as the world becomes more addictive, the two senses in which one can live a normal life will be driven ever further apart. One sense of “normal” is statistically normal: what everyone else does. The other is the sense we mean when we talk about the normal operating range of a piece of machinery: what works best.

These two senses are already quite far apart. Already someone trying to live well would seem eccentrically abstemious in most of the US. That phenomenon is only going to become more pronounced. You can probably take it as a rule of thumb from now on that if people don’t think you’re weird, you’re living badly.

That last point, if true, is going to be a tough one to wrestle with, since we don’t yet really have a firm sense of what is living well or badly in the modern world, the way we do with say, alcohol consumption or other addictive vices.

This paragraph from an essay by Dennis Overbye on discoveries in astrophysics really blew me away:

“Call it the two-sigma blues. Two-sigma is mathematical jargon for a measurement or discovery of some kind that sticks up high enough above the random noise  to be interesting but not high enough to really mean anything conclusive. For the record, the criterion for a genuine discovery is known as five-sigma, suggesting there is less than one chance in roughly 3 million that it is wrong. Two sigma, leaving a 2.5 percent chance of being wrong, is just high enough to jangle the nerves.”

If you think back to your first statistics class, you’ll remember a bunch of ways for testing an observation for significance, and I’ll bet you $10 you used the 95% confidence level for just about everything you did in that class. It’s become the default level for significance in most social sciences. Run the regression, and if p<.05, bam, you’re done. Call it significant and move on.

Then along comes a hard science like astrophysics that puts everyone else to shame. These guys run right past .05  without looking back, at .025 their nerves start “jangling”, but it’s not until 3.33 x 10^-7 that they’re ready to go ahead and say, “Excuse me, sir, but I think I have a genuine discovery on my hands.” Meanwhile the economics/poly sci grad student next door has run 1000 new regressions and ‘discovered’ a bunch of things that turn out not to be quite right but still get published with frightening frequency.

And that’s why people trust astrophysicists.

Ezra Klein weighs in on Tyler Cowen weighing in on the Krugman/Rogoff debate about what debt-to-GDP ratio America can stand before growth starts to feel a drag. Klein says that maybe we shouldn’t be worrying about the specific number, but rather how well our political system can deal with the problem in general. Money quote:

But the driver behind that question is not how much debt we have, it’s whether our political system can make the difficult choices to deal with that debt. So long as the political system is working reasonably well, we can get out from even quite a lot of debt. But the more it breaks… the more it has reason to worry.

What I think is worth asking, if that’s the case, is how well our business world understands the political system. We talk a lot about how politicians don’t understand economics, but what if the reverse is true? Even assuming no change in the system itself, it’s a pretty opaque system to someone who isn’t involved in it (not relevant to the budget, but all the stuff coming out of the Top Secret America report can’t be an anomaly). But, of course, you have to factor in the political systems ability to change itself, especially in response to crises (like a ballooning deficit). I don’t know how many people on Wall Street have a good sense of this.

Especially when it comes to the budget deficit, you can see the possibility of a self-reinforcing feedback loop. Businesses think that government will respond reasonably to a large deficit, and so U.S. Treasury prices stay low, but because Treasury prices stay low, the government doesn’t feel an imperative to fix the problem, and maybe even continues to make it worse. If that’s a threat, then I’m glad we’re having debates about what debt-to-GDP levels are feasible, because it at least gives us a chance to point to a concrete number and say, okay, now we have a problem, rather than relying on markets to correctly predict politicians or vice-versa.

There’s been some debate in the blogosphere this last week about an article on nudging*. It’s in the Bill Easterly vein of saying, hey, nudging is cool and all but it’s no panacea, and sometimes you need to push. From an economics point of view, I find the topic fascinating, and worked on a few research projects that dealt with these sorts of nudging questions while at school. From a policy side, though, there’s always been something that bugged me about the nature of the debate, though I could never put a finger on what exactly that was, until I read Chris Blattman’s response to the aforementioned article. Key quote:

…if we really want to change a behavior, we have to change incentives (like prices) or impose restrictions. We don’t nudge people away from domestic violence, for instance, we criminalize it. We don’t just encourage people to stop smoking, we tax the socks off cigarettes.

