All posts by Richard Thripp

Doctoral candidate at UCF studying financial education, 27-year-old photographer, writer, and pianist.

Announcement on IGI Global Handbook of Research on Emerging Practices and Methods for K–12 Online and Blended Learning

Book Cover

I am proud to announce the release of our new Handbook of Research on Emerging Practices and Methods for K–12 Online and Blended Learning published by IGI Global.

Heafner, T. L., Hartshorne, R., & Thripp, R. (Eds.). (2019). Handbook of research on emerging practices and methods of K–12 online and blended learning. https://doi.org/10.4018/978-1-5225-8009-6

My statement on the handbook:
I worked extensively on editing the handbook for writing quality, fact-checking, and APA style. At the same time, I enjoyed learning about virtual schools and blended learning across the country. There is something for everyone in this handbook—teachers, administrators, teacher educators, instructional designers, program and curriculum developers, and more. The researchers and practitioners in this compendium are at the cutting edge of fully online and blended learning pedagogies, practices, and technologies, not only in teaching K–12 students and preservice teachers, but also in offering professional development workshops on moving coursework online, stimulating critical thought, and facilitating deep learning. The handbook is rounded out with chapters with case studies in online pedagogies, tools, and strategies for specific subject areas, such as mathematics, science, and social studies. As K–12 learning is increasingly centered around online technologies and resources, this handbook is both timely and relevant, particularly with respect to the nationwide deficit in K–12 online teaching courses, certificates, programs, and continuing education opportunities.

Autobiographical statement:
Richard Thripp is a doctoral candidate and graduate teaching associate in the College of Community Innovation and Education at the University of Central Florida. He has instructed over 200 students in EME 2040: Introduction to Technology for Educators on the use of Web technologies in K–12 teaching practice. Richard’s primary research interest is in the improvement of individual financial literacy through education and behavioral approaches. He holds an M.A. in Applied Learning and Instruction and a certificate in Advanced Quantitative Methodologies in Educational and Human Sciences from the University of Central Florida.

Climate Change and the All-or-Nothing Fallacy

Learning that concentrations of carbon dioxide (CO2) in the atmosphere have increased 50% since the Industrial Revolution and are the highest they have been in approximately the past million years is what convinced me that human-caused climate change is real, has been occuring, is occuring, and will continue to occur. Even if all humans were to disappear overnight, the earth would continue to warm and CO2 levels would continue to increase for about 40 years. But, 37 billion metric tons of CO2 were emitted in 2018 and this is likely to continue or even increase.

The all-or-nothing fallacy, also known as the false dilemma, is a logical fallacy by which people argue that because climate change is happening anyway, we may as well keep doing what we are doing. It encourages defeatism rather than constructive action. It does not help that we are not psychologically equipped to easily comprehend a threat such as climate change, that is so diffused in time and space.

The world’s population growth compounds not unlike the stock market, with more people alive now than ever before. The global population has doubled since 1970, and of all the humans that have ever lived, about 1 in 15 are alive today.

There are 410 parts per million (ppm) of CO2 in the atmosphere now, or 0.041% by volume. This is compared with about 280 ppm at the start of the Industrial Revolution, and a projected 500 ppm in 2050 and over 600 ppm in 2100. Besides massive increases in natural disasters and malnutrition, this gives going outside to get a breath of fresh air a whole different meaning. Recent research shows people experience declining cognitive function from high CO2 concentrations, and it is not uncommon to see 1,400 ppm indoors due to lack of air circulation. People actually notice a decline in air quality above 600 ppm. If there are 600 ppm of CO2 outdoors, this is a baseline from which only higher concentrations will be seen indoors in 2100, and 600 ppm isn’t even a liberal estimate (some estimates are as high as 1,000 ppm).

Right now, historic ancient forests in Tasmania are burning on a massive scale. We have seen huge fires in California and elsewhere due to climate change, and all of these events release more CO2 while simultaneously reducing the earth’s ability to absorb CO2. Even the color and acidity of the oceans will never be the same again. As climate change continues, it will get far worse like a growing snowball. For example, arctic glaciers are releasing methane, which is far worse than CO2 by volume, and this will only accelerate.

