This caught my eye.
https://twitter.com/sjosephburns/status/1028628288607019008?s=21
I like the 🤷♂️ so much that ‘shrug’ is a keyboard shortcut. (Make technology work for you.) The likes and the huh and the obviousness of it makes it interesting. There are three reasons:
Distance. The difference between college debt and stock investments is partially the difference in distance. College tuition, like casino chips or in-app-Uber-payments, is abstracted away. Students do not pay to enter lecture halls or pay each professor (there were no tips in academia when I was there). Unlike the local bistro, there’s a cause-and-effect disconnect.
Investing meanwhile is immediate. Transfer funds, buy, sell, spend the money. Distance affects how people feel.
Stories. We hear about people swindled, stolen, and schemed against. There’s a villain, an arc, a conclusion. In One Shot, a work of fiction, we get to the heart of the matter. In this case, a former Army soldier was framed for a shooting rampage.
“A story needs the guy to be still out there. A story needs the guy roaming, sullen, hidden, shadowy, dangerous. It needs fear. It needs to make everyday chores exposed and hazardous, like pumping gas or visiting the mall or walking to church. So to hear that the guy was found and arrested even before the start of the second news cycle was a disaster for Ann Yanni.”
Yanni goes on to be one of the protagonists, but our antagonists act this way because they want to kill the story. Act one, two, and three close the book. Investing has clear stories, education does not.
Legibility. Thanks to the workings of Mr. Market, there is a numerical price. Clean and easy to see. Up or down. My local paper goes so far to use a thumb up or down to show price changes, the implied goodness, and badness as plain as the nose on your face.
College is more nebulous. How much does your education help or hurt your career? There’s no way to tell. Few people would change their past, but then again, we’re terrible at considering opportunity costs.
There are a few ways to change this situation. With a few tweaks, we can change the system so that stocks seem slightly better and college a bit more costly. Here are three ideas.
- Borrow a page from Zappos and make students pay for college before they even enter the hallowed halls. Part of the recruiting at Zappos (Amazon too) includes a buy-out. If applicants make it through the application and evaluation, they’re given one more chance to step off the train in the form of payment to quit. At Amazon, it’s once a year.
The effect forces people to consider the Why to their actions. Relatedly, companies like Betterment, do the reverse by showing the tax implications of a transaction. Three-fourths of investors, once they see the tax hit, choose not to sell. - Taking a page from the college playbook, investors can distance the payment process for investments. Pre-tax plans do this, once an employee sets up a contribution they don’t ‘feel’ the effects that money because it never really arrives. Similarly, there are programs like Save-More-Tomorrow where a portion of each future raise gets invested.
- Glamorize the savers. Part of the problem of investing is that we mostly only hear the bad news. Instead, we can highlight the people who live a good life, but also make sound financial decisions. This seems to be a thread among the FIRE crowd, who recognize both the today and tomorrow versions of themselves benefit from the same set of actions.
The solution to this is probably something weird. Or a combination of the above. Or none. Whatever the solution is though, I’d bet my investments that it involves distance, story, and legibility.
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