The obvious rejoinder is that not everyone is comfortable with regulating and taxing and messing with prices. Nudging’s appeal is that it preserves free choice and minimizes state manipulation.

Italics mine. Blattman’s characterization of nudging’s appeal is 100% accurate, but I think the appeal itself is misguided. Worse, the nature of the appeal suggests that many of nudging’s advocate don’t understand the point of nudging.

The underlying thought behind nudging, and much of behavioral economics, is that mental costs are often as important as monetary ones. Classical economics assumes that the most important characteristic of a product is its price. Changing the price of gallon of milk by five cents will have much more impact than, say, where in the supermarket you put that milk (in fact, the latter is assumed to have no impact at all). Behavioral economics comes along and says, hang on a minute, let’s use cool experiments to prove otherwise. What we’ve concluded from these experiments is that non-monetary costs are not negligible. Okay, so rather than just having monetary costs in your equation for how much milk you buy, you now have to factor in both monetary and mental costs.

Is there some kind of fundamental difference between these two kinds of costs? As far as the economics is concerned, no. And yet, policy people seem to be enamored with the idea that raising the monetary costs of a transaction reduces free choice while raising the mental costs of a transaction does not. They’re turning a semantic difference into a normative one. The point of nudging is that we take advantage of the peculiar irrational wiring of our brains in order to unconsciously change our actions. The point is to circumvent our usual (suboptimal) decision-making apparatus. How does that retain free choice any more than a tax (if anything, I can see an argument for the reverse)?**

The idea that nudging ‘minimizes state manipulation’ also seems to stem from strange logic. I think people who think this are conflating the how much a particular state manipulation costs with how much is actually being manipulation. The nice thing about nudges is that there are certain tricks we can implement to get people to do particular things, and often these tricks are quite easy to implement. It may be cheaper to nudge than to pass a tax law, collect the tax, audit, enforce, etc.*** On the other hand, a consumer will probably see none of this. If you buy two packs of cigarettes a week with no intervention, and one pack a week with either a tax or some nudge in place, would the state be manipulating less if it implemented the nudge instead of the tax?  No, it would be the same manipulation, only more efficient. The state is still meddling in your consumption. Ron Paul should still be upset. It can just meddle on the cheap.

The big picture problem is that behavioral economics puts into question some traditional assumptions about human rationality, and offers some cool byproducts of doing so. Policy people snatch up those byproducts, but continue to hang onto dated ideas about human rationality, and thus can say with a straight face that nudging both actively changes people’s choices and gives them more freedom to choose at the same time. They should ask themselves, what is the value of a choice that we know, ex ante, we will not choose?

—

* If the word nudging means nothing to you, it’s an idea in behavioral economics that has made its way into pop public policy via this book. The gist is that there are certain problems we can solve by making small structural changes that seem trivial but actually matter a lot, like improving health by making unhealthy foods slightly harder to reach or increasing bank use among the poor by making forms easier to fill out.

** Interesting aside: with taxes, we have progressive and regressive taxes, the former taxing rich people proportional to their wealth, like the income tax, and the latter taxing everyone equally, and usually hurting the poor more, like a hike in subway fares. A nudge is like a mental tax (or subsidy, depending on which way it goes). Is it regressive if it disproportionately affects stupid people? What happens to people with non-standard thought patterns?

*** Although not necessarily. I’m sure there are plenty of nudges that would work but would be a pain to implement, like putting an actor posing as a hobo next to liquor stores.

As usual, unfashionably late to the party on the whole Dave Weigel “What happens on the mailing list stays in the mailing list” fiasco, but watching it play out has been a doozey. Here’s JSC5 bigger picture take, the Bernstein post he commented on, and some other reactions (1, 2, 3, 4). I don’t know, the whole thing seems to be one straw man after another. The one reasonable point that people have made is that reporters can have strong opinions about whatever topic they cover, though I feel like even there the analysis tended towards abstraction. Would we get up in arms if an environmental journalist sent a private e-mail talking smack about BP? Would we get angry about a correspondent in Burma told a buddy that he hoped the junta would set themselves on fire?

