Forrest's incompetent money advice

Welcome to the first installment of what I hope will be a long series of articles containing my incompetent advice, on many issues. Today the topic is money.

I won't cover the (much more important) issue of actually obtaining money in very much detail. Suffice it to say that there are many different ways to get it, and to spell them out would just be ... trivial. To list just a few examples: donation of haploid cells (if you happen to be a genetically fortunate male), having rich older relatives, and marrying "up". Or you could stick with the traditional "get a job" route, but that wouldn't be nearly as easy or fun as the aggregated average of my three examples.

Now that you have lots of money, what should you spend it on? If, like the majority of Americans your happiness is a linear correlation with your rate of spending, you should spend it all at once, and also max out your credit cards. If, however, you happiness production curve is more reasonable, there's an optimal amount of money you should spend in a typical week on frivolous things like ice cream, new clothes, or that kidney transplant you've been putting off.

As you can see, the more money you spend on nice things for yourself, the happier you get. But consider this example: You could spend $1000 on a small, shoddy-looking, used motorcycle and have some fun riding around and running errands, or you could spend $10,000 on a shiny new motorcycle and have a bit more fun impressing your friends and bothering the neighbors with your engine noise. On the other hand, you could spend $2 on bus fare, have to get up early every day, and miss the bus sometimes. Your choice depends on how much you would enjoy each thing, and also on how much money you had in the bank. Except for explaining what's going on, I can't offer any extra help on what to spend your money on. As my most loyal readers will note, I spend most of my money on bacon.

No, the topic that interests me today is what to do with money you're saving. Where should you keep it? The first option is in the bank. For many people, keeping the majority of your money in the bank is the smart thing to do. The bank will never lose your money (or if they do, Uncle Sam will cover it). You'll never* lose money at the bank. (* some restrictions and fees apply to low balances, too many transactions, using other banks' ATMs, or trying to access your money). Banks will even give you a small amount of interest, as a reward! Note, however, that this interest rate is generally not much better than the rate of inflation, and often (like right now) much lower. What this means is that yes, you won't lose money if you keep it in the bank, but you will lose value. You'll be able to buy fewer motorcycles with that money when you withdraw it in 5 years than you could have today. The moral here is that banks don't really keep your money "safe".

The next option is to keep all your money at home. You could either keep it as cash, which would be like a bank only without the fees, interest, and inconvenience. Or you could keep it as a commodity, like gold. Gold (in theory) is not subject to inflation. No more gold is ever created (yes, I know more gold is mined, but ignore that for a second). You can buy the same number of motorcycles in five years with the same lump of gold (or, like me, a small fraction of a motorcycle). However, you keeping stuff in your house isn't safe against robbery, and gold is inconvenient to change into cash.

The third option is to invest your money. The word "invest" branches into a lot of other things, but the underlying principles are the same for each type: you essentially gamble your money, hoping the value of your investments will rise. With higher risk comes higher reward: you know for sure that in the bank, your money will be worth almost as much as it is now, when you withdraw it in five years. With an investment, you run the risk of losing value, but that earns you the possibility of gaining value. Now different investments are in different places on the "risk - reward" spectrum.

As you can see from this image I pulled straight from wikipedia, with higher risk comes higher reward. The light blue line represents possible investment choices, and the dark blue line, which is unique to each individual, represents a line of constant "utility", which pretty much means "happiness". Some people are young and OK with more risks, so their dark blue line shifts up-right. Others might be planning to buy a house soon, and have the right amount of money, so they don't want to lose that money. Their dark blue line shifts down-left. Yet other people might want to help save humanity by investing in green energy or something, which would change their "happiness" curve in various ways.

Diversification: Buying stocks can give you a good return, but there is a way to lower the amount of risk without compromising the amount of return: Diversification (that's right, Diversification). Let's say you buy $100 worth of google. Google's stock will roughly follow that of all stocks in its main area, like microsoft and apple. But sometimes when google does poorly, apple does well. If you buy a collection of several stocks from that sector, like microsoft, apple, and google, then the value won't jump around as much, but it will still rise when the sector rises. But you can take this one step further and say "when tech stocks fall, sunblock stocks will rise!" (because all those WoWers and googlers have pale, pale skin) and also buy some shares in the sun-block sector. Taking it even further, you might note that when stocks do poorly, bonds do well, so you could buy some of those.

In fact, a while ago some people had the great idea to put all their money together and hire someone to decide what to invest it all in (so they didn't have to quit their jobs and watch the stock market all day). That's called a mutual fund. Various other types of investments exist, filling niches of the risk-reward spectrum and offering different amounts of diversification.