Research by Irakli Loladze shows that when crops get more CO2, they grow faster but have fewer nutrients and more carbohydrates. This effect is separate from declining vitamins, minerals, and protein content in fruits and vegetables from factory farming focused on higher crop yields. CO2 will destroy the planet’s habitats and habitability for humans and it will even impair our cognitive function and nutrition, but no one seems to care.

Economists demonstrate that the true cost of CO2-emitting products are not included in prices. A gallon of gas may cost $2.30 now, but how much will humans of 2100 wish they could pay to go back in time and stop you from burning it? Even adjusting for inflation, $5.00 is not a stretch, and it likely may be $10, $20, or even more. The United States emits over five billion metric tons of CO2 a year, almost a third of which is from transportation. The impact of frivolous travel is enormous.

A large part of our economy and corporate valuations are built on emitting CO2 that will cost us dearly in the future. Although I write about personal finance and investing in the entire stock market to ensure capital gains over the long term and being well-funded in retirement, it is a fact that these gains come at a cost and are not sustainable in the long term. I have suggested in prior writing that rather than trying to pick corporations that are socially responsible, one should buy the whole market and contribute the differential gains to green causes; that is, the additional income one acquired by buying the whole market instead of a Sisyphean attempt to exclude polluting corporations. For several years now, I’ve railed against Amazon for continually stealing customer gift card balances, including my own $451 gift card balance in 2015. Nonetheless, my 403(b) and IRAs still invest in Amazon; it’s not like I have access to a special mutual fund that includes the entire S&P 500 except Amazon. But, with the gravity and enormity of the climate change conundrum, I find myself questioning this wisdom, particularly as my girlfriend and I are expecting a son in less than a month, who I certainly hope will live to the year 2100 and beyond.

Climate change is paradoxically both all-or-nothing and not at the same time. We have produced technological marvels that we could not even imagine 50 years ago, yet at the same time we cannot rely on humanity to miraculously come up with a technological panacea for climate change at some unknown point in the future. The answer is “all of the above.” We must invent, invest, abate, ameliorate, adapt, tax, legislate, regulate, educate, indemnify, chastise, and more. We asked Americans, “is this trip necessary?” during World War II to support the war effort. We took the drastic steps of making cents out of steel and nickels out of silver to set aside copper and nickel for the war effort. We sold $185 billion of war bonds, equivalent to $2.7 trillion today. Climate change is an even bigger threat than World War II. Why are we not investing $2.7 trillion in climate change solutions? Why are we not chastising tourists and jet-setters for their feckless recklessness? Why are Americans not united in protest against the U.S. military for not only consuming an ungodly amount of oil but orienting itself toward “controlling oil-rich regions and defending the key shipping supply routes that carry half the world’s oil” (Buxton, 2015, para. 4)? Talk about propping up fossil fuels. If Americans really comprehended the gravity of climate change, the protests would be larger and more widespread than the Vietnam War and Tiananmen Square protests combined.

I know I’ve stayed silent on the issue of climate change for far too long and done more than my fair share of polluting too (e.g., visiting family in China in 2017 and Yellowstone National Park in 2018), but I will stay silent no longer. My son’s future depends on it.

World War II poster

Combating Investing Profiteers and Their Propaganda Against Low-Cost Investing

No one knew better than Jack Bogle (1929–2019) that the interests of the financial industry are diametrically opposed to the interests of the common person. Low-cost index-tracking funds now comprise about 20% of the market for U.S. stock mutual funds, and this share continues to grow. However, Americans’ financial and investing literacy remains low, and those seeking out information are overwhelmed by propaganda from profiteers, which makes it hard to discern the truth.

John Paulson, a wealthy profiteer in the hedge fund industry, surprisingly shared some truth in a recent Bloomberg Opinion column:

“The other thing I love about this business, when I say why I went into this business, is the fee structure,” he [Paulson] added, detailing how much he could make in charging a 1 per cent management fee and 20 per cent performance fee on different levels of assets.

“The more money you manage, the greater the fees,” he said. “Now ultimately we managed over $30bn, and there were years our returns were well in excess of 20 per cent, so to get to those levels, the fees just pour out of the sky.”

