Rule of Thumb of the Day

Via Alex Tabarrok, a pair of researchers asked people how big the economy would be if it grew 5% a year for 25 years:

Only around 10–15% of the participants gave estimations between 50% less and 100% more than the true value…furthermore, the majority of the false estimations were systematically below the true value …which was underestimated by 88.9–92.1% of the participants.

Of course, this is actually a fairly tough calculation even if you’re mathematically inclined and understand the whole compound interest thing.  I guessed vaguely that 5% growth would produce a doubling in about 12 years, so the economy would quadruple in 25 years.  Wrong!  Turns out that doubling takes 14 years, so the answer isn’t 300%, it’s 238%.  But Alex made this worth my time by teaching me a new rule of thumb I hadn’t heard of before:

A good way of approximating is to use the rule of 70.  If x is the growth rate then the doubling time is approximately 70/x.  Thus, with a growth rate of 5% we expect a doubling (100% increase) in 14 years and a quadrupling in 28 years so a bit more than a tripling in 25 years (200% increase) is a good guess.

I love good rules of thumb, and this one makes me slightly more knowledgable than I was five minutes ago.  Thanks, blogosphere!

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We have a considerable \$390,000 gap in our online fundraising budget that we have to close by June 30. There is no wiggle room, we've already cut everything we can, and we urgently need more readers to pitch in—especially from this specific blurb you're reading right now.

In "News Never Pays," our fearless CEO, Monika Bauerlein, connects the dots on several concerning media trends that, taken together, expose the fallacy behind the tragic state of journalism right now: That the marketplace will take care of providing the free and independent press citizens in a democracy need, and the Next New Thing to invest millions in will fix the problem. Bottom line: Journalism that serves the people needs the support of the people. That's the Next New Thing.

And it's what MoJo and our community of readers have been doing for 47 years now.

But staying afloat is harder than ever.

In "This Is Not a Crisis. It's The New Normal," we explain, as matter-of-factly as we can, what exactly our finances look like, why this moment is particularly urgent, and how we can best communicate that without screaming OMG PLEASE HELP over and over. We also touch on our history and how our nonprofit model makes Mother Jones different than most of the news out there: Letting us go deep, focus on underreported beats, and bring unique perspectives to the day's news.

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