You can’t answer no to that question, yes to the Weigel equivalent, and still believe in the objectivity of news. If you answer the two questions differently, it’s probably because you think there’s something inherently worse about the Burmese junta than merits aggressive reporting from contrarian reporters, and that that something is lacking in conservative U.S. politics (Weigel’s beat). Now, that might be true, but if you think that reporting should change based on your opinions about the topic being reported on, then you’re not asking for objective news, because objective news would presumably have some standards that are independent from your personal tastes.

Which brings me to the bigger topic, which I haven’t seen mentioned in the Weigel case, which is how the hell do we measure objectivity in journalism in the first place? We can call a journalist voluminous, hardworking, concise and precise with his facts, but how do we go about calling him objective? In psychology there’s a word signaling, which means using something to signify something else (like, walking with a swagger to signal that your genes are the awesome). Weigel’s Journolist rant was taken as a signal of his lack of objectivity. Somehow, this rant managed to outweigh whatever signals of objectivity his entire opus of journalistic work was emitting.

This should be setting off red flashing alarms. I would hope that the Washington Post had some kind of opinion about Weigel’s objectivity before they saw the rant. If you called the in 2009 and asked them, hey, is Weigel an objective reporter?, they could have done more than shrug their shoulders. Somehow, though, a few lines about Matt Drudge’s self-immolation totally tipped the scales.

What this suggests to me is that it’s really hard to tell an objective journalist from a non-objective one. I haven’t heard anything more rigorous than a bells-and-whistles version of “I like to think I’m objective, and I like Weigel’s reporting.” If a show of hands is the best we’ve got, well, then we don’t got much, and whether Weigel should or should not have been fired is not the question we should be asking. Instead, we should be asking why ancillary factors like Journolist rants can totally change our evaluation of articles that have, without complaint about their objectivity, already been edited, published and consumed.

I guess where JSC5 and I disagree is how to deal with the problem that we both acknowledge exists. He, like a good American, is all for the pull yourself up by the bootstraps approach, and I think that’s fine, as long as it works. He uses the analogy of a bar, that a bar is entertaining, but none of us would focus all our social life at bars because we know that that wouldn’t be a good idea. I think the analogy works really well, but on a different level. The reason alcohol doesn’t monopolize our lives, as fun as it is, is because we have a strong social infrastructure that discourages it from doing so. Compare, JSC5, drinking culture in the U.S. to drinking culture in the Vietnamese business world, where those structures are weaker. Also, there’s the added fixed cost of having to go to a bar or otherwise procure alcohol, which at the very least means you need to be wearing a shirt, which already makes it different from most of time spent on the internet.

Right now, there’s very little cost to going online. Time and money costs are minimal, as most of us are never too far from an internet connection. And social costs, for now, are also minimal. We make fun of people who are glued to their Blackberries, but it’s worlds apart from how we view alcoholics. And so death by infotainment is very easy to reach, whereas death by cirrhosis is probably pretty rare. I still think that JSC5’s recommendation for diversifying entertainment stands, but I think that might take some willpower to implement. I know for me at least, software that let me forward commit to limitations would be a big help in implementing that diversification. Think about it like a forward commitment that didn’t allow you to drink during Vietnamese business lunches – tell me that wouldn’t have been nice?

And as for your recent guzzling of smart phone Kool-Aid, I say LEAVE! LEAVE BEFORE IT’S TOO LATE! BURN THE PHONE! No, but seriously, I have nothing against smart phones per se, other than that I think the social obsession with them is representative more of how much we are entertained by useless crap than by any value added. Obviously, this is not the fault of the machine itself, but how we use it. The alcohol analogy applies again; there’s nothing inherently wrong with the substance, just certain uses of it. Think of a smart phone as a the infotainment equivalent of a flask. A flask isn’t inherently bad – I’m sure there are plenty of occasions when I’ve thought, man, a spot of whiskey would really do the trick right now (as in, you know, every time I had to discuss something with el Doctor; apologies for the inside references, loyal readers). But generally, if someone has a flask, it’s not because they’ve adequately assessed their potential needs for portable alcohol, it’s usually because they’re the sketchy older guy taking his high school girl friend to a Dave Matthews concert and brooding in the background waiting for one of her hotter friends to ask if anyone brought liquor. Obviously, smart phones are handier than flasks, and, unlike flasks, will figure in prominent and useful ways in the development of human civilization. It’s just that those ways represent just a fraction of current smart phone use.

