Daily Archives: April 5, 2012

There are a lot of studies done in social psychology that analyze the way that we analyze risk. They’re pretty interesting if you’re into that kind of thing; if you’re not, I’ll cut through all the charts and control groups for you. One of the underlying discoveries is that people can’t legitimately conceive of the risk of things that are very likely to happen and very unlikely to happen, so we compress those things to be much closer to our average idea of ‘risk’ than they actually are. For instance, you’re very, very unlikely to die by being struck by a meteor; however, the chance is so astronomically (see what I did there?) small that almost everyone thinks it’s much more likely than the reality because we just don’t have a strong grasp of how uncommon it is.

The same goes for money, especially when you’re 21 years old and looking down a barrel at that $160K of law school debt. It’s a lot of money, but most people don’t realize exactly how much it is.
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