Master Financial Education

Financial and Economic Daily Commentary 2018
The  most intensive and extensive on the Web
Knowledge makes obsolete the inequities that ignorance and prejudice justify
Errold. F. Moody Jr.

click above for bio




USA Today- "This is a high-powered personal bookmark list that spans the spectrum of the truly useful."

FORBES- "You'll find some great information."

BUSINESS WEEK: "For an Expert, Click here"  

From an adviser: It is a daily read for me. Clearly biased towards the client.
Great perspectives and links to thought provoking material. Greatly appreciated

Investor/Investing Risk of Loss: Identify, Manage and Limit Investment
Risk of Loss on Mutual Funds and ETFs

Four Phase Process that will change the investment dichotomy for 75% of Middle and Lower Income investors overall and up to 90% for 401k Investors 

Losses limited to about 12% for recessions

Patent Pending

Morality, Sexism, Ethics, Corrupt Equilibrium

Critical reference to the limited fiduciary capabilities in the planning industry (and more) and why they may/will remain as such given sophomoric DOL rules and flaccid organizational enforcement. Specific commentary to sexism and ethical and moral lapses of society impacting women. Not the standard drivel

Analysis for investors and advisers. The economic changes from the Great Recession caused major adjustments in investing. One of the major issues is the flip flop of the correlations in bond funds versus equities  coupled with a truly lower return and an increased overall risk. It will take a lot more effort to provide adequate return for those in need and the discussion will address pros and cons particularly for retirement purpose Emphasis on risk, Click for full article. 

“It’s not the Fed’s job to stop people from losing money.”

Jay Powell- President of the Federal Reserve

A Detailed Timeline of the 2008 Financial Crisis


Revolutionary Method for Asset Allocation- Increase Returns, Reduce Risk

September 2018


October 2018

11/14: North Korea

Looks like the romance is fading. NK has an additional 19 sites that are doing more construction for missiles. And since Trump has already pissed off England, Iran, Canada, France, Germany- and who knows how many more-  he can now turn his attention to Melania and her needs. But he is sure to get rid of Kelly and a bunch of others soon so that should make him feel better.

The While House is in dire need of a leader

11/14: OIL- With prices coming down, will rigs be shut??

In today’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

-    The IEA says that the petrochemical industry will drive crude oil demand forward over the next 20 years.

-    The developing world is set to experience more than 5 mb/d of demand increase from passenger vehicles, but that is mostly offset by demand destruction in rich countries. 

-    That leaves heavy trucks and petrochemicals as the main sources of demand growth

-    As a result, the IEA does not see overall peak oil demand until 2040.


"Women on Board: Does the Gender Diversity Reduce Default Risk?" Free Download
9th Conference on Financial Markets and Corporate Governance (FMCG) 2018

SEARAT ALI, Griffith University, Griffith Business School, Department of Accounting, Finance and Economics, Students
Email: searat.ali@griffithuni.edu.au
Griffith University - Department of Accounting, Finance and Economics
Email: b.liu@griffith.edu.au
J.J. SU,
Griffith University
Email: j.su@griffith.edu.au

We provide the first comprehensive and robust evidence on the causal effect of boardroom gender diversity on default risk for 831non-financial Australian firms over the period from 2008 to 2013. We show that the proportion of female directors have an overall negative effect on default risk. The inverse effect of gender diversity on default risk is robust to alternative measures of gender diversity and default risk, and to alternative econometric specifications including the control for time-invariant firm characteristics, instrumental variable approach, propensity score matching, difference-in-differences, models based on changes in variables, and dynamic panel data estimation techniques. We also find that gender diversity reduces default risk through the mechanism of decreased information asymmetry (i.e., improved information environment). Further, we show that the inverse effect of gender diversity on default risk is stronger for firms with weak external governance and strong internal governance, suggesting that gender diversity could act as partial substitute for weak external governance quality but complementary for internal governance quality. Since the benefits of adding more females to boards are under current discussion, these findings will enrich the regulatory debate and also provide a guideline to investors and firms in designing appropriate trading strategies and governance structures, respectively. Overall, our results support the recent calls for more females sitting on corporate boards.

11/12: Men dying

Men die on average five years earlier than women, according to the US Centers for Disease Control and Prevention.

Prostate and testicular cancer contribute to the disparity. Also, four out of five people who kill themselves are men

11/12: Risk Tolerance and Circumstances

An investor’s risk attitude is a stable characteristic, like a personality trait, but risk-taking behavior can change based on the investor’s age, recent market events, and life experiences. These factors change investors’ perceptions of the risks. Differences in risk tolerance between men and women or in different circumstances trace back to emotional as much as rational considerations. Financial advisers should consider all of these factors when advising clients and can use four simple steps to incorporate best practices: be aware, educate, nudge, and hand hold.

The term risk tolerance is defined and used in different ways. Whether risk tolerance is a stable characteristic of a given investor or also takes into account external circumstances (e.g., economic shocks or the domain of the decision) depends on how it is defined and measured. This brief focuses on a definition of risk tolerance prevalent in the practitioner community—namely, an investor’s willingness to take perceived risk or the trade-off an investor is willing to make between the perceived risk and expected return of different investment choices. This definition derives from a psychological interpretation of the risk–return framework of classical portfolio theory. It treats risk tolerance as an attitude toward risk and decouples this pure attitudinal variable from the perceptions of risks and returns—psychological variables in their own right and distinct from the expected value and variance of the distribution of possible outcomes.

EFM- Wrong  Risk should be (and is by me for decades) by how much you can lose (mutual funds and ETFs- which are the main investments used by 90%+ of Americans) during a recession.

My formula provides an approximation of what could be lost by most funds and ETS (with histories- cannot work with newly minted investments). Client is then asked- how much do you want to lose?' That is a definitive risk acceptance or denial based on numbers not esoteric banalities from a client questionnaire. . Steps three and four of my Process identified above then shows how investors can reduce risk to 12% to maybe 15% (depends on the funds selected.) The Process has nothing to do with selection. The Process (step 4) then shows the time to get back in based on an independent statistic.

