January 27, 2006
A risk test
from - RSA
A column in the NYTimes by Virginia Postrell has a nice set of three math questions:
- A bat and a ball cost $1.10 in total. The bat costs $1 more than the ball. How much does the ball cost?
- If it takes five machines five minutes to make five widgets, how long would it take 100 machines to make 100 widgets?
- In a lake, there is a patch of lily pads. Every day, the patch doubles in size. If it takes 48 days for the patch to cover the entire lake, how long would it take for the patch to cover half the lake?
According to Shane Frederick, a management sciece professor at MIT, performance on this test is predictive of risk-taking in making economic decisions. Interesting. Answers below.
::The correct answers, by the way, are 5 cents, 5 minutes, and 47 days.Posted by RSA at January 27, 2006 02:42 PM
Woohoo!
Got them all right!
So that would mean that I am an economic risk taker. Hmm...I am actually somewhere in the middle, though I am on the agressive side of moderate.
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Posted by dave on January 27, 2006 03:15 PM Link to comment |
Well sir, I managed to fuck up every one of them. Other than lousy at math what does that say about me? I cannot even figure out what is meant by "this test is predictive of risk-taking in making economic decisions"
I took a left brain/right brain test the other day and it turns out I am 100% left brain. Math must be on the right hand side of my head.
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Posted by Buck on January 27, 2006 03:21 PM Link to comment |
> I cannot even figure out what is meant by "this test is predictive of risk-taking in making economic decisions"
That's more due to my writing skills than your reading skills; sometimes I get so involved in my work that when I dash off a blog post, it will contain jargon like "neurocognitive" and "task environments" and "problem-solving behavior." Yuck.
Like Dave, I'm okay at the math, but I'm pretty conservative in real life when it comes to money. (This makes me wonder whether the researchers in these studies controlled for any correlation between math skills and socio-economic status.)
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Posted by RSA on January 27, 2006 04:48 PM Link to comment |
I don't think the correlation is with math skills - these are all "trick" questions.. they have an answer that, if one isn't paying attention to detail, intuitively comes to mind...
The difference between $1.10 and $.10 is $1.00. It's a nice round number, and one's brain pushes one toward that answer if it picks out the highlights: "difference, $1.10, $1.00". Given an easy answer that jumps out from the key words in the question, some people will be more likely to succumb to it, some will check the language more scrupulously.
Similar answer on the widgets.. 5/5/5 is a direct ratio to 100/100/100 .. if one is satisfied with the quick answer, then one isn't going to analyze the problem for the real answer.
The final problem is very easy if analyzed... But the quick answer is the ratio - 48 days to cover 1 lake is proportional to 24 days to cover half the lake.
What this says to me is that people who get them right are more risk averse (assuming they don't just do a lot of math)... They are unwilling to take the risk of being wrong, so they analyze to find the answer. Others, more willing to take chances, don't mind jumping in with the first answer that comes to mind. They aren't so concerned with the wrong result that they feel it necessary to detail the problem.
That's my read, anyway.
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Posted by smijer on January 27, 2006 05:47 PM Link to comment |
All of these remind me somewhat of the problems that appear on the LSAT.
I remember the LSAT ones having a lot to do with persons seated around a table, and who couldn't be seated by whom. Doing a whole book of them in a couple of hours is enough to make a person mad, and I never figured out what they have to do with law.
Or, for that matter, with investment style choices.
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Posted by joe public on January 27, 2006 09:08 PM Link to comment |
Hey, smijer, I think you're right, that it has more to do with how much analysis you put into a solution than math skills per se. That makes me wonder whether about whether the correlations show what we think they do. . .
On games and puzzles, I used to be a fan of logic puzzles: If Joe is married to the person sitting to the right of Jane, etc. It turns out that it's possible to write computer programs to solve such problems, and when I discovered that I could do this, my interest in certain kinds of problems (which in computer science jargon involve "constraint satisfaction") dropped to nil. I'm not really sure why--it's not as if I treat computers as competitors, even if I can be beaten by the simplest chess programs. . .
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Posted by RSA on January 30, 2006 12:04 PM Link to comment |
Maybe that it's a mechanized process that doesn't really require new intuition... Kind of like after you figure out how to win or draw every tic-tac-toe game. I've had similar experiences.
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Posted by smijer on January 30, 2006 12:25 PM Link to comment |
