The numbers presented in every sales pitch seem clear, but do the numbers also hide facts the seller does not want you to know? In The Two Headed Quarter, Joseph Ganem provides an account of how a physicist evaluates the numbers in daytoday financial decisions. Seeing numbers through his eyes will surprise you. Like flipping a twoheaded quarter, many of the socalled deals you make each day are rigged so that no matter which side the coin lands on, you pay.Ganem covers a wide range of topics that touch on almost all aspects of our consumer lives. Whether shopping for items large or small, negotiating a salary, investing in stocks, or planning your retirement, you will want to know how numbers are routinely used to fool you. Useful, informative, and highly entertaining, The Two Headed Quarter exposes everyday consumer deceptions and provides realworld tips and tactics to 'beat 'em at their own game'.
Preface xiIntroduction: Deceptive Math: True and False 1Daily DeceptionsShopping: Meaningless Comparisons 9Elements of Deceptive Math 11Comparison Shopping 13Anchoring Effects 19The Negotiation Principle 22Summary 24Advertising the Nonexistent 24Averaging: Numbers In Place of Judgment 27A Class Where All the Children Are Above Average 28Meaningful Averages 30The Numerical Outcome Principle 32Examples of the "Numerical Outcome Principle" 33Summary 43Why I Would Fail Third Grade Math 44Financial Planning: Is it reasonable? 47A Different Way of Planning 48"Fermi Problems" 49Investing in a Business or Job 51Limits and Saturation 54Investing in Stocks 56The Mediocrity Assumption 62Summary 65The Tale of the Quarter Without a Tail 65Charting: Pictures Worth More Than a Thousand Words 69Different Pictures of the Same Data 72Your Tax Dollars 74Charts Not Seen 79Defining the "Deficit" 82Stock Charts 87Summary 93Medical Malpractice: A Two-Headed Quarter? 95IncomeEarning and Saving: The Deceptive Math of Income Growth 101Lines versus Exponentials 103The Doubling Rule 105Fixed Growth Rates 109Growth Not Measured in Dollars 114Integrated Fixed-rate Growth 116Changing the Compounding Interval 125Saturation 128Summary 132Mixing Water and Oil 133Investing: Wealth for the Future 137The Math of Investing 138Inflation 143Effect of Inflation 146The Halving Rule 150The Effective Rate of Return 151Short-Selling 154The Rich Really Do Get Richer 156Realistic Models for Investing 160History's Lessons 167Summary 169Following the Money Trail 170Gambling: The Probability Paradox 173Probabilities for Random Sequences 175The Game of Poker 177The Zenith Radio Data 180The Frequency of Improbable Events 182How long is long enough? 185The "Gambler's Fallacy" 187Probability and Gambling 188Books on Gambling 193Summary 196Music or Noise? 197Risk-Taking: Going Broke to Get Even 201Risk 202Behavioral Finance 204Prospect Theory 205When Bad Bets Are Good 208Insurance 211Mental Accounting 215Summary 218When is a vice a virtue? 220LoansBorrowing: A Numerical Black Box 225A Black Box 226Monthly Payments on a Loan 228Periodic Finance Rates 234Total Cost of a Loan 236Equity Accrual 242Payments on Intermediate-term Loans 251Total Cost of Intermediate-term Loans 255Total Cost of Short-term Loans 258Summary 263Yo-yo Financing 264Evaluating Loans: Phantom Finance Charges 267The Effective Interest Rate 270Introductory Teaser Rates for Credit Cards 272The 0% Percent Financing Scam 275Home Mortgages 27930-year Mortgages 283Accelerated Mortgage Payments 291Bi-weekly Mortgages 299Low Interest Rates versus Low Prices 301Summary 303"We're required to by law." 303Misunderstood MathVoting: Number-Dropping 309The Myth that Precise Means Accurate 311Precision 312Accuracy 317Elections and Laws 320Summary 327Negative Taxation? 328Estimating: The Three Sizes of Numbers 331Number Size 333Scientific Notation 335Language and Scientific Notation 340Reasonable Number Sizes 345Number Size and Risk Analysis 355Summary 360Making Sense of Safety 363Measuring: Is it valid? 365The Signal-to-Noise Ratio 366Signal Averaging 369Correlations and Causes 374Summary 387Metal Legs at the Airport 389Worksheets 392Mathematical Formulas 411Acknowledgments 415Examples Index 417Tables and Figures Index 419Index 421