I'VE BEEN AWAY FROM the HumbleDollar community for a while. Jiab and I are working on a new book about media literacy, examining the effects of social media influencers on youth consumerism. It will teach kids about responsible web use and how to avoid the traps of the online world. I’ve learned a lot myself, including lessons that apply both online and IRL, short for “in real life.” As part of our research, one of the seedier, more adult corners of the internet I’ve explored is the scam solicitations that come to just about every user of social media. All platforms have their cyber-pirates hunting for vulnerable prey. Let me recount my encounters on Instagram as representative of the type. Most scammers begin with an innocuous hello and some questions about my location and job. I usually say I’m in Atlanta—rather than my real Texas home—just to obscure the trail a bit. The profiles almost always seem to show photos of provocative young women. A Google image search shows that the same pictures are used in a variety of accounts. After the intros comes the flattery. When asked for a pic, I send one of a famous actor about my age. This often elicits, “You’re so hot, I want to party with you.” Then comes the pitch, such as asking for gas money so she can come to my house. Some tell me they’re multi-millionaires who want to share their good fortune by giving me money. As a teacher, I’m both amused and a bit irked that these scammers don’t do better homework preparation: A woman in Los Angeles told me she could drive to my Atlanta home “in just a couple of hours” if I spotted her gas money. A Phoenix woman confirmed that she saw September’s surprise snowfall there, telling me it was beautiful. The surprise is it hasn’t snowed there in decades. When I told one inquirer that I lived in Atlanta, Georgia, she enthusiastically said she was nearby in Batumi—a city located in the Republic of Georgia. All this is amusing until you consider that people really are taken in by these scams. The Federal Trade Commission said consumers reported $770 million in social-media-originated fraud losses to the agency in 2021. Bear in mind that’s what was reported. The FTC estimates that only about 5% of fraud victims report the matter to a government agency, often because of embarrassment. Scammers succeed because they know our three vulnerabilities: We let emotion get ahead of rational thought. Scammers try to catch people in a weak moment. Most people won’t respond to flattery or attention out of the blue. But it’s a numbers game. Somewhere out there are lonely people for whom kind words and compliments make them lower their guard. Some victims have been lured into sending intimate pictures and videos later used to blackmail them. Desperation and worry over debts can silence our brain’s warnings that the “can’t-lose'' money opportunity is a trap. An online “financial advisor” lists tips for when you’re behind on the rent. Several include playing online games that “pay” you—but also encourage you to pay them to increase your odds of winning. [xyz-ihs snippet="Mobile-Subscribe"] Many online brokerage firms are nothing more than investment platforms controlled by scammers. A victim’s account seems to show positive earnings at first, but that’s just to get the victim to increase his or her investment before it’s all pulled out. Other times, goods privately sold online go undelivered. It remains a rule that if a deal appears too good to be true, it probably is. We forget that information is the key that opens the vaults. I have been told that I’m owed money or that a generous person wants to give me some. I just need to share my PayPal, Venmo or other electronic payment information so the deposit can be made. People who have done so find themselves locked out of their account or with money withdrawn. Sometimes there’s not much gone, so the account holder doesn’t notice, but small sums are subtracted regularly. A fake lottery winner sent me “her” information sheet to fill out, so she could share some of her newfound wealth with me. The form was clearly copied from the internet, still bearing the Publishers Clearing House watermark. Had I sent it in, my identity and all my account information would have been in the hands of a scammer. We can be tricked into lowering our guard. Clicking links sent to us by people we don’t know—and even people we do—is like going down a dark alley. A phishing link or SMiShing text can open up your computer to being attacked by malware, your data stolen or your computer held for ransom. Beware of emails purportedly from major companies such as Amazon, Apple and Facebook. Real companies never directly email you to ask for your account information. Upon examination, you may notice a slight misspelling or other problems with the sending email address that'll be a clue it’s not from the actual company. These scams use the same sales techniques employed in real life—by door-to-door salesmen or phone solicitors—just adapted for the internet. Scammers gain false trust, get marks to lower their guard and then take advantage. Online may be a new world to many. But as explorers warned long ago on the maps they created, here there be monsters. Jim Wasserman is a former business litigation attorney who taught economics and humanities for 20 years. He's the author of a three-book series on how to teach elementary, middle and high school students about behavioral economics and media literacy. He's also authored several educational children's books. Jim lives in Texas with his wife and fellow HumbleDollar contributor, Jiab. They have a book that examines the impact of social media influencers on youth consumerism and identity development coming out in 2023. Check out Jim's earlier articles. [xyz-ihs snippet="Donate"]