11/12: Does race matter? Of course. How about just a name inferring same?

A 'team'  sent 6,500 emails to randomly selected professors from 259 US universities. The sender of the email was a fictional, out-of-town, prospective PhD student who expressed interest in the professor’s graduate program and sought his or her guidance. The emails were identical and impeccably written, varying only in the name of the senders, which included Meredith Roberts, Lamar Washington, Juanita Martinez, Raj Singh and Chang Huang. We used 20 different names in 10 different race-gender categories; some could be perceived as white and male, some could not. (Our study examined another issue related to the timing of the request, but for the findings reported here, the prospective student was requesting a meeting for the following week.)

Overall, 67 percent of the faculty members responded; of those, more than half agreed to meet with the fictional student. (As soon as the professor wrote back, we immediately canceled the meeting.) However, professors were more responsive to white males compared to other students in almost every discipline and across all types of universities and bias was most severe at private universities and in disciplines paying higher faculty salaries (with business showing the most bias). Even when the student and the faculty member shared a race or gender, we saw the same levels of bias. The only exception was Chinese students writing to Chinese professors; they received more responses. Nonetheless, Chinese students were the most discriminated-against group in our study.

EFM- somewhat surprised when faculty and student were of the same race or gender, there still was bias. I would have liked to know WHY? Is THAT much bias programmed in our society. Seems likely.

“America is only 1 generation away from losing its’ freedom."

Ronald Regan

11/12: This has to stop-

Medicare is paying 80 percent more than other nations for drugs.

11/12: Deficit: The federal government is projected to issue $1.34 trillion of new debt in 2018 — its most since the depths of the Great Recession — according to Treasury Department projections released Monday.

This will ultimately put us into a very bad corner and devatate the economy.

11/12: Only partly right

How 401(k)s Can Help Recruit and Retain Employees
by Roger Lee / Workforce

Four in five employees indicate they want benefits and perks more than a pay raise, and a 401(k) ranks in the top five requested benefits, according to a recent Glassdoor survey. On top of that, when it comes to millennials, benefits are particularly appealing – 90 percent of employees 18 to 34 years old say they would prefer benefits over pay.

Attracting, recruiting and retaining employees is a costly and time-consuming process. That’s why it’s imperative to bring in top candidates and hire them with the intent of keeping them at your company as long as possible.
Here are three ways a high-quality 401(k) can help your recruiting and retention efforts:
1. Attract top talent and build high-performing teams
2. Tip the balance in your company’s favor
3. Increase employee retention

EFM- the missing part is solid information/knowledge on investing. They are not getting it. Check losses in 2000 (49%) and 2008 (57%). Should not have exceeded roughly 15%. -f

11/12: What people spend out-of-pocket on healthcare in 23 states
Morgan Haefner / Becker's Hospital CFO Report

In 2017, patients in Utah faced the highest out-of-pocket healthcare costs compared to 22 other states, according to a report from global think tank JPMorgan Chase Institute. The report analyzed data on 4.7 million Chase customers in 23 states between January 2013 and December 2017. Researchers found the average annual out-of-pocket healthcare spending climbed 8.5 percent in 2017 compared to the year prior.

Here is how average annual out-of-pocket spending stacked up among the 23 states featured in the report, listed from highest to lowest:

Utah: $863.70
Colorado: $797.30
Connecticut: $782.20
Texas: $730.10
New Jersey: $702

11/12:Individuals Not Seeking Help for the Hardest Retirement Concerns

A study found the top financial tasks individuals need help with include choosing when to retire, choosing appropriate investments and developing a strategy to withdraw from multiple accounts. Read more >

EFM- Or they end up using their parents, friends, co-workers et al for advice. In a way I cannot blame them since finding a planner is extremely difficult. You should at least get one who has had experience with the last mess of 2008 and preferably for 2000 as well. Means at least 15 years experience. That's good for a start.


Median Household Incomes by Age Bracket: 1967-2017
by Jill Mislinski, 10/19/18


Earlier this week, we updated our commentary on household income distribution to include the Census Bureau's release of the 2017 annual data. Our focus was on arithmetic mean (average) household incomes by quintile (and the top 5%) over the 50+ year history of this data series. The analysis offered some fascinating insights into U.S. household incomes.


Read More


11/12: Human activity has decimated global wildlife, reducing species counts by an average of 60% over the last four decades,

Tracking populations of more than 4,000 mammal, bird, fish, reptile and amphibian species, the WWF researchers found staggering declines between 1970 and 2014. These reductions are thought to be directly linked to human activity since current rates of species extinction are now 100 to 1,000 times higher than before human pressures became a factor.

11/12: Living Planet Report

Full Report

11/12: Apparently China can't Read

China's Reversal of Rhino and Tiger Parts Ban Alarms Activists

The move marks a major about-face for China, which has taken steps to curb its image as fueling the slaughter and illicit sale of endangered animals

11/12: SEC advisory panel wants 'fiduciary' in Reg BEST INTEREST

An article meant to clarify the use of fiduciary by the SEC. Go ahead and see if you can make sense out of it. I really couldn't. Imagine how consumers will get confused


Longevity Concerns Inform Education Opportunities

Increased life expectancy among Americans—which currently stands at 76 years for men and 81 for women—has extended the average retirement period to 18 years, and it highlights the need for individuals to have a comprehensive plan for saving and investing, according to BMO Wealth Management U.S. A survey of more than 500 Americans age 55 and older finds top concerns about a lengthy retirement are health care costs and quality of life (46%), being a burden on family members (45%), and running out of money during retirement (44%). BMO says individuals should know to plan for living beyond the average life expectancy and what medical expenses to expect, among other things. Read more >

EFM- you should however see life expectancy stagnate by 2035 and even drop thereafter. Why? Climate change will change the world negatively and irreparably by man. Mother Earth is pissed. 