The column author (Matt Levine) continues, elaborating on how Paulson profited even while screwing over his investors:

Also if you start losing money you don’t have to give the fees back: “The 63-year-old money manager said that almost 75 to 80 per cent of the money managed by Paulson & Co was now his own capital, reflecting years of disappointing returns that have driven outside investors away”—though also reflecting earlier years of huge returns and huge fees that allowed him to have billions of dollars of his own money in his fund—and “he would consider turning his firm Paulson & Co into a family office ‘in the next year or two.'”

Hedge funds aren’t even open to the ordinary investor; you must be an accredited investor with at least a $1 million net worth excluding one’s home, or income over $200,000 in the past few years. Supposedly, hedge funds are where “smart money” goes; accredited investors are sometimes referred to as “sophisticated” investors, such as in Australian law. This is ironic, because it is foolish to pay 1% per year of portfolio value plus 20% of gains, when active investors are demonstrably incompetent. Above, we see that Paulson had a few good years early on causing foolish investors to pour into his fund, followed by many years of terrible returns that led them to pull out. All along, he collected about 1% per year in management fees plus about 20% of investors’ gains during good years, while losing nothing in bad years. This is highway robbery.

Vanguard, the company Jack Bogle founded, fought profiteering on multiple fronts. They fought against “load fees,” which are sales commissions for stockbrokers that come as a percentage of invested assets. Up until the 1970s, no-load mutual funds were almost unheard of, and it was common for brokers to get as much as 5% right off the top—if you put in $10,000, only $9,500 got invested and they kept $500, immediately kneecapping your returns. Now, investments with load fees are the abnormality. And, although Vanguard has always offered actively managed funds, they pioneered index-tracking funds with much lower fees. Tracking an index, such as the S&P 500, has shown to be consistently better than active management. Most fund managers produce returns that are lower than an index fund. When you add sky-high fees on top of this, you are guaranteed to lose money. Conway (2014) writes in a Barron’s article:

How hard it is to predict who will do well. This isn’t part of the latest S&P study, but the index maker’s previous work on the subject suggests there’s no statistically significant persistence among funds in the highest-performing groups. There’s no new evidence suggesting that’s changed.

When you look at your 401(k) plan, you will almost certainly see investment options that don’t belong there. There are almost assuredly funds in there that charge fees of 1% per year or more, and sometimes a low-cost index fund, with an annual fee of about 0.05%, isn’t even available. The profiteers’ reach is deep, and it extends even to our teachers who are scammed by 403(b) annuity plans, in cahoots with lawmakers and administrators who partner with profiteering companies to only put bad investment options on the table.

Online, the propaganda against low-cost investing is widespread. The industry reaps massive profits while creating little value, not unlike the tobacco companies. They have a lot to lose. This is why there are daily propoganda pieces in the news saying things like “if everyone invested in index funds, it would be a catastrophe” and stuffing Wikipedia pages with propaganda such as “many investors also find it difficult to beat the performance of the S&P 500 Index due to their lack of experience/skill in investing” and purporting that unsuccessful active managers are actually “closet indexers,” justifying high fees while failing to deliver the product (active management) that purportedly produces profits.

In truth, active management is a nothingburger. You pay high fees and get lower returns than an index fund. It’s sort of like going to a bank and paying $200 to arrange to be mugged in the parking lot.

Even without sales commissions, financial advisors and other financial professionals still have plenty of ways to profiteer. They do this via an annual or quarterly fee assessed against “assets under management” that you have made them custodian of, which is usually around 1% per year. Framing this as 1% per year actually does a disservice to the investor, however. The stock market only returns about 10% per year as a long-term average, before inflation which is roughly 3%. One percent of 10% is actually a 10% fee, and if adjusting for inflation, a 14% fee. Would you pay a real estate agent 14%?

On top of this, the investments financial advisors place you in, even if index funds, likely do not have the 0.05% or even lower annual fees that are offered by Vanguard, Fidelity, Charles Schwab, and others. You might see your money in a fund that is substantially similar yet has a 0.5% annual fee, with your advisor receiving a cut from the affiliated company. If you can expect a long-term average of 7% in real returns before fees, then 1.5% of fund and advisor fees gobbles up 21.4% of these returns. Each and every year.

