A View Through Glass

Rants and ravings of a curmudgeon of Generation Y

Category: rants

Are we living in a simulation? Maybe, but good luck proving it.

The idea is not new, but currently there is a bit of a buzz on the internet due to the article “No, we probably don’t live in a computer simulation” by Dr. Sabine Hossenfelder on the Backreaction blog. In it the author states the following:

The simulation hypothesis, as it’s called, enjoys a certain popularity among people who like to think of themselves as intellectual, believing it speaks for their mental flexibility. Unfortunately it primarily speaks for their lacking knowledge of physics.

Among physicists, the simulation hypothesis is not popular and that’s for a good reason – we know that it is difficult to find consistent explanations for our observations. After all, finding consistent explanations is what we get paid to do.

Proclaiming that “the programmer did it” doesn’t only not explain anything – it teleports us back to the age of mythology. The simulation hypothesis annoys me because it intrudes on the terrain of physicists. It’s a bold claim about the laws of nature that however doesn’t pay any attention to what we know about the laws of nature.

I suspect that part of the reason for the buzz is the author’s choice of language, but also because it is an interesting idea to think about. The whole concept of a simulated reality arguably traces back to the dream argument in philosophy. That has been around  which has been around since  Zhuang Zhou in the 4th century B.C. with the butterfly dream. Of course, essays like this tend to see responses like the one Gizmodo and “Think We’re Living in a Computer Simulation? Prove It.” To which my response is: can’t be done.

The biggest problem with arguments about a simulated reality is that ultimately they are unfalsifiable. This comes from Karl Popper and the epistemological theory of falsifiability and is discussed at length in “The Logic of Scientific Discovery.” In short, in order to properly test a theory, you need to be able to show that it can be false. The major problem with simulated reality is that you cannot develop an experiment that will prove (or disprove) that you are in a simulated reality! One argument is that an experiment could be developed that forces a glitch in the simulation. This would prove the simulation’s existence.  The argument against is that if the behavior is repeatable, you may have only uncovered a new natural law. Unless you know what the rules of the simulation are a priori you have no way of knowing it’s a glitch. Unfortunately without Out of Place Artifacts like Star Ocean: Till the End of Time it is unlikely we will have a clear indicator of something odd either.

Another problem with the augments for or against is that they make assumptions about how the simulation would be conducted. One common argument is that you would need massive amount of computing power to run the simulation. This is incorrect. The problem is not how fast the simulation runs, but how much storage is needed for the simulation state. To a resident of a simulation, they have no way to perceive the passage of time outside the simulation. So even if it takes several thousand years of “real time” to compute one second of the simulation, residents of the simulation will perceive only one second as having gone by. This does present some problems since the the hypercomputer may fail due to entropy long before the simulation is “complete” but again, the residents of the simulation would only be aware of the entropy of their own universe.

If you take the time to read though the comments on the post by Dr. Hossenfelder a lot of the commenters make comments about the unfalsifiability of the problem although some commenters fall into the trap about computing speed. Incomplete information seems to also be a problem. I suspect that most of the commenters are not at Dr. Hossenfelder’s level with regards to physics and comments reflect this. Ultimately, as a scientific argument this is a Kobayashi Maru since it can’t be won. As a philosophical argument, it’s fun but still can’t be won.

80% of singles will not go on a date in 2017. Wait, what?

I recently came across an article on LinkedIn: “80% of Singles Will NOT Go  on One Date in 2017.” Bold claims are a pet peeve of mine. Although articles about dating always seem to interest me for some reason. I do question why an article on dating would be on a professional networking site as opposed to a dating advice site, but I digress.

The author is the quintessential definition of a biased source since they state they have been “a professional matchmaker since 2009.” Even giving them the benefit of a doubt as an expert source, their claim that 80% of singles will not go on a date in 2017 begs a lot more explanation than what they give in the article. They don’t provide a source for where they came up with the number, so it could be anywhere from professional observation, to made up on the spot. Additionally,  the figure is not limited to a specific country, so the author failed to recall that there is a sharp divide between dating in the Western World and dating in countries like China. LinkedIn has a more or less global audience, so bold claims about the world really should be avoided.

