Upsets in the Rugby World Cup, held in New Zealand in September and October, can be seen as a tutorial in uncertainty – the idea that almost anything can happen even if it has a virtually non-existent probability. No matter how good the research or statistics backing a decision are, an unwanted outcome cannot be completely ignored. When the tiny island nation of Tonga bet powerhouse France in the cup, for example, many watchers of the international game were stunned. As ING Group chief economist Mark Cliffe says in his fourth video lesson from the financial crisis, it can pay to consider how investments are insured or hedged against extreme events.
Prince William’s marriage to Kate Middleton in the United Kingdom’s Royal Wedding in April put gift giving under the spotlight. The couple asked for donations to a dedicated charity fund rather than physical gifts. The choice demonstrates findings about how giving to charity can give a “warm glow” to donors as well as recipients. And it illustrates the idea from the growing body of research into gift giving that people prefer to receive presents that they have asked for rather than a surprise.
At 11.11am on 11 November the date and time made the rare palindrome 11.11 11/11/11 – considered by some to be lucky. The attention-grabbing numerical arrangement brings to mind debated calendar effects – such as the “January effect” that claims “as goes January, so goes the rest of the year”. As well as so-called magic numbers that occur when share markets hit round numbers that can ultimately sway investing decisions, and the left hand digit bias of the .99 price point.
The passing of a 114-year-old reputed to be the world’s oldest living man in April brings to mind increasing life expectancy and the importance of saving for the future. Because of hyperbolic discounting, people often consider the consequences of their actions less the more distantly it falls in the future. It can have big implications for retirement planning, as there is some inclination to spend now rather than saving for the future.
Finally, New Year is often a time to make resolutions and set goals. We can set deadlines, create incentives and penalties and use other thinking tools to help keep the resolutions and reach the goals. And we can do it all again as we head into 2012.