Liquid Independence

Liquid is the main editor of the Freedom 35 Blog.

Jul 252016

Apparently people who us¬†online dating websites are richer, taller, thinner, and better looking than the average person. At least, that’s what they write about themselves. ūüėõ¬†Hey, who would’ve guessed?¬†But how¬†honest are people really when it comes to sharing their personal information on dating sites?


Some women approaching 30 seek a¬†man-date to get married.¬†But they have to be careful about who they choose. Maybe¬†dating a tennis player would be a ball, but it could also¬†turn out to just be a racquet. ūüėܬ†Besides, tennis players aren’t even¬†romantic because Love means nothing to them.¬†ūüé嬆Since we live in a digital world, online dating can be a legitimate way for people to meet each other. So let’s see what the landscape looks like.

The Economics of Online Dating

A study focusing on over 20,000 active users of dating sites in the United States is outlined in the book Freakonomics. About 4 out of 100 users (4%) reported they earned over $200,000 a year. But only about 1% of the U.S. general population is making that much so either government statistics are wrong or 3 out of the 4 users were inflating their earnings.

Both men and women tend to report as being an inch taller than the national average for their genders. But in terms of weight, men were in line with the national average while women apparently weighed 20 pounds less than the national average.


Online dating¬†users are typically really good looking. About 70% called themselves “above average.” 30% chose “average.” Roughly 1% said their looks were “less than average.” How humble. ūüėí ¬†So either most people with online dating profiles are genuinely more¬†attractive than average or they have an overinflated view of their appearances. Of course make up and Instagram filters can alter the way we look.


28% of women said they are blond, which is a number much higher than the national average, which indicates either dyeing or lying. A¬†man who does not include a photo gets 40% less attention than a man who does. Meanwhile, a woman who doesn’t include her photo gets 76% less attention. Even a¬†low income, poorly educated, unhappily employed, not very attractive, slightly overweight, and balding man but who includes a photo with his profile stands a better chance of receiving messages from women than a man who says he makes $200,000 a year and is deadly handsome but does not have a photo. I guess people just want to see the goods. Just like posting an ad to sell a car, if there’s no picture then potential buyers will think there might be something wrong with the car.

How To Get Results with Online Dating

This is why economics is so cool. We can take all the data collected and come up with a winning formula to give us the best odds to achieve our goals. Below are step by step things you can do to increase your chances of getting a date. ūüôā

For men, looking for a woman. 

  1. Be white
  2. Be tall
  3. Be rich
  4. Be ready to commit
  5. Be a doctor, lawyer, or go join the military

That’s all there is to it guys! ūüėÄ You can exaggerate your height and income to appear tall and rich, and use whitening cream or makeup to look white if you aren’t already, lol. Asian, black and Latino men receive fewer messages in general than white men. White women in particular reply to white men twice as much as they reply¬†to black and Latino men. Asian men receive fewer than 25% as many messages from white women as white men with the same levels of income and education. Men who say they want a long term relationship do much better than men looking for an occasional lover.ūüíú¬†


Continue reading »

Jul 212016

Proper Portfolio Diversification 

Once upon a time a topiary artist¬†invested all his money in shears and hedge funds.¬†ūüėܬ†But he lost all of it¬†because he wasn’t properly diversified. We¬†diversify our assets so if one investment fails miserably it won’t drag down the rest of our portfolio with it. Owning 10¬†stocks is better than 1. But there comes a point when¬†adding more stocks to a portfolio ceases to make a measurable benefit. Many experts suggest that¬†optimal diversification is achieved when an investor holds 15 to 20 stocks spread across various sectors of the economy. ūüôā


So if our portfolio contains 100 different stocks in 10 different industries then we are properly diversified right? Hold the mayo. I would argue no. Although we have a wide range of stocks and sectors, we really only have one asset class Рstocks. Common stocks represent equity in publicly traded companies. But if a business becomes insolvent then its equity could be completely wiped out. This is why we have other asset classes such as bonds, which gives investors some recourse in a liquidation situation.

Okay, so diversification means having a balanced portfolio of index funds with both stocks and¬†bonds right? Well, not quite. The capital markets can be highly volatile and it operates¬†on a system that isn’t always reliable. In 1914 the US stock market shut down for 4 straight months.¬†ūüė쬆More recently in 2001 the NYSE was offline again for several days. This means at any time investors could be locked out of the market without warning.¬†So other than financial assets, we can also invest in hard assets such as real estate, private businesses, gold, or other commodities. Over the past 2 decades Canada has gradually lowered interest rates and loosened borrowing rules, which encouraged consumer¬†borrowing. This made the cost of living more expensive, especially in larger cities. But those¬†who bought homes in Toronto circa 1996 and kept it until now would have seen their home prices rise to keep up with, or even surpass the inflation rate.