The FINRA foundation’s recent study of Millennial investors found that Millennials are actually eager to work face-to-face with financial professionals rather than do-it-yourself investing or using a robo-advisor. Also, Millennials had no idea that you need substantial assets to work with a financial advisor, and they expected an advisor to take a whopping 5% of assets under management as a fee each year. Such lack of knowledge is kryptonite to achieving financial independence. Even a high income cannot compensate. “A fool and his money are soon parted,” as the saying goes. In this industry, it is not helpful that wolves masquerade as sheep and sheep do not even notice they are being eaten.

The common American does not have access to a hedge fund or even a financial advisor, yet they still have a 401(k) plan available, chock full of bad investment options. There might only be one low-cost index fund available in their 401(k) fund menu, or even none at all. About half of Americans do not invest in stocks at all, and if they do, they don’t know that buying and holding the whole market is the best strategy. This fact is both counterintuitive and pilloried by propagandists in the financial media. To combat profiteering and propaganda by vested interests in the financial industry, financial education is key, but must be coupled with outlawing and derriding profiteering practices. A good place to start is with 403(b) plans for public school teachers. Teachers lack financial knowledge, shape the next generation’s knowledge, and are besieged with low pay, awful pension plans that no one ever gets a pension from, cringeworthy annuities masquerading as investment options, and sales representatives that stake out school cafeterias to cajole them into financial ruination. Therefore, for my forthcoming Education Ph.D. dissertation at University of Central Florida, An Investigation of Investing and Retirement Knowledge Among Preservice Teachers, I am surveying the next generation of teachers to provide (a) evidence to support reforms both nationally and locally and (b) instructional design recommendations for financial education programs.

This article was also posted on Tippyfi.

Boston Restaurant L’Espalier Refuses to Honor Gift Cards; Relevance to Amazon’s Gift Card Racket

I came across a news story in the Boston Globe about the restaurant L’Espalier closing and refusing to honor gift cards. The restaurant isn’t going bankrupt; the owner just decided he was tired of it and wants to start a new restaurant. They announced on 12/26/2018 their last day would be 12/31/2018, only five days later. The restaurant’s PR firm has gone on record saying they won’t offer refunds to gift card holders, the owner has stated the gift cards won’t be valid at his new venture, and anyone who tried to book a table at the end of 2018 did not get to use their gift cards because they were fully booked.

Sean Murphy, author of the Boston Globe article contacted the office of the Attorney General of Massachusetts. Murphy reports: “But the office of Attorney General Maura Healey told me it expects L’Espalier to refund the gift cards, citing the state’s consumer protection law, Chapter 93A, which outlaws ‘unfair and deceptive’ practices by businesses.” Following this, L’Espalier’s PR firm said it will work with the AG’s office to “resolve any complaints amicably.”

Amazon banned my account and stole $451.20 of gift card balance from me in 2015, which I recovered from a law firm representing them, Stoel Rives LLP, in 2016. Amazon’s initial action prompted me to search online, where I found this is a racket they have been conducting since the height of the financial crisis in 2008 (see the Slickdeals.net thread started 11/12/2008).

It does not appear Amazon has stopped or slowed down. I still get emails and comments every week or two from Amazon customers who have been defrauded. In past writings I have cited the federal CARD Act of 2009, Chapter 19.240 of Washington state’s legal code, Section 1749 of the California Civil Code (in my April 2018 deposition), and Florida’s Deceptive and Unfair Trade Practices Act. All of these laws forbid theft of customer gift card balances, but citing them does not gain much traction with judges, attorneys general, or the general public (recall my shellacking from commentators on Elliott.org, with some even saying I belonged in prison for ripping Amazon off, on a story about Amazon ripping me off for $451.20).

With the L’Espalier story, we see the Massachusetts’s AG office has quite reasonably interpreted the restaurants actions to constitute an “unfair and deceptive” business practice. This is not specific to Massachusetts, however; most states have similar laws which can be applied against Amazon’s practice of closing customer accounts and withholding gift card balances. Even their home state, Washington, has such laws, and federal laws apply as well.