Say it with me: Oh-Ten

That's right! We're going to start saying the last THREE digits of years. We used to use two digits back in the '900s, then in '000 we got all scared about the so called "Y2K" so we moved to four digits. Then around '002 we moved back to two digits because obviously Y2K didn't happen. I mean, it did, but all the bad stuff didn't happen. But I'm telling you we shouldn't move back down from four to two. Have a look at the graph of human life expectancy over time, gleaned from this article:

As you can see, for the past two hundred years human life expectancy has been rising steadily. Soon, most people will live to be over 100 years old. Now, the reason we originally wanted to use two digits is because in our 35-year lifespans (for those of us who love the bacon) we would never be troubled with using the same number twice. Imagine if we called this the year zero, only using the last digit of the year. It would only make sense if we would never live to see the next year zero. But we WILL live to see the next year '10, so we need to act now and change our conventions. In the year '110, it will be too late to go back and change all our blog posts!

Act now! Say it with me: Oh-Ten!

War and Obesity: the human condition

In many places in the world, food is not abundant, and many people starve. But in the US, most people can afford to buy more food than they could ever possibly eat. Some of us can just eat and eat like slobs and never gain a pound (don't cry for me America), while others become overweight. However, bacteria don't get obese, they just make tons of children. In the long term even humans will follow suit, multiplying in the presence of excess food. As Darwin explains, a given population of organisms will grow exponentially until they use all available food. There is no doubt that the human population is growing at least exponentially (and maybe even superexponentially). Even if our current rate of food production were sustainable (which, because it's supported by fertilizers made from fossil fuels, some argue that it's not), we would eventually multiply to fill that vacuum. Until then, we will be overweight.

And once the number of people roughly equals the sustainable food supply, we will start to compete for those resources. We will go to war! Unless we can either a) transcend the laws of biology or b) find an infinite supply of resources, it seems that the human condition is to be at war. Let's examine two possible strategies to resist our fate:

1) The universe is infinite, right? Can't we just colonize every planet? This doesn't work for two reasons. First, while the amount of space is infinite, the amount of energy and mass (i. e. resources) is not. It's a huge amount, but given enough time we could expand to consume it all. Second, that still won't help the problem of local fluctuations in food, resulting in local warfare. Once we colonize the whole solar system, there might be a surplus of food on Jupiter, but we can't bring it to Venus, where people are starving. We have the same problem right now, on Earth, where one country gets fat while another starves and fights.

2) Our brains separate us from the animals, right? Can't we just all agree to have exactly two children per couple, plus a few extra in case of accidental deaths? Well wouldn't it be wonderful if we could all agree, but we won't. Those of us who do agree will pass on our agree-to-limit-procreation genes to a smaller and smaller fraction of the population than those with procreate-as-much-as-you-can-and-don't-listen-to-ecologists-or-bloggers genes. It's exactly the sort of trait that natural selection keeps a collection of on the walls of its hunting lodge.

Engineers over-represented in islamic terror groups?

A startling expose of the seedy underworld that is engineering has found that those people with a degree in engineering are severely over-represented in violent islamic extremist groups (full article). According to the study, engineers account for only about 3% of the (male) populace of the arab countries in question, while the terror groups examined were 44% engineering graduates. As an engineering grad myself, and a 'shiftless' [get it?] twenty-something arab male, this study strikes close to home. What about being me (apparently) makes me want to be a terrorist?

My first thought is that the study used a biased sample: they interviewed only those terrorists who were caught. A possible reason that engineers are more likely to be caught might be the explained, as all complicated theories are, by the plot of the movie "The Dark Knight". [Spoiler alert] The joker employs some talented criminals to help him rob a bank, and then once they complete their tasks, he has them killed so he doesn't have to share the loot with them. However, violent islamic terrorists aren't stealing money, they're just trying to damage, kill, terrify, etc. In addition, the engineers who were caught would be angry at being used, and possibly inform on the rest of the organization. So maybe it's not a biased sample.

Engineers are good at figuring things out and making things happen, so here's my hypothesis: If you get a bunch of angry people together, sure they'll talk about doing something about it. But they won't get caught for talking. An engineer will draw up a blueprint for how the objective could be achieved. For good or for bad, engineers make things happen.

The paper looks at tons of data, and here I distill some interesting bits:

-Engineering professors in the US are 58% conservative, compared with 34% of scientists

-Engineering professors are also very religious: 67% versus 49% of scientists

-Globally, violent left-wing groups have almost no engineers, while violent right-wing groups have more (especially in the middle east)

The paper concludes that a combination of two things caused engineers to be over-represented in violent islamic groups. First, after the oil crisis last century there were fewer jobs for engineers. Second, there is something about the engineering mindset which correlates religiousness, conservatism, and the engineering profession.

