Jeffrey Sachs

Supported by Greenhaven Road Capital, finding value off the beaten path.

Jeffrey Sachs talked with Barry Ritholtz on the Blumberg Masters in Business podcast. The entire interview was good and these will be a shorter set of notes in a non-list format. If you like the less is more approach let me know.

Sachs and Ritholtz note that there’s more to life than money, duh. As a platitude we understand this, but they wisely point out that we still use money for a hell of a lot of stuff. Gross domestic product, for example, is one form of measurement we use even though we know it’s not the only thing there is.

Another example is tax cuts as incentives for high net worth individuals. Why doesn’t this work? To use the words of Charley Ellis, people won’t stop working and earning because, “it’s fascinating, it’s really interesting, it’s very enjoyable and you don’t have to stop at 35…I know a couple of people over 100 who are still involved in active management…The rewards are really quite substantial.” There are are many ways to create good Incentives and they often involve more than money.

One inventive incentive solution the duo circle in the episode is the relative nature of incentives. To rephrase things, ‘Would you rather earn a lot absolutely or a lot relatively?’. Nassim Taleb writes that too many millionaires next door will shadow how you view yourself.

The expression “marshmallow test” is shared a few times so Ritholtz or Sachs must have read The Marshmallow Test by Walter Mischel. The book summarizes Mischel’s career and expands on other psychology books about habits and willpower. The whole book is good, but if you want one trick today it’s this: make your deferred gratification goals ‘hot’ and your current temptations ‘cool.’ How?

  • Make thoughts salient to heat them up. Imagine the results are today or tomorrow. Create a positive association with the future you.
  • To avoid temptations cool your thoughts. Create a mental or physical distance between you and temptation. Adopt The Third Stance and imagine what an impartial party would think.

See also: ‘Would Steven Pressfield pass the Marshmallow Test?

Ritholtz suggested that ESG funds may have better results because the companies that go that far probably get the basics rights. I like that and think I’ll add it to our list of Signals. When he said it I wondered how much the personality of the CEO reflects an organization’s culture. Some examples that came to mind were Zuckerberg and Musk compared to Spiegel and Kalanick.

The interview ended with Ritholtz asking Sachs about his hobbies and Sachs says he likes to work. Employment enjoyment is a common denominator for many successful people. Charlie Munger said “In my whole life I’ve never succeeded much in something I wasn’t interested in. I don’t think you’re going to succeed if what you’re doing all day doesn’t interest you.”

If you can create a feedback loop between job, quality, and enjoyment then you’ve got something special, just like Sachs.

Thanks for reading.

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