EVEN IN OUR consumer-driven society, some things are looked down upon if bought. One of those things is companionship. I’ll leave the topic of sexual intimacy for another day. What I’m talking about here is paying—directly or indirectly—for social interaction. We might buy a younger colleague lunch simply to have somebody to dine with. We might continue therapy long after we’ve finished exploring the issues that prompted us to sign up. We all have a need to connect with others and thereby have our own existence validated. It’s a basic human need and yet, if folks admitted they pay to have such companionship, many would cluck their tongues and argue it’s not genuine friendship. People would then feel shame and not do it. But in truth, we all need human interaction and we all pay to have it—one way or another. For more than 15 years, I’ve belonged to the same United States Tennis Association (USTA) team. In that time, we’ve had a core group of guys playing together. Record-wise, all we have achieved is new heights of mediocrity. We’ve played in 100-degree heat and near-freezing cold. We’ve all sidelined ourselves with embarrassing injuries. For those losses and discomforts, we must pay ever-rising USTA membership dues and player registration fees for each league we compete in, plus we split the cost of tennis balls. And I wouldn’t have it any other way. I love tennis. But it’s the interaction with the guys—the jokes about how lousy that shot I made was or how incredibly lucky my opponent was to eke out a 6-1, 6-1 win—that I’m really paying for. We text like schoolboys before and after matches, inventing words like “pushdink” or WOOF (winner off of frame) that become our inside jokes. The COVID-19 lockdown exposed and exacerbated a hidden societal ill—pervasive loneliness. Even afterward, many people continue to feel isolated and alone, yet balk at the idea of buying companionship. They see it as desperate or demeaning. That’s a shame. There are many ways to feed the soul’s need for being with others. I’ve seen writers’ groups that spend little time improving their prose in favor of sharing experiences that they’re “going to write about.” I have been to Bible studies where people discuss the food everyone brought at least as much as Bible verses. Seniors especially need companionship, and should be encouraged to seek it out and even pay for the opportunity. My mother was hesitant at first to move into a senior living center, preferring to stay in her home of 50 years—alone and complaining about her back. A few months after moving, she was a new woman. With a gleam in her eye, she would tell me of the gossip about romantic liaisons. People passing her in the hall would ask if she was coming to the card game later because they needed her. She stopped mentioning her back pain. I’m convinced that socialization alone extended her life and made her happier. [xyz-ihs snippet="Mobile-Subscribe"] Recently, my wife Jiab and I committed tennis treason by delving into pickleball on a rainy day. We went to the local community center, paid for membership and then paid to join the open play session in the gym. The bleachers were intermittently filled with people ranging in age from their 30s to their 70s. They seemed to be waiting their turn, although I would swear that many never played. They just hung out. Between matches, we struck up conversations with strangers who asked if we’d come back. Pickleball was fun, but the people were the selling point. Just don’t tell our tennis friends. Alfred Hitchcock popularized the term MacGuffin in storytelling. A MacGuffin is the thing you think the movie is about, like an object or a quest, while the movie’s real subject is the evolving relationship of its characters. It’s time to acknowledge that activities and professional and personal goals are great, but that seeking companionship and building relationships are also worthy objectives. There’s no shame in spending money in their pursuit. If it’s okay to pay for clothes or a trip that makes you happy, why not for a friend? Jim is a former business litigation attorney who taught economics and humanities for 20 years. He's the author of a three-book series on how to teach students about behavioral economics and media literacy. Jim lives in Texas with his wife and fellow HumbleDollar contributor, Jiab. They have a two-book series coming out in 2023, Behavioral Economics: A Guide for Youth in Making Choices and The Social Media Diet: A Guide for Young People to Be Smarter Online Users and Consumers. Check out Jim's earlier articles. [xyz-ihs snippet="Donate"]

I ENJOY WATCHING superhero shows. It feels good to see the hero swoop in and save the day. Truth is, however, I also get a bit annoyed, as there are always some citizens who seem to ignore imminent danger. They sometimes just stare at it coming, doing nothing to get out of harm’s way. It’s almost like they just count on the hero saving the day, and that’s a bad strategy. Strangely, many people in real life adopt the same strategy, relying on a particular financial superhero to swoop in and save them. I call this hero Future Self. I wrote about Future Self in the comment section below a recent article from Phil Kernen. Phil explained a new version of an old scheme, the buy-now-pay-later option. It sounds great—until you miss a payment and draconian interest penalties are levied. Why do people fall for such a trap? Because they imagine that their Future Self will be a hero. He or she will regularly make all payments and save present self from the burdens taken on today. Notwithstanding any financial obligations that Future Self will have of his or her own, people expect Future Self will also be able to shoulder the debts of present self. Future Self will have more money or, because