(The Absence of) ERE in Academic Literature

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(The Absence of) ERE in Academic Literature

Post by Fish » Fri Dec 30, 2016 7:12 pm

In the latest climate change thread, Jacob advocates that when learning about a new subject (particularly a controversial one), one should seek quality sources of information such as books and peer-reviewed journals, as opposed to YouTube and blogs.

Considering that extreme early retirement is still controversial outside of the FIRE niche, where should the beginner start if utilizing only quality sources of information? The ERE book is a good starting point, but would it be disqualified due to being (1) self-published and (2) not peer-reviewed by the personal finance establishment? Possible academic sources include the Journal of Retirement and Journal of Personal Finance. But academic research caters to the needs of the masses, and there seems to be a built-in assumption of old-age retirement. Perhaps it is time for a Journal of Early Retirement?

Why does it appear that the pioneering work in extreme early retirement came from an enthusiast (Jacob) and not from the academic establishment? Did the academics completely miss the connection between savings rate and retirement age? Or if they were aware of the relevant equations, did they fail to explore the mathematical domain to see the interesting consequences when savings rate exceeds 50% or 75%? Was the concept of an everyman saving 50% or 75% of income dismissed as impossible? Or supposing that the academics had all the pieces, was the dissemination of FIRE concepts halted by an indifferent public or anti-ERE conspiracy? But granted, FIRE math is relatively simple and easy to verify (when using the usual assumptions) that maybe it just falls into the realm of "obvious" and no one thought it worthy of publication?

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Re: (The Absence of) ERE in Academic Literature

Post by jacob » Fri Dec 30, 2016 7:45 pm

They were/are certainly aware of the relevant equations which should be familiar to any first or second year econ/fin-student. The typical recommendation of a 15% savings rate corresponds to a 40 year work life. For all intents and purposes, professionals seem to consider the "40 years" a fixed parameter and the savings rate a variable to be solved for leading to the 15% result. If markets are happy they tend to adjust it down to 10% ... ROI is obviously an independent (presumed fixed) variable here.

The few CFP/CFAs I've talked to in that regard have told me that it just never occurred to them to explore the full parameter space, e.g. insert a savings rate of 75% to see what happens. This is still the reaction I get when the extreme early retirement aspect is evaluated by a finance professional. First, they reflexively think ERE sounds totally unrealistic. Then they do the math with their standard equations. Sometimes I have to explain how to do it properly---typically when they simplify by linearizing (15% is close to 0% ... 75% is not).

The reason that the equations and plots are in the book is that given the lack of exploration of this part of domain space. I have never seen anyone make graphs connection savings rate and work years directly. The math is obvious, but that way of looking at it is not. I still think people don't like graphs and equations(*) that much. Right after I published the book, a few bloggers (MMM being the highest profile) and posters used the graphs for a while, but today most prefer Apps.

(*) Sometimes I get flak from complainypants who think I just put equations in the book to dazzle the riffraff and make myself look smart. Such are some people...

However, it should also be noted that for that part, I just did a formal exploration of well-known finance math as applied to ER. The YMOYL crossover curve is an "algorithmic" approach to solving the same problem (cf my analytic approach). Certainly, people have been doing their own ER calculations with spreadsheets or similar for decades.

There's not really any new ingredients in most of ERE. What is/was new is the way the ingredients are put together. YMOYL had a crossover algo (to be worked out on a sheet of paper on the fridge... a pretty clever and pedagogical way to do it) and the method to reduced expenses was voluntary simplicity. ERE had an analytic formula and the method to reduced expenses was a systems-approach similar to what one finds in permaculture, management consulting, operations research, ... so there's very little voluntary simplicity about ERE ... it's rather the opposite: voluntary renaissance man (which can be anything but simple if one is trying to learn a bunch of new skills at the same time).