11/11: When it rained in WWI, none of the soldiers on either side came out to fight. And that is why we should give Trump a pass for not going to the cemetery.


11/11: Earth is warming much faster

Nearly a quarter of the Northern Hemisphere's landmass sits above permafrost. Trapped in this frozen soil and vegetation is more than twice the carbon found in the atmosphere.

As fossil-fuel burning warms the Earth, this ground is thawing, allowing microbes to consume buried organic matter and release carbon dioxide and shorter-lived methane, which is 25 times as potent a greenhouse gas as CO2.

 If a region's active layer stops freezing consistently, consequences can be swift. Once unfrozen, soil microbes in the active layer can decompose organic material and release greenhouse gases year-round—not just in summer. And it exposes permafrost below to more heat so that layer, too, can begin thawing and releasing gases.

11/11: More climate changes

Once lush, El Salvador is dangerously close to running dry

The country's shrinking water supply is in jeopardy as weak regulation, lagging services, and climate variability fuel a complex crisis.


11/11: Oil

Oil fell below the $60 level, a day after slipping into a bear market. That means U.S. crude is now down by around 20% since early October as rising supply and concerns of an economic slowdown pressure prices. Fresh U.S. sanctions are unlikely to cut as much oil out of the market as initially expected with Washington granting temporary exemptions to Iran's biggest buyers. American production has also reached a new record high of 11.6M bbl/day.

11/11: More +Oil

Oil prices have hit a multi-month low as bearish sentiment takes over markets and OPEC considers reimplementing a production cut deal

11/9: Long Term Care and veterans

More than 40 million people in the United States serve as unpaid caregivers, usually for an aging parent or a grandparent.

Not only do they lack compensation, but they spend on average one-fifth of their income on caregiving expenses, according to a recent report by AARP. These out-of-pocket expenses keep them from saving for their own retirement.

Surprisingly, one-fourth of those unpaid caregivers are Millennials, trying to balance their work and family obligations and handle the financial stress of paying out of pocket to support a parent or grandparent while still paying off student loans.

In all likelihood, the number of unpaid caregivers will continue to grow as the elderly population doubles over the next generation.

But for veterans or their surviving spouses, there may be some relief. VA Pension benefits -- commonly called Aid and Attendance (A&A) benefits -- help veterans and their surviving spouses pay for in-home care, assisted living-, memory- or nursing care as well as medical supplies and medicines.

These pension benefits are available to former service members (who are older than 65 or completely disabled) or their surviving spouses. Additionally, the service member must have been discharged (not dishonorably) after at least 90 days of consecutive, active-duty service with at least one of those days during a wartime period.

A&A applicants must meet limited asset requirements. The net worth limit is $123,600 for 2018 and is indexed for inflation. Net worth does not generally include the veteran’s primary residence or vehicle. It does include assets in bank accounts, stocks, bonds and commercial or secondary property holdings as well as one year’s Income for VA Purposes (IVAP).

When calculating IVAP, veterans and surviving spouses can deduct certain unreimbursed monthly care expenses. These include skilled nursing, assisted living costs, and long-term care and health insurance premiums. They also include in-home care provided by a non-spouse relative.

By applying for A&A, you could help defray the costs of your own care and compensate your relatives so they do not have to defer their own retirement planning or deepen their debt.

The AARP study, Millennials: The Emerging Generation of Family Caregivers, found that millennials spend 21 hours per week on caregiving duties. Nearly three quarters of them, 73 percent, work also. More than half, 54 percent, say their work or career prospects have been negatively affected by their caregiving commitments. The average respondent reported spending $6,800 per year of their own income on caregiving expenses.

Figures were similar for older caregivers in a 2016 AARP study. That study found that more than three quarters, 78 percent paid out-of-pocket for caregiving expenses. On average family caregivers spent $6,954 per year. This amounted to nearly 20 percent of their annual income on average.

More than half of employed caregivers, 56 percent, said caregiving affected their work. Due to their caregiving responsibilities, respondents said they worked different hours, fewer/more hours, or took time off (whether paid or unpaid).

Many family caregivers also cut back on other spending because of caregiving obligations. One in six reduced contributions to their retirement savings and almost half cut back on leisure spending such as eating out or vacations.

If you are concerned about costly long-term care and the effect it could have on your family’s future financial prospects, consult with a trusted, VA-approved elder law attorney. An attorney can help you determine your options to not only pay for your care but help your family stay out of debt.

11/9:  Coastal homes caught in wave of climate gentrification

Sea levels are rising, and that could be causing waves of unexpected house price increases in poorer coastal areas.

The rich will buy the homes since they are able to pay for higher insurance. The article also noted that in areas like New Orleans, the poor neighborhoods did not rebuild so the rich could buy into newly built  homes in an exclusive area.

But certain areas remain in critical ocean areas and their prices have gone down by up to 10%

11/9: Another  big one bites the dust (life insurance)

Voya Financial Inc. VOYA 2.82% is the latest U.S. life insurer to exit a business that was once a core part: life insurance sold to individuals.

The company will keep its existing block of life-insurance policies and pay out claims as they come due.

The move follows the withdrawal by MetLife Inc. from sales of new life policies to individuals last year. Then the largest U.S. life insurer by assets, MetLife hived off much of its U.S. retail life-insurance operations into a new company named Brighthouse Financial Inc. Brighthouse became a publicly traded company in August of 2017.

Both Voya and MetLife continue to sell life insurance to employers through group-benefit arrangements. But those and many other insurers face a sluggish environment for selling these policies directly to American families, many of whom are more concerned about outliving their savings than dying prematurely. Voya has a large business selling 401(k) and other tax-advantaged retirement-savings programs.

11/8:  Rising Costs Could Threaten Puerto Rico’s Building Boom

EFM- that's a no brainer article. But costs for the Carolinas, Texas, et al are also rising. The U.S. will leave a lot of areas free of more building simply because more dramatic storms will be coming. Puerto Rico- I am not sure they will ever get back to where they were- which wasn't that great to begin with.

