[artdutra04]

The problem with algebra is that a large plurality of people today seriously don't know how much they can actually use it to improve their lives. Ignoring the time-value of money*, simple algebra can be used in many real life problems.

For example, do I buy a more expensive house closer to my job that lower commuting costs, or do I buy a cheaper house that is farther away but has a significantly longer and more expensive commute? At the simplest level, these are two linear y=mx+b equations that may or may not intersect.

All too often people fail to grasp the concept that things in life have both initial and ongoing costs/benefits (again, y=mx+b), and only balk at or support various things based upon their initial cost and ignore the annual costs/benefits. It's even worse when this mentality is used in the voting booth for public/government proposals/projects. "$X is too much money for a new highway interchange/light rail line/rebuild the schools/support robotics teams/etc" and ignore the long term costs/benefits ("it will collectively save drivers $50m per year and have a cost/benefit ratio well into the positive").

One of the greatest examples of this is the Clean Air Act; while this law annually costs the federal government about $50 billion to run/enforce, the benefits to the people and the economy from having cleaner air end up totaling over $1.3 trillion every year. In other words, the law has an insanely huge return on investment (about 26:1!!) that not even Berkshire Hathaway can match.

At the same time, most people also fail to grasp p=e^rt, and then they get screwed over on credit card debt, home mortgages, 401(k) and investment accounts, and anything else that involves interest. Many see the value of things rise but fail to account for inflation; for example if something is worth $100 now but will be worth $500 decades in the future, you lost value if the inflation-adjusted price ended up being $600.

Or if people had even the most basic understanding of statistics they would likely be more hesitant to gamble. Or at the very least, they would accept the cost of occasionally gambling as the price of a few hours entertainment that may have a small chance of ending up with more money than they started.

This list can go on and on and on.


* Which is never a good idea if you want accurate projections, but even simple analysis that has an interest rate of 0% is better than nothing.