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We tend to underestimate our future expenses – here’s one way to prevent that

<div class="theconversation-article-body"><em><a href="https://theconversation.com/profiles/ray-charles-chuck-howard-1361224">Ray Charles "Chuck" Howard</a>, <a href="https://theconversation.com/institutions/texas-aandm-university-1672">Texas A&amp;M University</a>; <a href="https://theconversation.com/profiles/abigail-sussman-227057">Abigail Sussman</a>, <a href="https://theconversation.com/institutions/university-of-chicago-952">University of Chicago</a>; <a href="https://theconversation.com/profiles/david-j-hardisty-753777">David J. Hardisty</a>, <a href="https://theconversation.com/institutions/university-of-british-columbia-946">University of British Columbia</a>, and <a href="https://theconversation.com/profiles/marcel-lukas-1236384">Marcel Lukas</a>, <a href="https://theconversation.com/institutions/university-of-st-andrews-1280">University of St Andrews</a></em></p> <h2>The big idea</h2> <p>When asked to estimate how much money they would spend in the future, people underpredicted the total amount by more than C$400 per month. However, when prompted to think about unexpected spending in addition to typical expenses, people made much more accurate predictions.</p> <p>These are the main findings of a series of <a href="https://doi.org/10.1177%2F00222437211068025">studies and experiments that we conducted</a> and which have just been published in the <a href="https://journals.sagepub.com/home/mrj">Journal of Marketing Research</a>.</p> <p>In our first study, we began by asking 187 members of a Canadian credit union to predict their weekly spending for the next five weeks. Then, at the end of each week, we asked them how much they actually spent.</p> <p>For the first four weeks, people underpredicted their weekly spending by about $100 per week or $400 for the month.</p> <p>In the study’s fifth and final week, we ran an experiment to see if we could improve people’s prediction accuracy.</p> <p>Specifically, we randomly assigned participants to one of two groups. In group one, participants estimated their spending for the next week just as they had done in previous weeks. These folks once again significantly underpredicted their spending.</p> <p>In group two, participants were asked to think of three reasons why their spending for the next week might be different than usual before making their estimate. This led them to make higher and much more accurate predictions – coming within just $7 of what they actually spent.</p> <p>Importantly, participants in each group spent roughly the same amount of money that week, on average. The only difference between the two groups was whether they accurately predicted that amount.</p> <p><iframe id="WlDv3" class="tc-infographic-datawrapper" style="border: 0;" src="https://datawrapper.dwcdn.net/WlDv3/3/" width="100%" height="400px" frameborder="0" scrolling="no"></iframe></p> <p>Next, we conducted nine experiments to better understand why people underpredict their spending and whether being prompted to think of unusual expenses helps improve accuracy. In all, over 5,800 people participated in these experiments, including a representative sample of U.S. residents.</p> <p>These experiments revealed two important insights.</p> <p>First, people primarily base their spending predictions on typical expenses like groceries, gasoline and rent. They usually fail to account for irregular – though still common – expenses like car repairs, last-minute concert tickets or one-off health care bills. This is what leads to underprediction.</p> <p>Second, prompting people to think of irregular expenses in addition to typical expenses helps them to make more accurate spending predictions. In our studies, people did not factor in atypical expenses unless we asked them to do so.</p> <h2>Why it matters</h2> <p>Helping people improve the accuracy of their spending predictions could help them improve their financial well-being.</p> <p>Underpredicting expenses can be costly. For example, 12 million Americans <a href="https://www.pewtrusts.org/en/research-and-analysis/reports/2012/07/19/who-borrows-where-they-borrow-and-why">borrow a total of more than $7 billion</a> in payday loans each year because they can’t meet their monthly expenses. These loans typically have extremely high interest rates – <a href="https://www.pewtrusts.org/en/research-and-analysis/data-visualizations/2022/how-well-does-your-state-protect-payday-loan-borrowers">more than 250% in some states</a>.</p> <p>Payday loans also come due in full so quickly that around three in four borrowers <a href="https://www.pewtrusts.org/en/research-and-analysis/reports/2012/07/19/who-borrows-where-they-borrow-and-why">end up borrowing again</a> to pay off the original loan.</p> <p>If consumers could better anticipate how much money they will spend in the future, it might help motivate them to spend less and save more in the present.</p> <p>In fact, one of our studies shows that our suggested prediction strategy <a href="https://doi.org/10.1177/0022243721106802">not only boosted spending estimates</a>, it also increased intentions to save.</p> <h2>What’s next</h2> <p>Members of our research team are currently investigating if, when and why underpredicting one’s expenses may be beneficial. For example, if a person sets an optimistically low budget and actively tracks their spending against it, does that help them reduce their spending?</p> <p>We are also investigating whether people who work in the gig economy show a corresponding tendency to mispredict their future income.<!-- Below is The Conversation's page counter tag. Please DO NOT REMOVE. --><img style="border: none !important; box-shadow: none !important; margin: 0 !important; max-height: 1px !important; max-width: 1px !important; min-height: 1px !important; min-width: 1px !important; opacity: 0 !important; outline: none !important; padding: 0 !important;" src="https://counter.theconversation.com/content/189100/count.gif?distributor=republish-lightbox-basic" alt="The Conversation" width="1" height="1" /><!-- End of code. If you don't see any code above, please get new code from the Advanced tab after you click the republish button. The page counter does not collect any personal data. More info: https://theconversation.com/republishing-guidelines --></p> <p><em><a href="https://theconversation.com/profiles/ray-charles-chuck-howard-1361224">Ray Charles "Chuck" Howard</a>, Assistant Professor of Marketing, <a href="https://theconversation.com/institutions/texas-aandm-university-1672">Texas A&amp;M University</a>; <a href="https://theconversation.com/profiles/abigail-sussman-227057">Abigail Sussman</a>, Professor of Marketing, <a href="https://theconversation.com/institutions/university-of-chicago-952">University of Chicago</a>; <a href="https://theconversation.com/profiles/david-j-hardisty-753777">David J. Hardisty</a>, Assistant Professor of Marketing &amp; Behavioral Science, <a href="https://theconversation.com/institutions/university-of-british-columbia-946">University of British Columbia</a>, and <a href="https://theconversation.com/profiles/marcel-lukas-1236384">Marcel Lukas</a>, Lecturer in Banking and Finance, <a href="https://theconversation.com/institutions/university-of-st-andrews-1280">University of St Andrews</a></em></p> <p><em>Image credits: Shutterstock </em></p> <p><em>This article is republished from <a href="https://theconversation.com">The Conversation</a> under a Creative Commons license. Read the <a href="https://theconversation.com/we-tend-to-underestimate-our-future-expenses-heres-one-way-to-prevent-that-189100">original article</a>.</em></p> </div>