I can’t help but take issue with some things my colleague says in his interesting post, “Death by information“.

First, our points of agreement. I, too, think that we as a culture are far behind the learning curve in terms of our ability to successfully integrate into our lives the massive amount of new information that the web makes available. The dopamine rush of clicking the next link, reading the next email, reading that next little piece of insightful analysis of today’s news … that’s all very real.

Where I part ways with JSC7 is where I look for a solution. He calls for technologies that give our internet experience more structure, with pre-commitments to self-limit time or locations while online. That seems a bit off to me.

The problem isn’t so much “death by information” but rather “death by entertainment“. We shouldn’t treat the next item in the RSS feed or the next email in the inbox as information that we’re gathering in a (misguided) attempt to make ourselves more productive. Instead, we should treat the next unread item in the RSS feed as entertainment, pure and simple. It’s not the case that we were thirsty and came to the internet faucet for a drink of water and just end up lingering a longer than is optimal. Instead, we were bored and went into the Internet Saloon for a drink, and our drunkeness is the predictable result.

One outcome of looking at the problem as death by entertainment rather than information is that the obstacle to optimizing internet use isn’t necessarily structure, but rather personal creativity and imagination. While bars are fun and great places to pass the time, all but the most incorrigible souses agree that it’s just not healthy for a bar to be the main source of entertainment. There’s a bunch of other great places to find entertainment, like triple-A ball parks, Do-It-Yourself artisan groups, folk music festivals, and so on. It seems to me that we all overconsume bars and underconsume all the other great entertainment options — not because we’re alcoholics, but because it’s an easy, sure place to find some fun without having do the work of scrolling through the list of alternatives and picking one.

To bring this back to the internet, I guess the lesson is that online communication can be great for spreading information and increasing productivity. But my personal overconsumption over the internet has little to do with the information I’m getting and everything to do with my failings as a creative, active pursuer of entertainment. I have all the tools I need to structure my online experience. It’s just that sometimes I’m simply not creative enough to find better modes of entertainment than reading the day’s news and commentary.

So maybe the solution isn’t additional technologies to structure the internet experience. Maybe the solution is additional effort in cataloging, searching, and settling on alternative modes of entertainment. The relevant barriers there are in higher entry costs, uncertainty, and inconvenient access.

Here’s what I think: whatever that curve is, we’ve proved really bad at climbing it. The anecdotal evidence is in cases like those SEC guys, high-up white collar professionals, who spent whole days downloading and burning to DVDs more pornography than they could ever consume. Increasingly though, there’s scientific research pointing to the same direction, like that discussed in this article about how being wired changes our brain. To be honest, the experiments themselves aren’t entirely convincing, and the conclusions verge on the extreme, but the basic premise is, I think, an interesting one. Basically, every time we see a new bit of information available for us, like a new e-mail or a new blog post on your favorite blog (no, really, you’re too kind), it gives us a little dopamine injection, an injection that we become accustomed to and learn to crave.

Here’s an experiment for you to do: wait until the most boring part of the day at work, like 4 pm (or 9 pm, if you’re in i-banking), and open your personal e-mail in a tab in your browser (if you don’t have it open already). Go to another tab, and go about your business. Wait for an e-mail come in, for the little (1) to appear in your Gmail tab (or, if you’re less organized, for the (564) to turn to (565)). Now see how long you can go without checking what that e-mail is. Can you go 10 minutes? 30 minutes? An hour? I usually give up after 15.