Add a bunch of other stuff as well (see chapter 3--5). Much of it likely came out of the zeitgeist at the time. For example, the exploration of different kinds of capital. After publication, I learned that permaculture folks had done more or less the same thing at the same time: http://www.appleseedpermaculture.com/8- ... f-capital/ (but their choices were slightly different... for example, they have "spiritual capital" in their list and I don't ... because I never even considered spirituality to be useful in that sense... very stereotypically INTJ of me). Reverse fishbone diagrams to work out the homeotelic/heterotelic aspects of the web of goals are as far as I know my [original] idea, but it could be argued that it's really not that novel to take a well-known idea (fishbone diagrams) and just change it around.

As far as publishing it academically ... I think the problem may be that ERE is very interdisciplinary and open-ended whereas journals tend by reductionist and prefer close-ended solutions.

It also seems to me that not being an academic allows me certain freedoms/removes a lot of constraints in terms of how far I can go and how fast I can move on certain subjects. I don't think PF is much different than many other fields. It's not unusual for engineering and methods to lead scientific understanding. Diet, exercise, and longevity would be obvious examples of something where it's really hard to "do science" on a new method...

I'm personally more interested in doing research that has immediate consequence and impact for people than doing some statistical study of a detail that will be interesting to 5 people in the world. It's a big part of the reason why I quit my academic science career.

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Re: (The Absence of) ERE in Academic Literature

Post by fiby41 » Fri Dec 30, 2016 11:24 pm

Who do you think would fund it and its publication?

Certainly not the government. The more longer you work, the more it gets to take away.

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Re: (The Absence of) ERE in Academic Literature

Post by C40 » Sat Dec 31, 2016 1:17 am

jacob wrote:... people don't like graphs and equations(*) that much.....
The intentionally unenlightened.. Ugh

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Re: (The Absence of) ERE in Academic Literature

Post by Fish » Sat Dec 31, 2016 4:34 am

From a brief literature review, it appears the the state of retirement thinking in 2007 (pre-ERE) is epitomized by this article: http://fiscalisadvisory.com/assets/pdfs ... elines.pdf The purpose of the study is to solve for the required savings rate as a function of accumulation initial conditions (starting age and assets). Retirement age is fixed at 65. Results are calculated with exacting precision including Social Security benefit estimates and Monte Carlo simulations of investment performance.

At the time, it was assumed that spending in retirement was proportional to pre-retirement income (usually 80%). This paper claims to innovate on the retirement income target by making it net of savings. This is getting quite close to our modern concept of retirement income matching actual spending.
R. Ibbotson et. al., 'National Savings Rate Guideline for Individuals', [i]J. Financial Planning[/i] (2007) wrote:Third, we used a more sophisticated approach by using the retirement ratio of 80 percent based on pre-retirement net income as defined as gross income less retirement savings. We used net income because someone who saves for retirement has reduced their pre-retirement living expenses, and for most, it typically follows that they also reduce their post-retirement expenses. For individuals who are saving a lot, this can be significant. Lower retirement expenses means less needed capital. You could say the more one saves, the less one needs to save.
I am starting to understand why the concept of FIRE did not emerge from academia, due to research predominantly focused on ever more precise calculations of a retirement problem with standard assumptions. Little effort was made to question the assumptions and expand the domain of the problem (e.g. earlier retirement). That task would fall to practicing (non-academic) financial planners to apply these methods to their clients' unique situations.

Proving the possibility of extreme early retirement required brilliance in two areas. First, a simplification of the problem to make it mathematically tractable. This means assuming job income and living expenses constant from the start of the accumulation period, and ignoring old-age pension income. Second, actually putting it in practice and proving that it could be done with a median income. The literature still assumes expenses proportional to income and I don't think I've seen an academic source within the PF-domain which suggests some form of human capital can partially substitute for monetary expenses.

Presumably, the purpose of solving for a (minimum) savings rate is to maximize consumption spending. It is implicitly assumed that more consumption is desirable. Post-ERE, FIRE thinkers now tinker with the more interesting problem of varying savings rate and solving for the retirement age. This approach assumes implicitly that minimizing the duration of the working career is desirable. I wonder if the communication problem between FIRE and non-FIRE people could be partly due to these different "cost function" assumptions being left unstated.

I could not really find any examples of extreme early retirement being discussed in journals. Maybe I'm not using the correct search terms? But there is a mention in this post-ERE era paper which hints at the possibility of high savings rates. From http://www.cfapubs.org/doi/pdf/10.2469/faj.v69.n6.4
S. Sexauer and L. Siegel, 'A Pension Promise to Oneself', [i]Financial Analysts Journal[/i] (2013) wrote:Also note that even with a 2% real return assumption, achieving the savings goal requires a much higher savings rate than most investors ever achieve. This shows one of our major points: To spread the income from 40 years of work over up to 80 years of consumption takes a lot of savings, indeed.

If it is surprising how high the required savings rate is, consider the following: You are trying to work for half the years in which you are likely to be consuming. With a real return of zero and no help from Social Security or from a lower standard-of-living expectation in retirement, you would have to save half your income. One more time, just for fun: Save half your income.

It is very difficult to save half one's income, so we should obviously try to lower that number -- through annuitization, positive investment returns, PFAs, and anything else that helps.
In addition to my now-academic interest in personal finance, part of the purpose of bringing up this question and going through this exercise was inspired by Jacob's post in the CC thread and its context. I thought (and still believe) that we are on the cutting edge of personal finance. But how do we know that we're not the nutters?

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Re: (The Absence of) ERE in Academic Literature

Post by FBeyer » Sat Dec 31, 2016 6:12 am

We ARE the nutters... Question is: does it matter?

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Re: (The Absence of) ERE in Academic Literature

Post by ducknalddon » Sat Dec 31, 2016 8:16 am

I suspect the academics are correct in their assumptions, Keynes prediction that we would only need to work 15 hours a week isn't so far from the ERE mindset but that's not how things turned out.

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Re: (The Absence of) ERE in Academic Literature

Post by jacob » Sat Dec 31, 2016 10:02 am

Fish wrote:But how do we know that we're not the nutters?
As far as the financials go, we know it from the math I provided. This is why I provided it(*). Otherwise it seems quite unintuitive that one only needs to work 5 years. Of course, the 5 years is also arbitrary and just happened to be my number based on a middle-income level (40k). Had I had a high income, it would have been lower.

Doing the math is what clinches the argument for PF professionals ... not all the systems-theory (which is still not that widely adopted) ... probably the only shift to systems-thinking is the shift to the "live in a small place close to work and food so you don't need a car and get some exercise and cook yourself" which is a general recommendation everywhere now, whereas pre-2010, the focus was still on frugality tips like DIY laundry detergent, coupon clipping, and 1000 tips to save a dollar on all kinds of things. However, that's not really "thinking" as much as it's just picking a result/tip w/o realizing the whys.

Of course, the requirement to not only be able to do the math but more importantly trust the math is what still holds back a lot of people.

(*) And because I hate it when textbooks leave the details "as an exercise for the student", I also included all the intermediate steps. During the early years (2010-2013) it was popular for people to replicate the calculations on their own. The main snag back then was the numerical solution at the end (which I did in Java). Apparently, Excel can also solve directly for it.

But notice, that ERE has not been laid out as counter-claim to conventional PF as "discovered by Dr Jacob Fisker". Rather than write a personal autoobiography (which would probably have been more popular for a general audience), I really wrote the textbook... or at least leaned a lot closer to that both in depth and style. I do/did not expect people to trust me at my word-of-authority but to work things out on their own. I also realized that my situation was/is special and therefore that a how-to-cook book would be better than a recipe-book.