But if we can spend a few hundred million on our Army to roll out some barb wire due to a rampant invasion by a massing hoard of immigrants  carrying children for 1000's of miles with no shelter, ............................

11/8: Coprolalia

an occasional characteristic of Tourette’s syndrome in which the sufferer involuntarily utters socially inappropriate remarks. It's now called Trumpette syndrome

Also called Trumpolalia- though this disease is where the sufferer intends on uttering such remarks and defending it as something else. Will last until death. Even after if some tweets are left in storage for use later on. Called  Narcissimolalia.

(As stated, not all his issues are bad- and I never said they were. But I have stated he is a schmuck many times. The stuff about McCain and women was just insufferable. And unforgivable for me)  

11/8: Why the Federal Budget Deficit Keeps Getting Bigger

USA Today: Why the Federal Budget Deficit Keeps Getting Bigger


Lear Capital Research(Nov 5 2018)

Across the nation, American families have to keep their budgets balanced in order to make ends meet. But the same has never been true of the U.S. federal government, which has routinely run budget deficits by spending more than it brings in through taxes and other revenue sources.

Budget deficits have been a bipartisan effort, with Republicans and Democrats trading positions of power in Congress and the White House without having found any permanent resolutions to the issue.

And a couple of answers

Martin Armstrong Warns Politicians Are Creating The Worst Economic Crash In History | Zero Hedge


Zero Hedge(Nov 5 2018)

'Politicians have totally and completely misunderstood the trends within the global economy and as a result, they are actually creating one of the worst economic debacles in history...

Yellen says rising US deficit unsustainable: 'If I had a magic wand, I would raise taxes'


cnbc.com(Oct 30 2018)

The United States is taking on too much debt right now, a problem that is will only worsen moving forward, former Federal Reserve Chair Janet Yellen said Tuesday.

"If I had a magic wand, I would raise taxes and cut retirement spending," Yellen told CNBC's Steve Liesman at the Charles Schwab Impact conference in Washington, D.C., who characterized the U.S. debt path as "unsustainable."

11/7: Here Come The Robos

Charles Schwab has published a new report, “The Rise of Robo: Americans’ Perspectives and Predictions on the use of Digital Advice,

Despite the benefits of automation with a robo advisor, it is clear that Americans still see value in the ability to interact with a person when needed. Seventy-one percent of people want a robo advisor that also has access to human advice and nearly half (45 percent) not using a robo advisor today would be more likely to use one if it has quick and easy access to human support. Even among millennials, 79 percent want a robo advisor that also provides access to human advice.

Beyond investing, 42 percent of boomers are more comfortable relying on technology than people to answer questions and solve problems, and boomers also report that technology has helped them improve their financial lives: 51 percent say technology gives them more confidence of mind when it comes to finances and 44 percent say technology has helped them reach financial goals. Although robo advice is often thought of as a tool primarily for younger investors, older generations see the appeal as well. In fact, nearly half of baby boomers using a robo advisor today say the service is perfect for their life stage. Among all boomers, 62 percent agree that robo advice takes the emotion out of investing, nearly half (49 percent) say it helps them maintain a diversified portfolio, and 46 percent trust robo advisors to provide more transparent financial advice.

11/7: Climate change

Extreme Weather and the Jet Stream

What Happens in the Arctic Doesn't Stay There

Daniel Swain, a climate scientist at UCLA and the National Center for Atmospheric Research who was not involved with the new research, said the study has some "compelling new evidence on the link between amplified Arctic warming and extreme mid-latitude weather during the summer months."

What happens in the Arctic doesn't stay there. Increased melting of reflective sea ice in summer exposes more dark-colored ocean to absorb heat, and that heats the surrounding land. As Arctic warming races ahead of the rest of the global average, the temperature contrasts that drive the jet stream are reduced, and the river of wind more frequently twists into sharp and slow-moving or stationary waves.

"When the jet stream enters this wavy state, extreme weather tends to occur on either side of the amplified ridges and troughs as the storm track becomes locked in place," Swain said. Then, specific regions experience long periods of cool and stormy or, contrarily, hot and dry weather, he added.

11/7: OIL- the U.S. is doing GREAT

In today’s newsletter, we will take a quick look at some of the critical figures and data in the energy markets this week. 

We will then look at some of the key market movers early this week before providing you with the latest analysis of the top news events taking place in the global energy complex over the past few days. We hope you enjoy.

-    U.S. monthly oil production jumped to 11.3 million barrels per day in August, a new all-time record high. Production in Texas topped 4.6 mb/d in August.

-    The jump was enough to make the U.S. the largest oil producer in the world, overtaking Russia’s 11.2 mb/d. 

-    Pipeline constraints and other bottlenecks were expected to slow development. “However, industry efficiencies in pipeline utilization and increased trucking and rail transport in the region have allowed crude oil production to continue to grow at a higher rate than EIA expected,” the EIA wrote in a report.

11/7: Emotional first Aid Kit for Caregivers

  1. Smile, it’s not funny how often we forget to do this simple act and how well it lifts our spirits 
  2. Call someone who makes you feel good, especially if you haven’t spoken with them in a long time
  3. Have a bite of something sinfully delicious, while being conscious your own dietary limitations. When was the last time you treated yourself to a snack?
  4. Take a bubble bath, once you make sure that your loved one is safe and secure, nothing expresses caregiver self-care better than a leisurely bubble bath
  5. Read, pick up that novel or re-read that motivating poem. When was the last time you turned off the television, turned down the phone and read something nice? (P.S. this tip goes very well with tip number 3.)
  6. Get a massage. It’s like taking a mini vacation. It will relax you and take care of all the tension you build up every day.
  7. Buy yourself some flowers. You deserve it and the sight and smell of something beautiful and fragrant will give you a reason to smile (see number 1).
  8. Take a walk at a pace that allows you to feel the energy of the wind washing over you.
  9. Go shopping buy something “just for you”, something that makes you feel special.
  10. Go online. You can explore different places, find new friends and learn new things. Make the Internet your getaway even when you can’t get out of the house.

