Having Some Fun with Online Loan Calculators

* I, personally, do not have a political party affiliation. I think the two-party system, as currently conceived, is one of the biggest impediments to Democracy in the modern world. With that said, I recognize that I live in a largely Blue community and thus, my implicit availability bias is altered. Nonetheless, if you do have a party affiliation (ehem… especially GOP) and a tendency to get irrationally butthurt, please skip this article. 

Last week, I wrote about part of the reason why I give my Amortization Project that seniors are working on currently. As part of that project, students read the Wall Street Journal article called Beware Online Loan Calculators; however, earlier this week I realized that some of them were struggling with the concept of why, exactly, the calculators are misleading. 

The reason is not because the calculators are giving answers that are wrong. The reason is because they are using (to their advantage) a combination of human psychology and the presumption that most humans in the modern world won’t take the time to understand semi-complex information. This occurs by programming the calculator to have a ‘default’ set of inputs that are advantageous to the lender and not the borrower. Potential borrowers who don’t understand the system that they are working in, then, will tend to just agree with the default settings and not vary their inputs very much from the that setting, leading them to take loans that may ultimately be more expensive than if they had looked at more than just the monthly payment. 

In the spirit of having some fun, I used media in my class (a rare occurrence indeed) by showing them the recent Jordan Klepper segment on The Daily Show. Obviously this comparison misses one of the major topics I invest time in – Kahneman’s difference between ‘thinking fast and slow’ – but the exaggeration of the technique allows students to see the effect that online calculators have on people in more slow, subtle ways. 

In the segment, Klepper goes to a Trump rally and asks supporters about their take on the impeachment (which obviously ended today, though I gave the lesson a few days ago). Of the full ridiculousness of the segment, some highlights that we discussed were these: 

[1:24]

Klepper: “Do you think John Bolton should testify?” 

Interviewee: “No.” 

Klepper: “Why not?” 

Interviewee: “Well he could testify, but I think he’s vengeful for getting fired from his job. I think he’s a liar.” 

Klepper: “You think John Bolton’s a liar?”

Interviewee: “Absolutely.” 

Klepper: “There should be a system set up where he takes an oath, and then under oath he tells the truth, otherwise he’s punished.” 

Interviewee: “I think there should be, yes.”

Klepper: “And then maybe there’s a judge that’s put in charge. Like, the highest judge in the land!” 

Interviewee: “Right.” 

Klepper: “Appointed by a Republican! And then we could all see what he has to say, would you be for a system like that?” 

Interviewee: “Sure!”

 

Another one that we had a good laugh at, but also compared to online calculators: 

[4:31]

Klepper: “Let’s say it happened tomorrow, Trump beats impeachment. Trump can get onto running the country.”

Interviewee: “Exactly, like he has been doing for the past three and a half years now.”

Klepper: “And now, with like no impediments. No checks, no balances?”

Interviewee: “Exactly.” 

 

Or:

[4:55]

Klepper: “He’s evolved his Presidency into a Dictatorship that we can all understand.” 

Interviewee: “Exactly. Yeah.” 

Now, I must put the disclaimer in here – of course there are people from all walks of life and of all political persuasions that make similarly erroneous lapses in judgement on a daily basis, despite the fact that these interviewees were all of one political persuasion. That’s important to recognize. And, of course, Klepper has a talent for making people react in strange ways. End of disclaimer. 

As I discussed in the introduction to my personal statement last week, I teach math. But the reason we use mathematics is to actually be able to analyze quantitative components of our world in order to understand it better, and to hopefully take responsibility for our small share of creating a more just society. Anytime I can link mathematics to understanding the broader scale issues of our times, and even add a bit of having fun with my students on top of it while encouraging them to research, analyze, and think, I call it a win. 

Next week I’ll tell the story of a more serious lesson that spanned mathematics to global economic policy, sparked by last night’s State of the Union. But alas, I still have to write that one – so get out there and connect daily, consistent mathematics to broader political conversations, and try to have some fun with it in the meantime. 

-mmm

 

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