Two Tips For Making Decisions

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By Bryan Caplan

When we see people making bad decisions – whether as consumers or voters – we often blame the “complexity” of the issues they face. If Ph.D. economists can’t figure out the best mortgage to use, how can we expect the average borrower to do so? If health policy experts can’t agree on how to fix the U.S. medical system, what is the typical voter to think?

But if complexity is your only demon, I’ve got two simple rules of thumb to exorcise him. Here goes:

1. If you don’t have clear and convincing evidence that doing something is better than doing nothing, do nothing.

2. If you know that doing nothing is bad, but don’t have clear and convincing evidence that one action is better than another, do the simplest, standard thing.

I frequently apply these rules to my consumption decisions. Until I’m convinced that a product will make my life better, I just don’t buy it. I might enjoy a big plasma T.V., but until a seller clearly explains how he’s going to painlessly install it in my house, I’m not buying one. If I do decide in favor of a plasma T.V., but remain confused about which one to buy, I’ll probably just get the biggest one that CostCo carries.

In the mortgage market, similarly, my heuristics say: (a) Rent until it’s clear that buying will improve your life; and (b) Get a standard 30-year fixed-rate mortgage from an established lender. Don’t buy a house you might not be able to afford by signing a contract you can’t explain to your friends.

Needless to say, voters could also use these heuristics to decide which policies to support. Until there’s clear and convincing evidence that health-care reform or invading someone will make things better, you’re better off saying No. And if you are convinced that “doing something” is better than “doing nothing,” your best bet is to go with the simplest, standard option.

Admittedly, that last sentence of advice makes me a little uncomfortable. Many policies I detest – like immigration restrictions – are nevertheless simple and standard. But overall, I’m not too worried about the political consequences of my rules of thumb. If voters just learned to say No until a politician could clearly show that government action would improve the world, voters would shout down most of the policies I detest before they ever got to my second heuristic.

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Reprinted by permission of the Liberty Fund.  The Liberty Fund is a private educational foundation dedicated to increased knowledge of a society of free and responsible individuals.

Bryan Caplan's simple, easy weight loss plan

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By Bryan Caplan

Yesterday I did a 10-minute interview in my office with self-experimentalist and diet guru Seth Roberts. Today he blogged it:

My self-experimentation inspired Bryan Caplan to do his own self-experiment: Could he lose weight by eating less without discomfort? He did two things:

1. Stopped eating when he wasn’t hungry. During a meal he began to pay close attention to how hungry he was. When he stopped being hungry, he stopped eating, even if it meant leaving food on his plate. Before this he rarely left food on his plate. Now it was common.

2. Cut down on his soda consumption. Previously he was drinking at least two cans/day of Coke or IBC Root Beer (both non-diet). He reduced this to one can/day, which he found was enough to keep his energy up.

Bryan is 5′ 10″. When this started he weighed about 178 pounds. Over 9 months, his weight went down to 155, where it has remained for 9 months. “Is this something I’m willing to do for the rest of my life?” he asks. “Yes.”

If I were going to write a book about my diet, I’d call it Don’t Clean That Plate! But my diet (or, as I prefer to call it, “lifestyle”) is far too simple to fill a book. The upside, perhaps, is that my eating advice is unusually practical – it’s not only painless; it’s easy to remember.

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Reprinted by permission of the Liberty Fund.  The Liberty Fund is a private educational foundation dedicated to increased knowledge of a society of free and responsible individuals.

Success In A Conformist World: A Guide for Nonconformists

 

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By Bryan Caplan 

I’ve been a non-conformist for as long as I can remember.  “All the other kids love sports” never seemed like a good reason why I should feel – or pretend to feel – the same way.  “None of the other adults are wearing shorts and flip-flops” never seemed like a good reason why I should make myself uncomfortable.  It wasn’t mere elitism on my part.  “All the other Princeton economists take general equilibrium models seriously” was no more compelling to me than “All the other teens want their own car.”

Non-conformism at my intensity rarely allows real-world success.  Doing well almost always has a big social element; going solo gets you nowhere.  Yet by conventional standards, I’ve succeeded.  I have a dream job for life and enough money that I don’t think about money.  How did I pull it off?

Some of it’s luck – especially the luck of being in the right place at the right time to meet the right people.  (Thank you, Tyler Cowen).  But in hindsight, I also played my cards fairly well.  If you’re a non-conformist who hopes to succeed in our conformist world, my favorite strategies will probably work well for you, too.  In no particular order:

1. Don’t be an absolutist non-conformist.  Conforming in small ways often gives you the opportunity to non-conform in big ways.  Being deferential to your boss, for example, opens up a world of possibilities.

2. Don’t proselytize the conformists.  Most of them will leave you alone if you leave them alone.  Monitor your behavior: Are you trying to change them more often than they try to change you?  Then stop.  Saving time is much more helpful than making enemies.

3. In modern societies, most demands for conformity are based on empty threats.  But not all.  So pay close attention to societal sanctions for others’ deviant behavior.  Let the impulsive non-conformists be your guinea pigs.

4. During childhood, educational institutions’ threats are by far the most real.  While “This is going on your permanent record” is usually an empty threat, “Do as we say or you will suffer at the next educational level” is not.  Vivid anecdotes about billionaire dropouts aside, the modern labor market remains extremely credentialist, and there’s no reason to think this will change anytime soon.

5. A non-conformist attitude toward education is dangerous because academic status is painfully linear and cumulative.  To go to college, you must finish high school; to finish high school, you have to finish all the 12th-grade requirements; to finish the 12th-grade requirements, you have to finish all the 11th-grade requirements; and so on. 

6. Fortunately, the content of modern education is neither linear nor cumulative.  You can safely forget most of what you didn’t feel like learning right after the final exam. 

7. Although teachers and students urge you to conform across the board, good grades in hard classes are virtually the only thing with long-run consequences.  You can live with C’s in P.E.  Or ugly nicknames.  Or exclusion from the cool kids’ clique.

8. Educational success hardly guarantees career success.  But educational credentials open a lot of doors – including most of the doors to non-conformist-friendly careers in academia, science, and yes, bureaucracies.

9. Most bureaucrats are deeply conformist, but bureaucratic (lack of) incentives are great for non-conformists.  Think job security.

10. Social intelligence can be improved.  For non-conformists, the marginal benefit of doing so is especially big.

11. Treat your family fairly, but remember that relatives – especially older relatives – are the lords of empty threats.  Despite all their criticism, they probably love you too much to do more than nag you.

12. When faced with demands for conformity, silently ask, “What will happen to me if I refuse?”  Train yourself to ponder subtle and indirect repercussions, but learn to dismiss most such ponderings as paranoia.  Modern societies are huge, anonymous, and forgetful.

13. Most workplaces are not democracies.  This is very good news, because as a non-conformist you’ll probably never be popular.  You can however make yourself invaluable to key superiors, who will in turn protect and promote you.

14. Spend the first year of any job convincing your employer he was right to hire you, and he’ll spend your remaining years on the job convincing you not to leave.  This advice is almost equally useful for conformists, by the way.

15. Despite everything, the world has more greatness than you can savor in a lifetime.  And in the modern world, finding greatness is remarkably easy.  Stop complaining, stop feeling sorry for yourself, and suck the marrow out of life.

16. Hiring your non-conformist friends is a great way to make your life better… but only if they follow these rules, too!

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Reprinted by permission of the Liberty Fund.  The Liberty Fund is a private educational foundation dedicated to increased knowledge of a society of free and responsible individuals.

More Bang For Your Buck: Better Ways To Buy Happiness

 

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By Bryan Caplan

Money has little effect on happiness.  Ancient Greeks like Epicurus said it, and modern empirical psychology confirms it.  Why do we have so much trouble accepting this?  In part, because our immediate reaction to money is highly favorable – and that sticks in our minds.  Before long, however, hedonic adaptation kicks in.  We start to take our good fortune for granted… and then we largely forget that our fortune is good.

