Debt Rule of Thumb for Students

Are too many students overborrowing?

"A good rule of thumb is if you borrow more than your expected starting salary, it's going to be hard to repay your debt, and if you borrow more than twice, you're at a very high risk of default."

Indeed.

I think far too many students look at student loans as free money. It seems like parents, lenders, and other adults in the students' lives should be doing a much better job informing them about the perils of too much debt and the difficulty of paying off massive loans. This is particularly bad when students don't take into account their expected future earnings.

One of my profs in my PhD program encouraged us not to fear student loans and to look at them as cheap money. I always felt like this type of blanket advice presumed far too much about the future.

I may err on the side of being too debt averse, but this propensity has helped keep me from getting into any sort of deep financial mess while in school. When taken too far, debt can be a form of slavery -- restricting future options and financially handicapping students for years (decades?) to come. With the current financial crisis, now more than ever is a time to be extra-careful with those student loans.

(HT Center for College Affordability and Productivity)

Religion, Income, and Voting

An interesting graph from Andrew Gelman. (Follow the link for many more.)



Will Wilkinson comments:

No matter how churchy, really poor people strongly favor Democrats. No matter how rich, people who don’t go to church VERY strongly favor Democrats. Generally, the higher the income, the more church attendance matters to votes, which as Andrew points out suggests that people care more about “social issues” the richer they get. But the relevant “social issues” is very different for religious and non-religious people. But what’s going on toward the top of the income scale?

At all levels of church attendance, having more money increases the chances of a Republican vote until you hit a relatively high level of income — looks like something near the border of the upper-middle and lower-upper class — at which point additional income starts to make a Republican vote a bit less likely. This is true even for very frequent church attenders. Superrich very-frequent churchgoers are evidently pretty [darn] Republican, but less so than almost-rich very-frequent churchgoers, and that’s interesting.

See my other posts on the economics of religion.

Does Respecting the Individual Promote Prosperity?

William Easterly:

To drastically oversimplify, values across different cultures lie along a spectrum between two separate poles: (1) valuing individual autonomy, believing in equal treatment of individuals, reliance on formal law, the same moral standards apply to all, enforcement of morality is between individuals vs. (2) seeing the individual mainly or only as part of the group, different standards of treatment for group insiders and outsiders, morality only applies to interactions within the group, group enforcement of moral standards, reliance on informal rather than formal institutions.

To continue the drastic oversimplification, the values closer to the first pole are more consistent with the kind of good government associated with democratic capitalism, while values closer to the second pole are more associated with authoritarian and collectivist politics and economics. Measurement of all this stuff is a tricky issue, but here are two illustrative associations:

Then it also turns out this same measure can predict which countries are richer or poorer:

Read the whole thing.

The Daily Dozen

1. A growing "Tea Party" movement?
2. 8.3 million U.S. homeowners with negative equity.
   
3. A new Terminator Salvation trailer. Looks like it could be pretty good!
4. Top Financial Portals: Google vs. Yahoo vs. AOL Finance.
5. Dave Ramsey's debt snowball. A strategy for debt reduction.
6. How to write quality blog posts when you have a day job.
   
7. Consumer Reports' best value small cars.
   
8. Barnes & Noble buys an eBook platform.
9. Meet the evil twin of the efficient market hypothesis: Efficient market hypnosis.
   
10. Should chess moves be subject to copyright?
    
11. Ten things that won't matter in ten years' time -- and ten things that will.
12. 5 reasons Kindle Textbook Edition will be a hit.
13. 7 photography exercises for the brand-new photographer.
    

David Pogue Reviews Amazon's Kindle iPhone App

David Pogue:

But for its free, 1.0 version, Amazon was smart to focus on the basics: making the thing idiot-proof, fast and solid. I’m not sure you’d really want to read the great American novel on a three-inch screen, but at least you can kill a few 15-minute standing-in-line sessions by picking up your Kindle book where you left off.

