Can you tell when someone is bullshitting you? Hopefully so – because an ability to spot financial bullshit predicts financial well-being.

At least so say the psychology and economics researchers behind the paper: Individual Differences in Susceptibility to Financial Bullshit.1

The researchers claim that young, higher-income males are particularly susceptible to BS. These individuals tend to be overconfident about their level of financial competence, too. Quelle surprise. 

This leaves older, lower-income females as the most sensitive financial bullshit detectors. (Presumably because young males give them plenty of practice from an early age.)

The researchers even built a Financial Bullshit Scale to test consumers’ gullibility vulnerability. 

Sorry, that sentence should read: 

The multi-disciplinary task force of highly-skilled, cognitive behavioural scientists deployed a proprietary FBS^TM system to leverage high-value client identification solutions. 

You get the picture.

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The Financial Bullshit Scale measured participants’ ability to detect meaning within a series of ‘profound’ and contrasting ‘pseudo-profound’ statements. 

The profound statements were classic quotes about finance, as dispensed by luminaries such as Adam Smith and Benjamin Franklin. 

The ‘pseudo-profound’ statements came from an internet Bullshit Generator. 

See if you can spot the difference:

The scores refer to the researchers’ six-point meaningfulness rating: 

• 1 = not meaningful
• 2 = hardly meaningful
• 3 = slightly meaningful
• 4 = rather meaningful
• 5 = meaningful
• 6 = very meaningful

Controversially, Adam Smith was rated as less meaningful than five out of seven spins from the bullshit generator. Pegged as a blatant bullshitter, Smith was axed from the final table. Oh the ignominy!

For the study, a participant’s receptivity to the pseudo-profound statements was subtracted from their receptivity to the wisdom of the financial greats. This generated their financial bullshit score. 

The lower your score, the more easily impressed you are by financial bullshit.

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Further tests probed participants financial knowledge, behaviour, well-being, numeracy, and capacity for cognitive reflection. 

Scores were correlated to establish whether an individual’s bullshit susceptibility could predict their financial behaviour and well-being. They also tested whether a weakness for BS was related to age, gender, education, and other demographic markers.  

The academics evaluated financial behaviour by asking participants how often they engaged in various money-related activities:

• Activities are rated on a five-point scale. 1 = never; 5 = always.

I suspect that many Monevator readers would notch hi-scores for this stuff. Though perhaps NHS-loving Brits would drop points for health insurance.

I’d earn black marks for maxing out credit cards and making minimum loan payments. (Only on 0% terms in my defence as a recovering stoozer). 

A quiz tested financial knowledge:

Again, I’d expect the Monevator massive to scoop A stars for this test.

(You got less than half marks? You’re hereby sentenced to re-read our entire website, starting with this warning on gullibility from 2007). 

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Thankfully the study concludes most people can smell bullshit to some degree. 

Females were typically more bullshit aware than males. 

And surprisingly, lower-income subjects had a better BS-sense than higher-income people. 

The study’s authors commented:

It seems reasonable to believe that as income rise[s] consumers become less vigilant when it comes to financial matters and therefore less alert when it comes to be[ing] affected by impressive financial language.

This seems to fly in the face of anecdotal evidence that lower-income groups are attracted to lotteries. 

Then again, high-income individuals can be easy marks for schemes that flatter their sense of status. ‘Attractive opportunities’ can be hard to resist when teamed up with ‘exclusive access’.  

The good news for Monevator types is that:

Participants with higher levels of numeracy, cognitive reflection, and objective financial knowledge were less susceptible to financial bullshit.

But the researchers warn:

Overconfident consumers (i.e., low objective but high subjective financial knowledge) were most susceptible to financial bullshit. 

File away that away for the next time someone insists their ‘monotonically disintermediated DeFi cloudified solution’ is going to the moon. 

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Other interesting findings included:

The financial bullshit score did not correlate significantly with financial anxiety.

So a well-tuned BS radar did not contribute to how anxious people felt about their finances. 

Fair enough. My concerns about the heating bill aren’t much influenced by my desire to “currency trade like a pro” as per yon swish YouTube ad.

However, people’s financial bullshit score was negatively related to their financial security. 

Just because you’re paranoid doesn’t mean they’re not all out to get you. 

The authors believe gullible types may enjoy an “ignorance-is-bliss effect” when it comes to their subjective financial well-being. 

Finally, having an acute olfactory sensitivity to bovine excrement does not make people better behaved, according to the financial management behaviour scale. 

But the researchers do believe it will help you judge financial products and services that play bullshit bingo with your brain. 

Dynamically delivering organic bovillus faeces?

Well, I can’t wait to hear what you all think. 

