[gxs]

You know, I hate to sound elitist or conceited or whatever word you may want to use to describe the following statement, but it's true: there is a huge element to these decisions that goes beyond education and background. At the end of the day, it boils down to plain old reasoning ability.

I have a friend who is pretty well educated in a non stem field and is decently successful (lower middle class).

We both drive the same car that is currently worth 9k (a car which he shouldn't have gotten either, but I digress).

We spent an hour the other day debating why he shouldn't buy a brand new 22k car that will save him 900 per year on gas.

For the life of me I just couldn't get him to see why the best decision financially was to drive his current car into the ground.

His argument was literally, in 10 years my new car will be worth more than yours. I was dumbfounded - I could not get him to see that it was coming at a cost of an additional 13k up front. He said it in a "haha got you! - you forgot about that!" kind of way.

I just gave up.

At what point do we just admit that no matter the education level, no matter the background, some actors in the economy just won't make the most prudent choice?

[chrismcb]

Are you sure the best decision financially is to drive the current car into the ground? We don't have enough context toy make an informed decision. But saving 1000+ a year in gas (that continues to go up) to have a brand new, relatively maintenance free car for the next several years isn't necessarily a horrible decision

[bradleyland]

It is incredibly difficult to beat the "drive it in to the ground" strategy on a strict fiscal basis alone. Even a $22k car will come with a ~$400/month car payment. That's $4,800/year in car repairs; which is a lot of repairs. That's almost 1370 gallons of gas (at around ~$3.50/gallon). You can drive 34,250 miles on that amount of gas if your current car averages around 25 MPG (not hard if you already own a compact car). It really only starts making sense when the older car requires so many repairs that it becomes unreliable. At that point, it starts making you late to work, or causes inconveniences that are untenable.

There are lots of reasons to buy a new car. I drive a new car every three years, so I lease. Fiscally, the decision to drive a new car every three years is about the worst decision you can make. I make that decision in the light of day though. I'm able to afford it, and we still maintain a household savings rate of 30%. Yes, I could increase that savings percentage even more by paying cash for a car and driving it in to the ground, but I choose not to. I choose the luxury of a new car in spite of its fiscal downsides.

[crassus2]

Education can only make up for so much of a deficit in cognitive ability. We know that cognitive ability and income levels are correlated.

[gxs]

Correlated, sure. But you can easily argue that it's as simple as people with higher cognitive ability can figure out ways to increase their income level better than others.

Or you could argue, education is correlated with higher income, so educate people, increase their income, and hope that their abilities go up as well.

Not sure if we're disagreeing or agreeing here, but all I am saying the problem isn't always as easy as, let's just give poor people more money and education. Problem solved.

At some point we'll have to recognized these difference in people, but it's embedded deeply in our culture that everyone is created equal. Which to be honest, I love.

[maxerickson]

I wonder if we just need words/abstractions that narrowly identify some of these things.

So if we could very quickly call something an attack on in-out group psychology (you know, like aggressive branding, or professional sports, or so called amateur sports, or much of political discourse or ...), maybe it makes it easier to sway people to resist it.

I guess if you figure out the right package, you do better than when you wave your hands around and mumble incoherently.

For financing, a first step is to point out that the real cost is often hidden in the length of the contract.

[crassus2]

We do more good for more people when our beliefs reflect reality, rather than what we wish were true. If it turns out that the cognitive science research showing that some people are smarter than others is correct we might decide that merely educating poor people will not convince them to act like less-poor people.

[wlievens]

What will, then, beyond "merely" educating?

[albedoa]

Can you show us the math you used to argue your point? Maybe using 3–5 years instead of 10.