11/7: Alzheimers

Approximately 5.5 million Americans have Alzheimer disease or dementia.
Results of a study published in the Journal of Law, Medicine & Ethics indicate that individuals who have knowledge of their Alzheimer disease biomarker status may possibly be exposed to adverse long-term care insurance coverage decisions.

11/7: Priming

Priming studies suggest that decisions can be influenced by apparently irrelevant actions or events that took place just before the cusp of choice. They have been a boom area in psychology over the past decade, and some of their insights have already made it out of the lab and into the toolkits of policy wonks keen on “nudging” the populace.

11/7: The killing of Khashoggi has brought the atrocity of Yemen to the surface. If his death can stop the killing, then he certainly did not die in vain. He may have done more good for humanity than anyone this year. Unfortunately, as of this morning, more bombing is going on

How the War in Yemen Became a Bloody Stalemate — and the Worst Humanitarian Crisis in the World.He may have done more good for humaity

Saudi Arabia thought a bombing campaign would quickly crush its enemies in Yemen. But three years later, the Houthis refuse to give up, even as 14 million people face starvation.

11/7: Managing Lung Disease

The lungs oversee the body’s oxygen needs by taking in air deep into their corridors (called bronchi), allowing for oxygen and carbon dioxide to filter in and out of the blood. The dance of oxygen exchange becomes more complicated with inhaled pollutants of different kinds, such as tobacco smoke, pollution and congestion from infections.

Our lungs also help the body’s metabolic process, releasing more carbon dioxide in situations where the kidneys need help keeping the body’s acid and alkaline quantities balanced. They can release more or less carbon dioxide if needed in a given situation.

Each body system works with the other to keep the body in a state of health. Illness can be acute (short term) or chronic (recurrent). Each disease has its own definition of acute or chronic. Lung disease can be caused by restrictive conditions such as spinal curvature, or obstructive conditions like emphysema. Lung disease is often a mixture of more than one condition, and both restrictive and obstructive conditions can occur at the same time.


The National Institute of Health estimates that 12 million people have been diagnosed with Chronic Obstructive Pulmonary Disease (COPD).The term COPD is a general designation for a group of lung diseases that includes asthma, chronic bronchitis, emphysema and bronchiectasis.

COPD causes shortness of breath, and problems with mucus clearing and oxygen exchange from the lungs to the blood vessels. Each of the diseases that fall under the COPD classification creates different changes in the lung tissue, but essentially similar symptoms and challenges. Air flow is not only obstructed from going deep into the lungs. The ability to exhale properly hampers the next breath coming in.

The airways can collapse because the smaller airways “flop” closed when exhaling. The closed airway may need medication to open them up, or an altered breathing pattern that lets the air flow out more smoothly. Ideally, a combination of the two provides consistent help. The trapping of air prevents easy exchange of oxygen and carbon dioxide, and the “dance” that occurs when a new breath carries in fresh air causes “old” air to block the entry of “new” air. It’s similar to people needing to exit an elevator before others can get in.


Individuals diagnosed in early stages of COPD may have an easier time adapting to lifestyle changes to assist with management of the disease. Eliminating smoking is a first course of action; and the earlier one starts, the simpler it may be.

Therapies like pulmonary rehabilitation are designed to adapt to the current state of health, and provide great benefits at any stage of diagnosis. Pulmonary rehabilitation by competent professionals includes breathing exercises, education on energy conservation and supervised exercise to improve stamina.

In all cases, COPD increases the amount of work it takes to breathe. Conserving energy, especially in later stages, improves breathing and the body’s ability to transfer oxygen. By supplying the body’s oxygen needs adequately, everything from digestion to sleep is positively affected.


Family members and loved ones can have a difficult time with COPD diagnosis, treatment and day-to-day activities. Meals and medication schedules may have to be changed to assist the loved one with maintaining their health. Where meds and meals could be delayed or possibly skipped until a “convenient” time, a stricter schedule may have to be adhered to, delaying family activities.

Friends may not understand a progressive intolerance to certain odors from cleaning solutions, pets or colognes. The COPD patient may have adapted to exposure to some environments, but once diagnosed and advised on making changes, it may be less tolerable.

Mrs. Valorie Bender has been diagnosed with COPD, specifically emphysema. She and her husband Michael had a number of adaptations to make during the first few years after her diagnosis.“Michael is a lot taller than me. If he sprayed air freshener or any kind of spray, I knew to stay out of the room until he was done.” Any spray releasing aerosol will have droplets that can be breathed in. Mrs. Bender learned to stay away from the area until the droplets had settled to avoid the mist penetrating her lungs.

She goes on to explain that adapting to COPD comes over time, and requires some creative thinking. With over a foot difference in height between the Benders, they are able to spot smokers to steer both of them away from second-hand smoke.“You have to be careful of people’s feelings” she indicates. Smokers, with or without a cigarette, carry the odor on their breath or clothing. The second- hand smoke can irritate lungs and trigger the need to use an inhaler. Preceding that would be a “coughing fit.”

Smokers may be used to strangers “commenting” on smoking by faking an intense cough. Mrs. Bender has chosen the middle path of dealing with this by avoiding the situation as much as possible. Family members may forget from time to time, or a new individual may be brought into their circle, requiring fancy footwork in being direct but kind. As her husband and caregiver, Michael Bender’s biggest adjustment was identifying what actions might be needed.“Michael had to learn not to panic when I went into a coughing attack.”


Loved ones with COPD may dig their heels in when it comes to adapting. Caregivers may feel obliged to push the situation. To eliminate stress on both parties, a middle ground is a better path.