of inflation, the money Future Self pays with will be worth less. No doubt folks also count on Future Self to get in shape, eat healthily, redeem all the accumulated airline points, and regularly call his or her mother. Future Self will save the day! I ended up discussing Future Self with my writing collaborator, Dave. Like me, Dave likes to take an intriguing concept and riff off it. He liked the superhero analogy of Future Self saving the day, but then he took it further. “Why do ordinary citizens always stand to the side just watching when the hero arrives, but only try to help when the hero gets in trouble? Why don't they try to help the hero earlier, distract the bad guy, give weapons or tools to the hero, or at least some water?” he asked. We then applied that question to Future Self. If we’re counting on Future Self to pay our debts and get us out of financial trouble, why don’t we start helping him now? How can we help Future Self? Give him tools, and that means money and means. Max out our retirement contributions. Keep a cash reserve for the expected unexpected villains that’ll pop up, such as an out-of-network medical bill. We can also mark the calendar with the expiration dates of airline and hotel points. Most helpful to Future Self would be to minimize debt now. Future Self will have his or her own foes to battle, and doesn’t need ours as well. When we anticipate Future Self having a big physical challenge—like running a marathon—we train, we plan and we monitor Future Self’s fitness to make sure the physical challenge will be met. Why can’t we do the same to help Future Self prepare for the financial challenges that loom on the horizon? When we do help Future Self, we should feel free to add a note saying, “You’re welcome.” Future Self will like that.

TEACHERS SHARE space with people who aren’t as knowledgeable or understanding of a subject as they are. Sometimes, students will display incredible depths of ignorance. Most students try, but there are some who are unwilling to meet a teacher even halfway. Worst of all are the insolent ones. Proud of their ignorance, they dismiss the subject—and the teacher—with not-so-veiled disrespect. You know what a good teacher does in the face of all this? She takes a moment, squelches all her frustration and even anger, and tries again. Jonathan Swift observed more than 300 years ago that, “Falsehood flies, and the Truth comes limping after it.” Imagine his reaction to today’s instantaneous, million-multiplying falsehoods that travel at the speed of social media? We’ve all been faced with the sneer of the doubters, adamant about their misinformation. Unfortunately, most of us aren’t good teachers. We shout, we question the person’s intelligence, we throw out gratuitous insults. We could ask for the source of their information. Instead, we opt for rhetorical questions like, “How can you be so stupid?” We need to be good teachers. Spewing venom, even as a return shot, does nothing to educate the ignorant person. In fact, it drives them (and perhaps you) further from learning. It may feel good, but it’s really a prideful display of our supposed superiority. This only tends to escalate the situation. You may say you don’t have time for such lost souls. But that’s like a doctor saying he only treats the healthy and has no time for the truly sick. If you’re out of patience, just walk away. Spewing bile only leaves the other person more entrenched and more difficult for the next person to persuade. You already know this. Everyone does. No one has ever experienced a change of heart after being yelled at or insulted, no matter how wrong he may be. Good teachers also know one other thing. Education is a life-long process. There is almost never an “aha” moment like in the movies. Understanding is gained inch by inch, from open-minded people willing to revisit what they think they already know. It’s a long road traveled on little wheels. It takes lots of turns to make progress—and it goes faster if the road is paved with patience.

WE LIKE TO THINK we’re rational, especially when it comes to spending and investing. But in truth, all of us are susceptible to impulsive decision-making and unconscious persuasion. Result? We often end up wasting our hard-earned money. According to traditional economics—which depicts humans as conscious, rational decision-makers—this shouldn’t happen. But this traditional view has been under attack since the late 1800s, when Thorstein Veblen explored conscious irrational decisions, such as buying items simply to impress others. His research laid the groundwork for what has become known as behavioral economics. One of the field’s best known academics, Richard Thaler, won the 2017 Nobel Memorial Prize in Economics, in part for his work describing how people can be subtly “nudged” into making decisions. Building on this work, the emerging field of media literacy looks at how the media—in all its forms—is used to nudge people into making less-than-optimal economic choices. One of media literacy’s goals: empowering consumers to resist, or at least be aware of, such nudges. Here are five tricks used to influence our financial decisions: 1. Buying bling. Veblen was purportedly inspired to study behavioral economics because he saw a rich man strolling through a park with an ornate cane he didn’t need. Instead, the cane was clearly intended as a signal to others that he could afford such swag. Dubbing such acquisitions “honorific booty,” Veblen may have been the first to identify how we waste money just to say, “I’m better than you.” Few stop to think how such acquisitions—whether it’s a huge house or an annual extravagant vacation—come at the expense of a far more satisfying purchase: a well-financed retirement. 