Money & Banking

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Art expert fired over gross underestimation of artefact

<p dir="ltr">A French art expert has been fired after grossly undervaluing a Chinese vase at 4,000 times less than its sale price.</p> <p dir="ltr">The vase in question, which was originally estimated at €2,000 ($3,119 AUD), sold for €9 million ($14,000,000 AUD) at French Osenat auction in Fontainebleau house in early October.</p> <p dir="ltr">The original estimate reflected the expert’s view that it was a 20th-century decorative piece, however buyers suspected that it might date back further to the 18th-century.</p> <p dir="ltr">Despite the date discrepancy, it is still unclear as to what drove the price so much higher. </p> <p dir="ltr">“The expert made a mistake. One person alone against 300 interested Chinese buyers cannot be right,” auction house president Jean-Pierre Osenat told T<a href="https://www.theguardian.com/world/2022/oct/07/why-chinese-vase-valued-at-euros-2000-sold-for-euros-8m-france">he Guardian</a> last week. </p> <p dir="ltr">“He was working for us. He no longer works for us. It was, after all, a serious mistake.”</p> <p dir="ltr">The anonymous seller found the Chinese ‘Tianqiuping’ style vase while clearing out her mother’s estate. </p> <p dir="ltr">While the dragon and cloud motif is greatly sought after among Asian collectors, some believe to have spotted a stamp belonging to 18th-century Chinese emperor Qianlong on the vase.</p> <p dir="ltr">“We don’t know whether [the vase] is old or not or why it sold for such a price,” explained Cédric Laborde, the director of the auction house’s Asian arts department. </p> <p dir="ltr">“The valuation corresponded to what the expert thought. In China, copying something, like an 18th-century vase, is also an art.”</p> <p dir="ltr">The unnamed and now-fired expert is reportedly standing by his original valuation of the Chinese vase.</p> <p dir="ltr"><em>Image credits: Getty Images / Osenat</em></p>

Art

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Did we underestimate the health effects of the Black Summer bushfires?