Murphy reports that the PR firm for L’Espalier smugly reiterated the terms of the gift card: “This card is not refundable and has no cash value.” Of course, to anyone with a modicum of legal understanding (or even common decency), this is ludicrous. In my recent deposition for a California small claims suit against Amazon, I pointed out these sentences from the California Civil Code: “The value represented by the gift certificate belongs to the beneficiary, or to the legal representative of the beneficiary to the extent provided by law, and not to the issuer,” and “Any waiver of the provisions of this title is contrary to public policy, and is void and unenforceable.” In most state canons of law and federal law as well, terms like “This card is not refundable and has no cash value” are void and unenforceable when used for the purposes of theft of a gift card balance.

Similarly, Amazon is quite smug when they point out their terms say “Amazon reserves the right to refuse service, terminate accounts, remove or edit content, or cancel orders in its sole discretion” and:

We reserve the right, without notice to you, to void Gift Cards (including as a component of your Amazon.com Balance) without a refund, suspend or terminate customer accounts, suspend or terminate the ability to use our services, cancel or limit orders, and bill alternative forms of payment if we suspect that a Gift Card is obtained, used, or applied to an Amazon.com account (or your Amazon.com Balance is applied to a purchase) fraudulently, unlawfully, or otherwise in violation of these terms and conditions.

These terms are not enforceable and wouldn’t hold up in most courts against many of the customers Amazon has banned. In fact, Amazon should not be allowed to keep the gift card balances at all due to escheatment laws in their home state and many other states. If they are going to count the gift cards they steal as “abandoned” property, they are still required to turn them over to state governments after three years of inactivity in most states. We can be damn sure they are not doing that.

Snarky commentators are quick to point out that if you don’t like the terms, you shouldn’t buy the gift card. But, what about the recipients of gift cards? When suggesting that we just present the original receipt to Amazon, or dispute the purchase of the gift card with our credit card issuer, this assumes we are also the purchaser of the card. Many Americans have poor record-keeping practices and unfortunate financial situations, so they may have purchased the gift card with cash and lost the receipt, even if they purchased the card for themselves. Due to a lack of knowledge, some people think purchasing a gift card with cash and using it on Amazon is safer or more secure than using a bank card directly on Amazon. When they get burned, they not only have no recourse, but a chorus of commentators shaming them for their foolishness and commending Amazon for keeping prices low for everyone while providing tremendous value for their shareholders and chief philandering officer.

Although the same laws apply, in the court of public opinion it is harder to dismiss recipients of L’Espalier gift cards than people who have been banned by Amazon. One can always assume an Amazon customer was banned with good cause; they were stealing from Amazon or programming magnetic strips with stolen credit card information to buy Amazon gift cards at the local gas station. Bostonites, on the other hand, just received L’Espalier gift cards for Christmas that were void by New Year’s Day. Even the snarkiest commentator does not have a retort for that.

Thoughts on Big Three Question #2 used to assess financial literacy: Inflation

Continuing from the savings account interest question, here I will talk about Question #2 of the “Big Three” financial literacy questions created by Annamaria Lusardi and Olivia S. Mitchell.

The prior question asked about the resultant nominal account balance of a savings account after five years earning 2% per year of interest. The second question is similar but introduces the construct of inflation and assesses understanding of erosion of savings via inflation.

2. Imagine that the interest rate on your savings account was 1% per year and inflation was 2% per year. After 1 year, how much would you be able to buy with the money in this account?
More than today
Exactly the same
Less than today
Do not know
Refuse to answer

The prior question was correctly answered by 75% of respondents to the 2015 National Financial Capability Study, but the above question was only correctly answered by 60% of respondents. If we break down respondents by educational attainment, their responses were as follows:

Inflation Question by Educational Attainment

The green (left) bars represent correctly answering the question as “less than today.” The yellow bars represent selecting “Do not know,” and the red bars represent selecting “More than today” or “Exactly the same,” both of which are incorrect. “Refuse to answer” respondents are excluded in the above statistics, and I have used the nationally representative weights provided by the FINRA foundation. The above figure is from my 2017 poster presentation on financial capability and educational attainment.

As we see, more educated respondents get the answer right more often. Although many highly educated respondents select a wrong answer, they are much less likely to select “Do not know” than those with less education.

