Recall the poisoned marshmallow thought experiment:
There are 100 marshmallows in bowl, and some number of them are poisoned with a substance that will cause sudden death. If you randomly select one of the poisoned marshmallows, you die, but if you eat a marshmallow and live, you get $1M. Will you play the game?
Most of you said you would play the game if there is just one poisoned marshmallow, but many were not willing to play when there are more than 10 poisoned marshmallows. Almost none of you were willing to play if half the marshmallows were poisoined.
In this activity, you’ll run a simple life simulation one year at a time. The board shows 1000 marshmallows, and a certain percentage are colored red. These are poisoned marshmallows. Then a blue square appears to simulate picking a marshmallow at random from this bowl of 1000 marshmallows.
To start, select your gender and click the Start/Reset button. Each click of the Birthday button updates the probability of all-cause mortality in the upcoming year according to common actuary tables, and then a blue box is randomly selected to determine if you live or die in that year.
If you make it to age 18, you will be prompted to specify whether you choose to smoke or not.
If you make it to age 22, you’ll be asked to make some financial decisions at the start of your career (starting salary, savings rate, interest rate, etc.). From that point on, the simulator models how your investment account could grow over time based on your choices.
Starting at age 62, if you’re still alive, you’ll be asked each year whether you want to retire. Once you retire, the simulation withdraws 4% per year from your investment balance (to represent retirement spending) and then applies your chosen interest rate to whatever remains.
When your simulated life ends, you’ll scroll down to see a line chart showing how your investment account (and earnings) changed over your lifetime— so you can compare outcomes and discuss how saving rate, returns, and retirement timing shape long-term financial security.
Data Sources:
https://www.ssa.gov/oact/STATS/table4c6.html
https://www.soa.org/resources/experience-studies/2015/2015-valuation-basic-tables
Below is an updated version of the simulator with a dashboard of chocies. Thanks to Cole Chapman for suggesting many of these updates.