Here’s the problem with checking stuff out on the internet: it offers small, randomly placed rewards at almost no cost. When I’m bored, there’s a list of websites I’ll run through, even when I’m pretty sure there’s nothing interesting on them. Sometimes I refresh the stats page on this blog. If the number has increased, I get that small burst of dopamine (see how important you guys are?). How many of you can honestly say that you check Facebook the optimal number of times per day? If someone told you that you could only check Facebook one time a day, you might be annoyed, but would you really feel like you were getting less information than you wanted about what your friends were doing? To phrase it differently, do you feel like you’re not getting enough information today?

For me, at least, the answer is no. Assuming I’m not the only person with this answer, why are people so obsessed with smart phones and iPads? We’re breaking more and more ground in terms of being able to access information faster and from any location, and yet I don’t most people would say that they’re truly obtaining or using that information optimally. Unless you need it for work, you probably don’t need to be any more connected with the Web 2.0 world than you already are. If you’re anything like me, you probably want more structure rather than more quantity. And yet the only products we’re developing are ones that increase quantity.

I’m shocked that we haven’t come up with software that allows us to self-limit internet use. Right now, if you’re considering toning down your internet use, all you have is this Manichean choice between embracing your data-addiction and going cold turkey. In a world where people are having friends make up new passwords for their Facebook accounts so that they can’t access them anymore, is there no room for a simple bit of software that limits your ability to access to Facebook to certain specified hours? This software would be really easy to make, and yet, there’s nothing. Is anyone at Google reading this? Please?*

The basic idea of easily accessible information and social networking is great, but to make it really work it requires a level of organization and control that will take time to develop. Not to sound hokey or overly dramatic, but I bet someday we’ll look back at the current age of information gluttony like people today look back at the beginnings of the sexual revolution – a good idea that people got a little too excited about and ran off the rails. Now, if you’ll excuse me, I need to go Google my name.

—

If you’re interested in the economics of being unable to self-limit ourselves, check out this paper on how higher cigarette taxes lead to greater self-reported happiness among smokers.

–          Fines for flopping. Soccer players treat every bump like they’re Romeo and they’ve just swallowed the poison. Even worse is when they see they’ve lost the ball and just fall the ground hoping for a foul. The rolling around crying in pain is pathetic and, in the era of instant replay, hopelessly obvious. Hard to solve in-game without more refs (see below), but just start video reviews after games, with fouls for obvious fakes. The NBA does this with assigning flagrant foul fines. Start low and increase for each infraction. Cherry on top: start a hall of shame on the FIFA website with the worst flops of the week.

–          More refs. Did you know there’s only one referee on the field? Blew my mind. Yeah, sure, there are the guys running around the sidelines, and the guy who holds up the substitution sign, but for the most part its one guy running around the field. When there’s a corner, there’s like, what, 20 people around the box? Is he really going to see every jersey that gets tugged? Tennis has more refs than football. Tennis! For something like the World Cup, at least stick one ref in each half of the field, and then have another one near each goal to monitor what’s happening in the box.

–          Stop penalty kicks determining ties. It’s like deciding baseball ties by playing tee-ball. Penalty kicks just aren’t that representative of soccer. I quite like Richard’s suggestion of taking players of the field every 5 minutes, but here’s another option: take a page out of college (American) football instead. Just let each team run set plays until someone scores. I don’t know if trading corners would be fair (if you watched the Chile-Switzerland game you’ll know what I mean), but just set the ball at the top of the box, and the first unmatched goal wins, with clearing the ball past midfield switching the ball to the other side.

–          Instant replay. I’m writing this while watching England-Germany, and, well, that’s all I really need to say.

–          No more instant penalty kicks on fouls in the box. I get the point of it – you don’t want fouls in the box. But it’s had the opposite effect. Refs are (oh, wait, that should say, “the ref is”) loathe to give a free point on a foul that they’re not sure about, so they don’t call anything in the box unless it’s ridiculously flagrant. Compare fouls by the offensive team versus fouls by the defensive team; I wouldn’t be surprised if we’re talking orders of magnitude. Defenders take major advantage of this fact.