For their part, the study’s authors anticipate that future research could:

Advance understanding on how to make individuals better equipped to distill financial communication and navigate the financial landscape.

That’s a laudable aim. 

The boffins also hope their research could cause financial institutions to lower the bullshit cannon that makes BS-savvy customers feel more insecure about their finances. 

On the other hand, perhaps the emerging field of Bullshit Studies will be flipped by corporate interests. 

Retailers infamously scour behavioural psychology literature, looking for cunning ways to route consumers past their sweetie displays.

Either way I don’t think the academics will run out of material anytime soon.

From my own experience, I can any assure budding professors of bullshit that the corporate world just can’t get enough of the stuff.  

Take it steady,

The Accumulator

P.S. Please post your favourite examples of financial bullshit in the comments. 

P.P.S. The Corporate BS Generator was of invaluable assistance in producing this article’s subheads. It’s a compellingly envisioneering career-maximising tool for networked professionals wishing to make an impact.  

1. Published 22 June in the Journal of Behavioral and Experimental Finance. [↩]

What caught my eye this week.

I was going to ramble semi-eloquently about how it feels to finally catch Covid, two and a bit years and three vaccination shots on from when this journey started.

Perhaps I’d reflect on our early speculation and debate about the virus and the economic costs and consequences of trying to contain it, the euphoria at the initial vaccine promise, and lately the long shadows cast by the pandemic. Weigh it all up while I’ve such a deep personal interest.

But honestly, while I’m basically fine – like a terrible flu the first day, followed by a couple of days of a shape-shifting cold – just pulling together the links I collected has sort of zonked me out.

The fatigue is real!

A friend of mine described having Covid at this point in the pandemic as like tripping over a rock on the way home from the war. Funny, but unfortunately this war isn’t over.

My immune system beat off several confirmed close encounters, but this latest overwhelmed my presumably de-escalated defenses. I guess a pattern that will continue for all of us for years.

I’m thankful that from that first rotten day I had faith that I just had to buy time for all that pre-loaded virus-killing weaponry to spin-up again.

Fancifully, I could almost feel it happening!

And so here I am, on day four with just a sort throat and a clogged nose. Tired but touchwood nothing worse.

Please let’s not have another year like 2020 – of blind shivering in the dark – for a couple of generations.

And if you are able to get out and enjoy some Victoria sponge with a slightly boring neighbour this weekend, haven’t we at least all learned not to take that for granted?

[continue reading…]

I have been FIRE (Financial Independence Retire Early) for over a year now and it’s fair to say the novelty has worn off.

No longer do I awake with a start thinking: “Oh God. I must be late for work.” Or wonder why my calendar isn’t packed with back-to-back Zoom calls. Or imagine my phone must be broken because it’s not ringing every ten minutes. 

Life has settled into a new and settled pattern. So how does the reality of FIRE compare with the dream? What did the brochure neglect to mention?

Is FIRE how I imagined it to be?

Well, no. I had a fantasy in my head. That I could somehow do whatever I wanted. That I’d learn tons of new skills and become a ripped FIRE-Warrior-Monk.

A master in love, art, philosophy, combat, comedy, and dance. 

I exaggerate, of course. But for all I dreamt of soaring once the chains fell off, I’m still flapping with the same stumpy duckling wings I’ve always had. 

That’s okay. It’s not a disappointment because fantasies aren’t real. The reality is plenty good enough. 

My relationship with time has changed in weird ways

Time is still the great enemy. Even though I’ve got bathtubs full of the stuff relative to my old life. 

But the reality is you can still only fit so much into a day. And a mysteriously large amount of it vanishes while you deal with life’s mundanities like fixing the toilet, acquiring food, and navigating customer service lines seemingly designed by psychological warfare experts. 

You know how the pensioners in your life claim they’re too busy despite having nothing scheduled bar a doctor’s appointment Tuesday week? 

Now I know why! Once you’re no longer spinning plates on your fingers, arms, ears, and toes, you drop the laser-focus on getting stuff done. 

Instead, you potter about for Britain. Must-dos get ticked off… e…vent…ually. In between breaks for a natter, a walk, a read, a leisurely lunch. 

Left to my own devices I proceed at the pace of a canal boat holiday. 

And it’s glorious! The height of luxury. 

No longer do you feel squeezed like a tube of toothpaste. 

You’re sovereign over your time. You can change the plan whenever. Say “yes” to helping someone out at short notice. Be more emotionally available for those closest to you. Finally catch up with old friends you haven’t seen in years. 

Tons of stuff still doesn’t get done. I feel guilty about it because I haven’t shaken off the modern demand to be productive like a 24/7 computer-controlled factory. 

But god, this is better. 