There are many hidden assumptions in this question which can be confusing for the reader. We must assume inflation refers not to expansion of the money supply but rather to increases in prices of consumer goods. The question deals with generalities rather than specifics; the reader must assume we are talking about goods on average, rather than a particular sector. If we are talking about 16 GB USB flash drives, one would probably be able to buy more of them in a year because technology prices tend to decline, but other goods go up in price. The reader must also assume we are talking about national averages, because prices may fluctuate contrary to overall inflation in certain regions.

Respondents who understand this question are likely able to divine the difference between nominal dollars and real purchasing power. Nominally, the account balance increases from $100.00 to $101.00. This is true whether the 1.00% interest rate is an annual percentage yield (APY) or an annual percentage rate (APR) compounded quarterly or monthly. Even monthly compounding would fail to increase the resultant nominal balance to $101.01 (assuming favorable rounding errors do not occur), as $101.0046 would be rounded down to the nearest cent.

With inflation being 2.00%, this means it takes, on average, 2.00% more dollars to buy the same items a year later. For “Exactly the same” to be the correct answer, the final nominal account balance would have to be $102.00, not $101.00. This means that it took 1.96% less dollars to buy the same goods at Year 0 than Year 1, or 2.00% more dollars to buy the same goods at Year 1 than Year 0. (Incidentally, many people are baffled when I tell them about this quirk of percentages. Examples: If the stock market drops 20%, it has to go up 25% to get back where it was. At Michaels [sic] arts and crafts store, forgetting to use your 50% off coupon means you paid 100% more than you would have had you remembered.)

“How much would you be able to buy” begs a response: “of what?” The question prompt does not provide this, and it couldn’t without being unwieldy. Nonetheless, a respondent could pick “More than today” and be technically correct if they make an undesired assumption about “of what?” If we are talking about quarters, one would be able to go to the bank and get 404 of them after a year, as compared with 400 at the start. A smart aleck could argue the “wrong” answer is actually right, and we must rely on the metaphorical spirit of the law rather than letter of the law to interpret the question appropriately.

In the scenario, real returns, which adjust for inflation, are about –1% in this year, because the nominal return of 1% was overwhelmed by inflation which exceeded the return, at 2%. Specifically, real returns would be ($101.00 / $102.00) – 1, which is .9902 – 1, which is –.0098. Multiplying by 100 to get a percentage, this is –.98%. Therefore, “Less than today” is the correct response with the unlucky individual in the question prompt having lost 0.98% of their real purchasing power. The Internal Revenue Service disregards inflation and would expect income tax to be paid on the $1.00 of increase in your savings account balance, and they actually classify interest income as “unearned” income. These two facts taken together are rather insulting.

In the end, you can buy 4 more quarters, 10 more dimes, 20 more nickels, or 100 more cents. Your account balance increased $1.00 and you owe anywhere from zero to 37¢ to the IRS, and possibly up to 15¢ of state income tax (in California if your income is over $1 million for the year). However, your purchasing power has declined by almost 0.98%.

In truth, the Big Three financial literacy questions are not magical. Although their widespread use has shown us the sorry state of financial literacy both in the United States and abroad, the questions are susceptible to biases such as framing and interpretation, and to an extent they confound financial literacy with linguistic knowledge, mathematical knowledge, and/or knowledge of financial practices and institutions. Regarding framing in particular, Stolper and Walter (2017, p. 596) state:

Another shortcoming of test-based measures of financial literacy is their sensitivity to framing. Specifically, Lusardi and Mitchell (2011a, b) and van Rooij et al. (2011b) document that the answers of survey participants differ significantly based on the wording of the test questions. In fact, the percentage of correct answers doubled in the latter study when the wording for the third question of the Big Three was “buying company stock usually provides a safer return than a stock mutual fund” as compared to phrasing the question reversely, i.e. “buying a stock mutual fund usually provides a safer return than a company stock“. Hence, Lusardi and Mitchell (2014) conclude that some answers classified as “correct” might instead reflect simple guessing of respondents and highlight that measurement error might be an issue when eliciting financial ability based on test questions.

In a future post, I will discuss the final Big Three question on a single stock versus a stock mutual fund, including Stolper and Walter’s criticism of the question’s susceptibility to framing effects.