<div> <div class="copy"> <p>Research led by the Australian National University (ANU) has discovered undocumented health problems among people exposed to bushfire smoke. This suggests that the physical and mental impacts of the <a rel="noreferrer noopener" href="https://cosmosmagazine.com/earth/climate/what-fuelled-australias-black-summer-fires/" target="_blank">Black Summer fires</a> were more extensive than previously thought.</p> <p>The team surveyed more than 2000 residents of areas around Canberra, Australia’s capital city, who were affected by widespread bushfires during the deadly summer of 2019–20. The survey asked a range of questions about physical and mental symptoms, as well as their behavioural changes during that time.</p> <p>“We found that almost every single respondent to our survey experienced at least one physical health symptom that they attributed to the smoke,” says Iain Walker, co-author of the study and a professor of psychology at ANU.</p> <p>The most common physical symptoms were coughing and eye and throat irritation.</p> <p>“In addition, about one-half of our respondents reported symptoms of anxiety and depression, as well as sleep loss,” says Walker.</p> <p>But less than one-fifth of respondents (17%) went to a medical practitioner for help, and only 1% went to hospital. This means that the official rate of people presenting to the health system as a result of bushfire smoke is almost certainly much lower than the actual number of people affected.</p> <p>Walker explains: “It is likely that official statistics greatly underestimate the prevalence of health problems because of the major hurdles in the way of anyone presenting into the system, and we think many residents were motivated to avoid overburdening the health system at a time when it was stretched.”</p> <p>We have long known that bushfire smoke can cause health problems. It contains a mix of particles and gases that can be transported by wind through the atmosphere, including fine particulate matter (particles smaller than 2.5 micrometres in diameter) that impact the functioning of the respiratory and cardiac systems, as well as impair the immune system.</p> <p>Every year, 340,000 premature deaths <a rel="noreferrer noopener" href="https://doi.org/10.1111/j.1440-1843.2010.01868.x" target="_blank">can be attributed</a> to bushfire smoke around the world, and during the Black Summer, <a rel="noreferrer noopener" href="https://doi.org/10.5694/mja2.50511" target="_blank">millions of people</a> were exposed to extreme levels of air pollution.</p> <p>This new research from ANU highlights that bushfire smoke affects mental health as well as physical health.</p> <p>Some of the mental effects were direct, such as anxiety and stress, and others were secondary, such as disruption to normal routines – the likes of sleep and exercise – that promote wellbeing.</p> <p>There was also, Walker says, “significant disruption to relationships with friends, family and community, which are all things that help maintain our wellbeing”.</p> <p>Some of these impacts may sound familiar from COVID-19 lockdowns, but this data was collected in February and March 2020, meaning there was minimal overlap.</p> <p>This adds to the relatively few studies that look directly at the impacts of bushfire smoke on psychological health and wellbeing, separate from exposure to bushfires in general.</p> <p>But while a survey is a good way to gather information from a large number of people, it does have limitations, says Brian Oliver, a <a rel="noreferrer noopener" href="https://theconversation.com/we-know-bushfire-smoke-affects-our-health-but-the-long-term-consequences-are-hazy-129451" target="_blank">respiratory researcher</a> at the University of Technology Sydney and the Woolcock Institute of Medical Research.</p> <p>For example, he says, it is difficult to get a baseline with which to compare the responses.</p> <p>“It’s not clear from the study whether or not they’ve actually compared these people’s symptoms to a similar period,” says Oliver. “So for example, are these the people that would visit a health care professional regularly anyway?”