Diversions January 12, 2012

How Much Would You Pay For That?

A study published in the Journal of Consumer Research suggests that we overestimate what others will pay for consumer goods. 
Reported by

Shane Frederick, an associate professor of marketing at the Yale School of Management, ran a series of experiments to discover how good people were at estimating what others might pay for various consumer goods including teddy bears, artwork, smoked salmon and books. 

Thirty-five students at the Massachusetts Institute of Technology (MIT) bid on 10 products and estimated what the median bid would be. On average, they overestimated the median bid by 43%, according to the study.

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People’s overestimation of what others will pay even applied to imaginary goods, such as a magic pill that allows one to speak French.

The estimates were better for non-monetary payments, or manual labor, such as the number of pencils a person would sharpen in order to obtain the good.

 

The Markets January 11, 2012

Investors Express Optimism for Retirement Plan Investing

The John Hancock Investor Sentiment Index score improved in the fourth quarter of 2011 from the annual low measured in the year’s third quarter.
Reported by

Many of those surveyed feel better about investing in retirement vehicles, like 401(k)s and IRAs. Nearly three-fourths of investors said they believe now is a good or very good time to be investing in retirement products such as 401(k) plans and IRAs (73% each). Both of these figures represent meaningful increases over last quarter’s lows (66% for 401(k)s and 67% for IRAs).   

More than half of all investors surveyed said they expect to be in a better position financially two years from now compared with today. A little more than a third of investors think they are in a better financial position today compared with two years ago, with 41% saying they are in about the same position, and 25% saying they are worse off.   

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Two-thirds of those surveyed (65%) believe that fewer than 10% of Americans actually make and keep New Year’s resolutions. However, those who are employed say that saving for retirement is their top financial priority for 2012. More than one-quarter (27%) say that trimming household budgets and reducing their debt levels are among their resolutions.   

Financial New Year’s resolutions appear directly related to investors’ primary concerns for the new year ahead, which include declining investment values (37%) and not being able to accumulate enough savings for retirement (18%).  

Investors continue to think long-term (95%) and say they are focused on savings (90%).

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