When Valorie Bender’s “coughing fits” started, Michael learned to stay as calm as possible and just observe Valorie’s actions. If her handheld inhaler was needed, he could help by getting it for her, or help her to a chair to sit down until the coughing spasm passed. As they began to accept their roles in coping with COPD, caregiver and care receiver panic diminished. Michael learned the general “flow” of her coughing spasm, and that not all episodes are an emergency. Valorie, as the COPD patient, has adapted to letting herself get through the cough experience at her own rate, rather than push herself to “hurry up and get better so as not to panic Michael.”

The Benders have developed a lifestyle that may have limitations they didn’t have before Mrs. Bender’s diagnosis. Their changed lifestyle takes their mutual mental, emotional and physical well-being into the spotlight. Developing coping skills and creative management of activities has improved their relationship and mutual health.

11/6: Very interesting- but would need more investigation

Loss Attitudes in the U.S. Population: Evidence from Dynamically Optimized Sequential Experimentation (DOSE)

Jonathan Chapman, Erik Snowberg, Stephanie Wang and Colin Camerer

No 7262, CESifo Working Paper Series from CESifo Group Munich

Abstract: We introduce DOSE - Dynamically Optimized Sequential Experimentation - and use it to estimate individual-level loss aversion in a representative sample of the U.S. population (N = 2,000). DOSE elicitations are more accurate, more stable across time, and faster to administer than standard methods. We find that around 50% of the U.S. population is loss tolerant. This is counter to earlier findings, which mostly come from lab/student samples, that a strong majority of participants are loss averse. Loss attitudes are correlated with cognitive ability: loss aversion is more prevalent in people with high cognitive ability, and loss tolerance is more common in those with low cognitive ability. We also use DOSE to document facts about risk and time preferences, indicating a high potential for DOSE in future research.

Keywords: dynamic experiments; DOSE; loss aversion; risk preferences; time preferences (search for similar items in EconPapers)
JEL-codes: C81 C90 D81 D90 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc 
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Downloads: (external link)
http://www.cesifo-group.de/DocDL/cesifo1_wp7262.pdf (application/pdf)


1.   Cost-Benefit Analysis in Reasoning


Larbi Alaoui; Antonio Penta


When an individual thinks about a problem, his decision to reason further may involve a tradeoff between cognitive costs and a notion of value. But it is not obvious that this is always the case, and the value of reasoning is not well-defined. This paper analyzes the primitive properties of the reasoning process that must hold for the decision to stop thinking to be represented by a cost-benefit analysis. We find that the properties that characterize the cost-benefit representation are weak and intuitive, suggesting that such a representation is justified for a large class of problems. We then provide additional properties that give more structure to the value of reasoning function, including ‘value of information’ and ‘maximum gain’ representations. We show how our model applies to a variety of settings, including contexts involving sequential heuristics in choice, response time, reasoning in games and research. Our model can also be used to understand economically relevant patterns of behavior for which the cost-benefit approach does not seem to hold. These include choking under pressure and (over)thinking aversion.


cognition and incentives, Choice theory, reasoning, fact-free learning, sequential heuristics


D01 D03 D80 D83





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1.   The causal effect of trust


Björn Bartling; Ernst Fehr; David Huffman; Nick Netzer


Trust affects almost all human relationships – in families, organizations, markets and politics. However, identifying the conditions under which trust, defined as people's beliefs in the trustworthiness of others, has a causal effect on the efficiency of human interactions has proven to be difficult. We show experimentally and theoretically that trust indeed has a causal effect. The duration of the effect depends, however, on whether initial trust variations are supported by multiple equilibria. We study a repeated principal-agent game with multiple equilibria and document empirically that an efficient equilibrium is selected if principals believe that agents are trustworthy, while players coordinate on an inefficient equilibrium if principals believe that agents are untrustworthy. Yet, if we change the institutional environment such that there is a unique equilibrium, initial variations in trust have short-run effects only. Moreover, if we weaken contract enforcement in the latter environment, exogenous variations in trust do not even have a short-run effect. The institutional environment thus appears to be key for whether trust has causal effects and whether the effects are transient or persistent.


Trust, causality, equilibrium selection, belief distortions, incomplete contracts, screening, institutions


C91 D02 D91 E02





11/6: Absolutely true

"Computer Vision and Real Estate: Do Looks Matter and Do Incentives Determine Looks" Fee Download
NBER Working Paper No. w25174

EDWARD L. GLAESER, Harvard University - Department of Economics, Brookings Institution, National Bureau of Economic Research (NBER)
Email: eglaeser@harvard.edu
Harvard University
Massachusetts Institute of Technology (MIT)
Email: naik@mit.edu

How much does the appearance of a house, or its neighbors, impact its price? (EFM- a LOT) Do events that impact the incentives facing homeowners, like foreclosure, impact the maintenance and appearance of a home? Using computer vision techniques, we find that a one standard deviation improvement in the appearance of a home in Boston is associated with a .16 log point increase in the home’s value, or about $68,000 at the sample mean. The additional predictive power created by images is small relative to location and basic home variables, but external images do outperform variables collected by in-person home assessors. A home’s value increases by .4 log points, when its neighbor’s visually predicted value increases by one log point, and more visible neighbors have a larger price impact than less visible neighbors. Homes that went through foreclosure during the 2008-09 financial crisis experienced a .04 log point decline in their appearance-related value, relative to comparable homes, suggesting that foreclosures reduced the incentives to maintain the housing stock. We do not find more depreciation of appearance in rental properties, or more upgrading of appearance by owners before resale.

EFM Buy a whole mess of posies or whatever is colorful and plant them around the house- particularly the front. If the paint is bad, consider repainting. It will bring in more money due to the enhanced curb appeal. Bake cookies, a turkey, use popcorn- the smell makes it feel like home. Use throw rugs over a bad carpet. The buyers know it will need to be replaced but the coverage helps dull the senses. First and foremost- CURB APPEAL

11/6: Another important economic issue

"The Impact of Permanent Residency Delays for STEM PhDs: Who Leaves and Why" Fee Download
NBER Working Paper No. w25175

SHULAMIT KAHN, Boston University - Department of Finance & Economics
Email: skahn@bu.edu
Boston University School of Management, National Bureau of Economic Research (NBER)
Email: mmacgarv@bu.edu

This paper assesses whether delays in obtaining permanent residency status can explain recent declines in the share of Chinese and Indian PhD graduates from US STEM programs who remain in the US after their studies. We find that newly-binding limits on permanent visas for those from China and India with advanced degrees are significantly associated with declines in stay rates. The stay rate of Chinese graduates declines by 2.4 percentage points for each year of delay, while Indian graduates facing delays of at least 5 1/2 years have a stay rate that is 8.9 percentage points lower. The per-country permanent visa cap affects a large share of STEM PhDs who are disproportionately found in fields of study that have been crucial in stimulating US economic growth yet enroll relatively few natives. Finally, results suggest that the growth of science in countries of origin has an important influence on stay rates, while macroeconomic factors such as GDP per capita affect stay rates only via their impact on science funding. We conclude that per-country limits play a significant role in constraining the supply of highly skilled STEM workers in the US economy.

11/6: I cannot swim that well at all. But then there is this guy........................

 A British man who spent five months at sea is believed to be the first person to swim around Britain.

Doing one marathon a day for a couple weeks is bad enough but I am awestruck that any one would attempt this never mind complete.


"Patient vs. Provider Incentives in Long Term Care" Fee Download
NBER Working Paper No. w25178

MARTIN B. HACKMANN, University of California, Los Angeles (UCLA), National Bureau of Economic Research (NBER)
Email: mbhackmann@gmail.com
University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics
Email: vincent.pohl@gmail.com

How do patient and provider incentives affect mode and cost of long-term care? Our analysis of 1 million nursing home stays yields three main insights. First, Medicaid-covered residents prolong their stays instead of transitioning to community-based care due to limited cost-sharing. Second, nursing homes shorten Medicaid stays when capacity binds to admit more profitable out-of-pocket payers. Third, providers react more elastically to financial incentives than patients, so moving to episode-based provider reimbursement is more effective in shortening Medicaid stays than increasing resident cost-sharing. Moreover, we do not find evidence for health improvements due to longer stays for marginal Medicaid beneficiaries.

11/6: Top 15 Cheapest States for Long-Term Care: 2018

From 2004 to 2018, Genworth's study has tracked the pace of increases in the cost of different types of care. For facility and in-home care services, the increase has been on average within a range of 1.5%–3.8% per year.  “That’s an increase of $700 annually for home care and up to $2,500 annually for a private room in a nursing home.”

Paychecks aren’t keeping up with the cost of health care as it is; adding the cost of long-term care to the package is a real struggle for many families — particularly since, the study adds, “At this rate, some care costs are outpacing the U.S. inflation rate of 2.1% by almost double.”

With the annual median cost of care now ranging from $18,720 for adult day care services to $100,375 for a private room in a nursing home, the states in the gallery above offer some of the lowest-cost options.

11/5: Is their love dying?:

North Korea threatens to restart nuclear program unless U.S. lifts sanctions

The strongly worded message from North Korea underlined the impasse in negotiations and exploited a growing rift between Seoul and Washington.

11/4: The Future of Healthcare: A National Survey of Physicians

The 2018 Future of Healthcare report, compiled from the observations of more than 3,400 doctors, has uncovered a complex picture of the attitudes of physicians nationwide toward the important issues facing the industry.

7 Out of 10 Physicians Unwilling to Recommend Healthcare as a Profession

Are changes in healthcare likely to lead you to retire over the next five years?

Healthcare Chart 1


How will value-based care and reimbursement (pay for performance) impact your relationship with patients over the next five years?

11/4: Merkel

The German chancellor may not be leaving the stage immediately, but Angel Merkel's announcement on Monday that she will not seek re-election either as head of government or of her party, the CDU, opens a huge space in EU politics

"The moderate, even-tempered chancellor, affectionately known in Germany as 'Mutti' (mummy), is bowing out as exponents of authoritarianism, nativism, anti-establishment populism and contempt for the west’s post-1945 values consolidate their power across the world."

EFM- going to be very interesting and crucial to calm EU as it faces Brexit


The IRS has announced cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2019. The 2019 limits are contained in Notice 2018-83, released Nov. 1.

The limits for 2019 are as follows.

The limitation under Code Section 402(g)(1) on the exclusion for elective deferrals described in Code Section 402(g)(3) is $19,000. The IRS set the 2018 level at $18,500; the level for 2016 and 2017 was $18,000.

The limitation on deferrals under Code Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations is $19,000 for 2019. The 2018 and 2017 levels were $18,500 and $18,000, respectively.

For an IRA contributor who is not covered by a workplace retirement plan and is married to someone who is covered, the deduction is phased out if the couple’s income is between $193,000 and $203,000; the 2018 levels were $189,000 and $199,000, respectively.

The AGI phase-out range for taxpayers making contributions to a Roth IRA is $193,000 to $203,000 for married couples filing jointly; the 2018 range was $189,000 to $199,000.

For singles and heads of household, the income phase-out range is $122,000 to $137,000; the 2018 range was $120,000 to $135,000.

The AGI limit for the Saver’s Credit (also known as the retirement savings contribution credit) under Code Sections 25B(b)(1)(C) and 25B(b)(1)(D) is:

  • $64,000 for married couples filing jointly; the 2018 level was $63,000;
  • $48,000 for heads of household; the 2018 level was $47,250; and
  • $32,000 for married individuals filing separately and for singles; the 2018 level was $31,500.

The limitation on the annual benefit under a defined benefit plan under Internal Revenue Code Section 415(b)(1)(A) is $225,000; the 2018 level was $220,000, while the level for 2017, 2016 and 2015 was $215,000. For a participant who separated from service before Jan. 1, 2019, the limitation for defined benefit plans under Code Section 415(b)(1)(B) is computed by multiplying the participant’s compensation limitation, as adjusted through 2018, by 1.0264.