</p> <p>But Oliver says this is still valuable work, especially since it is “incredibly difficult” to access healthcare records in Australia to obtain similar information.</p> <p>“In the Netherlands, for example, there’s one database…and your whole medical history is there,” he says. “But in Australia, we’re not set up for that, so this is a really nice snapshot of something that will allow other researchers to build upon it with more detailed, investigative-type studies.”</p> <p>Walker agrees that it’s becoming increasingly important to investigate the health effects of bushfire smoke.</p> <p>“We have known for some time from the climate science that the frequency, intensity and severity of bushfires in Australia will increase, so it’s something we need to learn to adapt to,” he says. “Part of that is understanding the consequences of things like exposure to bushfire smoke.”</p> <p>Walker recalls that during the Black Summer, the bushfire smoke was so intense in Canberra that it was constantly setting off smoke alarms at all ANU buildings. It was a logistical nightmare – to the point that the university had to close the campus.</p> <p>“It’s kind of a little microcosm of what happens in that sort of widespread catastrophe,” he says. “Services – service support, service delivery – are stretched beyond capacity.”</p> <p>Not only are disasters like bushfires expected to increase, but they are also likely to cascade into each other – imagine, for example, if the Black Summer had overlapped with the peak of COVID.</p> <p>“Broadly, I think we as a nation need to look closely at our various health systems and the ability to cope with a massive surge in demand,” Walker says, referring to not just hospital admissions but access to pharmacies, mental health services and more.</p> <p>“We are conducting further studies to understand how bushfires continue to affect the mental health of people impacted by these fires and the smoke, and how we can build resilience among individuals and communities.”</p> <p>Oliver says these kinds of studies are also important so that “the pollies don’t forget that bushfires have devastating consequences.</p> <p>“The more evidence and the more data we have showing that this is actually what happens in the real world when there are bushfire events, the more likely we are to get an appropriate response in the future.”</p> <p>For example, if there were major fires in Canberra, GPs, psychologists or other health services from Sydney could be called in to help share the burden.</p> <p>There are still many unanswered questions around the impacts of bushfire smoke, including the simple fact that we don’t have a good understanding of the long-term health consequences.</p> <p>This is partly due to lack of funding for health-related research. Even after the Black Summer fires, Oliver says that comparatively little funding was put into research around the impacts of smoke – a total of $5 million was <a rel="noreferrer noopener" href="https://www.health.gov.au/ministers/the-hon-greg-hunt-mp/media/5-million-for-bushfire-related-health-research" target="_blank">offered</a> from the federal government’s Medical Research Future Fund (MRFF) in January 2020.</p> <p>“For the magnitude of these events, it’s not proportional,” he says. “In general, Australia’s [health funding] is quite low.”</p> <p>He gives Singapore as a comparison: the country has a population one-fifth the size of ours, yet the Singaporean government puts more money into medical research than Australia.</p> <p>“The New South Wales government receives more income from gambling than the federal government spends on health and medical research,” adds Oliver.</p> <p>The study was <a rel="noreferrer noopener" href="https://doi.org/10.3389/fpubh.2021.682402" target="_blank">published</a> in a special edition of the journal <em>Frontiers in Public Health</em> devoted to rapid-response research to bushfires.</p> <em>Image credits: Getty Images</em></div> <div id="contributors"> <p><em>This article was originally published on <a rel="noopener" href="https://cosmosmagazine.com/health/body-and-mind/health-effects-of-bushfire-smoke/" target="_blank">cosmosmagazine.com</a> and was written by Lauren Fuge. </em></p> </div> </div>