That being said, I do tend to agree with some of their points. I believe that the Paradox of Choice is a real phenomenon. A tenuous example of it is students in college changing majors multiple times, but it might also be tied to the quarter-life crisis phenomenon as well. Dating sites tend to expose to you to a much wider set of options than what you might have in your local neighborhood. It’s not surprising that people might start to think that the grass may be greener on the other side, or that they can do better than their current partner.

The author talks about the “cheapening of sex,” but this is also quite complicated. Peer reviewed research has observed the following:

The effect of past partner number was very large. Average willingness ratings initially rose as past partner number rose, but then fell dramatically. For short-term relationships, men were more willing than women to get involved (although the difference was not large). For long-term relationships, in contrast, there was virtually no sex difference. Thus, contrary to the idea that male promiscuity is tolerated but female promiscuity is not, both sexes expressed equal reluctance to get involved with someone with an overly extensive sexual history

Thus, saying there is a cheapening of sex is not exactly on point. The research shows that your value as a potential partner declines with the more sexual partners you have had. Although the older you get, the less meaningful that number is as well. Someone that is 25 and has had 10 partners is a lot different than someone that is 50 and has had 10 partners. It should be noted that the aforementioned study was also WEIRD, so the sample might be quite biased.

Dating in and of itself is a complicated endeavor. It is intrinsically linked to sex since “romantic interest,” is usually coupled to some sort of sexual attraction to the person. If you meet someone through some sort of mutual activity then the ritual of dating may not be needed. You know the person to some extent, you know if you are attracted to them, and so forth. Historically a lot of the ritual of dating was associated with a demonstration of wealth by the man to indicate that he could provide for the women along with any children they might have. Now that there is a social expectation in the United States for adults to be working in general, that display of wealth no longer has meaning. What’s the point in having a ritualized activity (ex. dinner and a movie) when it’s not needed? Modern suggestions of what to do on a first date may read more like a list of fun ways to hang out as opposed to the cliché first date.

Something that the article missed is the Two-Body Problem. While classically associated with academics, it’s not limited to them any more. If you have two adults who are established in their career, eventually something will occurs that requires hard choices. This does lead to people needing to make a choice between there partner and their career and it’s becoming less and less unusual for someone to pick their career instead. Even more so if you have more time invested in your career than your partner as tends to be the case more and more. This is not an easy problem to overcome. I’d be hard pressed to believe that it doesn’t factor into the decisions that singles make.

So where does this leave things? Pragmatically I think that the original article on LinkedIn was just click-bait. The bold claim right out of the gate is a point against it. It wasn’t one of the authors most popular pieces though, so I might also just be judging harshly though. Also, I think that the author had some good points while also missing out on some as well. There has been a lot of disruption to the previous social mores of dating. More may be coming in the future. If we take time to understand them, I doubt we will find that 80% of singles are not dating in a given year.

Some thoughts on Codility…

So over the years of writing software I’ve been subjected to Codility tests a couple times and generally they tend to leave me feeling very conflicted. I think part of it might be due to the impersonal nature of the tests. I understand that a busy organization doesn’t really have time to reach out to everyone and automated testing can be an effective part of the screening process. But with that said, if I am spending an hour or two doing a test for the organization I should get something more back than just dead air.

This is something that has really bothered me because in general the tests I’ve gotten from Codility have not been “basic coding skills” like what Jeff Atwood complains most programmers can’t do. Rather I tend to get harder problems that are not Fizz Buzz, but are more like something from their lesson on dynamic programming. Part of this is due to the nature of the organizations I tend to apply for, but the general complaint of dead air after taking one of the tests seems common on Google. Now, I’m not expecting someone to call me and explain what I did wrong, but Codility does support automatic grading and report generation and seeing that report would be useful.

One of the common themes in the developer community is that you should always be working to improve your craft. If you can’t see how you did and the results of the tests, how can you work to improve your craft? Granted part of the reason why the results might not be shared is to prevent people from posting answers; however, it is naive to think that the answers will not eventually get out there in the public. There are a number ways to catch someone cheating the test and most people aren’t creative enough to write distinctly unique code given a reference example. Thus, not providing some sort of automated feedback might be one of the things that bothers me the most.

