Among the more directly related topics in 2013 were the moves towards automatic enrolment for workplace pension schemes in the United Kingdom and elsewhere. Not to forget the (non)taper in the United States, Abenomics in Japan and the ongoing Eurozone situation. But our picks are as follows.
Word of the year
The Oxford Dictionaries’ word of the year is “selfie” – a term for a self-portrait photograph, which, writes the BBC, research suggests has increased in use by 17,0000% in the past year. The selfie might seem a long way from the eZonomics space of personal finance and behavioural economics but, in fact, it’s not. For example, portraits showing their subjects in old age – or a “future selfie" – are a tool to cut hyperbolic discounting and raise awareness of the importance of saving for retirement.
2013 was the year a new king was crowned in the Netherlands after the abdication of Queen Beatrix and a new Pope appointed in the Vatican after the resignation of Pope Benedict XVI. While Queen Beatrix was the third successive Dutch queen to abdicate, Pope Benedict XVI was the first pope to resign in almost 600 years. Their stories highlight issues that affect many of us – including increasing life expectancies and the trend towards later retirement. It remains to be seen how these forces will shape the life of another high-profile figure in 2013, the UK’s “royal baby” Prince George.
In sport, the New Zealand All Blacks rugby team won 14 international test matches in a row in 2013 – the first time a professional side went through a calendar year with a perfect record . So-called “lucky streaks” in sport have many parallels to “lucky streaks” in investing and elsewhere. Think about hot hands. Or the gambler’s fallacy in which we tend to think future probabilities are altered by past events. More pertinent to investing, however, is the view that people often confuse luck with skill. There is no doubt the All Blacks are a very talented team but did supporters fall for the gambler’s fallacy? And how much of a role did luck (or the “unluck” of the Irish, losing only in extra time and after a retaken conversion, on the final game of the All Black’s winning streak) play in the incredible success?
Whatever the weather
Typhoon Haiyan, known as Yolanda in the Philippines, is reported to be one of the strongest super storms ever to make land, killing thousands of people and displacing even more in November 2013. No round up of the year’s news could not mention this disaster. As work continues to care for survivors amid the devastation, it is perhaps is a reminder about uncertainty – the idea that almost anything can happen even if it has a virtually non-existent probability. This sort of uncertainty can apply to many aspects of life, from natural disasters to tumbles in financial markets.
You’ve won the lottery, so all your problems are solved. Right? Well, not quite. Winners of a £148 million EuroMillions prize (the second-biggest ever in the United Kingdom) confirmed in November 2013 they had separated and were to divorce. Despite the virtually impossible chances of winning the lottery, other winners have ended up in a similar situation with The Daily Mail dubbing the divorces as “the curse of the lottery win”. As eZonomics has covered in the past, playing the lottery taps into particular emotions and there are several reasons why winning it probably doesn’t feel as good as you think.
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