So in the CC analogy, ERE doesn't actually challenge conventional PF understanding. We use the same financial calculations (both are "basic physics"). ERE doesn't rely on a brilliant new scheme, like the 4HWW did (dropshipping brain powder or churning ebooks for profit). It just adds on top of it. Maybe compare to how quantum mechanics adds on top of Newtonian mechanics because of the correspondence principle, IOW, QM explains macro-physics at large quantum numbers meaning that Newtonian physics is an innate simplification of QM. And thus you can use QM to calculate real cannon ball trajectories.

Much like you can use ERE to either go extreme (like me insofar we set the scale by my example) or you can use the same structure but do less implementation and reach 50% savings rates ... or even less and go back to a salaryman with a 10% savings rate. (See chap 3 ... in that sense, ERE is an expansion of the well-known salaryman, workman, and businessman models that are now put in proper perspective. This perspective doesn't change how these three function.)

There's as far as I know not anything inside the "ERE-theory" that's not self-consistent and inconsistent with standard theory.

ERE is rather a collection of old boring/well-known methods that our grand/great-grand parents would be quite familiar with. This is also why ERE is quite robust (Works for everybody)---it only requires the ability to go against the stream psychologically.

Another way of seeing ERE (as I've presented it) is simply an "overly scienced"(*) description of Depression era life (complete with all the developed self-reliance skills they all had but which which moderns do) BUT with a job (imagine if you had been in the top 1% with a good income during the Dep) and modern technology (computers, penicillin, ...).

(*) Or "academic" as it may be ... which is probably why we have so many academics and phds around here.

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Re: (The Absence of) ERE in Academic Literature

Post by jacob » Sat Dec 31, 2016 10:29 am

@Fish - Maybe compare the state of development to options trading/valuation. Bachelier invented the foundations (random walk diffusion process for stock prices) in his 1900 thesis which almost didn't pass. He worked some more but generally struggled with getting academic acceptance until the end. Meanwhile option traders were using their own (fairly accurate) heuristics based on experiental knowledge for trading them(*). Ed Thorpe claims to have developed a working valuation model in the 1960s which he used to make lots of money rather than publishing it. Options valuation didn't become widely accepted until the Black-Scholes model in 1973 (later Nobel Prize, and shortly thereafter the LTCM blowup). The BS model was essential Bachelier's idea but cast in the language of arbitrage pricing which was the language academics "spoke" and thought in at the time.

So even if one has the correct "key" one sometimes has to wait a long time before the key fits into the metaphorical lock to get the idea into the academy.

(*) One such rule is that the price of an option ATM moves half as fast as the price of the underlying. In modern parlance we understand that this is because the delta is close to 0.5 and that the delta more or less indicates the probability of the option expiring ITM or OTM. But you don't need to know the theory to observe the behavior and act on it like a trader.

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Re: (The Absence of) ERE in Academic Literature

Post by Fish » Sat Dec 31, 2016 6:27 pm

jacob wrote:ERE is quite robust (Works for everybody)---it only requires the ability to go against the stream psychologically.
The math provides a solid foundation, and as you stated, trusting the math and finding a way to live on 25% of one's income is the other essential part, one that's still controversial outside of our FIRE bubble/echo chamber. Scholarly works would give the impression that extremely early retirement is virtually non-existent, and therefore, nearly impossible. This argument centers around the assumption that retirement for people of normal means requires a pension of some sort, and that high savings rates are infeasible.

https://books.google.com/books?hl=en&lr ... yVRUfCNooC
J. Saarela and F. Finnäs, 'Language-group differences in very early retirement in Finland', Demographic Research (2002) wrote:We are convinced that very early retirement can be considered as an indicator for poor health, because retiring in these low ages almost inevitably implies that a person receive disability pension. [...]
Retirement in ages 30-49 is also rare, but still almost twice as common as death.
http://m.403bwise.com/oldpdf/howmuchsave_tiaa.pdf
T. Walsh, 'How much should a person save for retirement?', TIAA-CREF Institute white paper (2003) wrote:We have chosen age 62 and age 65 as the two retirement ages for which figures will be presented. Age 62 was the earliest age chosen since it is the earliest age at which a recipient can receive Social Security benefits. It is a rare and very fortunate person that will have accumulated the financial resources to retire at an earlier age. [...]
Persons of moderate-income levels will normally develop a lifestyle that consumes most of their disposable income.
And from my last post above, the quote that "it is very difficult to save half one's income." It was hard to find academic discussion on the feasibility of a 50% savings rate and ended up settling for these less formal sources. Apparently, it's not controversial at all if a dependent and living expenses are already paid for, such as when incarcerated.

http://citeseerx.ist.psu.edu/viewdoc/do ... 1&type=pdf
C. Newman, 'Last chance: older women through the prison system', The Griffins Society research paper (2005) wrote:Women can go out to work 12 months before their release date. I was informed by a prisoner that foreign nationals are not allowed to work outside the prison. They can earn as much as £15,000 and, after paying taxes and national insurance the rest is their own. The prison states that they must save half of what they earn. No money is given to the prison. They can drive their own car if they have one. But those who cannot work do not get a pension.
Or when a teenager and living at home with parents:
http://www.nclnet.org/teens_spend_big_b ... pend_smart
National Consumers League survey (2002) wrote: Saving money is important to American teens; about nine out of 10 save money, though 36 percent admit that they're saving for specific items that they want to purchase. Almost one-quarter (22 percent) are saving for college, and 27 percent save for no particular reason. Four out of 10 say they save half or more of their money, and three out of four have a savings account.
Is there any scholarly acknowledgement that ERE is feasible or even compatible with the traditional personal finance canon? Extreme early retirement seems to be at a stage where the academic low-hanging fruit is just waiting to be harvested by anyone with an interest and the right credentials. That being said, there might not be any grants or funding available to do scholarly research about SWRs and optimal asset allocations for 60-year retirements... but isn't that kind of the freedom that FIRE enables?

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Re: (The Absence of) ERE in Academic Literature

Post by jacob » Sat Dec 31, 2016 8:26 pm

Given that it's generally acknowledged that people aren't forced to spend all their money(*), this basic syllogism shows that it is at least not impossible.

1) Observe that some people live on under $20000/year.
2) Observe that some people make over $40000/year after tax.
3) From (1)+(2), it logically follows that a savings rate over 50% is theoretically possible if (2) adopts the behavior of (1).

That is so blatantly self-evident that it seems shameful for Professor Dr. Obvious to try turn it into a journal paper.

Imagine a grant proposal that summarizes to something like: "We propose to study whether it's possible for an untenured asst. prof. normally making $55000/year to live in a way so as to spend under 50% of their earnings for at least one year. We, therefore, kindly request a research grant of $110,000 to investigate the feasibility of this concept." :geek:

I can't imagine any way to phrase this to avoid such a proposal or study being circulated around the greater research community as a joke or a serious candidate for the Ig Nobel prize. But of course I might be committing a fallacy of incredulity here :lol:

(*) But therein lies the kicker. It would appear that the paper(s) above just takes this assumption for granted. Therefore, the actual research should not be in whether it's possible (which is obvious) but in investigating how frequent it is in practice and what those high-savers have in common as seen from 50,000', e.g. behavior, values, personality type, ... For that, maybe look at Thomas Stanley (Millionaire Next Door).

The 60+ yr plans are covered by research into endowment investment/management. That stuff is certainly being published because such strategies are complicated/non-trivial.

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Re: (The Absence of) ERE in Academic Literature

Post by Fish » Sun Jan 01, 2017 12:12 pm

What I meant is that there's an existing body of research with standard assumptions, e.g. 40-year working career, retirement at age 65, and the problem being studied is how to maximize standard of living without running out of money. The suggestion is not to prove the feasibility of high savings rates but to acknowledge this as a possibility and revise the assumptions accordingly.