But there’s probably another important reason why we have so much trouble accepting the weak effect of money on happiness.  Namely: There are so many ways to buy happiness with money!  The fact that “Money doesn’t buy happiness” clashes with the equally obvious fact that “Money can buy happiness.”  The simplest reconciliation, of course, is that most people spend their money poorly.  And in my experience, this reconciliation is entirely correct.  Most people stubbornly spend lots of money on hedonic dead-ends, while ignoring omnipresent opportunities to turn cash into smiles.

So what are these alleged “omnipresent opportunities”?  Here are my top picks.

1. Buy your way out of unpleasant chores by hiring other people to do them for you.  Start with cleaning, laundry, yardwork, auto repair, childcare, and tax preparation.

2. Buy your way out of unpleasant chores by buying different products.  Most obviously, switch to disposable plates, cups, and utensils.  It’s very cheap, and saves lots of time.  If this gives you environmental guilt, compensate with some Effective Altruism.

3. The leading source of happiness is pleasant social interaction.  Use money to get more of it – and make your interaction more pleasant.  If you have to spend hours preparing for and cleaning up for any gathering, you probably won’t enjoy it much.  So cut down on both preparation and clean-up using #1 and #2.

4. Don’t buy products to impress strangers or casual acquaintances.  They’re barely paying any attention to you anyway.  Indeed, even your close friends probably don’t pay that much attention to the details of your possessions.  So if you and your immediate family won’t durably enjoy an expensive product (such as… granite countertops), save your money.

5. Entertainment spending is one of the best ways to convert money into happiness.  That’s why they call it “entertainment.”

6. If you live with other people, soundproof your house – especially if you have kids.  Other people’s music, t.v., and phone conversations (not to mention children’s crying) don’t just get on your nerves; they create needless conflict.  But you don’t have to choose between isolation and serenity.  Solid wood doors aren’t exactly cheap, but they’re affordable.

7. Put less effort into finding a job that pays better than your current job.  Put more effort into finding a job that is more enjoyable than your current job.  First and foremost: Look for jobs with lots of pleasant social interaction.

Overarching doubt: Won’t these attitudes alienate more conventional people?  My answer: Only mildly, as long as you’re friendly.  So be friendly!  And don’t forget that these attitudes also attract people who are eager to actually enjoy life.

Finally: You can and should use your money to build and maintain your Beautiful Bubble!

Update: Keller Scholl rightly points out that I should have mentioned, “Spend money to cut your commuting time.”

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Reprinted by permission of the Liberty Fund.  The Liberty Fund is a private educational foundation dedicated to increased knowledge of a society of free and responsible individuals.

How to Avoid Poverty

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By Bryan Caplan

If you live in the First World, there is a simple and highly effective formula for avoiding poverty:

1. Finish high school.

2. Get a full-time job once you finish school.

3. Get married before you have children.

Researchers call this formula the “success sequence.”  Ron Haskins and Isabel Sawhill got the ball rolling with their book Creating an  Opportunity Society, calling for a change in social norms to “bring back the success sequence as the expected path for young Americans.”  The highest-quality research on this success sequence to date probably comes from Wendy Wang and Brad Wilcox.  In their Millennial Success Sequence, they observe:

97% of Millennials who follow what has been called the “success sequence”—that is, who get at least a high school degree, work, and then marry before having any children, in that order—are not poor by the time they reach their prime young adult years (ages 28-34).

One common criticism is that full-time work does almost all the work of the success sequence.  Even if you drop out of high school and have five kids with five different partners, you’ll probably avoid poverty as long as you work full-time.  Wilcox and Wang disagree:

…This analysis is especially relevant since some critics of the success sequence have argued that marriage does not matter once education and work status are controlled.

The regression results indicate that after controlling for a range of background factors, the order of marriage and parenthood in Millennials’ lives is significantly associated with their financial well-being in the prime of young adulthood. Simply put, compared with the path of having a baby first, marrying before children more than doubles young adults’ odds of being in the middle or top income. Meanwhile, putting marriage first reduces the odds of young adults being in poverty by 60% (vs. having a baby first).

But even if the “work does all the work” criticism were statistically true, it misses the point: Single parenthood makes it very hard to work full-time.

A more agnostic criticism doubts causation.  Sure, poverty correlates with failure to follow the success sequence.  How, though, do we know that the so-called success sequence actually causes success?  It’s not like we run experiments where we randomly assign lifestyles to people.  The best answer to this challenge, frankly, is that causation is obvious.  “Dropping out of school, idleness, and single parenthood make you poor” is on par with “burning money makes you poor.”  The demand for further proof of the obvious is a thinly-veiled veto of unpalatable truths.

A very different criticism, however, challenges the perceived moral premise behind the success sequence.  What is this alleged moral premise?  Something along the lines of: “Since people can reliably escape poverty with moderately responsible behavior, the poor are largely to blame for their own poverty, and society is not obliged to help them.”  Or perhaps simply, “The success sequence shifts much of the moral blame for poverty from broad social forces to individual behavior.”  While hardly anyone explicitly uses the success sequence to argue that we underrate the blameworthiness of the poor for their own troubles, critics still hear this argument loud and clear – and vociferously object.

Thus, Eve Tushnet writes:

To me, the success sequence is an example of what Helen Andrews dubbed “bloodless moralism”…

All bloodless moralisms conflate material success and virtue, presenting present successful people as moral exemplars. And this, like “it’s better to have a diploma than a GED,” is something virtually every poor American already believes: that escaping poverty proves your virtue and remaining poor is shameful.

Brian Alexander similarly remarks:

The appeal of the success sequence, then, appears to be about more than whether it’s a good idea. In a society where so much of one’s prospects are determined by birth, it makes sense that narratives pushing individual responsibility—narratives that convince the well-off that they deserve what they have—take hold.

Cato’s Michael Tanner says much the same:

The success sequence also ignores the circumstances in which the poor make choices. Our choices result from a complex process that is influenced at each step by a variety of outside factors. We are not perfectly rational actors, carefully weighing the likely outcomes for each choice. In particular, progressives are correct to point to the impact of racism, gender-based discrimination, and economic dislocation on the decisions that the poor make in their lives. Focusing on the choices and not the underlying conditions is akin to a doctor treating only the visible symptoms without dealing with the underlying disease.

Strikingly,  the leading researchers of the success sequence seem to agree with the critics!  Wang and Wilcox:

We do not take the view that the success sequence is simply a “pull yourselves up by your own bootstraps” strategy that individuals adopt on their own. Rather, for many, the “success sequence” does not exist in a cultural vacuum; it’s inculcated by an interlocking cultural array of ideals, norms, expectations, and knowledge.*

This is a strange state of affairs.  Everyone – even the original researchers – insists that the success sequence sheds little or no light on who to blame for poverty.  And since I’m writing a book called Poverty: Who To Blame, I beg to differ…

* To be fair, Wang and Wilcox also tell us: “But it’s not just about natural endowments, social structure, and culture; agency also matters. Most men and women have the  capacity to make choices, to embrace virtues or avoid vices, and to otherwise take steps that increase or decrease their odds of doing well in school, finding and keeping a job, or deciding when to marry and have children.”

(Original title: "What Does the Success Sequence Mean?" Source.)

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Reprinted by permission of the Liberty Fund.  The Liberty Fund is a private educational foundation dedicated to increased knowledge of a society of free and responsible individuals.

Caplan advice book apparently coming soon!

 

Bryan Caplan recently announced that he is publishing eight new books of highlights from his blog posts.  All of the books are organized by a particular theme; the first is Labor Econ Versus the World: Essays on the World's Greatest Market.

One of the eight apparently will be a collection of his advice columns, including probably some of the material I have been given permission to reprint in this blog. When that particular book is released, I will buy it immediately and I will publicize it on this blog.