Mutant Atomic Race of Super Men?

Let me start this like any other good article: by raffirming that I'm not a secret nazi racist. Now that's out of the way. So. I was reading an interesting article on bbc which quotes "Evolutionary theorist Oliver Curry of the London School of Economics" when he predicts that

The human race would peak in the year 3000, before a decline due to dependence on technology. People would become choosier about their sexual partners, causing humanity to divide into sub-species.

An interesting concept. First, let's think about how a species could diverge evolutionarily while being in the same geographical place (i. e. all of earth). Let's say you're some kind of squirrel thing. To get food you could either dig up tubers or you could climb up a tree and get some nuts. Let say right now the population has arms that are okay at climbing and at digging. But if they could just evolve thumbs, they might be able to climb a lot better, but no longer be able to dig. Or they could evolve shovelly-hands which would help them dig a lot better, but they wouldn't be able to climb any more. The species might evolve into two, since the child of a shovelly-arm and a thumb-hand would be bad at both things.

Aren't we starting to "decline" already? By that I mean, if all our technology were removed, we would be less fit than a thousand years ago. Our feet can't handle the rough ground. More of us are born with diseases which are merely inconvenient right now, with medical technology, but would be fatal or very bad otherwise. You might argue that we don't do hardly any real stuff now. Our houses are built by human-operated machines. Our food is harvested by human-operated machines from farms. Most of our transportation is by car, plane, or train. Even birth is increasingly being performed through C-Section. Women with poor birthing hips, who in the past would not have been able to pass on their genes, are now fine. I'm not saying there's anything wrong with any of these things, but it does show our increasing reliance on technology.

However, with the increasing research in genomic technology, there are some quiet murmurings about the possibility of, say, making sure your baby doesn't get a certain gene. If you have sickle cell anemia, for example, you might be able to take your haploid cells to a clinic, and have them filter our the ones without that gene. But would parents always select the most "fit" child? That depends on what we mean by fit, exactly. Right now, in American society, one might say that blonde women are more fit, because they're perceived as more attractive. But other women can just dye their hair. But in the wild, blond hair is less fit for most of the earth. Sunny days require a dark sun-reflector, which black hair (and black skin) do pretty well. No, the parents will choose their children to be the most fit in the framework of the anticipated environment.

Drake's weakness

Every astronomer and science nerd has wondered: are we alone in the universe? One such nerd (or was he an astronomer?), Dr. Frank Drake, came up with the Drake Equation, which tries to estimate the number of detectable civilizations there are in the galaxy. Let's take a brief look at the equation:

1. The rate of star formation in our galaxy

2. The fraction of those stars with planets

3. The number of life-friendly planets around those stars

4. The fraction of life-friendly planets that develop life

5. The fraction of life-full planets that develop intelligence

6. The fraction of civilizations that broadcast detectably into space

7. The length of time such detectable civilizations exist

We are supposed to take the product of these seven terms, and that will tell us the number of detectable civilizations at any given time in our galaxy. But maybe you've noticed a certain earthling-centric bias built into this equation? It assumes that the only place life can exist is on a planet, near a star. Because that's exactly how we are. Now, let me assert that life could hypothetically take on many different forms. Instead of water-based life, we could have ammonia-based life. Instead of having cells, cell-less viruses might be considered alive. There was even a meme - I mean, fad - in the '80s in favor of Clay Theory, which hypothesized that a certain type of clay-based life might be possible, where drying stream-beds crystallize, and those crystals that work the best and kick up the most dust will infect the most other stream-beds. Crystals are just a pattern in the clay, but our own DNA and cells are just patterns of the same few elements. Consider the latest type of marketing, "viral videos". A company will make a funny/cool video promoting their product, then wait for college kids to stumble onto it and send it to each other like wild fire. The company pays almost nothing, but gets lots of exposure. The idea of the video can be said to be alive, living as a pattern on our computers and in our brains. And we infect each other just like the flu.

What I'm trying to get at is that other life can be startlingly different from us. We shouldn't expect that all life in the universe is on a little planet about this big, revolving about that far from a star about this size. What about bigger planets? Moons? Dust rings around stars? Inside stars themselves? Or even in cold, distant space? One of these in particular - life inside stars - seems to me to be the most plausible. The mass of all the planets in the universe is much much smaller than the mass of all the stars, and that mass is a lot hotter. We know that matter-based life requires at least some kind of energy or entropy, so in general, hotter is better.

But then again, I'm no astrobiologist.