Monday, March 22nd, 2010

In the wake of 2008’s financial crisis and the ensuing recession, speculation about total financial collapse is rife in unofficial circles. Armageddon scenarios are familiar to most Americans. In our lifetimes, we have faced nuclear annihilation, attack by extraterrestrials, collision with asteroids, nuclear winter, global cooling, global warming, various other eco-catastrophes and killer viruses.
 Authorities invariably scoff at such predictions, but in this case they have only themselves to blame. In the fall of 2008, Treasury Secretary Paulson and Fed Chairman Bernanke cooked up their own doomsday scenario in order to terrify Congress into passing bailout legislation. Apparently, this kind of [...]

Die Rich or Die Happy?

Tuesday, March 9th, 2010

Economist Steven Landsburg noted that policy wonks want people to die rich while economists want them to die happy. Is it better to die rich or die happy?
 “Why die at all?” will be the reaction of some. Science has not advanced quite far enough to make this attitude practical, although that may change shortly after we die. Others will find it impossible to separate the two outcomes, let alone treat them as mutually exclusive. How could one die happy without dying rich? Then there are those of us who would cheerfully settle for either outcome.
 The reason for pondering the question [...]