Something else that really bothers me is the timer. While someone might argue that you are always under the clock when you are at work, realistically, if you are trying to crank out code of any complexity and there is a clock counting down in the background, something went horribly wrong or you are doing it wrong. At this point I’m fairly confident that watching the clock tick down in the corner does nothing to help my thought processes. For a basic string manipulation problem it is likely not such a big deal, but a dynamic programming challenge? When I encounter a hard problem in the work place one of the steps I might take to solve it might be to write some notes down paper and sketch out expected solutions… which leads us to the next problem I have.

Codility claims the following:

Codility gives you objective insights into your candidates programming skills, showing you their thinking process before you interview them.

however, if part of my thinking process is to whiteboard a problem then that insight is going to be lost. Also, since Codility generates a numeric score, realistically, how many hiring managers are going to look at the code for insight if the score is 26 out of 100 points? Again, my thoughts towards Codility are largely skewed because I tend to see a lot of higher level dynamic programming problems as opposed to more basic ones but the point stands.

The focus on dynamic programming problems might be the thing that bothers me the most. In general, even when working of very complex projects, the vast majority of the code is not going to be complex algorithms but your basic CRUD operations. This might be where some sour grapes come into play: I know I’m not the best coder in the world (although I like to think I’m pretty decent) but I also know that at the end of the day I’m able to solve the problem and the amount of time isn’t necessarily that dramatic.

I’d be very curious to see what would happen if the timer on Codility counted up as opposed to down. I doubt that the actual results for hiring managers would be that different given the scoring, but it would add a very interesting dimension to things. Without the pressure of the clock would more people finish the challenge in the expected time frame? Would a number of people who didn’t finish before finish within the five to ten minutes of the currently allotted time frame? For that matter, would you have some people that finished quickly and got low scores? I know that if I was given an hour to solve a problem that normally takes five I might look to get creative with my code in the remaining time to show off. Pragmatically though, having to do maintenance work on code where someone was showing off is not fun and can make it take longer to find the bug or add the feature.

At the end of the day, I’m still very conflicted about Codility. The lack of any feedback about the results is likely one of the things that bothers me the most but the clock must be a close second. While I understand why they are doing what they are doing and to a certain extent I agree it is a good idea, it strikes me as something that could be done much better than it actually is.

Some thoughts on cursive and writing…

Recently a conversation came up at work about cursive writing which lead to me finding an article on CNN about cursive vs. typing which in turn leads finding blog articles such as one questioning if it is obsolete and of course it doesn’t take much effort on Google to find articles that declare it dead. Now, this might not be much of a surprise coming from someone that has reviewed a fountain pen, but I do think that any reports of the death of handwriting are greatly exaggerated even though I think that cursive is largely reminiscent of a bygone era.

As near as I can tell, I was taught D’Nealian script when I was in grade school and my ability write in it was largely limited my early years of high school before it atrophied into my pretty much just limiting my writing to some sort of odd block writing. Of course now I have been making a dedicated effort to learn Italic script and eventually I will be moving on to Spencerian script. Now I have a fairly long list of reasons for this, but a lot of it boils down to the fact that I still hand write letters to people and take notes by hand as well. Even with my fairly good typing skills I’ve always found that handwriting notes tended to cause them to be retained better (which is backed by science) but the past couple years I did find myself being annoyed at not being able to read my own handwriting.

But I digress, with regards to cursive I tend to be very opinionated since even when I was in grade school I thought that the script that we were being taught was fairly unattractive and even if you look at the exemplars that are out there it is kind of blah. In short, it was something that you learned because you had to, but it usually was something that I remember fellow students being excited to learn. On the other had, learning Italic script is something I’ve been learning on my own because it interests me.

Now part of this might simply be dismissed as the difference between learning something as an adult versus being forced to learn something as a child; however, I think there is more to it than just that. While I did have to learn cursive when I was in school, I don’t seem to remember it really being emphasized and something that was consistently practiced. Of course, the fact that the Common Core is looking to de-emphasize or remove entirely the requirement to teach cursive doesn’t come as much surprise to me given what I remember from when I was in school.

However, is this a side effect of technology or is something else going on? Personally I’m inclined to believe that it is a combination of the two. Just as you hear that Japanese are reporting that their skills at writing kanji is declining due to computers, you can see the same argument being made in the American media with regards to cursive and handwriting skills in general. As for what the “something else” could be, I’m not really sure to be honest. The fact that you really don’t need to be able to hand write something in the modern era certainly means that there is a lack of motivation (i.e. “Why should I learn this when I’m just typing things anyway?”) but on the same token, people I’ve met over the years still like getting a handwritten letter regardless of their age. In some ways, I think if students were taught a more attractive script and it was continuously emphasized over the duration a student’s compulsory education that you would see more writing being done.

Is there really any way of fixing this though? To be honest, I kind of doubt it. In order to get good at writing you need to be doing exemplars on a daily basis and even if it is only fifteen minutes a day, that is fifteen minutes that are being used to teach something that is not required by the No Child Left Behind Act. Plus, to be honest, most of the more attractive scripts require tools other than just your basic writing implement. The Italic script I’m learning works best with a fountain pen that has a good nib and Spencerian script tends to work best with a flex nib. Factor in pen ink (which can be a mess even when you are being careful) and I can see how teachers would want to side step the the issue all together.

In the long run I’m inclined to be somewhat cynical and I can see handwriting being something that people can still do, but not do well. I don’t think that we will ever see it disappear completely since there are many skills out there (i.e. hand spinning) that still exist as hobbies even though technologically “superior” alternatives exist. With any luck handwriting will make a comeback, but I’m seriously doubtful unless that comeback occurs in art class.

Some thoughts on video games…

Recently, I took advantage of the days off between Christmas and New Years that I get from my job to go back and play a game that I have been meaning to for a number of years: Vampire: The Masquerade: Bloodlines. While the game was fun and had aged surprisingly well for a game released in 2004, finishing it left me feeling off. The problem wasn’t so much the game, but the realization of burning through the time off playing it, finishing it, and concluding I hadn’t really accomplished anything by the end of the game. Sure I had had a bit of fun and was told a story, but most of the writing for video games really isn’t that good, and as good as BioShock Infinite is, I doubt people are going studying it the same way as Mary Shelley’s Frankenstein.

I suppose part of this was triggered by watching A Dose of Buckley – 30 Is The New 20 on YouTube and other such commentaries and realizing that, yes, in a lot of ways most of us in our twenties are just spinning our wheels and video games are just another way of doing that. As part of this realization I sat down and took a hard look at my video game collection and realized that the odds of me actually playing most of the games I have, let alone replaying or finishing some of the games I have started is very slim.

At the time of this writing I have about 75 console games plus another 30 or so in my Steam library. Since I tend to play RPGs more than any other type, each of those games represents between 30 to 40 hours of game play assuming I actually finish the game. If I were to go of the more realistic route of playing until I got bored, annoyed, or stuck, it would still take me around 20 hours per game based upon past records. So that means that it might take 2,000 hours or more (likely much more) to play the each of the games in the collection enough to decide to move on to the next game. The problem is that, I’ve also come to realize that there are other things that I value more than sitting on the couch playing a video game.

As such, I started to sell off my console game collection. Now I’m not the first person to do so, and others have talked about this more eloquently than I have, but it just seems like the right time to do so. As I eluded to in my article about buying collectables as an investment, console games hold some value that you can get back out of them. However, I’ve been watching what has been going on with video game prices for awhile now and barring rare games it really looks like the market has pretty much peaked on the older consoles. The newer consoles such as the Xbox One and PlayStation 4 are designed to remove most of the value from used games and for current generation Xbox 360 and PlayStation 3 consoles, the fact that you can purchase most of the really popular games on Steam seems to put a damper on their values.

Now this isn’t to say that I’m suddenly about to start campaigning against video games and refusing to ever play them again. I’m still keeping my Steam library and I’ve recently played Civilization V and I am very much looking forwards to episode two of The Wolf Among Us being released. However, my attitude towards video games has changed quite a bit over the past month and at this point I’m looking for more meaningful use of my time.

No, 20% of your net income should not be consumer debt

The other day I came across the following article, Debt and Credit: Known Your Limits, which has a guideline in it stating that consumer debt (“non-mortgage obligations such as credit cards, auto loans and installment plans”) should not be more than 20% of your net take home pay. I’m sorry, but that strikes me as a really bad idea and it might be due to the fact that I subscribe to the same school of thought as what Dave Ramsey presents in The Total Money Makeover: A Proven Plan for Financial Fitness and what Mr. Money Mustache advocates when he says that your debt is an emergency.

If we use $45,000 as the average household income in the United States and a very rough estimate of 35% of the gross being taken to cover taxes, heath insurance, retirement, and so forth we arrive at a net income of about $29,250. On a monthly basis that is about $2,625 and if we were to follow the “advice” that up 20% of your net income can be consumer debt then that means that monthly payments up to $487.50 would be considered “acceptable.” That’s a horrible idea since it leads to people thinking that because their monthly credit card payments haven’t yet reached that 20% figure that getting more debt is acceptable. However, if we use a minimum payment calculator, a $525 monthly credit card payment works out to carrying a balance of $19,500 at 18% interest. That means that if you make the minimum payment you will end up paying $28,675.23  in interest over 408 months! So somebody please explain to me how that is a good idea?

Now, I suppose that the author of the article might have car payments in mind when they came up with that figure as opposed credit card debt in which case the figure might make nominally more sense; however, on the same token, do you really need a car that costs $525 a month just to cover the payment? Using the previous examples, Mr. Money Mustache is a pretty strong advocate of not even owning a “clown car” in the first place where as Dave Ramsey advocates for selling any vehicles that you have when you are in debt and paying cash for a “clunker” that will get your to and from work each day. Two extremes, but I can see where they are coming from and myself personally, I’d rather not have the car payment.

Now I tried to do some searching around to see if this advice was echoed elsewhere and baring some interesting articles in the New York Times about consumer debt (e.g. “How Much Debt Should Households Have?“, “Crisis Prompts a Rush Back to the Mortgage Basics“) I really couldn’t find much. The article that I found in Time on “Consumer Debt: How Do You Compare?” seems to be quite representative of most of them in that it notes that the debt loads tend to be uneven but it states that the average household debt in 2011 was 11.5% of after-tax disposable income but on the same token, that figure also includes mortgages so is largely useless as a metric of consumer debt.

At the end of the day though, no, 20% of your net income should not be servicing consumer debt. You might be able to make a case for a car payment if you can’t afford to pay cash for a car (you can’t use this excuse as you get older though) but Saturday Nightly Live had a skit that perfectly sum my position on credit cards:

SNL: Don’t Buy Stuff You Cannot Afford from Northpointecc on Vimeo.

A Response to “Why Generation Y Yuppies Are Unhappy”

Today, an article on wait but why came to “Why Generation Y Yuppies Are Unhappy” came to my attention and as things tend to go, a lot of the gross generalizations that it makes about Generation Y are inaccurate, condescending, and well, just not funny which is what I think the author was originally going for. I’ll allow the internet to address the question as to if Generation Y is quantifiable unhappier than other generations, although thus far there isn’t much evidence for that, and keep the more interesting points to be addressed here.

Happiness = Reality – Expectations

This equation summarizes the first major point that the article was trying to made; however, consider the following diagram:

Generation Y vs Great RecessionFigure One, Generation Y and the Great Recession

Here I’ve loosely organized the Generation Y by expected current life milestone, birth year, age, and I’ve highlighted those affected by the Great Recession on the left. The years that are highlighted in blue are those generally accepted to be part of Generation Y and the ages highlighted in green also correspond to those that are in the workforce, regardless of if they went to college or not. You will note that effectively all of Generation Y in the workforce has been affected by the Great Recession and likely are still being impacted by it.

Now, one of the career milestones that I’ve always heard of is that even if you start out at a junior level position, you can usually expect to get your first promotion between three and five years. This is quite variable based upon the company, career field, and so forth, but the concept of “Up or out” is nothing new and I find it quite surprising that people are saying that employees that are approaching the beginning of their mid-career are acting “entitled” when they bring up promotions. The fact of the matter is that children do listen to their parents and many of the expectations that Generation Y bring to the workforce are reflections of what they heard from their parents when they were growing up.

So needless to say that there are expectations in place, but in many ways they are being tempered by the fact that the expectations are based upon those that have come before. If someone grows up hearing that that you go to college, get a job, and get your first promotion a couple years latter, then that expectation will be used to take stock of your current life circumstances. Don’t forget that the article was also targeted at Yuppies who might even have been given information by companies during their on-boarding that discussed career milestones and set some of these targets for them from day one.