I want you to hear me out about something, but let’s one thing clear before we start. I’m certainly not what you would call an ardent socialist. Most of you have earned your heaps of money in ways that are compatible with generally accepted moral standards, and I think you should be able to do whatever you want with it.  Still, you make me sad, rich people. Really sad. I know you’re human, you have wants and needs and sometimes it’s hard to gain a sense of perspective when you live in a gated community with other rich people, but… well, I’m not sure how to put this gently… you’re fucking it up.  There’s so much you could do with that money, and you just sit on it.

Let’s start with some basics. Why become rich in the first place? I can think of four reasons off the top of my head, and I imagine they usually go in unison. 1) Because of a competitive spirit; an extreme case of keeping up with the Joneses. 2) To be able to ensure some minimum livelihood for you and your family. 3) The thing that you love happens to pay really well. 4) To have the freedom to do what you want. Before I give you my two cents on what you should do, let’s go through these briefly.

Competitiveness: Let’s be honest, this, at least in some abstract sense, fuels many people, down to aid workers and artists. We want to prove that we’re better than other people. That’s fine, and I’m glad you were able to turn that desire into riches, but I think at some point it has to stop. Two reasons why. First, by some age haven’t you proved everything that you can prove? I mean, Warren Buffet will make more money investing between now and when he dies, but if he called it quits now, would you really look down on his investing abilities? Would you say he didn’t reach his potential as an investor? I doubt it. Second, there are things in life better than money. Of course, you know this, but given that you’ve made it in the money field, start diversifying into more worthwhile things. After all, who’s cooler, someone with 5 million dollars, or someone with 3 million dollars who retired a little earlier and devoted his time to something awesome? Who wouldn’t want to be the slightly out there, cool one at a rich people’s party?

Minimum livelihood: I know, I know, who am I to tell you what your lifestyle should be like. But I’m going to venture this point: at some level of wealth, you stop earning money to buy the things you want and you start buying things based on the amount of money you have (some potential proof). You can afford an expensive car? Great, you’ll buy it. But unless you’re truly greedy (and I honestly don’t think most of you are), you’re not driving a Porsche and still going to sleep fantasizing about the day you’ll get a Bentley. Look, it’s the 21^st century. Life is good. You don’t have to be filthy rich to buy most of life’s luxuries. After you’ve put away money for your kids’ college education and taken out awesome health insurance, if you can’t like off, say, $200,000 per year and still be happy, more money probably isn’t curing what ails you. Furthermore, you know who suffers the most from your lavish lifestyle? Your kids. Unless you don’t love them and they spend their life trying to make up for that by earning even more money than you, they’re probably going to grow up wimpy and spoiled.

Passion pays: This is the most acceptable reason, in my book. Steve Jobs is filthy rich, is suffering from pancreatic cancer, and still clocks in a lot of hours for Apple. Fine. But before you default to this argument, ask yourself if you’re really as passionate as he is about being a senior exec at a Fortune 500 company. Let’s call this the pancreatic cancer test: if you found out you had it, and weren’t sure how long you would live, would you keep working at your current job?

Freedom of choice: Choice is the modern holy grail. We love the idea of options, to the point where many of us would rather have options than use them. And this is where you’re making your biggest mistake, rich people. You’ll never have more options than you have today. You’re worth millions. DO SOMETHING. You might make more money, but you’re also going to get older and even more settled. Now’s your opportunity. Contrary to what many people seem to think, there’s no award at the end of it all for the person who had the most options. Not even a ribbon. You won’t earn interest on wasted opportunities.

Okay, okay, I hear you saying, shut up already. I see you pulling out your proofs of tax deductible donations to charity. Some of the more with it of you are even giving me the website of your own foundation. Sorry, but throw it all to the fire. Charitable donations are the modern equivalent of Catholic indulgences, and thinking that a foundation will earn you karma points is like U Po Kyin thinking that building a lot of monasteries will send him to Nirvana in Burmese Days. I’m not saying that you’re not doing any good. I’m sure you are. You’re just being really lazy about it. Your heart isn’t in it. You see brochures with pictures of poor orphans, you cut a check, and you sleep easy. Do you check up on how the organization spends the money? Would you ever think of flying out to Africa or even reading some development papers to understand what the hell poverty is even about? Or when you start a foundation, you just hire someone to run it, you appear at the annual gala, you shake some hands, and you go home. LAZY! Shame on you.

