Stupidity tax is the cost incurred due to one’s ignorance. Ignorance is not bliss. It cost something. Sometimes it is people’s lives, sometimes it is people’s future, and often times in a less serious case it is the extra money you paid for.

To give one very simple example, collagen hotpot is a very famous concept in Asia. Collagen is the one which builds up our hair and the thing that makes skin soft, tight and supple. As one grows older, the collagen in the skin gets lesser and lesser. From the firm, soft and smooth baby skin you will reach an old, saggy and wrinkled skin. Women are very particular about that. Afterall beauty is the capital of most women. They would spend great effort and big money to maintain their youthful looks. One concept which appeals to them is the collagen hotpot, where a bundle of collagen is thrown into a hotpot and then you treat it as soup as it dissolves under the heat. The idea behind it is that if your body lacks collagen, then by eating it, you are replenishing the collagen your body needs.

However if we have some basic Biology knowledge, we will know that collagen cannot be absorbed by the body directly. Proteins comes in 4 different levels – primary structure (amino acids which make up a protein or polypeptide chain), secondary structure, tertiary structure and quaternary structure. I shall not go into too much technical details here, but collagen belongs to the highest level of quaternary structure. It does not matter what form of protein you eat, all proteins will be broken down into amino acids and then reconstructed into whichever form of protein the body requires. Paying so much more for a collagen hotpot (hotpot filled with protein) is the same as going to the supermarket and buying a piece of meat to eat.

To give another example even more fall into, it is the buying of a house. We imagine there are 2 people – Tom and Jerry with the same annual salary package of $80,000. Both save $24,000 a year = $2000 a month. Tom bought a $300,000 house, putting down a $60,000 cash deposit and taking a $240,000 loan with an interest of 2% per year. Jerry however bought a $600,000 house. Similar to Tom, he put a downpayment of $60,000 and borrowed $540,000 with an interest of 2% per year.

Running it through the interest calculator we have the following:

We can see that despite Jerry buying a house exactly double the cost of Tom, Jerry had to pay more than double in mortgage every month, and at the end of it paying more than double for the house. Yet when you go around and talk to people, Tom and Jerry would not say they spent $365,000 or $746,000 buying a house. They will say they spent $300,000 or $600,000 for their house. That is because they neglected to consider that the interest they pay every month is also money. Not factoring in the interests into the total cost is a significant mistake, causing people to unknowingly pay more than what they had expected. At the end of it, if Jerry sold the house for $700,000, he would have thought he made a profit for $100,000, when in actual fact he lost $46,000.

The lack of basic knowledge by many people has caused them to unknowingly pay for something they do not need or to pay for something of low quality. Increase your general knowledge about the world you are living in, read up and take the effort to understand what is going on in your life, and you will realise that perhaps, there is a lot of money to be saved. And most importantly, you do not need to pay tax for your stupidity.

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