This brings us to the whole idea that Generation Y is delusional and everyone thinks they are special, eh, no more than anyone else. If anything, Generation Y may be more pragmatic about it considering that the 2012 “You Are Not Special” commencement speech at Wellesley High School was a huge hit while an Op-Ed piece in the New York Times by Vladimir Putin was met with shock due to him insinuating the same thing. So really, what more can I say then that?

Freedom is not a vacuum in the driveway

Recently NPR did a very interesting special series on “Millennials and The Changing Car Culture” and I would encourage anyone to go through and read or listen to the pieces and specifically the following two:

Both of which give some very keen insight into how Generation Y is approaching car ownership as well as what I believe is likely to be a longer term trend of the younger generations altering the way the view cars. Arguably this also applies to the older generations as well and I believe that the trends the past couple years for the annual vehicle miles driven showing a downturn supports this argument. In fact, the Frontier Group released a report in 2012 that noted,

The trend toward reduced driving, however, has occurred even among young people who are employed and/or are doing well financially.

and that,

Policy-makers and the public need to be aware that America’s current transportation policy – dominated by road building – is fundamentally out-of-step with the transportation patterns and expressed preferences of growing numbers of Americans.

Which in some ways is bad for those whose livelihoods depend upon the jobs generated by road building and maintenance, but I digress. When reading through the comments on the NPR series I noticed that a very curious line of reasoning appeared that is best summarized by the following quote,

so freedom means being dependent on public transportation? Freedom to you means being dependent on others?

Which is a comment that was made in response to the following,

Part of Freedom is defined for me by in having a good public transportation system and bike paths. I haven’t owned a car in ten years, but I have travelled to more than twenty countries. I’m glad to here US Millennials are deciding that their worth is not defined by what they own.

Which is another very interesting line of thought that I have observed tends to occur more with people that I know that live in urban areas as opposed to rural areas. To return to the original quote though, the commenter who made it also makes a number of other comments, that are echoed by others, that effectively equates car ownership with personal freedom. While this is an interesting line of thought, as you might conclude from the title, it is a line of thought that I disagree with.

Now, I should start by saying that there is something to be said for the ability to just get in a car and go where ever you need to, when you need to. However, I commuted to work by train for a number of years before having to return to taking the car to work and quite frankly, as annoying as having to keep an eye on the train schedule should be at times, sitting in rush hour traffic going 10 miles per hour is even more so! Plus, for people that live in urban areas, programs such as zipcar mean that you can rent a car on a short term basis for chores that require a car for hauling goods or if you want to do a shorter road trip.

So what do I mean when I say that a car is a “vacuum in the driveway?” Quite simply, it’s about the cost of ownership involved with owning a car and it is not light by any means. AAA released a brochure that discusses how to calculate your driving costs per mile and they summarize their averages as follows:

AAA Average Costs Per MileThese numbers seem fairly reasonable but they take their own assumptions into account and I’m not entirely sure that I agree with them. But since these are in the context of cost per mile, we need to look at things from the standpoint of the pure cost of ownership. In other-words, what would you save by not owning the car in the first place? Some costs that come to mind are vehicle excise taxes, inspections, and auto insurance.

With regards to vehicle excise taxes, they tend to be all of the place and are state specific, but the local excise tax of $25 per $1,000 of assessed value seems to at least be a reasonable metric given the limited estimation I did of the tax in other states. Thus, if your car has an assessed value of $10,000 you can expect to pay $250 a year just to continue to own it1. Factor in an annual state inspection if you live someplace that requires them, in some places the costs are fixed by law, but in others they can be variable. Still figure, somewhere between $25 and $75 for an annual inspection and we will disregards the gas associated with driving to the inspection facility.

Car insurance is one of the big ones and as near as I can tell, you need to carry insurance even if you don’t plan on actually driving the car  and Massachusetts actually provides a very interesting little spreadsheet for comparing the insurance costs. For some very basic assumptions I was told to expect to pay between $379 and $1,321.34 with the average being $698.39. So there you are looking at another $379 at a minimum and since the amount you drive plays a role, the costs can go up if you drive more each year.

