The problem with most of these is that they are ways that other people’s irrationality hurts you.
It is no good to advise someone that it is in their interest to spend time and effort becoming more rational, because if everyone else were more rational, then their life would be better. I control my rationality, not everyone else’s. And that is the problem.
Out of your 10 examples, only two (financial losses due to trying to predict the stock market and driving instead of flying after 9/11) are cases where your investment in rationality pays back to you. And the 9/11 case is hardly a very big return—if 300 extra people died in the USA as a result, then that’s a 1 in 1,000,000 reduction in probability of death for being rational, which translates to an $20 return (statistical value of a life), which is worth far less than the time it would take the average person to learn rationality. Perhaps you could argue the figure of $20 up to $100 or so, but still, that isn’t a big enough return. I’m not counting the Albanian Ponzi schemes because if the society you’re in collapses, it is no use to you that you avoided the Ponzi Scheme (and I think that leaving Albania was unlikely to be an option for most, though if anyone can find significant numbers of counterexamples, I am prepared to count that one)
So 90% of your examples give people no incentive to be rational.
EDIT: I’m shifting to thinking that the Albania example should count. After all, you could at least have put a significant amount of money into gold, foreign currency or other assets, right? You know, when I get some money I’m going to see if it’s possible for someone in the UK to just go and turn sterling into gold without suffering a killer loss.
But then again, correctly predicting that the society is going to collapse is a high bar, much higher than realizing it’s not a good idea to invest in a pyramid scheme.
Voted up for trying to find evidence against my hypothesis, but this doesn’t seem to be what we’re after. It says these were mostly late 1980s and early 1990s, i.e. just before and after the fall of communism, not just before the pyramid schemes of 1997.
Also they’re mostly illegal immigrants, so presumably they couldn’t take their assets with them. Though maybe if you’d seen it coming you could have fled to greece with your life savings in dollar notes.
The current albanian immigrant population of greece is about 12,5% of the current population of albania. It’s also not clear that the numbers reflect illegal or legal immigration (I think the real numbers were much higher at their peak, perhaps more than 2x). Also consider that Italy was a more preferred destination. And then count in the rest of the world, to where albanian immigration got directed after the early 90s.
What it is safe to say is that many people did leave Albania when they were given a chance. Also, the crisis erupted in January of 1997, and I assume the ponzi scheme had been brewing for a few years before that.
In any case, this was a minor point, but I just happen to be aware of the extent of albanian immigration to greece for (obvious?) reasons.
I’d be interested to see the details. My suspicion is that the costs to leaving may have swamped the benefits for many people, and that the optimal move for a rational person under the circumstances would have been to hold on to assets and US$ and weather the storm, which would probably have been less bad than for those who lost their life savings, but still pretty bad.
The problem with most of these is that they are ways that other people’s irrationality hurts you.
It is no good to advise someone that it is in their interest to spend time and effort becoming more rational, because if everyone else were more rational, then their life would be better. I control my rationality, not everyone else’s. And that is the problem.
Out of your 10 examples, only two (financial losses due to trying to predict the stock market and driving instead of flying after 9/11) are cases where your investment in rationality pays back to you. And the 9/11 case is hardly a very big return—if 300 extra people died in the USA as a result, then that’s a 1 in 1,000,000 reduction in probability of death for being rational, which translates to an $20 return (statistical value of a life), which is worth far less than the time it would take the average person to learn rationality. Perhaps you could argue the figure of $20 up to $100 or so, but still, that isn’t a big enough return. I’m not counting the Albanian Ponzi schemes because if the society you’re in collapses, it is no use to you that you avoided the Ponzi Scheme (and I think that leaving Albania was unlikely to be an option for most, though if anyone can find significant numbers of counterexamples, I am prepared to count that one)
So 90% of your examples give people no incentive to be rational.
As I have said before, irrationality is a commons problem
EDIT: I’m shifting to thinking that the Albania example should count. After all, you could at least have put a significant amount of money into gold, foreign currency or other assets, right? You know, when I get some money I’m going to see if it’s possible for someone in the UK to just go and turn sterling into gold without suffering a killer loss.
But then again, correctly predicting that the society is going to collapse is a high bar, much higher than realizing it’s not a good idea to invest in a pyramid scheme.
Significant numbers of counterexamples: http://en.wikipedia.org/wiki/Albanian_immigrants_in_Greece
Voted up for trying to find evidence against my hypothesis, but this doesn’t seem to be what we’re after. It says these were mostly late 1980s and early 1990s, i.e. just before and after the fall of communism, not just before the pyramid schemes of 1997.
Also they’re mostly illegal immigrants, so presumably they couldn’t take their assets with them. Though maybe if you’d seen it coming you could have fled to greece with your life savings in dollar notes.
The current albanian immigrant population of greece is about 12,5% of the current population of albania. It’s also not clear that the numbers reflect illegal or legal immigration (I think the real numbers were much higher at their peak, perhaps more than 2x). Also consider that Italy was a more preferred destination. And then count in the rest of the world, to where albanian immigration got directed after the early 90s.
What it is safe to say is that many people did leave Albania when they were given a chance. Also, the crisis erupted in January of 1997, and I assume the ponzi scheme had been brewing for a few years before that.
In any case, this was a minor point, but I just happen to be aware of the extent of albanian immigration to greece for (obvious?) reasons.
I’d be interested to see the details. My suspicion is that the costs to leaving may have swamped the benefits for many people, and that the optimal move for a rational person under the circumstances would have been to hold on to assets and US$ and weather the storm, which would probably have been less bad than for those who lost their life savings, but still pretty bad.