So what am I advocating? Nothing really, except a change of attitude. I don’t even think you should necessarily be spending your money to help the poor. If that problem doesn’t get you ticking, no fault of yours. To illustrate, let’s talk about a rich person I respect, Jim Jannard. Jannard’s story falls into the Bill Gates mold of college drop-out entrepreneur. He started a little company called Oakley in 1975 and sold it for $2.2 billion 2 years ago. In the process, he revolutionized the sunglasses industry yada yada. I’m sure many of you, while not billionaires, have done something cool and made a ton of money out of it.

Jannard could have, like you, found some expensive hobbies and spent the rest of his life enjoying himself.  Instead, he found a real challenge. He said, I have a lot of time and money, and a keen interest in camera equipment: I’m going to rock some ass in the video camera industry. In 2005, he started a company called RED, which, to put it quick, makes amazing effing cameras for 20% the price of their Sony or Canon equivalent, and has those other manufacturers wetting the bed. Do you think RED would have developed if he had started a foundation for developing better video cameras?

Jannard took a huge risk, but why would he care? Unless you’re putting your body in physical danger, there’s no such thing as a risk when you’re a billionaire. Even if he lost all that money on roulette, he could make millions as a consultant. He’s set. And so are you, Mr. or Mrs. Rich Person who has so attentively read this excessively long post on a two-bit blog. You’re set. You have the freedom to take the sort of fantastic, dream-inspired risks that others can only, well, dream about. And yet there’s people like William Koch, one step above Jannard in the Forbes 400 list, a man with an M.I.T. PhD, who spends half a million dollars for four bottles alleged to have belonged to Thomas Jefferson. Bottles! Out of all the fascinating problems out there in the world, isn’t there something that will interest you more than bottles? If you’re so interested in collecting and history, how about, I don’t know, funding an ambitious archeological project, or making some kind of model summer camps where inner city kids go to learn about history?

Why am I putting so much onus on the rich people doing it themselves? After all, Koch could easily cut a check to some archeology department, which would presumably know what it was doing, instead of starting some half-baked scheme on his own. I have two reasons, one practical, the other philosophical. The practical one is that bilking uninformed rich people out of their money is really easy. Assume a simple world where there are three kinds of people: rich people, good marketers and good doers. If rich people can’t distinguish between the guys that talk the talk but can’t walk the walk and the guys who walk the walk but can’t talk the talk, the talker will get the money. And squander it. This is why rich foundations fund so many crappy charities. I agree that rich people should delegate to experts. Even the president does that. But the president has an incentive and the ability to pick good experts. Rich people usually don’t have the ability, and the only way they will have it is by really understanding the issue they’re dealing with. Without a passion about the issue, they won’t get the understanding.

The second, more philosophical reason, is because I think that the cloistering that rich people inflict on themselves, retreating into rich people havens where rich people can mope about rich problems without feeling ridiculous, and from where they interact with the rest of the world only through their checkbooks, is sad form of passing the buck. It’s implicitly saying, okay, I’ll pay my taxes and make some donations, but after that, my hands are clean and don’t bug me. I don’t think there’s anything terribly reprehensible about this, and people can obviously do what they want with their money, but it doesn’t seem like a sign of social health if the rich are more interested in buying bottles than in tackling the social problems around them (and when the only ones that do are evangelicals – does it really take a blind orthodox faith and a Manichean world view to get out off your crocodile leather sofa and do something?). There’s not a whole lot of rigor behind this feeling, but it just seems like having a lot of money for the sake of it wouldn’t be worth as much as it seems to be in peoples’ estimations of their own self-worth.

Well Rich Person (or, maybe at least future Rich Person), thanks for reading. I promise that I admire your hard work and respect your freedom with regards to your fortune. But come on, live a little. Find something you care about. I promise it will be more fun than pawing Thomas Jefferson’s bottles.

Yours fondly,

JSC7