That brings us to a very, very rough estimate of $654 on the low end of things just to have a car sitting in your driveway and not even driving. Once you start driving it you need gas and since driving also causes wear and tear, you are going to need maintenance at some point. You can use tools such as the edmunds.com True Cost to Own calculator to give you a rough estimate2 but it appears that anywhere from $6,000 to $9,000 a year gets thrown around on a fairly regular basis. My own costs appear to be somewhere around $5,000 a year once I take into account the cost of parking and maintenance and I keep the costs down by trying to avoid driving a lot and getting decent fuel economy.

So the question we must ask ourselves, and the one that I’m seeing members of Generation Y asking a lot, is if spending upwards of around $9,000 a year to own a car is really worth it? For those living in urban areas with decent to good public transport you might be able to avoid needing a car in order to commute too and from work which just leaves chores and pleasure driving. In those cases a number of people have told me that they use the aforementioned zipcars and find ways to minimize the time they actually need a car. Plus, in urban areas, walking or biking to various places can be a viable option. The biking option being especially popular with some bloggers like Mr. Money Mustache.

In some ways, a bike might actually represent more freedom than a vacuum in the driveway since bike generally have a fairly low initial fixed cost up front (say $100 to $500) followed by the occasional need for repairs which you can learn to do yourself by picking up a book and learning the relevant skills. I’ve heard many people from the Baby Boomer generation decry the fact that most people can’t or wouldn’t work on modern cars and just take them to the mechanic.

So bringing things around, a car may represent freedom to some, but at the end of the day it is also a money vacuum that is sitting in the driveway and the more you use it the more it is going to cost. Also, since just owning it requires a certain amount of money, it ensures that you are paying money out of your monthly budget to its up keep that can be significantly above and beyond the costs of using alternatives such as public transportation, bikes, and just walking where you need to go if it is close enough. Cultural attitudes are changing with regards to cars and they are being seen as less of a representation of personal freedom and more of a monthly expense to be minimized or done away with if possible.

 


  1. As an aside, I tried to find the average value of car but turned up short, although apparently a new car is going to cost on average $30,000. Ouch.
  2. Amusingly, my car is so “old” that it doesn’t even appear as an option.

Generation Y and the housing recovery

Anyone that has been paying attention the past couple years knows that the has been a Great Recession which has had a highly variable recovery. By “highly variable” we mean that real salaries have been shrinking versus inflation and nobody is quite sure how things will be affected when the Affordable Care Act is fully implemented couple that with unemployment that is still somewhere around 7.4%.

So what prompts this particular rant? Articles such as the following:

Which, of course, leads to such comments as the following by Christopher Mims:

Millennials are holding back the housing recovery. Is there anything they can’t mess up?

Umm, yeah, if people can’t afford to buy a house because real salaries have been going down, unemployment is high, and don’t forget those student loans that need to be serviced, clearly they must be screwing something up.

Now don’t get me wrong, it’s not exactly a secret that members of the Generation Y cohort are living at home with their parents for longer than other generations a lot of us are also graduated from college straight into a recession or a weak job market at best. For that matter, I worked to pay for my Bachelors degree and was a contractor when I finished, going into the recession I was glad to be offered a full time position… with a 20% pay cut.

The housing market is all over the place, but there appears to be a US national average of $152,000 and the 2011 Massachusetts average of $319,900 seems to be pretty accurate based upon my recent experiences when looking for a house to buy. You can find homes for less, but they either need work or are  likely to be a bit of a commute to get to work.So lets be generous and use the national average of $152,000 for a hypothetical scenario.

Based upon government statistics the average income for males with a Bachelors degree in 2010 was $49,800 and for females it was $40,000. Note that this doesn’t match another average household income study for the 25 to 34 cohort that shows it be around $50,000. So lets call it $45,000 as an average and assume a single person with a student loan debt of $35,000. Currently only about 20% of Generation Y is a married which will affect things, but the math is a bit easier for a single person and since it 80% of Generation Y is single, it works.

It is currently being reported that members of the Generation Y cohort are graduating from college with $35,000 worth of debt, each. Depending upon where someone goes to school, how long, and how much they work during school this number could be higher or lower, but as an average it doesn’t seem half bad. A student loan payment chart [pdf] shows that $35,000 at 6.8% interest would be around $400 a month to service the debt. Note that 6.8% is higher than the current issue rate, but then again we are looking at people who have already graduated and entered into the workforce so, again, it works for demonstration purposes.

