1908: Credit Card Rewards

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The Synologist
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1908: Credit Card Rewards

Postby The Synologist » Fri Oct 27, 2017 4:28 pm UTC

Image
Title Text: I should make a list of all the things I could be trying to optimize, prioritized by ... well, I guess there are a few different variables I could use. I'll create a spreadsheet ...

I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

AveSharia
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Re: 1908: Credit Card Rewards

Postby AveSharia » Fri Oct 27, 2017 4:54 pm UTC

See (or listen to) Algorithms to Live By for a survey of "when should I stop optimizing."

Also:
The Secretary Problem
Optimal Stopping

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Re: 1908: Credit Card Rewards

Postby Sableagle » Fri Oct 27, 2017 5:56 pm UTC

Silly cartoon character. Why limit yourself to just one credit card when you could get two or three and exploit the deals in sequence, transfering your balance between them for extra weeks of 0% borrowing?
Oh, Willie McBride, it was all done in vain.

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Reka
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Re: 1908: Credit Card Rewards

Postby Reka » Fri Oct 27, 2017 6:35 pm UTC

Sableagle wrote:Silly cartoon character. Why limit yourself to just one credit card when you could get two or three and exploit the deals in sequence, transfering your balance between them for extra weeks of 0% borrowing?

Except no credit card I've ever encountered applies an introductory no-interest offer to balance transfers, probably for this precise reason.

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Keyman
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Re: 1908: Credit Card Rewards

Postby Keyman » Fri Oct 27, 2017 7:21 pm UTC

Reka wrote:
Sableagle wrote:Silly cartoon character. Why limit yourself to just one credit card when you could get two or three and exploit the deals in sequence, transfering your balance between them for extra weeks of 0% borrowing?

Except no credit card I've ever encountered applies an introductory no-interest offer to balance transfers, probably for this precise reason.
Sorry, beg to differ. I often get credit card offers that specify that very thing as an enticement. It is, usually, for a specified period of time, but when I play my {ahem} cards correctly, I've paid off that balance before the 'introductory period' is over.
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Re: 1908: Credit Card Rewards

Postby Sableagle » Fri Oct 27, 2017 7:49 pm UTC

I get them all the time. There are turtles all over our oceans choking on tiny fragments of the fake credit cards they stick on the adverts they send me.
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Re: 1908: Credit Card Rewards

Postby rmsgrey » Fri Oct 27, 2017 8:15 pm UTC

The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.


Yeah, best case, you do some sort of for-hire work with an hourly rate where you can pick up as many (or as few) hours as you like. Even then, some of the time you'll need to be doing things that don't earn money - like eat, sleep, read xkcd... Anything you're doing in those hours shouldn't be optimised for income directly - if anything, you might optimise for efficiency in meeting your non-financial needs so that you can devote more time to earning, but that's not directly earning money. And, of course, optimising for money earned is kinda silly (at least past a certain point) - money's only valuable for what it can get you, not as an end in itself.

And a lot of jobs just pay you an agreed amount for completing agreed tasks within an agreed time - so long as you meet your agreed goals, you can't significantly change the amount of money you get per month, so any time you're not working on those required tasks, your time is only worth money to the extent your activities support your paid work.

On the other hand, if you want to equate your time with money, dividing your annual salary by the hours in a year is one of the few ways of doing so...

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Re: 1908: Credit Card Rewards

Postby Rombobjörn » Fri Oct 27, 2017 10:58 pm UTC

I have no experience with credit card reward programs as I have so far managed to remain free from credit cards. However, I usually ignore coupons of various kinds because the little money I could save isn't worth all the trouble I'd have collecting coupons, remembering to bring them to the store and remembering to use them at the checkout. That is so because my time is valuable to me even when I'm not working for money.

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Re: 1908: Credit Card Rewards

Postby arkista » Sat Oct 28, 2017 12:28 am UTC

The basics aren't terribly complicated, although you'd be amazed how many "good credit card" sites fail to mention many good credit cards. They're more interested in pimping highly profitable referral cards like the bs laden chase freedom card, or some airmiles claptrap that deludes boneheads with big numbers.

Ahem. Anyway:

Amazon store card: 5% back on all Amazon purchases for prime members. Kind of a no brainer for most.
Amex Bluecash Preferred: 6% back on $6000 a year of groceries, $95 annual fee. There's a ton of 3% on grocery cards out there without the fee if you spend less than the breakeven. The regular Amex Bluecash is one of them.
2% back on everything is pretty common these days, though it usually has some minor caveat. Paypal and Fidelity both have rewards cards like this.
Cardpool and similar sites: Buying gift cards can easily get you 10-20% off almost anything you wouldn't buy insurance for.
USAA has a 5% on gas card, and their membership is pretty broad. A relative visited an army base in the 1970s? You're in. 3% on gas cards are very common beyond that.

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Re: 1908: Credit Card Rewards

Postby Quey » Sat Oct 28, 2017 2:43 am UTC

The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

The comic doesn't seem to be valuing time by the opportunity cost of working more hours for hourly wage, but rather if it's worth the time. Your hourly wage may be a decent rule of thumb conversion factor for time to money just to set some standard. Taken to an extreme, most anyone would get a credit card that nets them, say, $500 for 2 hours of comparisons, but few would say the same card is worth 200 hours of time to read through all the agreements for any legal gotchas. Given these bounds, it's reasonable to conclude that time is worth something to most people.

Sure, things like quality of time, other things you could be doing, or whether you can listen to a podcast while doing it might change your value of time, but acting like time is worthless is absurd. Under that theory, more people should rationally be walking around the streets, hoping to encounter pennies in the road. Sure, the payoff is low, but in exchange for worthless time, it makes sense.

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Re: 1908: Credit Card Rewards

Postby Cougar Allen » Sat Oct 28, 2017 3:08 pm UTC

The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

When I was a boy whenever I bought something I calculated the correct change in my head and then counted it - until I finally noticed I was doing something I did not enjoy (math is fun; arithmetic is not) for a very small hourly wage. Then I quit counting my change.

If you enjoy comparing credit card reward programs that's different. My father always said the money he saved by growing his own vegetables wasn't worth the time he spent at it, but he enjoyed gardening, so he had a hobby that didn't cost him money; it saved him money (and of course his home-grown vegetables tasted better than store-bought). I feel the same way about shopping at thrift stores. I'm not only supporting various good causes - I have fun doing it! Some people play the lottery and lose money. My hobby is shopping at thrift stores. When I score a $450 camera for $2 that's winning a prize - and when I don't, I'm still having fun.

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Re: 1908: Credit Card Rewards

Postby ericgrau » Sat Oct 28, 2017 3:40 pm UTC

The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

At minimum it's a good ballpark. You are already trading away your time for money at this rate and you don't have a severe mental disability, so there must be a reason for it. And your free leisure time must be worth something, unless you are an extremely dull person who does not value your time off at all.

Some questions to ask would be:
"Would you work less if you could? Even though it will mean less money when you have bills to pay?" => Your free time is actually worth more than what you are paid.
"Would you work more time if you could to get more money?" => Your free time is worth less than what you are paid.
"Will you refuse overtime when you are not tired? Even remembering all the nice things it could buy" => Your free time is worth more than 50% than what you are paid.
"Would you work a second job that pays less than your current job? A part time fast food/retail/sales job, driving Uber/Lyft, etc." => Your free time is worth as little as that 2nd job, or less.

The last one further illustrates that there is no way your time is worthless. If your leisure time is worth so little, you could be an Uber/Lyft driver very soon and convert that "worthless" time into money. I'll take a 5% commission on all that money I got you tyvm, because surely your leisure time wasn't worth anything and you will be eager to trade it away for money as soon as you read this post.

galibert
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Re: 1908: Credit Card Rewards

Postby galibert » Sat Oct 28, 2017 7:51 pm UTC

Good thing for cueball he never tried factorio... "If I move that assembler there I can fit one more here and braid the belt there and..."

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Re: 1908: Credit Card Rewards

Postby rmsgrey » Sun Oct 29, 2017 12:59 am UTC

ericgrau wrote:
The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

At minimum it's a good ballpark. You are already trading away your time for money at this rate and you don't have a severe mental disability, so there must be a reason for it. And your free leisure time must be worth something, unless you are an extremely dull person who does not value your time off at all.


The thing is, for most people, money has a very non-linear utility function. There's a large chunk of utility associated with the ability to pay rent/mortgage, utility bills and food costs, a rather shallower curve associated with increasing access to luxuries, and then more jumps associated with being able to buy a house outright, etc.

As Mr Micawber observed, the difference between misery and happiness can be narrowed down to 1 part in 400 of a person's income (or less) - the difference between living within one's means and overspending.

If your salary is just above your necessary expenditures, then it's entirely rational to be unwilling to take a cut in hours, but also be unwilling to work any overtime even at double (or more) you normal rate of pay - the marginal utility of the income from the last hour of full time work each week is much, much higher than the marginal utility of the income from an hour's overtime.

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Re: 1908: Credit Card Rewards

Postby gmalivuk » Sun Oct 29, 2017 1:18 am UTC

The Synologist wrote:If you have a set work schedule, it's not like you could work more hours and get paid more money
Because as we all know it's totally impossible to get a second job or even to hypothesize about whether you'd want to get a second job?
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Re: 1908: Credit Card Rewards

Postby orthogon » Sun Oct 29, 2017 8:34 am UTC

rmsgrey wrote:The thing is, for most people, money has a very non-linear utility function. There's a large chunk of utility associated with the ability to pay rent/mortgage, utility bills and food costs, a rather shallower curve associated with increasing access to luxuries, and then more jumps associated with being able to buy a house outright, etc.

As Mr Micawber observed, the difference between misery and happiness can be narrowed down to 1 part in 400 of a person's income (or less) - the difference between living within one's means and overspending.

If your salary is just above your necessary expenditures, then it's entirely rational to be unwilling to take a cut in hours, but also be unwilling to work any overtime even at double (or more) you normal rate of pay - the marginal utility of the income from the last hour of full time work each week is much, much higher than the marginal utility of the income from an hour's overtime.


I was going to say something related, which is that I think leisure time also has a non-linear utility. The marginal value of leisure time goes up the less of it is left: your last hour of free time is worth more than your first. It's hard to separate the two factors as they work in the same direction: working an extra hour earns you money of ever-decreasing utility in exchange for time of ever-increasing utility.

I find it quite hard to examine in my own case. I'm extremely fortunate to enjoy my job enough that it doesn't feel like working for an hour is a sacrifice for which I require "compensation". Working is just one of the things I do, and whilst some of it is vexatious, boring or stressful, mostly it's rewarding and fun. And there are plenty of things I do in my leisure time that are significantly less enjoyable: I don't just mean things like cleaning the bathroom, but, say, spending time with my [wife's] brother-in-law. In fact, a change being as good as a rest, an hour cleaning the bathroom is quite enjoyable, because it's my bathroom and I get to benefit from it. And being a tight-fisted bastard I also enjoy not having to pay a cleaner; and being a rubbish negotiator and somewhat on the spectrum, I enjoy not having to engage a stranger to work in my flat. An hour listening to b-i-l's crap about Trump, Brexit and 9/11 is pure penury and I'd much rather be cleaning the bathroom. I guess it's about payback: the enjoyment of a clean bathroom is worth the time spent on it, whereas there's no upside to the b-i-l "conversation".

My point is that I'm not sure an alien would find it easy to work out which parts of my life are supposedly things I'd rather not be doing and require compensation to do them, and which are enjoyable things that I expect to pay for.
xtifr wrote:... and orthogon merely sounds undecided.