The research already performed could be revisited with a new premise, such as minimizing the duration of the working career ("when can I retire?") or finding some optimal compromise between standard of living and working years. It appears to be new territory and its exploration doesn't require much creativity, just switch the role of working years and savings rate as independent and dependent variables.

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Re: (The Absence of) ERE in Academic Literature

Post by Seppia » Mon Jan 02, 2017 6:02 pm

Personally I think the absence of academic studies on ere (or the feasibility of it) is due to its statistical irrelevance.
For the same reason, some things are postulated as given even if they're really not (people will spend 80% of their past salary in retirement, people will not save more than 15%, etc).
It's just that the overwhelming majority of people will behave like so, and studies focus on the majority, not on the irrelevant subset of ere people.

I mean, like Jacob states, the general idea of "hey if you save/invest a ton of money and learn to live on little you can live off the income much younger than a normal worker*" is mathematically and conceptually very simple.
It's not rocket science.

Proof is the "millionaire next door" type of ninja-millionaires that basically apply ere-lite/mmm principles but just continue to work well after they're financially independent.

The (very) hard parts are
1- actually thinking ere is possible.
2- trusting the math after you've stopped working.

For point 1, the more people do it, the easier it gets for others.
Aside from the easy math, it takes amazing indipendent thinking to do what Jacob did, it took great inner strength for someone like mmm to follow, and it gets easier and easier for the people like me and others who have more and more written history ("proof") that shows it's feasible (even if I find some of the more recent "yay I saved 25x yearly expenses so I'm done forever!" type of guys/gals to be quite a bit irresponsible).
I've always saved about 30% of my income till 2012, experiencing lifestyle inflation at every pay rise (started working in 2004). I was doing so much better than the average that I was basically patting myself on the back along the way.
It took a guy linking an mmm post on a watch enthusiast forum to make me consider I could save much more without actually sacrificing anything meaningful (isn't life crazy?)

On point 2, I know that's what will scare me the most. I've always been a very conservative person, and I would argue that the more a natural saver you are, the worse this issue could be.
I'm so used to having a gigantic buffer all the time that the idea of having zero money coming in on a regular monthly schedule is instinctively terrifying.

*not saying that ERE is just this, I'm simplifying

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Re: (The Absence of) ERE in Academic Literature

Post by BRUTE » Mon Jan 02, 2017 6:46 pm

Fish wrote:Post-ERE, FIRE thinkers now tinker with the more interesting problem of varying savings rate and solving for the retirement age. This approach assumes implicitly that minimizing the duration of the working career is desirable. I wonder if the communication problem between FIRE and non-FIRE people could be partly due to these different "cost function" assumptions being left unstated.
brute would imagine that even hardcore ERE-humans don't solely optimize for minimal duration of working career - it's more of an optimization for the volume of a multi-dimensional geometrical structure, with the sides being work duration, standard of living, desirable/interesting skill set, and a few more. so ERE adds more dimensions to the optimization, but does not simply replace it with another single variable.

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Re: (The Absence of) ERE in Academic Literature

Post by BRUTE » Mon Jan 02, 2017 7:08 pm

jacob wrote:ERE [..] only requires the ability to go against the stream psychologically.
ha

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Re: (The Absence of) ERE in Academic Literature

Post by BRUTE » Mon Jan 02, 2017 7:28 pm

jacob wrote:So in the CC analogy, ERE doesn't actually challenge conventional PF understanding. We use the same financial calculations (both are "basic physics"). ERE doesn't rely on a brilliant new scheme, like the 4HWW did (dropshipping brain powder or churning ebooks for profit). It just adds on top of it.
brute thinks there are some emergent properties in ERE that enable qualitatively different results (=FIRE) from existing/standard methods.

