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builds from then on, and peaks near retirement. But human capital grows quickly in the 20s and thirties too, as most human and other depreciation is concentrated toward the end. These are persuasive reasons to think that human capital is the riskier and higher-return factor overall. The argument becomes complicated in that most investment in us before independence comes from parents rather than from self-invested work. Parents have aa strong say in what risks children run, so that parental risk tolerance governs too. But it governs most in pre-teen years, when parents themselves are passing through their own risk tolerance peaks. And human capital is probably the most versatile of assets in adjustment to our tastes for risk at the time. Cops can become robbers at will, and robbers can get religion. We should not slip into the error of concluding that an individual’s human capital is riskier than her physical capital at the same time. Both adjust to her current risk profile alike. That’s why the parable of the boss and her secretary falsifies the notion that pay compensates realized work and nothing else. That would make return of each in her human capital a little over 100% per day at the start of the last day, and 100% per second at the start of the last second, even while their security portfolios reveal their time preference rates as a few percent per year. Human capital is not inherently risker, as hand grenades than nerf balls. Each cohort adapts all its wealth of both factors, counting balanced security portfolios as single assets, to its single characteristic risk profile. There may be novelty, but not much surprise, in this projection of the owner onto the asset rather than conversely. That parable helped confirm the pay rule and explain age-wage profiles. It brought another surprise along the way. I grew up being told that houses are safe investments. But in fact they are owned by about the same age group and gender mix that owns the business sector. The publicly traded corporate sector is a part of the business sector that has given up return for safety by providing instant liquidity to shareholders. The notion that houses are safe took a punch in the gut in 2008. The Chapter 9: So What ‘s New? 3/17/16 3 HOUSE_OVERSIGHT_011119