Farnam Street helps you make better decisions, innovate, and avoid stupidity.

With over 400,000 monthly readers and more than 93,000 subscribers to our popular weekly digest, we've become an online intellectual hub.

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: