Modern Wisdom - #531 - Russ Roberts - An Economist’s Guide To Life’s Big Decisions

Episode Date: September 26, 2022

Russ Roberts is an economist, a research fellow at Stanford University, an author and a podcaster. Economics promised us a model which works for all of life's decisions. From what to buy for lunch to investing in a company. But when you're faced with decisions like where to live, how many children to have, whether to get married or what sort of person you want to be, it falls short. Thankfully Russ has a new toolkit. Expect to learn why Charles Darwin made a checklist before marriage which said his wife was slightly better than a dog, why the decision about whether to have children is so difficult to predict, whether rationality is totally incompatible with the decisions that define us, why happiness is overrated as an optimising function, whether tradition is any use and much more... Sponsors: Get 83% discount & 3 months free from Surfshark VPN at https://surfshark.deals/MODERNWISDOM (use code MODERNWISDOM) Get a Free Sample Pack of all LMNT Flavours at https://www.drinklmnt.com/modernwisdom (discount automatically applied) Get 15% discount on all VERSO’s products at https://ver.so/modernwisdom (use code: MW15) Extra Stuff: Buy Wild Problems - https://amzn.to/3qWTzRa Follow Russ on Twitter - https://twitter.com/EconTalker  Get my free Reading List of 100 books to read before you die → https://chriswillx.com/books/ To support me on Patreon (thank you): https://www.patreon.com/modernwisdom - Get in touch. Instagram: https://www.instagram.com/chriswillx Twitter: https://www.twitter.com/chriswillx YouTube: https://www.youtube.com/modernwisdompodcast Email: https://chriswillx.com/contact/  Learn more about your ad choices. Visit megaphone.fm/adchoices

Hello, everybody. Welcome back to the show. My guest today is Russ Roberts. He's an economist, a research fellow at Stanford University, an author, and a podcaster. Economics promised us a model which works for all of life's decisions, from what to buy for lunch to investing in a company, but when you face with decisions like where to live, how many children to have, whether to get married or what sort of person you want to be, it falls short. Thankfully, Russ has a new toolkit. Expect to learn why Charles Darwin made a checklist before marriage, which said his wife was slightly better than a dog. Why the decision about whether to have children is so difficult to predict? Whether rationality is totally incompatible with the decisions

that define us. Why happiness is overrated as an optimizing function, whether tradition is any use at all and much more. I really, really enjoyed this episode. Russ is a cool guy. I like people who have been through the ringer of the utilitarian hyper rationalist'sist economic-se expected value calculation approach and come out the other side with genuine wisdom and ease and grace and Russ is an absolute baller. You're going to enjoy this one. But now ladies and gentlemen, please welcome Russ Roberts, welcome to the show. Great to be with you, Chris. As an economist, how do they typically assess decision-making in humans?

What's the framework that an economist looks at decisions through? The framework is one that I've often advocated for in my youth when I was less wise, I suppose, but it's a pretty standard framework and it makes a lot of sense. It's that you have a finite amount of money, you have a finite amount of time and you have infinite wants. You have all the stuff that you enjoy and you'd like more of everything, but you can't

have all you want, you can't always get what you want. That's because you don't have an infinite amount of money. The goal of life is to get the most out of it. The way we do that is we balance off the pleasure we get from this good versus the pleasure we get from that good, and we pick how much we want to consume of these goods and services based on our limited resources. And it's a formal maximization problem. It's a calculus problem. The goal is to accumulate as much pleasure as possible. And pleasure doesn't just mean days at the beach

and gluttonous meals. It includes subtle satisfactions as well in the hands of a skilled economist. But the goal in life is to be happy. Where happiness can have some real texture to it if we're thoughtful about it. You said that that was something you used when you were younger.

Why has that framework been eroded over time? It has trouble dealing with some of the things that I've come to think are quite important. It struggles, and I should out as a footnote before I start, that there were probably a handful of economists who wouldn't struggle to include these things. I'm talking about the average economist and the average person who's drunk the economist's school aid and has used these techniques for their for their own lives. Let's talk about what's missing from that. One of the things that's missing is other people. Now, in my earlier work as a scholarly academic, I tried to build models of charity. And obviously,

there are parts of charitable giving where you get pleasure from it. And that fits very nicely into the economist toolkit. It implies things like if you make charity tax deductible, and it wasn't before people give more because you've lowered the price of giving money to someone else. It's a bit sterile, right?

It's a bit sterile, but it can be fitted to the framework. But what about my wife? How should I think about my wife's happiness? Is my wife's happiness something that makes me happy? If I am kind to her, is that, do I do that because I enjoy being nice to her because then she'll be nice to me? Is it all about keeping score,

which is sort of the economist framework? And I'd suggest it's not. A life well lived, a marriage well executed and lived is not about keeping score. I shouldn't be thinking about what's in it for me all the time. The economist model is, what's in it for me? And you can broaden it to say,

well, one of the things that's in it for me is, what's in it for you makes me happy. But again, I think that's kind of a little bit sterile. It doesn't really capture the full way we think about. Most of us think about being nice to other people. And how about decisions that my wife and I make together? How do I think about my happiness, her happiness, the morality of it? Do we take turns? That's not the right way most people live. And most importantly, most of the things that really bring deep and abiding satisfaction, as opposed to momentary pleasure. Most of the things that bring us deep and abiding satisfaction don't fit so well into the model. Dignity, sense of self, autonomy,

I don't think it's so well into the model, dignity, sense of self, autonomy, mattering that people think and respect you. These are things that you can cram them into the economist toolkit, but not very easily. One of the reasons is that they overlay the entire experience of life, I argue, in my book, they give texture to everyday life. And it's very different from the texture of, well, that was a good ice cream con. Should I have a second one? Well, they're 585 apiece. Now I won't. Well, that's a rational economics decision, but the deeper questions of moral dilemmas,

what should I do with my life? Should I get married? Should I have children? These don't fit into the economist toolkit. It's not all about cost benefit analysis on a day-to-day basis. And so that's where I've kind of parted company in some sense. I think most economists would recognize whether I don't want to be a great, a straw person. You know, economists would say, there are some,

but economists would say, you should maximize your satisfaction from your marriage and that means you can get away without taking out the garbage or doing the dishes or you can watch the movie you won for a certain year. And there are economists who do that. Most economists know that economics has some limitations and what it applies to. And so then the question is, what's left?

What do we do for rational decisions in these tough areas? So that's kind of the starting point for my book. Evolutionary psychology would say the reason that you want to be selfless to other people is for ultimately selfish ends. Reciprocal altruism, you would be pushing your own genetic fitness, they will owe you. I learned this amazing insight, which you may be familiar with or may not, about why we feel sympathy for people. So sympathy is investment advice. The reason being that someone that is unbelievably down on their luck will be disproportionately appreciative of even the smallest amount of investment that you give to them.

The reason why your heartstrings are pulled when you see a homeless guy in the street who has no shoes and two pens to his name, because you know that two pens to him would be so much, whereas two pens to the millionaire down the road would not. And it is one of the tensions that I think we'll probably talk about is this difference between knowing yourself, knowing the world, understanding the principles that things are based upon, and then transcending them, like realizing that the principles and the artistry of life kind of have to flow together in a way where if you look at them through too much of a utilitarian rationalistic perspective where you've got an expected value outcome proposition on the other side of it,

you end up removing the joy of the decision itself because I think integrity and a sense of faith in your own character comes about from making decisions beyond simply a rational framework that you go through. It's something that's emergent. It applies. It comes out of you because you wanted to do it, because you have imbibed the right principles that turn you into the sort of person you want to be as opposed to your desires clashing up against some external framework that you always need to be funneled down. I would say a little differently.

I would say that happiness is one of those things that's best pursued in a roundabout way. I'm gonna have a vacation and you say, I've got to get the most out of my vacation. Or I'm not going to do not to make myself really happy. And of course, some of those things you have to discover and they're not things you're going to plan. That's the part that you're saying that I agree with very much. This is a idea of emergence.

It's the irony that some goals are best achieved by not thinking about the goals. And the other part though is that economists, because of their, they're not careful, because of their commitment to the model. The model is only an idea for trying to understand the complexity of human life. But if you take it a little too seriously, you can put yourself in the following situation. It's an example, it's not in the book.

I think it illustrates it nicely. So you invite me over for dinner, and I think, you know, that was really nice to Chris to have us, we should bring something. Now you might ask the question of why we would even think of doing that, right? You're having a sofa dinner. Why would I think of bringing something?

I mean, you're giving me a gift. It awaits the gates, the gift. But this is called a floor. Okay. So, my wife says, I'll just bring them bottle of wine. And I think we're having, it's dinner will probably be bread wine will probably be appropriate. So she suggests a bottle of bread wine and I being the foolish economist say, you know, you might not like wine as much as we do. And instead of bringing the bottle of wine, I think

he's probably, I'm sure he's got wine prepared for the dinner. He's not counting on us. Let's just bring him a $20 bill. So that way he can get the most out of it because the $20 bill can buy the $20, let's say it's a $20 bottle of wine. He can buy a $20 bottle of wine with if he wants. But if he likes something more than the $20 bill, then the wine, excuse me, if he likes something more than the wine, he could buy that instead. So to get the wine is inefficient. We could produce more happiness for the world, but get them the $20 bill. And most wives, unless they've been married to economists for a long time, go, what the heck are you talking about? What's wrong?

Aren't you a human being? There's a norm that you don't bring money to somebody's house. And I'll say, is the stupid economist. Yeah, but the wine is like money. Even if I do bring the wine, I'm still paying him back something. So at least let's pan back with something. It'll get the most out of but most people go like, well, that's stupid. Why would you do that? It's not gracious. So you might ask a deeper question. Why is it gracious? What's the economist missing there? And one, we could talk about that for the horrorous the time, but one of the things economists missing is missing there? And one, we could talk about that for the horror at the time,

but one of the things the economy is missing is that there's certain expectations that have been set up for a social experience. You know, it'd be like me saying, well, you know, if I experience a dinner, where it is, they work best when people take turns talking. And nobody really talks more than say 53% of the time. So just going to let you know that while you're talking at dinner, we keep a stop watch to make sure

that you don't take more than your share. And because I'm a good person, I'm doing that for myself as well. These are bad ideas, but they're the reductio out of certain where you end up. If you take too seriously this notion of getting the most out of every opportunity. And the economist toolkits, quite useful in many settings, I think it's the kind of settings we're

talking about. It leads to social forepaws. And then scaling these problems up to the bigger ones about where to live, about whether or not to marry, how many children to have, how self-centred to be. These are what you've termed as wild problems, which have bigger externalities and lasts for longer and are more serious, but the kind of run along similar lines that trying to do the expected value calculator for them is going to end up in a challenging place. I give a lot of examples of why that's the case, you know, to take your first point, the subtitle of the book is a guide to the decisions that define us. These decisions about whether they're married, who to marry, whether they're children

where to live, career, we're kind of a friend to be. These are decisions that capture who we are. They're much more than just the sum of everyday pleasure and pain that I accumulate to the course of living And if I only take that perspective, I'm going to miss out on the the overarching things I've mentioned earlier that I think matter dignity self-respect A feeling of of of being living the way one should live Inspiring becoming the person you want to become I think if you only focus on the narrow pleasures and pains, the way the economist toolkitschens really pushes you, you'll miss out on some of these bigger things.

But of course, the other point is, is that you can't really do a rational calculation on becoming a parent when you realize that, becoming a parent changes what you care about. So who should you take into account to you before you have kids or to you after you have kids? And so that's another piece of it. What should people rely on if they're not using more data in that

case? What else is there? So I, you know, the narrow definition, I go with these well problems. So these are problems where it's not just you can't do a cost benefit analysis. You don't have the kind of information you need to make a rational decision. You can't really imagine remotely what it's like to be a parent or a spouse, a little bit with a spouse, but a parent you really can't. What it's like to live in a foreign country, what it's like to live an ethical life.

These are things that you learn about as you experience them. You make sacrifices, for example, of day-to-day pleasure and get something else. So, now what? That's great. Okay, so you've ruined my day. I can't make a rational decision. I can't use an algorithm. I don't have an app on my phone. What do I do? And I suggest that, since these are the decisions that define us, you might want to think about who you want to be. If they define who you are, to answer that question, you have to think about who you want to be,

to figure out who you want to be, you have to get some thought to what you care about and what you might care about if you were different, what you might care about if you grew, what you might care about if you reach beyond who you are now to be something maybe better, greater, could be more ambitious, but it could be more ethical, it could be more meaningful, more purposeful, it could be you accomplish something you would otherwise neglect or miss if you focused on the only on the day-to-day. And I in the book I spent I think a whole paragraph, only a paragraph on the different ways that you might explore those questions.

Obviously, many, many books of many, many values have been written on who you might want to become. The standard roots for getting there, the paragraph version is, well, you could go into therapy because you have trouble actually seeing who you are. You could try religion, which forces you to transcend yourself. You could meditate, which although it seems self-centered, I think often leads us to be able to stand outside ourselves and observe what triggers us, pushes us. And you can read great literature, which I think helps us understand the human heart.

So those are the roots to go, but my book's not about that. The question then is, okay, so I have to give some thought to where I want to go, but how do I cope with the fact that I can't use my tools? I can't use my cross-benefit analysis. I can't make my pro con list. And so most second half of the book is trying to give people this various ideas for how to frame these decisions, you know, to recognize that there's not right decision. Many people find that comforting. We're so obsessed. I've got to find that just the right decision, the best decision. I can find the best outcome. I've got to maximize, optimize, rid the life hacks. Give me the 10 best ways to find a spouse. The 10 best ways to decide whether to have a child.

And there aren't there. so you have to think about What would be like to live in a room or you're unmoored from the techniques and tools that you've come accustomed to using and so some of the book is trying to give you ease and and solace over what I think is a reality that you will make many what or Will be called mistakes if you're not careful, but we're actually just part of the natural process of living because you can't see the future. So why would you feel guilty that you couldn't make the best decision when you didn't have any date? I mean, that's not a mistake. That's life.

I fell in love with a concept called release the tiller, which is from Jed McKenna and the tiller is the thing that's touched to the rudder on the back of a boat. And his argument is that a lot of the time while people try to control their life, they grip the Tiller harder and harder. Yeah, they grip it with fury and he says that one of the best ways is to just release the Tiller, to just allow yourself to have ease. And I ended up realizing a bunch of situations that people get themselves into, myself first and foremost, one of them being that

the more that I try and apply cognitive horsepower to the decisions that I need to make, a lot of the time the less effective the decisions are, the more painful they are to go through, because I put all of the onus somewhere, it's kind of like the paradox of choice, if only if only if only I'd had a better model, more, more time, more whatever to do the thing, as opposed to realizing that every single person that's listening to this podcast right now, no matter what the challenges are that they came up against, the neuroses, the overthinking, the complete, the sleepless nights of not being able to believe that they could get through this thing. If they're listening

to this podcast right now, buy that fact. It means that they've got through whatever the challenges are. You have however many years or decades that you've been alive of proof that every single challenge that you thought would destroy you or take you to the edge of destruction and despair has not managed to do it, right? You are the survival of all of those challenges. And yet, because of negativity bias and loss of version and all of that sort of stuff, we look to the future still with this same degree of fragility. And I think that, I think

that the fact that we've got through all of that is super important. You used as an illustrative example, one of my favorite stories from history, which is Darwin's marriage and how he went through that. I've got a little description that I took out of the first book I ever learned about it in, which was The Moral Animal by Robert Wright from 1993. So, in the decade of Darwin's marriage, the 1830s, the number of British couples filing for divorce averaged four per year. So Darwin, that's not in thousands, that's just four. Four. I mean, the population will be a bit lower, but it's not, the marriage is significantly

lower than the population is lower. So Darwin, the ever ever the rationalist and the self-assessor, he was a man that seemed to be quite troubled with his own motivations. I think he was his degree of analysis and attention and assessment of other creatures also got turned in with on himself too. And he journals, he journals very frequently. So it meant that he has this journal,

which we now have access to. And he is trying to make this decision about whether to marry or not. The document has two columns, one labeled marry, one labeled not marry, and above them circled other words, this is the question. On the pro-marriage side of the equation were children, if it please God, constant companion and friend and old age, who will feel interested in one, object to be beloved and played with. After a reflection of an unknown length he modified the foregoing sentence with, better than a dog, anyhow. He continued, home and someone to take care of the house, charms of music and female chitchat,

these things good for one's health, but terrible loss of time. Without warning, Darwin had from the pro-marriage column swirved uncontrollably into major anti-marriage factors so major that he underlined it. This issue, the infringement of marriage on his time, especially his work time, was addressed at greater length in the appropriate not-marry column. Not marrying he wrote would preserve freedom to go where one likes, choice of society and little of it, Freedom to go where one likes, choice of society and little of it, conversation of clever men at clubs, not forced to visit relatives and to bend in every trifle. To have the expense and anxiety of children, perhaps quarrelling, loss of time cannot read in the evening, fatness and idleness, anxiety and responsibility, less money for books, and, if many children children forced to gain one's bread.

What an unbelievable example of somebody trying to use those frameworks in order to come up with a big life decision. Yeah, what I suggest, at first point, of course, as I argue, is that if you look at those two columns, it's pretty clear what the right choice is. Not enough time to read, do your work and missing the clever conversation in clubs with men, and what do you get in return, female chitchat, and something that's better than a dog anyhow.

It's thin soup. It's pretty clear that the right choice for Darwin is not to marry. And underlying, of course, all that loss of time, I think is his worry that he will not achieve his scientific legacy. Kafka, by the way, as I recount in the book, makes a similar list. And he decides not to marry, which is very rational, based on his list. But Darwin, despite his list, Mary's, and at the end of having made those two cons, he then writes this stream of consciousness paragraph, which is basically, oh my God, I'll be alone in my old age,

coming back to a did you apartment? Mary, Mary, Mary! And he's Mary's. And he's Mary's, I think about six months later, Mary's cousin. And he, I don't think she was planned as the person in the back of his mind. I think he just went out and found her footnote, fascinating. She would read to him every night and he actually liked it. So even though he was doing his own reading at night, he did come to like the alternative

that he was able to have through marriage. But the question is, what was he thinking there? I mean, that he was able to have through marriage. But the question is, what was he thinking there? I mean, in the calm, sober, light of day, he totes up the costs and the benefits, and it's pretty clear, marriage is a loser. But he bears anyway, and I think there's a lot of things you could say about that decision. And you could argue social norms kind of pushed him in that direction. I'm sure they did. But I like to think, and what I explained on the book, I like to think that he understood there was more at stake than the day-to-day pleasures and pains of married life. There was meaning, and there was satisfaction he could only imagine, and he really couldn't imagine because he had no access to them. He's surely knew no one articulate about marriage who could explain it to them.

He might have read a great novel. He could have read Jane Austen, and maybe if he did, I don't know if he read Austen, but I think she'd already written a sensibility essay or other books by that time. But he didn't really have, who's going to explain it? I think about your own, for those of you out there who were married, I'd explain to someone what's good and bad about marriage. The bad is pretty clear. Most people, I think, could list what's bad about marriage. Like Durham was worried about the downside. It really no access to the upside. The same would

be to a children. From the outside, children looks like a pretty bad decision. I mean, really all the expense and the time and the nuisance and they get sick and they're worried about this they would die and they did hard. And yet most people have children. Is that a rational or is there something else going on there? And I think certainly until you've had children you're access to the inner life apparent to it is limited. It's not for everybody. It's not like it's a day at the park, it's not, but it adds a texture to your life that is unattainable and other, very difficult to attain. I'd say it other ways. It adds a meaningfulness, an appropriateness to life. And I think Darwin probably understood that somewhere when they didn't write it down. Maybe not. I don't know. How is that similar to the choice about whether or not to become a vampire?

So the vampire idea comes from the philosopher LA Paul of Yale University and our book transformative experiences that I riff on in my book. You know, a vampire, if you talk to vampires, they're really happy. They like flitting about at night and drinking blood and sleeping on a coffin. And those us mere mortals, we look at that and go like, that sounds kind of creepy. I don't think I'd like that. And yet, almost everyone, maybe, maybe all of them think it's a great way to live. And they look back on their feeble and thin lives as humans with disgust and disdain. So now what do you do?

You take the leap? If you do, there's no going back, right? And some decisions in life are literally like that. There's no going back. It's very hard to go back from being a parent. It's very hard to, it's costly to go back from being married, but you can't go back, you can get divorced. If you move to a place you turn out, you don't like, you can go back, but Thomas will say, you can't go home again. He was I think on to something, right? It's easy to say you can go back, but it's actually quite emotionally complicated. Many decisions in life and we're talking about a handful of decisions, marriage, children, career, what kind of friend to be is a little bit different. But many of these decisions, they have a irreversibility about them. They're a bit of a one-way leap.

It's harder to leap back. You can sometimes, and you can do it sometimes at a cost, and I argue later that if you don't, the cost is relatively small. You should do more leaping. You can go back. It's okay. Nothing to be ashamed of. I think a lot of times there's a moral diswerry that all the foolish, I changed my mind. Why is that embarrassing? It's not. It's okay.

It's like saying, I bought the wrong stereo in the old days. I bought a bad car or I picked a bad college or whatever it is. And it's okay to transfer. It's okay, right? Nothing shave all there. But a lot of times I think we're emotionally very awkward because you don't want to reveal to other people that quote, we made a mistake. And I suggest in the book, it's okay, it's that mistake really. There's a topic that I have fallen in love with called anxiety cost. So you'll be familiar with opportunity cost, right? Which is by doing a thing you can't

do. Another thing, anxiety cost is the mental effort that is taken up considering the thing that you are yet to do, which could have been gotten is taken up, considering the thing that you are yet to do, which could have been gotten rid of by simply doing the thing. So every morning when you wake up, your daily routine starts and you have to meditate and walk the dog and do whatever else it is that you do. And the longer that you wait during the day to do that, the more time you spend thinking about having to do it, whereas had you have done it earlier, you reduce what I've turned anxiety cost. Nice. Bro science economist over here.

I love that. What I realized with regards to the anxiety cost is that closing the loop, right, getting rid of that zygonic effect wherever you can, is a good opportunity. On average, it seems like people that make decisions end up being happier. People enjoy just making decisions and having change.

So if you are faced with two relatively similar options, especially one which is reversible, and moving, this is one that I've been playing with for a long time because I recently moved to America and I got this visa and it was a big thing, and I'm in a country on my own doing this podcast thing and God knows how that's going to go. And yet I ended up going and doing it. And I adored it. I'd I dored the decision. I absolutely loved it. I know that you recently made the jump to go to Israel, I think. Yep. And I, everything is everything's exciting and new. And

if I want to move back, and even if I messed up, even if I messed up, and I came back with agon my face, I genuinely think getting back into the economist's thought process, that the discomfort of having to admit publicly that I made a go of this and it didn't work out would be less painful than living with the anxiety cost of the what if had I not done it. Well, I don't totally agree with that. I like the anxiety-cost idea. I think I would have been totally happy

if I'd not moved to Israel and doing whatever what I was doing before, which was very pleasant. It's true I would have had that what if, but I would have forgotten about it. I would have pushed it down and tried not to dwell on it because it's in the past. You also moved to a country where they speak more or less the same language.

Israel is a lot harder. They speak Hebrew here. There are a number of people who speak English, but cultural transition, I think, between the United States and Israel and England and the United States is trickier. I took what you were saying differently and tell me if I got this wrong. I like this anxiety-cost idea because it says you need surgery and you can have it now or you can have it in six weeks. What do you want? What people would say, I don't want it now, not to in six weeks and then you have six weeks of torment. Pull the bandaid off.

Do it now. Get it done. Now it's true. You could die. That'd be a negative and you could have had the six weeks alive in between before the surgery. So that it's a little bit more complicated, but the idea that procrastination is a malaise, a unhealthy thing, and we justify it by saying, I'll just get one information, or in the case, maybe I'll recover before the surgery, I won't need it at all, right? We have all these stories we might tell ourselves

to avoid short-term pain. I have a different trick, see what you think of this one. I believe, or I a chair of psychologist, that pleasure remains much longer in our memories than pain. So if you go on a great vacation, you're gonna save her. And you'll be able to enjoy it for years because you'll be able to look back on it and say, remember that?

That was so much fun and we did this and you have the photographs photographs whereas the root canal so over I don't think about it. I could say how bad was that root? Oh my gosh, it was horrible. I had a bad one. I've had good ones sits by the way which I dread it but they turned out to be fine. I was wrong to dread them but I shouldn't have dreaded them for the reason. I'm saying now which is like really do you look back on it and say oh it was horrible? There you go. You don't even think about it. And so, get through it. Do it now. Do the painful thing now and do a more of the pleasurable thing, because the algorithm, you know, I'll get more information about whether I really need the operation. That's a bad trick. That's a false trick.

It's not good for you. It's your brain playing a bad, a bad life hack. The opposite of the anxiety cost, which you can leverage to have more enjoyment in life, is the anticipation effect. So you Tim Ferrist does this, and I love doing this as well. Have holidays booked two years, three years in advance, right? Because a big chunk of the enjoyment of the holiday, before you get the sand between your toes and you got the cocktail that was blended not on the rocks and it's a bit hotter than you expected. It's the anticipation of it. So you can reverse the anxiety cost with the anticipation effect. And what you just said there, I think is an example of fading affect bias. The goodness and

badness of memories fade over time, but the badness fades faster. Some bad memories even become good memories, while good memories rarely become bad ones. It makes sense that both join pain fade with time, stuff just feels less intense when it's farther away, but why does pain fade faster? It's because when bad stuff happens to us, our psychological immune systems turn on. We start to rationalize, why would I want to be with someone who doesn't want to be with me? We downplay, breakups happen all the time in high school. It's no big deal. We distance. I never liked that much anyway.

And we distract. I'm going to go and play video games. These mental processes function like emotional antibodies, taking the sting out of bad memories. We don't use them on good memories. So good memories keep their luster longer. Everything is temporary, bad stuff, especiallyy plus time equals comedy is the closest thing psychology has to a chemical equation. Who wrote that? Adam Maastrioni.

And... Substack. I'll send you the article. It's very nice. And it's consistent with what Adam Smith says in his theory of moral sentiments. He says, when you have a really horrible trip and think about a horrible trip, Adam Smith says in his theory of moral sentiments, he says, when you have a really horrible trip

and think about a horrible trip, for us a horrible trip is the plane set on the tarmac for four hours, they didn't let us get off and then we didn't end up taking on. We had to come back, they lost their bags, blah, blah, blah, blah. Adam Smith got dysentery. Yeah, I don't know what he got. And the horse, the horse stepped on his foot.

I don't know what it was, 1759. But, uh, and Dissertari's, that's bad. Uh, but Smith says, would you have a bad trip? When people are bad to you and things go wrong and are unexpected, he said, there's a certain type of person who just, who comes and winds about it. They come to other friends. Oh, this was so horrible. You can't believe what happened to me. It was so unfair. Why me? You know, the plane was et cetera, et cetera. And what Smith says is, no one sympathizes with you, actually. One reason being, of course, is because it's

a first world problem. Really nothing horrible happens to you in those stories. It's just your expectations get frustrated. And what Smith says, which is very consistent with Adam Estriani, Smith says, you're better off making a joke out of it. And you know, some of my brother's best comedy retains.

He has many, but some of the best ones are about the trips to go wrong. And it's great advice, you know, I got bit by a cat about a week and a half ago, a street cat here in Jerusalem. It's a it's a pretty good stand-up routine. At the time, it didn't feel like one. You know, I'm watching blood run down my hand. I'm worried about rabies. I'm thinking I'm

gonna die. By the way, I think I'm outside the window. I think I'm good. I'm gonna be okay. But for a bit there, I was kind of anxious. But I didn't tell people about it. You can't believe what happened to me. I can't believe they're all these street cats here. Is that I tried to make it humorous? And I think that's great advice for life. What about John Stuart Mill? What did you learn about a life where I lived from him?

So this comes from Dan Gilbert, the great Harvard psychologist. He and I don't agree about this, but I love the example, so I use the book. So Mill said it's better to be a philosopher unsatisfied than a pig, satisfied. And that's a deep question, is that true? Is that true statement? Is ignorance bliss? Yeah, is the unexamined life really not worth living?

Is a colleague of mine here at Shalem said wants to be? I don't know I know a lot of people with an unexamined life, they see pretty happy I could argue the opposite, you know, the loss was kind of morbid and depressed and so on and Dan Gilbert's insight, which I don't agree with, but it's an interesting claim, is that Mill was wrong, he says. The only thing that matters is how much pleasure you have in life. And if you swim in a pool of plastic water for 23 hours a day, and for one hour a day, you step out of the pool and go like, that's my whole life, I'm doing a swimming, and

I should be ashamed of myself. It's okay, for an hour you're unhappy, but for 23 hours you're happy. And the 23 hours you're happy, you're not thinking about the philosopher saying that's it, that's all there is to life. And for the one hour you're in the philosopher, you're neglecting the pleasure you get from swimming. So all you've got is how many hours there are. If there's more hours of swimming than guilt, swim. I think that's wrong. I don't agree. I think when you're in the pool, after a while some of the thrill is gone because you think this is my whole life of swimming is just enjoying myself merely.

And so I think there's a lot more to say about it, say in the book, but the, it's a very interesting way to think about framing how we think about where we want ourselves to be. Just gonna have fun. That can't really say anything wrong with that. You know, is it really true that a more meaningful life is a better life? I don't know. People say that they think so. A lot of smart people seem to argue so. A lot of signals going on there. Yeah. Yeah. It could be. Yeah. It's true. Hard to know,

but it's worth thinking about. I first heard this as a, positive as a debate between the two great dans of psychology, Kahneman and Gilbert, because they stand on opposite sides of the fence with regards to this. I've come to believe that this is temperament dependent. I have some friends who live in the now who are much more hedonic than I am who are much less introspective they're ruminate less. And they would be I don't know whether they would be completely but they would be more likely to be the person that happy having the cocktail on the lilo in the pool right. For me because of the amount of time that I tend to spend reflecting introspecting ruminating I know that to me a life where lived is one which in retrospect I'm glad that I lived. I very much am assessing, reassessing the things that I did and then

my current degree of self-worth is based off the back of that reflection. Whereas somebody else very much may be able to, and this is the question, right, is ignorance bliss. Now you also get into something similar, I'm very interested, I'm going to see Jordan Peterson tonight in Manchester. He's a good friend. The first time I ever saw him was five years ago in Manchester at the same venue. And someone asked him a question that he used to take

questions from Twitter. He does a Q&A at the end, but he still may do. And someone asked him basically, the depth of my consciousness causes me to suffer is Ignorant's Bliss. I wish that I could regress back from this. And Jordan's answer basically was, once you have opened that box, once you have seen

what is inside, you've peered into the red pill, you've begun to examine the life, there is no going back. And his argument was that the only way out is through. He used this analogy of taking more of the thing that poisons you until you turn it into a tonic that allows you to girdle the world around you. I mean, it's in typically apocalyptic Jordan Peterson patriarchal, finger wagging tone, but I read, and I've kept that way, that's a five-year-old two-minute monologue that I've kept with me because it's

a question I ask myself a lot about, you know, this sort of bloody hell, would life not be simpler if it was just simpler? And then on the reverse of that, you think, well, if you can learn to love the process of analysis, there is such deep pleasure that can be got from working out how things link together and knowing that there is a bit of a heavy weight to bear here. Like I had to do a bit, good bit of a lift to get myself around my own encumbered nature. And yet on the other side of it, it's really, really satisfying.

And I thought that that linked in a little bit with Adam Smith's example. Well, when you're talking about your friends who are a little more head and mystic than you are, I was thinking, yeah, they're each one of them as happy as a clam. An expression that we use. It's a very strange expression when you think about it. Can't imagine a clam is that happy, but I think what it means is it's easy to please a clam, just pleasant in water. You're good. And I don't know whether it's because I'm a religious person

or my culture or upbringing, but I kind of aspire to more than a clam. I think many do. Not the wrong with, you know, not judging. Yeah, clam life is great for clams. And so as you say, I think it is a temperament, it's partly a temperament issue. Your example of doing the hard work. I think most people who do hard work and find a reward at the end find that meaningful. I think it depends what the reward is. Sometimes it's self-actualization.

Sometimes it's the sense of command. Sometimes it's helping others by something you've created with a group of people through a set of sacrifices and hard work. But when I list the things that are deeply meaningful to me, most of the clam area, I've had a lot of fun in my life. I don't look, I'm not a, HL M H.O. Mankin's not an exact quote, but just if it is Mankin said that, you know,

Puritanism is the haunting fear that someone somewhere is having a good time. I love a good time. All kinds of good times. There's many different ones, some with group of people, some with close friends, some with your family. They're all good. They're great.

They're part of the important texture of day-to-day life and they're not to be looked down on or sneered at and many of them are transcendent through the sublimity of them. But at the same time, there are many other things that are part of life that extend past just the moment. You were alluded to them earlier a minute ago. And you know, as I write in the book that as you get older, Bittersweet Chocolate is better than Sweet Chocolate. When you're a child sweet, it's all you want, and when you're an adult, things that are bittersweet, they're a little more painful that come with sacrifice. There are the things that I think we value more deeply. Often.

There's a very interesting point to be raised here around age, I think, and wisdom. Yeah. There is an element of this that Confucius talks about. So he says, in the early stages of training an aspiring Confucian gentleman needs to memorize entire shelves of archaic texts, learn the precise angle at which to bow and learn the lengths of the steps with which he is to enter a room, his sitting mat must always be perfectly straight. All of this rigour and restraint,

however, is ultimately aimed at producing a cultivated but nonetheless genuine form of spontaneity. Indeed, the process of training is not considered complete until the individual has passed completely beyond the need for thought or effort. One of the problems that we encounter is that when most people begin any sort of pursuit that are reflective and probably the sort of people that listen to this podcast, they will rely on cognitive horsepower to get them through these challenges. They will have frameworks, they will have principles and so on and so forth, that they apply to these situations. Now over time what you realize is that your subconscious embodied experience, whatever it is that you want to call it,

is able to aggregate all of your experiences in a much more effective way than rationally trying to go. So what got you here won't get you there, but because we use like memetic evolution to work out, well, this in the past worked, therefore I should continue to do it, it's very difficult to let go of that. And the ruling that I'm thinking about here is that when you are younger, relying on frameworks seems like a smarter idea because you don't have as much experience, right? What are you drawing on?

And also another element to consider here is, I always thought when I was younger, and I still do now, my ability to do sort of hyperbolic discounting or to basically just have such a small sphere of understanding around the tactics I'm using now are going to be the ones that I'll use forever. They're not. You periodize your life. You go through a period, everyone that I know went through a period of being obsessed about productivity and having the note-taking, external brain app and they were pomodoroing 25 minutes on and five minutes off. Getting things done. Yes.

Yeah, they were David Allen-ing their way through the world. And then they transcend that after a while. But I remember when I was doing that, that this is going to be my pursuit for the rest of time. I'm going to be completely just dedicated to productivity. And then now, I just have like a minimum viable system. I'm like, look, could it be better? Yeah, but is it enough?

Yeah. And now I move on to the next thing. And you aggregate through all of these different bits. My point being, in the beginning, relying on principles, you know, the stuff that you guys talk about on your show and learning the more rational, utilitarian foundations. This is how things get underpinned, and then allowing yourself to ameliorate that.

How does it just get mixed in with the soup of everything else that I do? And the good shit sticks. The stuff that I like will stick about and the stuff that I don't use will just fade away. And that's fine. And I think it also gets on to what you said earlier on about relieving some of the pressure.

It's like, look, you're going to let some stuff go. Maybe you're not going to be able to recall all of the different elements of David Allen's GTD method as effectively as you could 20 years ago, but it doesn't matter because you are now on to bigger and better things. And I think that that balance between young, procedural, old, spontaneous wisdom embodied whatever you want to call it. I think that that's a dynamic that increasingly I think people should be aware of.

It's a great insight. I think when I say to people, don't use cost benefit analysis or at least be aware of the shortcomings, which I talk about at length, people then say, well, what's the alternative going with your gut? And I wouldn't suggest going with your gut generally in most situations, although I give some examples in the book where seemingly rational people looks like they went with your gut, but I suggest that other things going on there. But I do think when you talk to very successful people,

particularly in the financial and business world, you ask them how they make decisions, they will often say, at least I've heard it many, many times, I just use my intuition. This is a form of going with your God. It's like, I don't like to think about it. I see the path. On the surface, that sounds like just going with your God.