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Re: (The Absence of) ERE in Academic Literature

Post by 7Wannabe5 » Mon Jan 02, 2017 8:22 pm

jacob said: Given that it's generally acknowledged that people aren't forced to spend all their money(*), this basic syllogism shows that it is at least not impossible.
When a person buys 5 shares of MCD, puts a down-payment on a property they hope to rent, or purchases a packet of pumpkin seeds, he is spending money. Very few people stuff $100 bills in their mattress or store 1000 cans of baked beans. The other day I was noticing that there isn't really that much difference between the behavior of a person who takes an interest in the stock market and a person who takes an interest in fashion, except that the first person will likely end up with more money. Maybe if there was an even lower barrier to the purchase of productive assets more people would spend more of their money on them? Of course, that is pretty much what happened before 1929, so...? -lol

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Re: (The Absence of) ERE in Academic Literature

Post by Seppia » Mon Jan 02, 2017 8:36 pm

I thought the addition "buying non productive, depreciating assets" was obvious.
The difference is between the words spending and investing.

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Re: (The Absence of) ERE in Academic Literature

Post by 7Wannabe5 » Tue Jan 03, 2017 10:44 am

Seppia said: I thought the addition "buying non productive, depreciating assets" was obvious.
The difference is between the words spending and investing.
I'm considering it more in terms of observed behavior. The "extreme" notion or function of ERE is the re-set of the DISCRETIONARY spending marker at either a universal minimum of around $5000/yr for FIXED/NECESSITIES or some relatively small fraction of income. What I am sort of getting at is that there might be individuals who agree that spending beyond $5000 is discretionary, but still don't choose to save or invest, and there also might be individuals who would agree on the $5000/yr figure, but would likely benefit to a greater degree by making a choice different than saving/investing at the margin. In particular, I am thinking of the example of my 19 year old niece who is a professional dancer and lives with her parents and thinks frugality is sharing a $30 drink with her boyfriend after they get their nails done together vs. my 76 year old friend who has an income of $100,000/week and a 40 year old sofa with shot springs, tattered upholstery and no legs in his living room. The main point I am trying to make being that it is my observation that my niece likely does not know how to open a stock market account and my friend does not know how to shop for a sofa, because they both are habituated to shopping for other things. It's not just a matter of ability to delay gratification or exert discipline vs. the opposite, because as I noted, my niece is a professional dancer, so very well able to exhibit discipline in realm where she holds interest.

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Re: (The Absence of) ERE in Academic Literature

Post by Fish » Mon Jan 09, 2017 5:02 am

Here's a paper which indirectly suggests the possibility of extremely early retirement with very high savings rates. Not only does it predate ERE, this publication is rather unique in that the author (1) acknowledges the mathematical possibility of savings rate varying from 0-100%, and (2) treats retirement age as a dependent variable to be optimized.

https://papers.ssrn.com/sol3/papers.cfm ... _id=267499
On page 6 of the PDF, there's an unnumbered equation between (6) and (7):
A. Simonovits, 'Employment, Leisure and Pension: Incentives with Limits', Central European University Working Paper (2001) wrote:
Image
(Fish note: tau = savings rate, D = life expectancy, and R = working years. Other parameters are not really relevant to our discussion, see paper for definitions. We will make the value of lambda irrelevant by assuming sigma=0, meaning present and future consumption are equally valued.)
This equation can be rearranged to yield (R/D) = 1-tau , giving us the self-evident but still insightful observation that:
(Proportion of life spent working) = (1 - savings rate)

I don't think this should affect any priority Jacob may claim for proving the possibility of extreme early retirement. This lacks the investment part of modern FIRE in assuming a real return of 0%, meaning FI is achieved through one's own eventual death. Curiously, the author varied parameters and one combination resulted in a "ridiculously low" <10 year accumulation period(*). Retiring extremely early requires that an individual have a "very low elasticity of utility with respect to consumption." That's academic-speak for "voluntary frugality."

(*)In that example, it appears the savings rate was about 50%, and post-FIRE spending was reduced 75% from pre-FIRE levels to stretch the nest egg across a 40-year retirement. The author's assumptions resulted in increased consumption during accumulation to offset decreased leisure pre-retirement.

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