Body

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Don’t underestimate the value of a hug

<p><strong><em>Celena Ross’s plans to ramp up her celebrant businesses were compromised when she found herself part of the sandwich generation of caring for her elderly mother and grandchildren. Faced with a loss of identity in her transition to semi-retirement, Celena established her website <span style="text-decoration: underline;"><a href="http://www.retireematters.com.au/" target="_blank">Retiree Matters</a></span> to assist others.</em></strong></p> <p>After a couple of long, emotional weeks, as mum struggled with her health and I struggled with the hours and stress of caring, Mum said, “I need a hug! I just need to be held and hugged!”</p> <p>We hugged tightly.</p> <p>We are on this journey together. One which we know will end. When we don’t know. We do know that there are many ups and lots of downs and struggles to go through. A hug. A simple hug between a mother and a daughter. A memorable moment in time.</p> <p>It made me thing about touch. No matter our age we all love to have our hand held, our backs rubbed, or the feel of a warm embrace. How often do we go long periods without touch, without a healing, reassuring love?</p> <p>Seniors who live alone often do not experience the simple act of touch on a daily basis. The reasons vary: spouses and close friends have passed away, families live in other states, or physical limitations may affect activity and contact with others.</p> <p>In our busy lives, it is often easy to forget to show feelings of affection. For the elderly – and single people – a loving touch can make a big difference in their lives.</p> <p>How often do we stop and reach out and touch each other? Hug each other? So much care, support in that hug. It means, you are not alone. It says: I feel your pain. I feel your struggle. I am here for you.</p> <p>According to researchers at Ohio State University, hugging and physical touch becomes increasingly important with age. “The older you are, the more fragile you are physically, so contact becomes increasingly important for good health,” University psychologist Janice Kiecolt-Glaser told USA TODAY. Studies have shown that loneliness, particularly with age, can also increase stress and have adverse health effects. By hugging someone, we instantly feel closer to that person and decrease feelings of loneliness.</p> <p>I feel uplifted each time I see my granddaughters and we hug. I will often reach out to my daughter and give her a hug. And my son – he is like hugging a big teddy bear. But I am reflecting now, I don’t do it enough. </p> <p>A hug also says I love you. I am proud of you.</p> <p>A hug provides solace, safety and tenderness and an overall sense of wellbeing.</p> <p>Touching someone you love often conveys a message in a way words cannot.</p> <p>So although I am so busy, I must now remind myself, to reassure mum, by giving her a hug when I see her. It will help both of us in this journey with ups and downs, together.</p> <p><em>Follow Celena Ross on <strong><span style="text-decoration: underline;"><a href="https://www.facebook.com/Retireematters/" target="_blank">Facebook here.</a></span></strong></em></p> <p><strong><em>If you have a story to share please get in touch at <span style="text-decoration: underline;"><a href="mailto:melody@oversixty.com.au" target="_blank">melody@oversixty.com.au</a></span>.</em></strong></p> <p><strong>Related links:</strong></p> <p><a href="/lifestyle/relationships/2016/09/robyn-lee-on-living-on-my-own/"><strong><em><span style="text-decoration: underline;">I love being on my own</span></em></strong></a></p> <p><a href="/lifestyle/relationships/2016/08/beautiful-quotes-about-friendship-from-over60/"><strong><em><span style="text-decoration: underline;">Beautiful quotes about friendship</span></em></strong></a></p> <p><a href="/lifestyle/relationships/2016/09/6-ways-to-deal-with-aggressive-people/"><em><strong><span style="text-decoration: underline;">6 ways to deal with aggressive people</span></strong></em></a></p>

Relationships