Monthly Archives: June 2010

Judge Richard Posner of the Chicago-based 7th U.S. Circuit Court of Appeals does a lot of reading—but he apparently hates boilerplate as much as the next person.

Appearing at a recent American Constitution Society conference, Posner recalled his encounter with hundreds of pages of documentation for his home equity loan, Above the Law reports. Posner got a laugh when he said he didn’t read it; he just signed it.

The most interesting issue in this article is not it’s focal one, i.e. that a judge ignored the fine print when getting a loan as a consumer.

Most interesting, to me, is that this is a striking example of REAL consumer behavior (e.g. people generally don’t read the fine print of important documents before signing them), as compared to legal fictions (e.g. people are presumed to have read, understood and willingly signed the contract at issue). To me, the scariest aspect of this scenario is not that a judge didn’t read the fine print. Far scarier is that our legal and political systems are based on the legal fictions, rather than the realities.

The first reality: most people don’t understand most of the complex documents they sign. Another reality: many companies take advantage of people who don’t read or understand their contracts. And more companies will do this, the way the trend is headed. That is, if existing economic and legal incentives remain intact, and continue to reward companies who lay traps via fine print.

Scariest of all, note the central element that allows all such contractual transactions to unfold: trust. When people sign contracts they don’t read and/or understand, they do so with the belief that the company that drafted the lengthy fine print can be trusted. That is, our internal monologue that says, “I don’t know what all that stuff in this contract means, but I assume the other party does not intend to take advantage of me.” Judge Posner’s scenario exemplifies the huge role that trust plays in the consumer’s mind– even a very sophisticated consumer who is exceptionally well-versed in law and economics. If all THAT consumer has to rely on is trust– given the lack of law and/or enforcement with teeth for most such scenarios nowadays– yikes.

Newark Mayor Cory Booker’s inspiring speech for ACS, calling for Americans to take positive action for ourselves and our communities. An excerpt:

“[M]y parents made it clear to my brother and me every single day – you did not get here on your own. ‘All the privilege that you have, young man, was paid for by someone else, you drink deeply from wells of freedom and liberty that you did not dig. You eat lavishly from banquet tables that were prepared for you by your ancestors. You have an obligation; you have a burden – a righteous, glorious burden, because this nation is not finished. We have so much work to do.'”

This is a very interesting talk about the nature of happiness by Daniel Kahneman, behavioral economist and Nobel Prize winner.

Some key points:

– People have two selves: (1) an Experiencing Self, i.e. YOU, as you are reading this, feeling the feelings you feel in real time; and (2) a Remembering Self, i.e. the self we are when we look backward or forward, and think about how satisfied we are about something we did or plan to do.

– Spending time with people we like is the biggest factor that causes happiness in our experiencing self.

– Money earned above $60,000 annually does not increase happiness, according to scientific studies.

– However, poverty definitely causes unhappiness, with a person becoming progressively unhappier the further he or she falls below the $60,000 annual income mark.

An example that comes to my mind that sums this up: BP’s CEO’s Remembering Self probably feels very satisfied (understandably so) with his life accomplishments and earnings. But his Experiencing Self, not feeling much support from other people right now, is probably not happy, notwithstanding his income being substantially higher than $60k.