Or not. The true brilliance of Amazon’s move is that you no longer need a Kindle anymore to read current bestsellers in e-book form. Amazon, like thousands of businesses before it (see also: iTunes store, console games), has shifted into selling the razor blades, not the razors. Those $10 downloadable books—800K software files, with no physical material costs, shipping costs or warehousing costs—are surely where the profit is.

In other words, Amazon, having ignited new interest in the whole e-book concept with its $360 Kindle reader, is already steering itself from hardware back to software, to e-books as a service, to the skills where it already excels.

Clever.

Clever indeed.

Read another review here.

My only drinking problem…

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US Auto Sales Plunged 41% in February

We can bail out their companies, but that doesn't mean people will buy their cars:

U.S. auto sales plunged yet again in February, falling 41% to 688,000 vehicles, according to Autodata Corp. The steep drop left car makers worried the market may not yet have bottomed out.

Almost all auto makers suffered significant setbacks. General Motors Corp.'s sales fell 53% from February 2008 to 126,170 cars and light trucks while Ford Motor Co.'s dropped 48% to 99,050.

Import brands also suffered. Toyota Motor Corp.'s sales slid 40% to 109,583, Honda Motor Co.'s fell 38% to 71,575 and Nissan Motor Co.'s dropped 37% to 54,249.

So exactly why are we bailing these guys out? Call me crazy, but keeping people working in poorly managed companies to make things nobody wants to buy doesn't seem like a very good way to stimulate the economy.

Nights and Weekends

(PhD Comics)

What One Economist Has Learned From the Finanical Crisis

Seth Roberts:

Three things, he said:

1. Finance professors have all been working for hedge funds. Their research has been about how to price derivatives and options. In other areas of economics, the research topics are much broader and include policy questions.
2. Macroeconomics hasn’t made progress since the 1930s.
3. Recommendations what to do about the crisis, even from economics professors, are based on very little they learned in graduate school. They hardly differ from opinions. Listening to his colleagues’ recommendations, he thought they would be backed up by something solid. They weren’t.

As I've written several times before, I have been highly skeptical of the validity of most of macroeconomics. I wish I had been wrong.

The Daily Dozen

1. Scrimp to save more than money.
   
2. Humility is more important than confidence.
   
3. PadMapper puts Craigslist rentals on Google Map.
   
4. Free Kindle books at the Kindle store.
5. A great example of why you need to diversify.
   
6. Airlines are losing less luggage... but only because passengers are checking fewer bags.
   
7. A tablet netbook with a removable keyboard. It runs on Android and gets 10-15 hours of battery life too.
8. The myth of economic recovery?
   
9. With the eBook revolution upon us, is now the time for open source textbooks? If a Kindle TextBook Edition ever comes out, here are legal arguments publishers will use to attack it. Another reason to go open source?
10. The economic value of popularity.
11. Macroeconomists who favor elegant theory over empirical relevance are suffering on the job market. Read on to see what this has to do with law and economics.
    
12. The MacBook Air by Asus?
    

Quantum physics cat . . .

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iPhone Kindle App Syncs Reading Location Across Devices

I mentioned earlier today that it would be cool if Amazon would develop software that syncs your reading location across several devices. When it comes to their new iPhone app, it looks like Amazon is one step ahead of me:

[B]ig news today as Amazon has released a Kindle application for the iPhone. It is, well, kind of mindblowing. I downloaded the app, signed into my Amazon account, and every book I purchased on my Kindle was instantly available to me on my iPhone. Better yet, I navigated to the book I'm currently reading and it picked up to the exact page where I had left off on my Kindle!! Wow. Wow wow. My apologies to SF Muni employees, who are probably still finding pieces of my exploded head.

Of course, I don't find iPhones particularly easy to read on for long stretches, so I'm still glad I have a Kindle and its e-ink screen, but this will be awesome in a pinch. The main drawback is that they don't have direct shopping through the App and you have to buy books either through your Kindle or on the Internet.

James Kendrick also tested it out and thinks "it rocks!" I suspect this will help boost both sales of Kindles and iPhones and is a win-win for both Amazon and Apple. (As an existing Kindle owner, this certainly makes the iPhone more appealing to me.)

Read more of Kendricks thoughts and watch this video review:



Here is my post from last month about reading Kindle books on iPhones.

P.S. -- A good question is whether or not this will kill every other iPhone reading App? Another question is if this will help incentivize Apple to come out with a larger version (9" perhaps?) of the iPod Touch?

(HT Cousin Amy)

As the Dow Keeps Dropping, the President is Running Out of People to Blame

(A graph of the Dow Jones Industrial average since the passage of the stimulus bill.)

The Wall Street Journal:

As 2009 opened, three weeks before Barack Obama took office, the Dow Jones Industrial Average closed at 9034 on January 2, its highest level since the autumn panic. Yesterday the Dow fell another 4.24% to 6763, for an overall decline of 25% in two months and to its lowest level since 1997. The dismaying message here is that President Obama's policies have become part of the economy's problem.

Americans have welcomed the Obama era in the same spirit of hope the President campaigned on. But after five weeks in office, it's become clear that Mr. Obama's policies are slowing, if not stopping, what would otherwise be the normal process of economic recovery. From punishing business to squandering scarce national public resources, Team Obama is creating more uncertainty and less confidence -- and thus a longer period of recession or subpar growth.

That's just what I was saying a couple days ago.

The Daily Dozen

1. Turn your iPhone into a Kindle. Amazon releases a free app that lets you buy Kindle books for your iPhone. If you also have a Kindle, you can access your entire library. It will only be a matter of time before Amazon releases this software for other devices as well -- for comptuers (including netbooks), smartphones, and other eReaders? For a while now, I've thought Amazon had it's greatest strength in content provision, not hardware manufacturing. Looks like they are going to start leveraging this strength. What will be particularly nice is if they create software that syncs where you left off your reading when you move from one device ot the next. I'm sure that's coming soon.
   
2. Todd Zywicki talks with Russ Roberts on debt and bankruptcy.
3. Recession vacations: do more with less.
4. How to set-up a super-office with 6 monitors and more.
5. Tom Hazlett on the switchoff of analog TV.
6. Surprise, surprise; PC sales expected to drop in 2009. Who knew?
7. What happens to relationships when men lose their traditional bread winner role?
8. How to be Jason Bourne: Multiple passports, Swiss banking, and crossing borders.
9. ESV Study Bible Online: Free for the month of March.
10. The difference between CMOS and CCD sensors in digital cameras.
    
11. No tenure? No problem.
12. Japan's crisis of the mind. "Washington may see Japan, the world’s second-largest economy, as a powerful nation, but the Japanese don’t see themselves in the same light." Having worked closely with the Japanese for six years, I agree.
    

DANCE

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The Onyx Boox eReader

This should get announced in a few days. Here are some promising specs:

1. The specifications page lists 6″, 8″ and 9.7″ screens.
2. The web browser uses WebKit customized for the eInk screen. Using WebKit is pretty impressive - both Safari and Chrome use it too.
3. They have a pretty good looking folders system, and use thumbnails etc. well.
4. Its a touch screen with a pen included and handwriting recognition.
5. Support for Wi-Fi, CDMA, EVDO, and GSM is listed as optional.
6. It supports a wide variety of formats including ePub, PDF, and Amazon’s own Mobipocket (.prc).
7. There’s no keyboard and there’s an iPod scroll wheel type control on the front.
8. There’s a rather intriguing button on the back identical in design to the scroll wheel on the front.
9. They say - “full screen scribble will bring you real handwriting experience - Search, annotate, highlight, and input text easily with a pen.”
10. Also support for multiple languages - English, French, German, Spanish, Arabic, Japanese, Simple and Traditional Chinese.