Real world problems don’t go away

Nobody thinks all their problems will be solved, right? But still, FIRE is presented as some kind of personal End Of History.

Some of the marketing encourages you to believe that FIRE-ees step out of a monochrome world and into a primary-coloured Oz of rainbows, sparkles, and boundless joy. 

But this has been The Accumulators’ worst year for a long time in terms of health. Death and life-threatening and life-limiting illness have struck close to home.

Mrs Accumulator and I are okay but others we love have not fared so well. 

I’ve never had so many reminders that our healthy years run out and it’s always too soon. 

I’m only dwelling on it here because the Monevator community has often debated the time versus money trade-off in the comment threads. 

When should you pull the plug on your peak earning years and focus on living more? 

It’s a very personal question but for me the answer has swung decisively in favour of time.

I haven’t completely renounced ‘work’

That said – and the thing that’s surprised me most – is that I’ve picked up a reasonable amount of paid work without trying.

Does this mean I’m not really FIRE? 

For me, I’m 100% FIRE because I’m in control. 

• These projects are a hobby not a hustle. 
• I do them on my terms. I’m completely free to say no and nobody’s making me do anything I don’t want to.
• I’ve never had to drag my exhausted carcass through a bad day to meet ridiculous deadlines while fighting political trench warfare. 
• If it all dried up tomorrow, I could still pay the bills. I don’t need the money. But I can’t deny it’s nice.

This is a healthy relationship with work which I enjoy. And it’s helped settle me into FIRE for two reasons.

Firstly, knuckling down for two or three days a week to nut out a problem has kept my brain ticking over. It also allows me to feel like I’ve occasionally done something useful. Such as with the social care series. 

Secondly, I need some discipline in my life. Committing to delivering something tangible makes goofing off with Mrs Accumulator all the more pleasurable.

Scoffing up coffee and cake after a weekday amble feels like a wonderful treat. But only because we’ve tricked ourselves into believing we’ve earned it by doing some ‘work’. 

It’s basic carrot-and-stick psychology. Admittedly we’re beating ourselves with a tickling stick but it still works. 

I think there’s something pretty universal about this. There’s a reason why so many FIRE-ees keep starting blogs and YouTube channels.  

Note: hat tip to The Investor who saw this coming and would be livid if I didn’t acknowledge his wisdom on this point.

What about money worries?

Inflation is enemy number one for retirees. So it’s not ideal that UK inflation is scaling heights not seen for over 30 years. 

Our portfolio is roughly where it was a year ago. That means it’s down after inflation. 

Am I worried?

No. 

I haven’t spent a penny from my FIRE warchest. The money trickling in from paid projects has covered my outgoings.

The cash I’d earmarked to spend has been rerouted into the emergency fund, which was looking lightweight. 

Knowing I can pay the bills by doing a little work makes me think we’ll almost certainly be okay in the future. 

Sure, we can Red Team this and scare ourselves with disaster scenarios but I don’t see the point. 

I set my sustainable withdrawal rate (SWR) at 4%. We’d only need to earn a third of our outgoings to reduce it to the so-called perpetual withdrawal rate of 3%. 

Earning half of your expenses drops your SWR to a near-bulletproof 2%. (Global catastrophes aside.)

I’m less concerned now about decumulation than I was when I listed my backup plans to rescue retirement should things go wrong. 

Some Monevator readers have said they’ll be terrified to spend down their resources. But I’ve noticed that people who actually are decumulating typically seem sanguine about it. 

My guess is you soon get used to the idea. 

I actually feel more relaxed about splashing the cash than I did when in full-on accumulator mode. 

Before FIRE, I often regretted inessential spending because it delayed financial independence. 

Now we’re here, I think we might as well enjoy ourselves. 

For the record, our first-year FIRE spend was £25,000 for two. Versus a budget of £26,000. 

Now I didn’t account for 10% inflation or doubling energy bills. We’re heavily exposed to food and heating costs so things will tighten up. 

But it still feels like we’re spending quite freely and we can rein things in if needs be. 

Ultimately, I’m not worried because I believe that if you can FIRE then you’ve probably got what it takes to handle any bumpy years along the way. 

FIRE: my one-year verdict

I don’t do happy-clappy but don’t get me wrong: I’m loving FIRE. It was the right move for me. 

I thought my problem was the low-level, chronic stress of working in a corporate environment. And the heartache of letting down my nearest and dearest who needed me there, more than they needed the money. 

Luckily for me, that diagnosis was correct. FIRE is just the tonic. 

The autonomy alone is worth the entry price. 

They say ‘it’s the journey not the destination’. Well, with FIRE it’s definitely the destination.

The journey is agony. 

But keep going. I think you’ll be glad that you did. 

Take it steady,

The Accumulator