Continue reading »

Jul 182016

Advantage of Long Term Thinking

There’s an advantage in the business world for thinking long term. If a company¬†only makes short term goals then it will be forced to compete with many other businesses¬†in the same industry. It doesn’t take a lot of foresight or planning to run a company for 1 or 2 years, so that’s what a lot of other¬†competitors¬†will do. But if a company is willing to invest in a longer period of time, such as 5 to 10 years, then it will gain a competitive edge because there are fewer companies that set those kinds of lofty goals. ūüôā

For example¬†McDonald’s owns the real estate of its fast food restaurants. Leasing¬†might¬†be cheaper in the beginning, but owning property directly is more profitable in the long run.

New video games that take a long time to create, such as the Grand Theft Auto franchise or The Elder Scrolls series are typically released once every 5 years or so. Not many game studios spend 5 years developing a single product so these types of games will often have less competition in their genre, and receive more favorable critic and user reviews due to their quality than other franchises which have a much shorter development cycle, such as Call of Duty.


Netflix¬†would have higher earnings if it focuses more on near term profit and not spend so much cash on creating new original content. But from a long term perspective its executives have decided that investing in additional content with more market penetration is better for shareholders in the long run, because there’s not a lot of other streaming services with that level of long term dedication to their brand. But is another company that thinks long term.

Continue reading »

Jul 142016

An Economy Based on Resources

Our¬†current economic system can use some¬†improvement. The government’s manipulation of currency, deficit spending, and bank bailouts are among many of the controversies that we have to deal with in modern times.

But I recently found out about¬†an organization called the Venus Project that aims to replace the society we currently have with¬†one that’s based on computer driven central planning. In this new hypothetical economy money doesn’t exist.¬†ūüė≤¬†The system¬†will revolve around resources instead. The idea is that all the resources in the world belongs to everyone. And the way resources are used up and distributed is by a computer program. Right now we have enough food¬†in the world to technically feed everyone, but poverty and hunger still exist. This new system would solve those kinds of social economic problems. A central artificial intelligence would¬†keep track of all the oil, timber, fish, and other goods available, and it would manage the production and distribution of stuff in the most efficient and environmentally sustainable way so that everyone would have enough. In such an¬†economy that is based on resources, there would be no use for money. ūüėē¬†The Venus Project also claims it will shorten the work day and raise the standard of living higher than what most people realize is possible.


Although I agree that the status quo needs to be challenged I don’t think the¬†Venus Project is the right solution. In fact, I¬†don’t think its proposition is¬†even possible at this time. There are a lot of concerns¬†about the project that have yet to be addressed. Personally I don’t understand how an economy can even function without a price mechanism.

Money¬†doesn’t just simplify life.¬†It also bolsters stability in a market so we can budget in a predictable fashion. ūüôā¬†Money can be anything as long as most people accepts it as a medium of exchange.¬†It can also be used as a store of value.

Continue reading »

Jul 112016

Real Estate Incentives

Financial advisors sometimes get a bad reputation for not having their client’s best interest in mind. Many continue to earn commissions even if their client’s portfolio is losing money. But what about real estate agents? Their compensation structure is also heavily based on commissions. They often earn a percentage from the final sale of a home. For a homeowner looking to sell, the ideal situation is to sell his house for the highest price possible. So at first glance it would appear that both a homeowner and a real estate agent would have the same financial incentive; to get the best possible deal for the seller. ūüôā


But further investigation reveals that maybe that’s not really true. Let’s say a homeowner¬†sells his house for $500,000 with the help of a real estate agent on a fixed 2% commission. This means the realtor earns $10,000 and the homeowner keeps the remaining $490,000. To keep it simple we’ll ignore taxes and other costs.

But maybe¬†with some additional¬†advertising, negotiations, and patience, the house could actually be sold for $510,000. ūüėȬ†But this is when the¬†incentive structures begin to diverge. As the homeowner selling the house, an extra $10,000 from the sale price means adding $9,800 more to the bank. ūüėÄ Most sellers would like to see that money, even if it means waiting an extra couple of weeks to find the right buyer. But a realtor would only make $200 off the extra $10,000. For most real estate agents, putting in the extra time and effort (and sometimes even money for ads) isn’t worth the extra commission. So if the homeowner stands to gain $9,800 while the agent would only receive $200, then clearly their incentives do not align very well anymore.

Continue reading »