I particularly like the thought of a 9.7" screen that can display PDFs. As I've said before, the first company to release an affordable eReader that can display PDFs well will likely get my business.

Here's a video about the device. I must say, it looks pretty slick!



It also looks like iRiver is about to enter the fray.

(HT TeleRead)

The Daily Dozen

1. Apple announces refreshed iMac, Mac Pro, and Mac Mini.
2. Foreclosure rates aren't really that high... unless you live in Arizona, California, Florida, or Nevada.
3. How low will the stock market go?
4. Should you go to graduate school in a recession? Penelope Trunk says no. Tyler Cowen doesn't completely agree. Now is certainly a bad time to go to law school.
5. Third year law students are getting hosed.
   
6. Richard Posner writes faster than publishers can publish.
   
7. The Eee Top 18-inch touchscreen computer is now on sale for pre-order Amazon for $599.
   
8. Was recent productivity growth an illusion?
9. Faith in God hurts academic law school performance?  That might explain a few things!
10. Smart kid's careers are often shaped by what others expect?
11. Prison spending outpaces all but Medicaid.  "One in every 31 adults is in prison, on parole or probation, at a cost to the states of $47 billion in 2008, according to a new study."
12. The better, cheaper mortgage fix.

naps

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The Lost Decade

Actually, it's worse that that. Today, the Dow dropped below 7,000 for the first time since 1997. The government's current spending spree and talk of massive legislation is only adding to market uncertainty, spooking investors, and making things worse. Obama's constant pessimism isn't helping matters.

More on this here.

Hope for America

Greg Mankiw:

According to a new Rasmussen Reports telephone survey, 59% of voters still agree with Ronald Reagan’s inaugural address statement that “government is not the solution to our problem; government is the problem.”. Only 28% disagree, and 14% are not sure.

Will This Be the Kindle 3?

(Actually, it's just a mock-up of Plastic Logic's eReader.)

Engadget:

Now that the Kindle 2 is out, it's time to get back onto the Kindle rumor mill. You might recall that in addition to the early leaks of the device that become the Kindle 2, a bigger screened Kindle mimicking an 8.5 x 11-inch sheet of paper for students was rumored. According to DigiTimes' sources apparently within Prime View International (PVI), the makers of the Kindle's electrophoretic display (EPD), Amazon's next Kindle will launch by the end of this year and will be "larger in size and equipped with touch functions." Of course, that's no big stretch to the imagination -- Plastic Logic has been kicking around its 8.5 x 11-inch touchscreen eBook reader ('Shopped with a Kindle logo above) for months now with a plan to launch in 2010. Let's just see if Amazon can get this out in time for the back to school selling season.

I love my Kindle 2, but whoever gets an eReader out the door that does a good job at reading any PDF file at an affordable price will have my business.

P.S. -- I am interested to see how well Foxit's eSlick will work. It is slightly smaller than the Kindle, has a similarly sized screen, and sells for $259. First shipments should be delivered sometime this month. I expect it to display PDFs well, but the screen may be a little small to adequately view them.

The Daily Dozen

1. The market for romance goes from bullish to sheepish. Are guys with less to spend less of a catch?
   
2. Free Kindle books from Amazon. Including many by Mark Twain.
3. Is rationalization the key to happiness?
4. James Dobson steps down as chairman of Focus on the Family.
5. Should you avoid identifying with anything? I normally like Paul Graham's essays, but am not sure I agree with this one.
6. A way of seeing: How to travel at home.
7. Nikon to release a new DSLR with HD video and swivel display?
8. 20 uses for netbooks in your home.
9. Doodling increases focus and recall.
10. State Department releases annual country reports on human rights.
11. Why some Hutus are returning to Rwanda after long years away.
12. The Death of Copyright? "There are many reasons why copyright law as we know it is fundamentally ill-suited for the networked age, and why it will (if we are fortunate, and smart) look very, very different 10 or 20 years from now."

Gotz nu web-kam!

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