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In this paper

I may choose between a job that offers $\$12,000$ per year, and another that offers $\$2,000$ per month. Let’s say the jobs are identical in all other respects: I would then choose the one that pays $\$2,000$ per month — not because $\$2,000$ is the greater payment (it isn’t), but because the payments correspond to a higher (additive) growth rate of my wealth.

Isn't the example supposed to work with $\$1,000,$ not $\$2,000$? Otherwise it is a greater payment, isn't it? $\$24,000$ versus $\$12,000.$

Antoni Parellada
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  • I can't find that passage in the link, but you're probably right that it's a typo. – Robert Shore Mar 31 '21 at 16:14
  • @RobertShore Look under Financial Decisions Without Uncertainty on page 1218. – Antoni Parellada Mar 31 '21 at 16:15
  • Yes of course you are right. I'm not sure what the author's point is anyway. But I lack any knowledge when it comes to economics. Also, I think this would be better posted on economics.se. – Adam Rubinson Mar 31 '21 at 16:18
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    @AdamRubinson His point amounts to better money in your pocket than promised at a point in the future. It is supposed to be self-evident, and to be contrasted later on with some expectation of gain that is subject to risk. – Antoni Parellada Mar 31 '21 at 16:19
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    @AdamRubinson The author's point is presumably that you will gain interest on monthly payments, whereas you gain nothing from interest if you are paid at the end of the year. (That said, yearly salaries are typically paid out every two weeks; this passage could probably be worded better.) – Théophile Mar 31 '21 at 16:20
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    "His point amounts to better money in your pocket than promised at a point in the future". That's not necessarily true though - some people spend the money they have right now in their bank account because they can, and then they regret doing this later on because they wish they would have saved it. But there are of course arguments for both sides... – Adam Rubinson Mar 31 '21 at 16:22
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    "The author's point is presumably that you will gain interest on monthly payments". I don't think the author's point is that trivial. – Adam Rubinson Mar 31 '21 at 16:23
  • @AdamRubinson: And that is called "behavioral economics", which is a particular branch of economics that takes into account the behavior of people, and does not assume rational actors trying to maximize some measurable outcome. It seems fairly clear that, as this article addresses "current economic formalism", it is in the latter camp. – Arturo Magidin Mar 31 '21 at 16:44
  • @Numericallyilliterate This part I cannot comprehend. For me it doesn´t make sense, especially when they mention the term "growth rate" Maybe it wasn´t the best idea to write about economics in "nature physics". – callculus42 Mar 31 '21 at 18:03

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