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Re: 1908: Credit Card Rewards

Postby ericgrau » Sun Oct 29, 2017 4:58 pm UTC

rmsgrey wrote:
ericgrau wrote:
The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

At minimum it's a good ballpark. You are already trading away your time for money at this rate and you don't have a severe mental disability, so there must be a reason for it. And your free leisure time must be worth something, unless you are an extremely dull person who does not value your time off at all.


The thing is, for most people, money has a very non-linear utility function. There's a large chunk of utility associated with the ability to pay rent/mortgage, utility bills and food costs, a rather shallower curve associated with increasing access to luxuries, and then more jumps associated with being able to buy a house outright, etc.

As Mr Micawber observed, the difference between misery and happiness can be narrowed down to 1 part in 400 of a person's income (or less) - the difference between living within one's means and overspending.

If your salary is just above your necessary expenditures, then it's entirely rational to be unwilling to take a cut in hours, but also be unwilling to work any overtime even at double (or more) you normal rate of pay - the marginal utility of the income from the last hour of full time work each week is much, much higher than the marginal utility of the income from an hour's overtime.

No chance in heck it's so black and white. There's a steady curve of time worked vs value per hour, not a sudden cutoff, nor even a sharp change in slope.

You can get a home in the middle of nowhere for super cheap, with a low cost of living too. But besides being suckier you also won't be near your friends who may not want to live their either. Nor have many neighbors in general, because very few do this. There are different levels even for the "necessities". So almost nobody actually does what you're describing in practice. Everyone puts a handful of basic luxuries right next to necessities in value and this continues steadily through most income levels. Plus saving for emergencies and retirement keeps anyone from straddling the border. Or heck putting it into investments vs credit card debt for that matter. That first hour after your needs are paid off can't be so crazy valuable that you wouldn't work it for any amount. Rarely would anyone even refuse the +50%. Instead it's usually the employer limiting the amount of overtime not the employee. At the very least you could use it to save up so that you don't need to work as much in the future. I don't think anyone actually operates such a way in practice once they get the actual opportunity, even if they think they do in theory.

Actually I think I read that the "cutoff" is an income of about $300,000. After that additional money has much less effect on happiness. Despite the old saying. There might be some extra hardship below about $75,000 though. But $75k is still high enough for the average person to benefit a great deal from working extra if they get paid well enough. And the actual poverty line is much below that. There's no cutoff, just an ongoing curve of value vs time.

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Re: 1908: Credit Card Rewards

Postby rmsgrey » Sun Oct 29, 2017 6:32 pm UTC

ericgrau wrote:
rmsgrey wrote:
ericgrau wrote:
The Synologist wrote:I never understood considering your time as being worth as much as you can make per hour. If you have a set work schedule, it's not like you could work more hours and get paid more money, so your time is basically worthless as far as money is concerned.

At minimum it's a good ballpark. You are already trading away your time for money at this rate and you don't have a severe mental disability, so there must be a reason for it. And your free leisure time must be worth something, unless you are an extremely dull person who does not value your time off at all.


The thing is, for most people, money has a very non-linear utility function. There's a large chunk of utility associated with the ability to pay rent/mortgage, utility bills and food costs, a rather shallower curve associated with increasing access to luxuries, and then more jumps associated with being able to buy a house outright, etc.

As Mr Micawber observed, the difference between misery and happiness can be narrowed down to 1 part in 400 of a person's income (or less) - the difference between living within one's means and overspending.

If your salary is just above your necessary expenditures, then it's entirely rational to be unwilling to take a cut in hours, but also be unwilling to work any overtime even at double (or more) you normal rate of pay - the marginal utility of the income from the last hour of full time work each week is much, much higher than the marginal utility of the income from an hour's overtime.

No chance in heck it's so black and white. There's a steady curve of time worked vs value per hour, not a sudden cutoff, nor even a sharp change in slope.