2. Price as quality. When the free market system was first described by Adam Smith more than 200 years ago, consumers were familiar with most of the products they bought and most of the people they bought from. As knowledgeable buyers, this gave them the power to assess the quality of the goods proffered and thus determine a fair price. Today, consumers need to purchase a host of items, from tires to computers, that they aren’t familiar with—and they buy them from salespeople they don’t know or over the internet with no salesperson involved. How do such consumers judge quality? Many, in a reversal of how the free market system should operate, use price to gauge quality. Who hasn’t, when opting for something they’re unfamiliar with, shrugged their shoulders and opted for the mid-level price? Obviously, this opens us up to being played by marketers, who raise the price just to convince people that quality is commensurate. Even more worrisome is the lure of what’s now called a “Veblen good.” These are products, usually luxury items, the demand for which increases after a certain price point. It’s as if people want to pay more—and brag about paying more—to feel better about what they’re buying. 3. Limited offer. In economics, scarce things are valuable because there aren’t enough of them to meet demand. Rare things are those that are few in number, but which may or may not be valuable. Marketers conflate the two by creating false scarcity with “limited offers,” where they exhort you to get their goods “while they last” or “before time runs out.” A major department store for years ended a clothing line with a “last call” sale, driving frantic consumers to grab what they could while they could. My advice: Don’t be rushed. As my father used to say, “If it’s a good deal today, it’ll probably be a good deal tomorrow.” Do your research and give the slower, rational side of your brain a chance to weigh the pros and cons. 4. Bandwagon effect. We don’t like to think of ourselves as followers, but we are. That isn’t always bad; think of a group moving away from danger. But the bandwagon effect can also hurt us, as we become infected by FOMO—fear of missing out. A lot of people couldn’t explain cryptocurrencies, but they also didn’t want to be the prospectors who missed “the gold in them thar hills.” Remember, by the time you hear “everyone’s doing it,” the price may have been bid up to bubble levels—and could be ready to burst. 5. Appeals to centrics. No matter how rational we are, we all have weak spots. Young people wish to be older; older people wish to be younger. Marketers know this, so they’ll couch their goods and services in terms of these gut values and vulnerabilities, which are known as “centrics.” Whether it’s cookies or vacations, ads will show slow-motion families bonding and smiling as they use the product. One luxury car kept using the word “gorgeous” in its ad, as it alternated between sleek images of the car and shots of older, gray-haired men frolicking with young, sexy women, even saying, “Gorgeous gets in… everywhere!” Financial firms also do this. An ad for Fidelity Investments showed clips of Paul McCartney’s life and told his story, finishing with the tagline, “We’ll help you plan for the next part of your life.” And yet I suspect McCartney’s success stems from writing and performing hit songs—and not because Fidelity advises him. Jim Wasserman is a former business litigation attorney who taught economics and humanities for 20 years. His previous article for HumbleDollar was Gaming the System. Jim’s three-book series on teaching behavioral economics and media literacy,  Media, Marketing, and Me, will be published in early 2019. Jim lives in Granada, Spain, with his wife and fellow HumbleDollar contributor, Jiab. Together, they write a blog on retirement, finance and living abroad at YourThirdLife.com. [xyz-ihs snippet="Donate"]

I’VE HEARD SOME parents say that, while they don’t like their kids watching online videos, at least they aren’t being exposed to the ads that inundate kids on regular TV. Nope. Advertising is at least as pervasive, and definitely more insidious, on the web. Kids have shifted from network television to web-viewing, and advertisers have trailed right behind them with Willie Sutton logic—because that’s where the money is. YouTube is the most popular video streaming site in the world. Kids watch it more than they do live TV or even many streaming video sites such as Netflix. What kids are also seeing on YouTube (even if it doesn’t consciously register) are all manner of ads located in banner scrolls, sidebars and pop-ups. There’s almost never a time when advertising is not on the screen. Many feature characters similar to the ones that children enjoy on their favorite programs. The difference is, these animated pitchmen are telling kids what to buy. There are few, if any, age filters on video streaming sites, plus kids circumvent them easily by sharing videos with one another. If you have middle-school children, you probably know how they love to pass along age-inappropriate stuff that they somehow already know about. As an educator and author in the field of media literacy, I know that no single ad will make middle-schoolers buy a product or become enamored of gratuitous violence and sex. But the constant drip, drip, drip of commercial messages builds up like a stalagmite. Their influence may be firmly planted before parents notice, by which time there may be a lot of bad ideas to undo. Advertisers know this, too. They’re counting on you being too busy or distracted to notice what your kids are watching. They certainly don’t want you watching alongside them, taking note of the messaging about violence, sex or products that will supposedly make your child happy. My advice: Prove the advertisers wrong.