So plugging the following into a paycheck calculator:

  • $45,000 annual income
  • 5.3% state income tax (Massachusetts)
  • $380 monthly health insurance premium (based upon $4,565 annual premium)

We arrive at a net monthly paycheck of $2,575.99. Depending upon where you live your rent can range anywhere from $650 to $1,500 which gives an average of $1,075 which in the Boston metropolitan area would be cheap. So it might be a good number to work with.

Thus, recalling that $2,575.99 monthly net salary. After we factor out rent ($1,075) and the student loan debt ($400) we are left with $1,100 to live off of. While that does seem like a lot, recall that we are not making any contribution to a 401(k) which would shrink the size of the net income and food (figure $200), car insurance (figure $100, minimum), utilities (figure at least $250, which also includes cellular service) and we are down to $550.

But what about that 401(k) contribution that we aren’t making? A 6% contribution means $163.12 less in the net while 12% gives us $326.25 less. So realistically that $550 surplus we were showing before realistically would be about $223.75 to $386.88 if we were to use the 6% to 12% 401(k) contribution rates. So at the end of the day, not that much is left over for saving for a down-payment.

Recalling the relatively modest $152,000 average cost for a home, a 20% down payment would be $30,400, plus closing costs, so call it $35,000 to buy a home. That means that if you were able to save $550 a month, then it would take you about 55 months or a 4 years 7 months to save for the down payment. Granted you could put down less, but that means a higher monthly mortgage payment. Given the absolutely horrible current rates for savings of under 1%, the interest isn’t going affect calculations that much. Plus, we are also looking at a situation where someone is not saving for retirement, doesn’t have a car payment, credit cards, and really isn’t doing much of anything with their income for that matter.

So where does this leave us? Well, to be honest, someone would be really hard pressed to convince me that members of Generation Y aren’t doing enough to try and buy a house given their incomes – you can only save so much banks aren’t exactly willing to allow NINA Loans like they were prior to the Great Recession, which is a good thing. Just because you can put less down doesn’t mean that you can actually afford to buy a home.

Something I mentioned earlier might be a good argument, namely the marriage rates. To say that Generation Y is marrying later is hard given the ages involved after all, most people don’t marry during college and it may take a couple years after college to establish yourself and get married. Realistically the only part of Generation Y that would be “marriable” in this day and age would be the 22 to early 30’s cohort so the 20% overall marriage rate is a good metric to work with but may be misleading.

The reasons for not getting married are highly variable and can be another post in and of themselves, but it goes without saying that a dual income household is going to be able to save more money than a single person can. If we had a couple hold of two incomes at $45,000 each putting 12% of their income into a 401(k) they we will likely have at least $2,000 left over after household expenses are paid. If all that is put to saving for a down payment then $30,400 could be reached in about 15 months.

But again, we are being very generous with our estimates, which means they are likely wrong. However, this is also where things tends to get interesting since the more we adjust and correct of things, the more they point to things not being Generation Y’s fault, or at least, Generation Y is subject to may circumstances than are beyond its control. Take the marriage rates, sure members of the Generation Y cohort could get married but then again, this is no guarantee that it would really affect things that much since a lot of members of Generation Y are living with their parents or room mates, thus saving more money, and still  not buying homes. Even if someone is able to save more money, $152,000 for a home is a national average and thus might be something you just can’t find where you live. It’s the classic problem of cost of living.

Originally I titled this entry “No, Generation Y is not holding back the housing recovery” and while I think that title is accurate since a lot is holding back the housing recovery and blame can’t be placed on a single generational cohort, I don’t see it as easily defend-able as when I first started writing. Generation Y is definitely putting off such “milestones” that are classically associated with adulthood such as marriage and home ownership, but fluctuations in the times associated with these milestones are nothing new1 and tend to raise questions of if the economy is holding back Generation Y or if Generation Y is holding back the economy in some way.

So at the end of the day, quit trying to blame a slow housing recovery on Generation Y and making snide comments such as those that came courtesy of Mr. Mims. I’m sure if we sit down we can find a lot of reasons to explain the slow recovery of the economy as a whole and I doubt that Generation Y has the buying power to actually affect the entire economy, yet.