It's just a wild guess. I try something. I just see what I feel like, but it's really more than that. It's what you were talking about. You said it very well that as you get older, you accumulate evidence that your self-processes in ways you don't see rationally. And you got to trust some of that. It's not your gut. It's the accumulated experience of living and I always wonder these lists of what I want my 20 years what what I have wanted my 20-year-old self to know and

I'm not sure my 20-year-old self was well. I know my 20-year-old self was not a good listener So I don't think my 20-year-old self would have heard advice much. And I don't know if young people in general can hear wisdom from older people, like you just passed on. So can it's a temperament issue. I think people bury in how their ability to to absorb lessons. But what you're really saying is that when you're younger, you're going to need to realize you're going to make decisions differently when you get older and there's nothing wrong with that because you'll have different powers.

It's pretty cool. It's a very big problem that we have that a lot of the people who, especially now in the world of podcasting and YouTube, the people that have a lot of status and or reach online are people who have been through a lot of situations that young people haven't, and young people are trying to model young behavior on old people's advice. Yeah, that's interesting. Doesn't work. You can take a photo of the top of the mountain

and say to people, look, here's what it looks like at the top. By the way, there's this hole on the right hand side, you need to avoid that, and the ladder's a little bit rickety, so the fourth wrong up, you should avoid that one, and people go, yeah, yeah, yeah, that sounds great and yet they still decide to have to go up the mountain themselves in order to be able to see what's at the top of it and this is part of I have an insight maybe that a good amount an embarrassingly large amount of the wisdom that we think is self-generated through our introspection and our self-work comes along for the ride as a byproduct of just getting older.

That's like someone that loves an agentic, like sovereign experience, terrifies me because I think, oh, God, how much of the time that I'm spending? Now, that being said, I take pleasure from the introspection and the work in any case, so it's kind of a moot point. But I think- Some of it's a narrative fallacy, right? You're just convincing yourself of something that just looks, it's on the surface.

It's like the, my favorite example is the guy playing the video game, and he hasn't put any money in yet. He doesn't realize that it's got an automatic version before you put the money in that you're doing. And in the case of, you know, you're pushing the buttons for space invaders for those old enough to remember what it was. And you see things firing and you think, rock and chips of the enemy going down. You think, I'm doing great.

But you haven't even put the money in. It's just an illusion. So some of that going on. What about having, I have to presume that having robust principles and hard rules that scale across multiple situations must be one of the solutions that people can have here, not having to approach each individual challenge with the expected value calculator of this one.

Something a firmer place for people to stand must be a good way to expedite this. Yeah, so I have some of those in the book. There's some nice, there's some thoughtful people on Twitter and in wisdom literature and elsewhere who have some of these rules. You know, one I focus on in a chapter is called privilege or principles that a lot of times keeping your principles, keeping your values living by them is going to be costly. And you're not going to get much pleasure from the idea that you stuck to your principles, just going to miss out on something you thought you could have done if you were a little less honest. And I use the example of returning a wallet where no one sees you finding it on the street. You find a wallet on the street. What'd it be great if you could keep it and not feel guilty? But

I suggest it might be a good thing to aspire to be a person in Wittfield guilty, even if you don't feel guilty now. And these kind of ideas of ethical principles mostly, I think they come up a lot of work and in situations where there's always a financial temptation to do certain things that are, you know, and you're harder wrong, don't compromise. Economic suggests, oh, the bigger the gain, the more likely you are to sell out your principles.

And I suggest, don't, just never sell much better rule. Have a rule. Don't go, well, in this case, it's probably worth it. Now, if your kids' life's at stake, steal the bread, yes. That's a different kind of principle than besides honesty is to keep your children alive. But in general, those conflicts don't happen. It's usually about your pleasure versus doing the right thing. You should do the right thing. It's your right thing. You'll lead a better life, but not a better life. You're a fuller of human being.

But you will have some pain. So might not be the right thing. You see this online a lot in the online content creation world that there are people who will succumb to audience capture one piece of content at a time. Yeah. And the problem is when you sell your integrity, you can't buy it back. It is a one way street.

Good line. Yeah. Yeah. It's true. It only goes in one direction. And although you don't have the external accountability of the audience fact checking you about whether you did give that wallet back or not, there is something, whether it's the Damon, whether it's the subconscious, whether it's the

whatever, right? There's something that's keeping track. And I remember, so I was a club promoter for a long time, I ran nightclubs in the UK, and I wasn't the most honest person, I wasn't stealing money, I wasn't doing anything like that, but I just compromised my own opinion to try and please other people. I wanted to be liked, so I would tell them what I thought they wanted to hear. Yeah. And there was this ambient sort of trepidation

around how I would feel. And I think it's because I was always fearful that I would be found out for not being the person that I said I was. So there was ambient anxiety the whole time, just infusing whatever I did. Yeah, and On the other side of that now, you know, maybe not being the same party guy or whatever that I was that wouldn't appease people in that same sort of way First off, I found that authenticity is much more seductive and attractive to people than whatever version of persona

You think that they want to see because they can see through it and secondly secondly, your degree of self-love, self-respect, whatever you want to refer to it as, really should be prioritized. But above most other things, there are a few things that I think should go above. You'd still to the bread if your child's hungry and dying. Yeah, cool. There's not many, there's not many situations that I think that should go above that. Yeah, I agree with that. I do, I wanted to say I think redemption is possible. It's hard to get your integrity back, but it is possible. And I do think that a lot of people who are good at deceiving others have to deal with that temptation of they can be in an authentic and get away with it, which seems like a blessing, but it's probably a curse. It's an extra degree of difficulty on their life.

What about, so obviously one of the issues that we have here is that there are, these large decisions have an anxiety of uncertainty around them. How should people avoid being crushed under the pressure of these big decisions that they need to make? Well, I think it's helpful to start off by recognizing that as a human being, you have a strong desire for certainty that the uncertainty and the anxiety of produces is very normal. And to be able to be aware of that, as opposed to just being anxious, is a huge step forward, I try to relieve some of the uncertainty by pointing out that it's inevitable.

We talked about this earlier. You're making a leap into the dark. The fact you don't know where you're going to land is nothing to be embarrassed about or ashamed of or and should think of it as a mistake. I also talk about the virtues of settling. The pressure we put ourselves to buy the best

wicking underwear or the best fell in the blank using the great, these more kind of recommendations with my Amazon thing. And I've got this other site that checks on whether Amazon recommendations, you know, the stars are real or whether they're done by a bot. It's okay. So you don't have to have the best one. It's not, usually isn't the best one. There's not a best one for you. There might be a best one for the average person and not the average person. It's, um, I, it fastens to me that, that we are anxious about those things. And I do think that some self-awareness about that is, goes partway toward reducing the,

that some self-awareness about that is goes partway toward reducing the pain of it. What did you learn from Bill Balachek? I know that you looked at him. Yeah, so Bill Balachek said interesting example. He's widely regarded as one of the greatest football coaches of all time. What I suggest is he's very aware of his own limitations. Most important thing, one of the most important things,

but one of the most important things, one of the most important things, a coach or general manager as a football's pick players from college who are going to play for your team. Bill has been around for a long time. He's learned that that's really hard to do well. And it's interesting why it's hard to do well. There is hard data on every player. They know how fast they run, how much weight they can lift, how many yards they ran for, what competition, level of competition they played against, have an immense amount of statistic, statistical information about these players, and it's not vaguely enough.

And one of the reasons not enough is that each player then comes into a specific situation, and Bell Check has put a lot of pressure on his players to adapt to his system and to communicate with each other. And therefore, he can't really know how good that person's going to be until they're in the actual crucible game. And exactly. And so he's realized that his success ratio is small. So his best bet is just to have a large denominator. His success ratio is small. So his best bet is just to have a large denominator. Pick a lot of players and some of them he will discover

through the process of testing them in preseason, whether they're going to be good players or not. Probably you'll get one player per round. So how can you get more picks in the answer as well? You can trade the higher rated picks, the second, first or third round picks for multiple picks and the choices and the sixth and seventh and fourth rounds. And he does that quite often. And I don't know if it's true, by the way. I presume he doesn't more often than others. And I presume he does it. You know, it's just it's my impression is a very casual fan of the Patriots his team.

That he's often doing that. And what he is famous for, though, is finding really good players from later rounds, Tom Brady, being the most famous example. And often players that weren't drafted. He has chosen a player who was not drafted. Meaning he signed them after the draft was over, selection process, and they've made the team. He's also famous for cutting people

that he thought really good that weren't. He doesn't go, oh, I'm gonna look stupid. I wasted this high rig pick. He goes, they're not a good player. So he's a fast thing example. By the way, he was major in economics at Wesleyan. And I think he understands trade-offs really, really well, which is one of the things you learn as an economist.

And if you're a successful football coach, I think you understands trade-offs really, really well, which is one of the things you learn as an economist. And if you're a successful football coach, I think you understand also. There's a guy called Eddie Jones. He is England Rugby's head coach, and it is the World Cup for Rugby 2023 coming up. So there is a good amount of pressure on him. He has coached Australia, Japan, and England. And in between that, he went and he was a PE teacher of 13, 14, 15-year-old boys.

So he has literally been from the lowest of the low to the elite in terms of rugby, and I had him on the show and got to have a breakfast with him while he was in Newcastle, which is where I am now. I got to have breakfast with him, but about a year ago. And first off, I noticed that he paid a lot of attention, a bunch of other things. He asked me a ton of questions, and then I wanted to ask him about what was the selection criteria for his players? Because he travels around the country watching club games, primarily club games of rugby,

and he's maybe got three or four players on the pitch who he's assessing and these guys are going to be right. And I was like, what are you looking for? And the answer that he gave was just nothing that I thought. So he said, he arrives well before the game starts. And what he's looking for has almost nothing to do with the ball handling skills, their speed, their strength, their power, any of that.

What he looks at is what's their relationship like with the ground staff when they walk out onto the pitch? What's their relationship like with the other players when they're determining what drills to run before the game begins? Once the game begins, if they're winning, how does their body language change? If they're losing, how does their body language change? One of the key things that he looked at was how often are they looking to the coaches for what to do next and how often they're deciding themselves, so that when he went to

Japan, he spoke to the only successful Japanese team, which was the female volleyball team. Japan wasn't having a good period with regards to the Olympics, and he went and spoke to the coach who had been relatively new and he said, what did you do? Some successful criteria here. In volleyball, I didn't know this. In volleyball, the coach is very close to the edge of the court, and that means that the players can interact with the coach pretty quickly. I guess similar to football, except for the fact that the pitch is, you know, one tenth of the size, or one fifth of the court. And that means that the players can interact with the coach pretty quickly. I guess similar to football, except for the fact that the pitch is, you know, one tenth

of the size or one fifth of the size. So he's able to speak to them and the coach immediately cut any player that asked him for advice. Now, that seems like a perhaps a bit more of a brutal hard and fast. Yes. But the principle, I think, came through that Eddie says that the absolute elite of sport, you want players that are self-sufficient, you want players who are not going to have their internal state to affected by the current position of the game because that means they're going to be down when you're down and up when you're up and there's this flip flopping around. And he wanted to see how they interacted with the training staff, with the ground staff, with the coaches, with the physios, with the other players.

I just thought that that was again, again similar to Bill, he's looking for the intangibles because, yeah, is there a term for this vampire problem the unknown unknowns and how you need to Bayesianly update and you can't predict that updating? Is there a term for that? I think it's the term is the unknown unknowns and the Bayesian, no, I don't think there's a term.

Yeah, I mean, there should be one. The vampire, we can refer to it as the vampire problem for now. Look, Russ Roberts, ladies and gentlemen, Russ, this has been great. I really, really appreciate it. I appreciate your artful form of looking at economics through the transcended sage that you've obviously now managed to get yourself close to. If people want to check out the stuff that you do online, why should they go? I am on Twitter as econ talker. They can go to econtalk.org to see if I'm a podcast or any place where podcasts are found.

And I archive all my work at russ robberts.info. Amazing, Russ, I appreciate you. Thank you. A lot of fun, Chris. Talk to you soon.