The limitation for defined contribution plans under Code Section 415(c)(1)(A) is $56,000; the 2018 and 2017 limits were $55,000 and $54,000, respectively.

The dollar amount under Code Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a five-year distribution period is $1,130,000; the level for 2018 was $1,105,000, and for 2017 it was $1,080,000. The dollar amount used to determine the lengthening of the five-year distribution period is $225,000 for 2019; the 2018 and 2017 levels were $220,000 and $215,000, respectively.

The dollar limitation under Code Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan is set at $180,000 for 2019; the level for 2017 and 2018 was $175,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b) most 457 plans, and the federal government’s Thrift Savings Plan is $6,000, which was also the 2018 level.

The limit for an individual making qualified retirement contributions is $6,000; the limit for 2018 and 2017 was $5,500.

The dollar limitation under Code Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer is $6,000, which was also the level for 2018 and 2017. The dollar limitation under Code Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Code Section 401(k)(11) or Code Section 408(p) for individuals aged 50 or over is $3,000, which was also the level for 2018 and 2017.

The limitation under Code Section 408(p)(2)(E) regarding SIMPLE retirement accounts for 2019 is $13,000, up from $12,500 in 2018.

Compensation Limits

The annual compensation limit under Code Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) is $280,000; the 2018 level was $275,000, and the level 2017 was $270,000.

The limitation used in the definition of a highly compensated employee under Code Section 414(q)(1)(B) for 2019 is $125,000; for 2018 and 2017 it was $120,000.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Code Section 401(a)(17) to be taken into account, is $415,000; it was $405,000 in 2018 and $400,000 in 2017.

The compensation amount under Code Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) is $600, which was also the 2018 level.

The compensation amount under Treas. Reg. §1.61 21(f)(5)(i) concerning the definition of “control employee” for fringe benefit valuation is $110,000 for 2019, which was also the level in 2018; it was $105,000 in 2017. The compensation amount under Treas. Reg. §1.61 21(f)(5)(iii) is $225,000; it was $220,000 in 2018 and $215,000 in 2017.

IRS guidance issued last month clarifies when advisors and other taxpayers can continue to deduct 50% of the cost of food or beverages conducted in the course of doing business.

Prior to enactment of last year’s Tax Cuts and Jobs Act (TCJA), taxpayers generally could deduct 50% of meal expenses and 50% of entertainment expenses that met the “directly related” or “business discussion” exceptions under Code Section 274. Section 274 was amended by the TCJA to disallow a deduction for entertainment expenses. However, the legislation did not specifically address the deductibility of expenses for business meals.

Accordingly, Section 274(n)(1) generally provides that amounts allowable as a deduction for any food or beverage expense cannot exceed 50% of the amount of the allowable expense. Thus, while entertainment expenses are no longer deductible, otherwise allowable meal expenses remain deductible, subject to the 50% limitation.

Where it gets a little complicated is that, while the TCJA did not change the definition of entertainment under Section 274(a)(1), it also did not address the circumstances in which food and beverages might constitute entertainment. The TCJA’s legislative history makes it clear, however, that taxpayers generally may continue to deduct 50% of the food and beverage expenses associated with operating their trade or business.

New Guidance

In Notice 2018-76, the Treasury Department and the IRS said they intend to propose regulations clarifying when business meal expenses are nondeductible entertainment expenses and when they are 50% deductible expenses. Until future regulations become effective, taxpayers may rely on the guidance described in the notice.

Under the guidance, taxpayers may deduct 50% of an otherwise allowable business meal expense if five conditions are met:

  1. the expense is an ordinary and necessary expense under Section 162(a) paid or incurred during the taxable year in carrying on any trade or business;
  2. the expense is not lavish or extravagant under the circumstances;
  3. the taxpayer, or an employee of the taxpayer, is present at the furnishing of the food or beverages;
  4. the food and beverages are provided to a current or potential business customer, client, consultant or similar business contact; and
  5. in the case of food and beverages provided during an entertainment activity, either the food and beverages are purchased separately from the entertainment or their cost is stated separately from the cost of the entertainment on one or more bills, invoices or receipts.

The notice also advises that the entertainment disallowance rule may not be circumvented by inflating the amount charged for food and beverages. It also provides three examples describing the interaction between entertainment and meal expenses and the circumstances under which the 50% meals deduction may be taken by the taxpayer.

As they work on additional guidance, the Treasury Department and IRS are requesting comments concerning whether and what additional guidance is needed to clarify the treatment of entertainment expenses and business meal expenses. In particular, the agencies are interested in whether the definition of entertainment in Section 1.274-2(b)(1)(i) of the regulations should be revised; whether the objective test in section 1.274-2(b)(1)(ii) should be revised; and whether additional examples should be addressed in future guidance.

Comments are requested by Dec. 2, 2018. See the notice for details.

Summary Prospectuses

The SEC explains that proposed new rule 498A would permit the use of two distinct types of contract summary prospectuses that would be voluntary to satisfy the registrant’s section 5(b)(2) obligation:

  • initial summary prospectuses covering variable contracts currently offered to new investors; and
  • updating summary prospectuses for existing investors.

The initial summary prospectus would include:

  • an overview of the contract;
  • a table summarizing certain key information about the contract’s fees, risks and other considerations; and
  • more detailed disclosures relating to fees, purchases, withdrawals and other contract benefits.

The “updating summary prospectus” would include a description of certain changes to the contract that occurred during the previous year, as well as the key information table from the initial summary prospectus.

In addition, certain key information about underlying investor-allocated investment options (typically, mutual funds) would be provided in both the initial summary prospectus and updating summary prospectus

EFM- I doubt the SEC can make it work. Recognize  the SEC makes no demand on how to use a financial calculator. The odds of deciphering a retirement plan is effectively nil.