Formulating decision to take out mortgage or pay cash for home.

Well, we'll have to disagree on this. The sales pitch makes this product sound pretty good, after all, who wouldn't want to pay off their mortgage early? But I think the time value of money just isn't common sense. I'm amazed how many people don't understand compound interest, inflation, equity, and progressive taxation, let alone more advanced concepts like risk, etc. Isn't this the reason that we, as a society, need financial planners?

-Will

??? First, paying $3500 for a calculator doesn't sound like a very good deal - one with a mathematical mind would surely know you could do this with Excel. Common sense would tell you there's something fishy here. Second, borrowing at high interest to pay off low interest doesn't sound like a good deal and it would only take common sense to realize it. So, you can disagree with me that the guy doesn't possess an ounce of common sense, but I don't see how when he apparently was going to fall for two traps.

Elizabeth Richardson

I find the disconnect between the mathematical skill and its application to money/finance to be intriguing [in your friend's case]. In my experience, a strong math background (an 800 on math SATs for those who are tracking geeks) led to a love of finance, it seemed a natural progression. I would agree with Elizabeth's sentiment except somehow I've found a number of people who are great with numbers, but when they have a dollar sign in front they turn into idiots. You may conclude we need planners, but I'd say we need some education brought in to the schools. Kids may not need the deep dive on EMH, or the risks of CMOs, but the understanding of mortgages, the stock and bond market, in general, should be required. No one should fall for any mortgage scheme to accelerate payments for some crazy fee to a third party. JOE

Maybe you're on to somethin' Joe.

Just think, if we could pound EMH into the heads of investors at a young age how much more rational the market would be and how much less volatile (or "over-reactive) its movements. It would wipe most of the "get-rich-quick" scams right off the map.

Oh well, a boy can dream can't he!!!

I think it's emotional. When the calculations are about money, then many people start fantasising how great it would be to have lots and lots of it. And they are afraid of how much of a bummer it would be to have less. So there is a tendency to see what they WANT to see, and avoid seeing what they don't want. And to sort of "negotiate" with the numbers and calculations.

The focus isn't about facing the hard reality of the math. Instead, they are thinking about merchandise they want to buy, or the stress-relief of having extra cash, or about the social and interpersonal coolness associated with financial wealth. Plus, of course, the fear of deprivation of those things.

Greed and fear make people get stupid.

So it is radically different to dealing with the numbers in making a computer program, or designing a piece of equipment, or increasing efficiency at work (as long as that efficiency doesn't go very directly to his/her own paycheque.)