You can get a home in the middle of nowhere for super cheap, with a low cost of living too. But besides being suckier you also won't be near your friends who may not want to live their either. Nor have many neighbors in general, because very few do this. There are different levels even for the "necessities". So almost nobody actually does what you're describing in practice. Everyone puts a handful of basic luxuries right next to necessities in value and this continues steadily through most income levels. Plus saving for emergencies and retirement keeps anyone from straddling the border. Or heck putting it into investments vs credit card debt for that matter. That first hour after your needs are paid off can't be so crazy valuable that you wouldn't work it for any amount. Rarely would anyone even refuse the +50%. Instead it's usually the employer limiting the amount of overtime not the employee. At the very least you could use it to save up so that you don't need to work as much in the future. I don't think anyone actually operates such a way in practice once they get the actual opportunity, even if they think they do in theory.

Actually I think I read that the "cutoff" is an income of about $300,000. After that additional money has much less effect on happiness. Despite the old saying. There might be some extra hardship below about $75,000 though. But $75k is still high enough for the average person to benefit a great deal from working extra if they get paid well enough. And the actual poverty line is much below that. There's no cutoff, just an ongoing curve of value vs time.


That super-cheap home also comes with some hidden costs associated with anything you can't provide/do for yourself - anything you need to get from outside costs significantly more and takes significantly longer to arrive. And, of course, you'd either need a job that lets you work remotely or which is itself based in the same middle of nowhere, or have significant commuting costs.

And having the option to retreat into rural isolation doesn't mean you don't have a significant financial threshold associated with your current home and lifestyle; it just puts a (generous) limit on how bad the effects of dropping below that threshold can be. Moving house comes with its own costs.

There are portions of the curve where your finances are more elastic, but there are also some pretty rigid thresholds.

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Cougar Allen
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Re: 1908: Credit Card Rewards

Postby Cougar Allen » Sun Oct 29, 2017 8:41 pm UTC

ericgrau wrote:That first hour after your needs are paid off can't be so crazy valuable that you wouldn't work it for any amount. Rarely would anyone even refuse the +50%.

Where did you get that statistic? It's not at all rare in my experience; in fact I think the majority of workers choose not to work overtime at time and a half when they have the choice. That has certainly been true every place I've ever worked.

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Re: 1908: Credit Card Rewards

Postby ericgrau » Mon Oct 30, 2017 3:00 am UTC

Cougar Allen wrote:
ericgrau wrote:That first hour after your needs are paid off can't be so crazy valuable that you wouldn't work it for any amount. Rarely would anyone even refuse the +50%.

Where did you get that statistic? It's not at all rare in my experience; in fact I think the majority of workers choose not to work overtime at time and a half when they have the choice. That has certainly been true every place I've ever worked.

Different workplaces then. Every place I've worked has been that way. But I have noticed that when they offer 2 hours of overtime at the last minute on a Friday most people say "No, it's the end of the week, I'm tired and I have plans." That's why in my other post I said "when not tired".

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Re: 1908: Credit Card Rewards

Postby gmalivuk » Mon Oct 30, 2017 3:57 pm UTC

Also, if for example it takes me an hour to get to and from work on a Saturday, then I might want at least double time to make one lone hour of work worthwhile. (Quite apart from the simple fact that even when people aren't tired they may have other plans that conflict with working additional hours on short notice, whatever the rate of pay.)
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Re: 1908: Credit Card Rewards

Postby qubex » Wed Nov 08, 2017 12:37 pm UTC

Economist here. This loop converges to a definite value provided some basic criteria are met (evaluation Function is Turing-Decidable). It is a known phenomenon in Decision Theory and Rational Choice Theory.

(New member, first post because this is within my domain of knowledge.)

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Re: 1908: Credit Card Rewards

Postby Steve the Pocket » Mon Nov 13, 2017 7:45 pm UTC

gmalivuk wrote:
The Synologist wrote:If you have a set work schedule, it's not like you could work more hours and get paid more money
Because as we all know it's totally impossible to get a second job or even to hypothesize about whether you'd want to get a second job?

*Tina Belcher voice* In this economy?
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