Over 500,000 people visited Farnam Street last month to learn how to make better decisions, create new ideas, and avoid stupid errors. With more than 100,000 subscribers to our popular weekly digest, we've become an online intellectual hub. To learn more about what we do, start here.

Can Suspicion Give You An Advantage?

Yea. The more suspicious you were the more you likely would have avoided an adjustable-rate-mortgage. (While the entire world isn't out to screw you there are a lot of people with incentives to do just that).

We find evidence that households selecting adjustable-rate mortgages (ARMs) during the recent decade were disproportionately those who were less suspicious or who may have had difficulty understanding complicated ARM features that became commonplace prior to the financial crisis.

Source: Who Selected Adjustable- Rate Mortgages? Evidence from the 1989-2007 Surveys of Consumer Finances, Daniel Bergstresser & John Beshears, (PDF)

Filed Under: