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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. This is Master's in

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Speaker 1: Business with Barry Ridholts on Bloomberg Radio. This week on

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Speaker 1: the podcast, I have an extra special guest, returning champion,

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Speaker 1: Professor Meyer Statman. We've talked a number of times about

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Speaker 1: what investors really want all sorts of different aspects of

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Speaker 1: behavioral finance. His new book is really comprehensive, A Wealth

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Speaker 1: of well Being, A Holistic Approach to Behavioral Finance. I

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Speaker 1: found this conversation to not only be informative, but to

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Speaker 1: be rich with both data and anecdotes. He has spent

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Speaker 1: the past forty four years studying this work. Lots of

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Speaker 1: what forms his opinion is data driven, is based on

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Speaker 1: research he's done, and he really flavors the book with

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Speaker 1: a lot of specific anecdotes. I found it quite interesting

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Speaker 1: and I think you will also. With no further ado.

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Speaker 1: My conversation with Professor Meyer Stafmann.

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Speaker 2: Well, I'm so delighted to be with you again.

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Speaker 1: Very so before we get to the book, which I'm

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Speaker 1: really enjoying, I have to go over your background, which

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Speaker 1: is really fascinating. Right, So your academic background, you get

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Speaker 1: a Bachelor of Arts and an MBA, from Hebrew University

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Speaker 1: of Jerusalem. You come to the US where you get

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Speaker 1: your PhD in economics from Columbia University. Was academia always

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Speaker 1: the plan?

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Speaker 2: No, it was not at all. I didn't really know

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Speaker 2: exactly what I wanted. When I was in the army,

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Speaker 2: I was destined to go to a kibbutz collective farm

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Speaker 2: in Israel, and I took a course on agriculture and

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Speaker 2: we had an economists who came and talked about exporting

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Speaker 2: oranges and what it involved. And I was thinking, you know,

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Speaker 2: this is stuff that I can understand that makes sense

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Speaker 2: to me. I'll pick economics. My dad said, study accounting.

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Speaker 2: You know, that's a practical thing. I thought that my

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Speaker 2: second major is going to be literature because I did

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Speaker 2: not know that I had sufficient background in mathematics. But

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Speaker 2: I went to one of those psychotechnic tests and they

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Speaker 2: say you can you can take it, and I did so.

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Speaker 2: I studied economics and statistics and then finance for an MBA.

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Speaker 1: So your curriculum, Vitail is kind of fascinating, mostly because,

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Speaker 1: as far as I can tell, since nineteen eighty, you've

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Speaker 1: had one job that's forty four years. Professor of finance

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Speaker 1: at Santa Clara University. You're the Glenn Klimaic professor. That's amazing.

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Speaker 1: Forty four years the same school. Is has it been

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Speaker 1: the same subject the whole time?

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Speaker 2: Well, you know, it is the same subject, but the

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Speaker 2: subject itself is changing a lot rapidly. I'm lucky to

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Speaker 2: be one of those people who is changing the subject.

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Speaker 2: And so it turned out that it is just the

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Speaker 2: right place for me. It is a place that values

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Speaker 2: teaching and values scholarships. So teacher scholar is the way

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Speaker 2: we describe our faculty, and that is what we strive

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Speaker 2: to be. And it is open, perhaps because at the

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Speaker 2: beginning it just was turning, moving from being just a

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Speaker 2: teaching place to a teaching and scholarship place, and so

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Speaker 2: they didn't really have the notion that it must be

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Speaker 2: a paper in the Journal of Finesse or whatever it was.

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Speaker 2: R just do stuff that has an audience, you know,

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Speaker 2: And to this very day they are very flexible as

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Speaker 2: to the audience they have in mind. It might be

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Speaker 2: fellow academics, but also professionals and also the general public.

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Speaker 2: And so they that delighted when I write something for

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Speaker 2: the Wall Street Journal, for example.

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Speaker 1: So you got the PhD from Columbia. How did you

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Speaker 1: make your way to California. That's not the first place

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Speaker 1: you would think of.

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Speaker 2: Well, you know, when I was studying at Columbia, I

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Speaker 2: was teaching at Rutgers College. And when I got to

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Speaker 2: my PhD, I went to the chair of the department

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Speaker 2: and asked whether there's a pay raise accompanying completioning of

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Speaker 2: the PhD. And he said, well, the way you get

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Speaker 2: a raise is you go to another university. You get

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Speaker 2: an offer, and then we see if we can match it.

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Speaker 2: And so I went to Binghamton University, which you know

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Speaker 2: is and that was the end of follow It is

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Speaker 2: highly regarded and cold, not a.

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Speaker 1: Fun place in the winter, especially if you're from a

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Speaker 1: much warmer climate like Israel.

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Speaker 2: Yeah, and so I went to Santa Clara and it

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Speaker 2: really felt like home from the beginning. Now, remember that

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Speaker 2: this is a Jesuit, a Catholic Jesuit university, and I

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Speaker 2: am Jewish, so so you know, I didn't really know

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Speaker 2: much about Jesuits so Christianity more generally, but it just

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Speaker 2: turned out to be just right. And I say, you

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Speaker 2: know that kind of similar. Both begin with the letter J.

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Speaker 1: So hey, they both started with the same book, right.

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Speaker 2: You know, it is a wonderful place. Yeah.

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Speaker 1: So you're teaching the same subject for forty plus years.

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Speaker 1: But as we said earlier, behavioral finance and the entire

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Speaker 1: field of economics has clearly evolved over that time. You've

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Speaker 1: been part of that process, pushing behavioral finance through one, two,

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Speaker 1: and now let's call it three generations. Tell us a

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Speaker 1: little bit about that process.

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Speaker 2: Well, so I studied standard finance, which we all studied

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Speaker 2: at graduate school then, and some places still where people

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Speaker 2: are rational, they are interested only in maximizing their wealth,

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Speaker 2: maybe subjects to risk considerations, and that is it. And

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Speaker 2: you say, so, what that they got to do with

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Speaker 2: the wealth? And they say, well, that's not our field,

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Speaker 2: you know, that's marketing. I never, I never felt that

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Speaker 2: it is right, but I didn't really know how to

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Speaker 2: put it together into something that would look like an

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Speaker 2: academic paper. I came to New York to study at Columbia.

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Speaker 2: That was in the summer of seventy three, and that

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Speaker 2: was just before the Omekipour War and the energy crisis

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Speaker 2: and so on, and con Edison felt compelled to suspend

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Speaker 2: its dividend and they had a raucous annual meeting in

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Speaker 2: April of seventy four, and people were really trying to

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Speaker 2: physically harm the chairman of the body, mister Lewce. One

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Speaker 2: woman said, I used to be a husband. Now con

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Speaker 2: Edison is my husband. Whereas my dividend, you know, I

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Speaker 2: live on the dividend. It occurred to me that contrary

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Speaker 2: to what we studied about rational behavior, did not occur

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Speaker 2: to them that they can sell a few shares and

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Speaker 2: generate homemade So that stayed with me. And then when

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Speaker 2: I came to Santa Clara, I heard my colleague her

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Speaker 2: Chefrin speak about those issues of mental accounting and framing

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Speaker 2: and self control, and it just clicked, you know, I said,

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Speaker 2: here is the answer to the issue of dividends. Now.

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Speaker 2: I did not know at that time the work of

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Speaker 2: Kanman and Firsky. And the funny thing is that while

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Speaker 2: I was at the Hebrew University, the economics building was

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Speaker 2: right next to the psychology building, and Conman and Firsky

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Speaker 2: themselves were doing their work there. But I had no

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Speaker 2: idea who they were, their work, none of my professors.

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Speaker 1: Late sixties early seventies, they had extablished and really become

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Speaker 1: name Jet.

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Speaker 2: That is exactly right. That is when they did their

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Speaker 2: their pioneering work. In fact, I went over to do

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Speaker 2: some of those experiments later on with them. It turns

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Speaker 2: out that none of them were their experiments, but but

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Speaker 2: at least, you know, it kind of gave me a sense,

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Speaker 2: but I just did not know how to connect it.

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Speaker 2: And then once I got to know their work, it

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Speaker 2: really clicked together. And so the first paper that her

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Speaker 2: Chefren and I did was about dividends. It is about

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Speaker 2: why it is that people like dividends. We were exceedingly

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Speaker 2: lucky to have Fisher Black as their reviewer as a

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Speaker 2: referee for that paper. And he said, uh, and and

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Speaker 2: you're going to see my blush now. He said, this

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Speaker 2: paper is brilliant.

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Speaker 1: Really, Oh that's great, that's.

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Speaker 2: The editor wrote. After a lot of soul searching, I

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Speaker 2: guess I agree.

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Speaker 1: So so the interesting thing about dividends from my perspective,

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Speaker 1: I always thought dividends were preferred by investors over stock buybacks. Yes, right,

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Speaker 1: stock buybacks are arguably more tax efficient. But if you're

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Speaker 1: like those people who are kind at investors, if they're

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Speaker 1: living on the dividends. We used to call those widows

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Speaker 1: and orphan stocks. The loss of a dividend is a

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Speaker 1: real loss and income, and people really feel it. Yes,

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Speaker 1: of course you can sell a few shares, but I'm

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Speaker 1: going to bet those people who either bought that stock

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Speaker 1: or were handed that stock by a parent or a spouse.

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Speaker 1: We're told this is a great, reliable dividend payer, never sell.

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Speaker 2: It, exactly. And people make the distinction between what is

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Speaker 2: capital and what is income, and so the rule that

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Speaker 2: we follow is move money from income to capital, such

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Speaker 2: as four one K, but don't dip into capital when

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Speaker 2: you spend dividend. Dividends count as income and so you

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Speaker 2: can spend them freely, but selling shares it's dipping into capital,

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Speaker 2: you know.

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Speaker 1: And they've been admonished against that their.

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Speaker 2: Whole lives exactly.

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Speaker 1: That hivid and I have all these examples that I

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Speaker 1: have to hide because I don't want people to recognize them.

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Speaker 1: And we'll talk about them. But in my day job,

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Speaker 1: one of the things that we notice all the time

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Speaker 1: are people who have been workers and savers and investors

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Speaker 1: hit a certain point where they slow down working. They

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Speaker 1: have a ton of money in the bank and in

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Speaker 1: their portfolio, and they have a real hard time making

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Speaker 1: that adjustment to hey, you don't have to be an

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Speaker 1: accumulator saver. You could start spending some down. Even if

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Speaker 1: you live to one hundred, you're good. It's a very

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Speaker 1: tough transition.

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Speaker 2: It is indeed a very tough transition. Yeah. When my

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Speaker 2: mother in law was old, she had a rickety old sofa.

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Speaker 2: The kids said you must replace it, and she said, no,

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Speaker 2: it is just fine. Finally they just bought the new

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Speaker 2: Sofaine tossed the old one and she smiled and she said, well,

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Speaker 2: y're dipping into.

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Speaker 1: Your so I literally I had a conversation with a

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Speaker 1: guest who was driving a twenty five year old car.

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Speaker 1: I said, why don't you go get yourself a new car?

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Speaker 1: And his answer was, I'm dipping into the money I

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Speaker 1: would otherwise give to charity. I said, not for nothing.

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Speaker 1: But you know, the latest cars they have the emergency

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Speaker 1: stop and the seatbelt pretensioners, and the improved brakes, and

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Speaker 1: the lean departure warnings and the automatic stop in case

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Speaker 1: you're getting too close to the car in front of you.

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Speaker 1: If you're not around to keep making all this money,

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Speaker 1: you're gonna have that much less to give to charity.

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Speaker 1: And about three months later, I got an email, all right,

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Speaker 1: you guilted me and to getting a new Lexus. I

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Speaker 1: go listen, the fifty grand you're spending on the Lexus

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Speaker 1: that'll keep you alive. You'll be able to keep giving

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Speaker 1: money to charity for that much longer.

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Speaker 2: Exactly. In fact, I just days ago gave my thirty

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Speaker 2: year old Toyota station wagon to my handyman, and my

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Speaker 2: wife compelled me to buy a Subaru that has all

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Speaker 2: of those good thing to say, that right that you mentioned,

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Speaker 2: And it took me a while to make this switch.

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Speaker 1: But the last time you hear we talked about compounding

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Speaker 1: and how money grows over time. You just don't recognize

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Speaker 1: how much all of these little incremental changes, whether it's

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Speaker 1: automobile technology or your phone or whatever. You know, you

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Speaker 1: don't notice it year to year, but twenty thirty years later,

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Speaker 1: oh my god, it's a much better phone, it's a

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Speaker 1: much better car, it's much better. Things improve over time,

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Speaker 1: and why not have the latest, greatest if it's going

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Speaker 1: to protect you and your family?

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Speaker 2: It is. Yeah, I was reluctant to do it, and

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Speaker 2: of course I'm happy now that I did that. I

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Speaker 2: listened to my wife, what can you do this better

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Speaker 2: than that.

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Speaker 1: Happy wife, Happy life. Right, let's talk a little bit

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Speaker 1: about the book, which I'm finding to be fascinating, and

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Speaker 1: I want to start with a quote from you. Financial

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Speaker 1: well being alone is not enough. True life wellbeing comes

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Speaker 1: from living a satisfying life, full of meaning and purpose.

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Speaker 1: That doesn't seem like the traditional Wall Street definition of

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Speaker 1: financial success discuss.

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Speaker 2: Well, it is not, but of course it is just

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Speaker 2: common sense. That is, if you just think about your life,

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Speaker 2: when I think about mine, and the listeners as well.

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Speaker 2: In finance, we usually end with financial well being. That

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Speaker 2: is what you should do to get financial well being,

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Speaker 2: but what comes after that? So if you ask people

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Speaker 2: what really matters in life, they are going to say

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Speaker 2: things like family and friends and work and health and

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Speaker 2: so on. All true, but often they forget the finance part.

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Speaker 2: And so it is this kind of like like two worlds,

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Speaker 2: one focused on finance entirely and one focused on things

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Speaker 2: other than finance. But of course finance by itself enhances

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Speaker 2: well being. That is, being a millionaire really makes you

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Speaker 2: happier than just earning fifty thousand a year. And being

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Speaker 2: a billionaire is not bad. You know, I'm a few

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Speaker 2: million short of a billion. I don't really aspire to

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Speaker 2: a billion. I'm doing just fine. But money matters period

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Speaker 2: on its own, but it also matters because it underlies

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Speaker 2: other things. If you want a sure divorce, make sure

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Speaker 2: that you are unemployed and there's not enough money to

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Speaker 2: support your spouse and children. So you need money for family,

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Speaker 2: You need money for health, you need money for education.

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Speaker 2: You even need money for religion because you know they

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Speaker 2: expect you to support the church or synagogue or any

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Speaker 2: other temple that you go to. And so money matters

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Speaker 2: because it underlies everything else. You don't have to be

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Speaker 2: wealthy to enjoy friendship and family and the rest, but

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Speaker 2: you have to have some minimum that will get you there,

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Speaker 2: and from that you can build on, of course, to

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Speaker 2: get life, well being life. Where you are, you can

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Speaker 2: describe yourself as as say, having a vocation, not just

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Speaker 2: a job.

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Speaker 1: So it sounds almost as if you're referencing Maslow's hierarchy

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Speaker 1: of needs. You have to take care of your basic survival.

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Speaker 1: You need a shelter, food, clothes, and then the next

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Speaker 1: tier is you want a little bit of security and

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Speaker 1: a little bit of reserve to deal with any sort

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Speaker 1: of emergency and then beyond that, you want options to

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Speaker 1: be able to spend your time how you want. Is

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Speaker 1: that the wrong frame of reference or or is there

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Speaker 1: other parallels?

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Speaker 2: It is similar to it, except that that sequence is

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Speaker 2: not a sequence that any that everyone goes through or

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Speaker 2: aspires to. That is, there are lots of people for

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Speaker 2: whom gathering more and more money gets to be the

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Speaker 2: ultimate in what life is meant to be?

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Speaker 1: The contest aspect.

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Speaker 2: Yeah, the contest and so on. That is what they are.

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Speaker 1: That's the polite way to describe it.

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Speaker 2: Yes, So I think that that Maslow got it right,

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Speaker 2: and I think that I can describe myself as someone

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Speaker 2: who followed Maslow. That is, I have more than enough money,

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Speaker 2: but I also have a vocation. I'm seventy seven now

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Speaker 2: and I'm not even thinking about retirement. That is not

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Speaker 2: because I need the money. It is because I am

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Speaker 2: a professor. This is who I am. And emeritus professor.

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Speaker 2: You know, you get the title that you are no

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Speaker 2: longer connected.

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Speaker 1: You're still teaching classes.

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Speaker 2: I am still teaching classes. I'm still teaching classes, I'm

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Speaker 2: still writing. Yeah, this is my life. I mean, of

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Speaker 2: course I have lots of other things. I have lots

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Speaker 2: of other thing.

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Speaker 1: Right, So that's a perfect opportunity to ask about the

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Speaker 1: four kinds of capital you explore in the book financial, social, cultural,

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Speaker 1: and personal. Let's go over each of those what what

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Speaker 1: makes them all so different?

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Speaker 2: So, so financial capital is kind of straightforward. That is,

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Speaker 2: you need you need money, and money, as I said,

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Speaker 2: underlies everything else. But it is also important on its own.

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Speaker 2: And contrary to a very famous article that experienced well being,

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Speaker 2: emotional wellbeing stops growing after you have seventy five thousand

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Speaker 2: dollars a year.

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Speaker 1: And that's an old number, right, yeah, right.

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Speaker 2: But even even adjusted for inflation, that turns out not

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Speaker 2: to be true. So really, more and more recent study

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Speaker 2: by killing Worth found that it is not so. Now

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Speaker 2: canman in Deton who did this original famous study, They

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Speaker 2: asked people what emotions they had yesterday, but the emotions

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Speaker 2: you remember from yesterday and not the emotions that you

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Speaker 2: feel right now. The way he did it was working

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Speaker 2: with an iPhone and asking people how do you feel

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Speaker 2: right now? And people had to make choices now. And

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Speaker 2: it turns out that in fact, emotional well being experienced

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Speaker 2: while being grows without limit, but without limit but diminishing benefits.

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Speaker 1: So it starts the plateau exactly what's that number where

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Speaker 1: you really see because I remember seeing something I don't

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Speaker 1: know if it was this study. There's around four hundred

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Speaker 1: k it starts to.

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Speaker 2: So if you go from from say twenty to sixty,

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Speaker 2: that is three times the increment is the same as

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Speaker 2: going from say one hundred to three hundred, right, which

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Speaker 2: is three times the second one you by two hundred thousand.

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Speaker 2: But it really accounts in terms of your well being

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Speaker 2: as an increase in forty thousand when you begin with

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Speaker 2: twenty thousand, I got you.

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Speaker 1: Yeah, going from broke to or right, I have enough

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Speaker 1: money to pay my rent and to pay the doctor

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Speaker 1: and to get food. That's like a big threshold. But

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Speaker 1: going from one hundred to three hundred or I would

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Speaker 1: imagine ten million to thirty million. You know, there's a

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Speaker 1: there's a joke. I love to tell two clients, what's

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Speaker 1: the difference between one billion dollars and two billion dollars?

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Speaker 1: And the answer is nothing, There's no difference, right, What

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Speaker 1: how does that? How is your standard of living going

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Speaker 1: to be affected between a billion or two billion? It's

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Speaker 1: the same.

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Speaker 2: Yeah, well it is the same. But of course, if

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Speaker 2: you have a fellow Hatch fund manager who has a

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Speaker 2: twenty five billion Boy, you feel like it's puny. You know.

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Speaker 2: I read I read the book by a sociologists that

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Speaker 2: interviewed very wealthy people being in Manhattan. Uh and a

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Speaker 2: woman whose income annual income is in the millions and

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Speaker 2: wealth is many multiples of that. She said, I guess

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Speaker 2: I'm in the middle. You know that there are there

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Speaker 2: are people who have chauffeurs that have private planes, and

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Speaker 2: we don't have that.

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Speaker 1: There's always going to be unless you're you know, Warren

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Speaker 1: Buffett or Bill Gates or I guess now Elon Musk,

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Speaker 1: there's always someone that's going to have more money than you.

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Speaker 1: Is that really the way people should be measuring themselves?

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Speaker 2: I hope not. You know this is this is guarantee

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Speaker 2: of being wealthy and miserable. That is not life wellbeing.

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Speaker 2: It is surely financial wellbeing. But this is extreme example

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Speaker 2: of the difference between financial wellbeing and life wellbeing.

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Speaker 1: So I just want to make sure I understand the

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Speaker 1: does money by happiness question? So it starts to diminish,

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Speaker 1: but in terms of proportions, when you're going from twenty

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Speaker 1: five to seventy five or two fifty to seven fifty.

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Speaker 1: The tripling is more or less parallel no matter where

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Speaker 1: you start from.

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Speaker 2: Exactly.

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Speaker 1: So if you like drugs, you need a bigger and

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Speaker 1: bigger hit to experience the same increase in satisfaction that

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Speaker 1: you're going to get when you're in the millions or billions.

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Speaker 2: That's right. And once your your income is seven hundred

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Speaker 2: and fifty a year still you know that is that

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Speaker 2: is there. I'm just describing it from my perspective. You

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Speaker 2: know that is I ask myself how much do you need?

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Speaker 2: And there comes a point, you know, such as when

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Speaker 2: you know that your state is going to be subject

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Speaker 2: to a state tax, we wou say, come on, mayor

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Speaker 2: now it's a question of whether you're going to give

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Speaker 2: it to the government or give it to charity. And

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Speaker 2: so for me, I established with my wife, we established

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Speaker 2: an endowment if at Santa Clara University to support the

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Speaker 2: work of my colleagues, you know, several million dollars. And

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Speaker 2: I'm thinking, think about it, Mayor, I mean, you have enough.

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Speaker 1: I always laugh when people complain about the estate tax,

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Speaker 1: which as of right now is married couple over twenty

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Speaker 1: four million dollars. To me, it's like The only excuse

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Speaker 1: for paying a state tax is you're hit by a

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Speaker 1: boss on the way to the estate attorney. You fill

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Speaker 1: out some forms, you sign a document, and you're donating

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Speaker 1: that money to charity as opposed to you know, that's

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Speaker 1: to say nothing about trust and estates and doing all

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Speaker 1: these other things if you want to move money around.

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Speaker 1: But it's not that hard to not pay a state tax.

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Speaker 2: Yes, but the question really is again about life well being.

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Speaker 2: So when I told my younger daughter that we have

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Speaker 2: established this endowment, and I said, there's going to be

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Speaker 2: enough left for you, and she said dead, I already received.

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Speaker 1: My bequests lovely.

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Speaker 2: And you know truth. I mean, she got quite a

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Speaker 2: lot of help buying your house and so on. And

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Speaker 2: I'm so happy that she is not one of those

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Speaker 2: greedy people who know that they're going to get ten

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Speaker 2: million and say, but I want twenty.

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Speaker 1: So let's talk about that a little bit. Another quote

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Speaker 1: of yours, life well being comes when we live satisfying lives,

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Speaker 1: full of meaning and purpose. How can we measure meaning

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Speaker 1: and purpose for ourselves? And how as an academic can

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Speaker 1: you measure that in other people?

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Speaker 2: Well? Measuring it is really quite easy. Now it is

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Speaker 2: not as precise you might say as saying my income

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Speaker 2: is one hundred thousand or two hundred thousand. But you

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Speaker 2: ask people, you know, do you think that your life

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Speaker 2: has purpose? And they say, ah, I have a job,

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Speaker 2: I have a family. Okay, but I'm waiting to retire.

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Speaker 2: You know this is and what will you do? I

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Speaker 2: don't know. I'll play golf and so on. Lots of

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Speaker 2: people I like that, and I count myself among the

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Speaker 2: very fortunate. Who's a working career is also a vocation,

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Speaker 2: you know, it is also who I am.

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Speaker 1: And you're not a golfer, let me guess I am,

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Speaker 1: And they're so great golf. I'm not a golfer either.

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Speaker 1: I don't I can't imagine looking forward to doing nothing

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Speaker 1: but golf. That doesn't hold any thrill to me. But

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Speaker 1: some people love it.

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Speaker 2: I mean, I have nothing against them. Yeah. In fact,

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Speaker 2: when when I was about to say something along the

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Speaker 2: lines you described about golf and making fun of it

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Speaker 2: in my earlier book, the editor said, you know, there

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Speaker 2: are many golf players who will want to buy a book.

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Speaker 2: Do you want to annoy them?

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Speaker 1: So let's let's go over one of the other things

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Speaker 1: that I picked up early in the book the Three

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Speaker 1: Generations of behavioral finance. So generation one of economics, well,

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Speaker 1: the original homo economists as humans are rational profit maximizers.

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Speaker 1: Behavioral finance comes along and says that's not true, people

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Speaker 1: are irrational. Generation two comes along and says, well, people

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Speaker 1: are people in that what you're calling irrational is just

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Speaker 1: people being normal. You want to expand this in generation

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Speaker 1: three to say, behavioral finance describes people as normal, but

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Speaker 1: we have to broaden our lens and look at people holistically,

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Speaker 1: see the whole person, see the entire life, and not

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Speaker 1: just look at individual transactions or survey responses.

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Speaker 2: So let me describe very briefly how it develops. So

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Speaker 2: standard finance, as you said, is people are rationale. The

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Speaker 2: first generation of behavioral finance, we found, for example, that

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Speaker 2: people do stuff that is not maximizing their wealth. For example,

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Speaker 2: they trade too much and doing that diminishes their capital,

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Speaker 2: or they make distinction between what is capital and what

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Speaker 2: is in come. Uh, and so we call them irrational.

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Speaker 2: But irrational has this this sense that they're stupid, you know,

437
00:26:08,480 --> 00:26:11,960
Speaker 2: and people are not stupid, or by that measure, I'm

438
00:26:12,000 --> 00:26:15,440
Speaker 2: stupid and likely you are. I said, Look at things

439
00:26:15,520 --> 00:26:18,960
Speaker 2: like like a watch. Okay, so so a watch has

440
00:26:19,080 --> 00:26:23,800
Speaker 2: utilitarian benefits but also expressive and emotional. You know, all watches,

441
00:26:23,880 --> 00:26:26,320
Speaker 2: even those that cost less than one hundred dollars, show

442
00:26:26,359 --> 00:26:32,359
Speaker 2: you the precise time. But when you buy a Rolex,

443
00:26:32,880 --> 00:26:36,320
Speaker 2: you get not just showing time, but you also get

444
00:26:36,400 --> 00:26:40,280
Speaker 2: those expressive benefits. I am a man who can afford

445
00:26:40,280 --> 00:26:44,240
Speaker 2: a Rolex, and you feel proud those emotional benefits.

446
00:26:44,240 --> 00:26:47,439
Speaker 1: Profession Scott Galloway describes that as it's a way to

447
00:26:47,520 --> 00:26:51,200
Speaker 1: signal your a suitability for mating to the opposite sex.

448
00:26:51,880 --> 00:26:55,119
Speaker 2: That that is one thing that it does. Yeah, that,

449
00:26:55,640 --> 00:26:58,400
Speaker 2: but then all the people in merit ones still still

450
00:26:58,480 --> 00:27:01,760
Speaker 2: buy those fancy watch is good for them? You know?

451
00:27:02,040 --> 00:27:08,000
Speaker 2: That is people signal their status, and the status is

452
00:27:08,040 --> 00:27:13,120
Speaker 2: about expressive and emotional benefits. And so that was kind

453
00:27:13,160 --> 00:27:16,880
Speaker 2: of the second generation that said people who buy Rolicxes

454
00:27:16,960 --> 00:27:20,680
Speaker 2: are not irrational. They are normal people. They just care

455
00:27:20,720 --> 00:27:24,400
Speaker 2: about some other things other than show me the right time.

456
00:27:25,280 --> 00:27:29,160
Speaker 2: And then I was saying, wait a minute. People want

457
00:27:29,280 --> 00:27:34,960
Speaker 2: more than those expressive and emotional benefits. People want well being,

458
00:27:35,040 --> 00:27:39,120
Speaker 2: people want life well being. Have you touched on family?

459
00:27:40,119 --> 00:27:48,400
Speaker 2: Have you spoken about education, about work? About religion, about society.

460
00:27:49,000 --> 00:27:52,800
Speaker 2: Just think about how whoever wins the election, they are

461
00:27:52,800 --> 00:27:55,159
Speaker 2: going to be half the country happy and half the

462
00:27:55,320 --> 00:27:59,920
Speaker 2: country miserable. And so it truly affects life wellbeing as well.

463
00:28:00,080 --> 00:28:02,680
Speaker 2: And so we have to look at that whole. And

464
00:28:03,040 --> 00:28:06,720
Speaker 2: as I said before, you need money underlying it all,

465
00:28:07,400 --> 00:28:09,680
Speaker 2: but money is not enough.

466
00:28:10,600 --> 00:28:14,520
Speaker 1: Huh. That's really interesting. What led to the recognition that

467
00:28:15,000 --> 00:28:19,240
Speaker 1: we're going through these different generations of behavioral finance and

468
00:28:19,280 --> 00:28:20,760
Speaker 1: that it's evolving over time.

469
00:28:21,520 --> 00:28:25,040
Speaker 2: Well, you know, I cannot say that it is a

470
00:28:25,119 --> 00:28:29,520
Speaker 2: general feeling that is in my senses, that finance generally

471
00:28:29,600 --> 00:28:34,399
Speaker 2: is still dwelling on the irrational stage. I think I

472
00:28:34,480 --> 00:28:39,640
Speaker 2: moved forward to describe people as normal. And when I

473
00:28:39,720 --> 00:28:43,920
Speaker 2: say utilitarian, expressive and emotional benefits to people in marketing,

474
00:28:44,000 --> 00:28:46,760
Speaker 2: they say, tell me something new. I mean, we know

475
00:28:46,880 --> 00:28:50,080
Speaker 2: that people in finance are still kind of reluctant to

476
00:28:50,760 --> 00:28:54,360
Speaker 2: do that, and life well being is really beyond their

477
00:28:54,440 --> 00:28:57,280
Speaker 2: sense of what finance is. And yet when I speak

478
00:28:57,320 --> 00:29:01,280
Speaker 2: about it to my students, they know exactly what it

479
00:29:01,480 --> 00:29:04,680
Speaker 2: is that I'm talking about, and they tell me stories,

480
00:29:05,000 --> 00:29:09,960
Speaker 2: their own stories. The graduates said, fifteen years ago, I

481
00:29:09,960 --> 00:29:12,800
Speaker 2: would have said that what is most important for me

482
00:29:13,600 --> 00:29:16,640
Speaker 2: is to have money to spend it on myself. But

483
00:29:16,840 --> 00:29:20,080
Speaker 2: now I have a son and he's the center of

484
00:29:20,280 --> 00:29:20,800
Speaker 2: my life.

485
00:29:21,360 --> 00:29:22,520
Speaker 1: Your priority has changed.

486
00:29:22,800 --> 00:29:26,120
Speaker 2: I get it exactly. There is more than having money

487
00:29:26,360 --> 00:29:27,520
Speaker 2: to make you happy.

488
00:29:27,720 --> 00:29:31,280
Speaker 1: So I see this book as the logical next step

489
00:29:31,720 --> 00:29:36,760
Speaker 1: to what investors really want, where you describe, Hey, it's

490
00:29:36,880 --> 00:29:40,080
Speaker 1: not just about I want to generate the most return

491
00:29:40,160 --> 00:29:44,040
Speaker 1: on my invested capital. There are all these expressive and

492
00:29:44,280 --> 00:29:50,920
Speaker 1: value based and even status signaling aspects of people's investments

493
00:29:50,920 --> 00:29:54,560
Speaker 1: and portfolios, their personal values, what they believe in. At

494
00:29:54,600 --> 00:29:57,760
Speaker 1: the time that seemed a little radical to a lot

495
00:29:57,760 --> 00:30:00,880
Speaker 1: of people. I think it's now become a accepted in

496
00:30:00,960 --> 00:30:05,080
Speaker 1: the canon of behavioral finance. How much of a leaping

497
00:30:05,120 --> 00:30:09,640
Speaker 1: off point was what investors really want into a wealth

498
00:30:09,640 --> 00:30:10,280
Speaker 1: of well being?

499
00:30:10,520 --> 00:30:13,360
Speaker 2: It is a natural progression. And so one of the

500
00:30:13,400 --> 00:30:16,760
Speaker 2: things that I worked on even in the eighties in

501
00:30:16,800 --> 00:30:21,360
Speaker 2: the late eighties was socially responsible investing, which known now

502
00:30:21,400 --> 00:30:24,840
Speaker 2: as ESG. And I said, look, there are people who

503
00:30:24,880 --> 00:30:27,800
Speaker 2: are willing to give up wealth to be true to

504
00:30:27,880 --> 00:30:32,800
Speaker 2: their values by divesting from fossil fuel companies or whatever

505
00:30:32,840 --> 00:30:37,200
Speaker 2: it is that offends them. These are not irrational people.

506
00:30:37,320 --> 00:30:41,200
Speaker 2: These are normal people. Now it is a matter of

507
00:30:41,320 --> 00:30:46,680
Speaker 2: kind of going further and saying what else affects your

508
00:30:47,280 --> 00:30:52,240
Speaker 2: life well being beyond say, investing in line with your values,

509
00:30:53,000 --> 00:30:58,440
Speaker 2: And then you get into those issues of education. For example,

510
00:30:58,600 --> 00:31:02,680
Speaker 2: you know, education is about getting a better job, yes,

511
00:31:03,200 --> 00:31:07,800
Speaker 2: but education is about so much more than that. You know,

512
00:31:08,040 --> 00:31:11,240
Speaker 2: an educated person is likely to be a reader, is

513
00:31:11,360 --> 00:31:14,440
Speaker 2: likely to be a thinker, is likely to have a

514
00:31:14,440 --> 00:31:17,440
Speaker 2: different set of friends and all of that. It is

515
00:31:17,480 --> 00:31:20,400
Speaker 2: not just about having a better job. It is about

516
00:31:20,720 --> 00:31:22,960
Speaker 2: life well being beyond financial well being.

517
00:31:23,200 --> 00:31:26,240
Speaker 1: Really interesting, you know, I'm going to stay with one

518
00:31:26,280 --> 00:31:31,040
Speaker 1: investers really want. We use a custom index piece of

519
00:31:31,080 --> 00:31:35,040
Speaker 1: software called Canvas. It's now won by Franklin Templeton. It's

520
00:31:35,080 --> 00:31:37,760
Speaker 1: got a lot of different uses because it's a powerful

521
00:31:37,760 --> 00:31:41,320
Speaker 1: piece of software. So with a custom index, you can

522
00:31:41,360 --> 00:31:46,440
Speaker 1: own the Vanguard total market like eight hundred different stocks.

523
00:31:47,040 --> 00:31:50,040
Speaker 1: And you have the ability to say I don't want

524
00:31:50,080 --> 00:31:53,600
Speaker 1: guns or tobacco, which is a very common request. I

525
00:31:53,680 --> 00:31:57,680
Speaker 1: was speaking to Jim O'Shaughnessy about it. The New York

526
00:31:58,000 --> 00:32:03,200
Speaker 1: Catholic bishops say we don't want any drug companies that

527
00:32:03,320 --> 00:32:08,560
Speaker 1: produce drugs that cause abortion, or insurance or hospital chains

528
00:32:08,600 --> 00:32:11,560
Speaker 1: that provide those services. We just we don't believe that's

529
00:32:11,600 --> 00:32:15,200
Speaker 1: consistent with our beliefs, and if we underperform a few percent,

530
00:32:15,240 --> 00:32:20,600
Speaker 1: we don't care. How significant are people's personal values to

531
00:32:21,320 --> 00:32:23,280
Speaker 1: their portfolios? How important is this?

532
00:32:23,360 --> 00:32:26,480
Speaker 2: Well it really varies by person. In fact, I'm one

533
00:32:26,480 --> 00:32:29,600
Speaker 2: of them who invests in general index funds and then

534
00:32:29,680 --> 00:32:34,440
Speaker 2: makes donations consistent with my values. But for other people,

535
00:32:34,760 --> 00:32:38,400
Speaker 2: you know, I have this standard analogy. I say, imagine

536
00:32:38,560 --> 00:32:42,320
Speaker 2: that you face a potential client. Here's an Orthodox Jew.

537
00:32:43,040 --> 00:32:46,920
Speaker 2: Imagine saying, listen, pork tastes pretty good. It costs less

538
00:32:46,920 --> 00:32:50,040
Speaker 2: than kosher beef. Why don't you eat pork and donate

539
00:32:50,080 --> 00:32:53,360
Speaker 2: the savings to your synagogue. Well, everyone understands that it

540
00:32:53,400 --> 00:32:57,960
Speaker 2: is absurd, So I say, look, if having fossil fuel

541
00:32:58,160 --> 00:33:01,920
Speaker 2: or tobacco stocks in your portfolio feels like pork in

542
00:33:02,040 --> 00:33:05,080
Speaker 2: the mouth of an Orthodox Jew, take them out of

543
00:33:05,120 --> 00:33:08,640
Speaker 2: your portfolio. But if not, then it is perfectly okay

544
00:33:08,680 --> 00:33:11,280
Speaker 2: to separate the two. And I like the term that

545
00:33:11,360 --> 00:33:15,040
Speaker 2: you use. That's the one I use, values based investing.

546
00:33:15,600 --> 00:33:19,760
Speaker 2: In fact, there is an ETF for conservatives and an

547
00:33:19,760 --> 00:33:24,600
Speaker 2: ETF for liberals. And then there is the other Maria

548
00:33:25,080 --> 00:33:29,400
Speaker 2: mutual fun where they exclude everything that offends at the

549
00:33:29,440 --> 00:33:30,360
Speaker 2: Catholic church.

550
00:33:30,680 --> 00:33:31,560
Speaker 1: That's really interesting.

551
00:33:31,600 --> 00:33:31,760
Speaker 2: You know.

552
00:33:31,840 --> 00:33:33,680
Speaker 1: I remember a couple of years ago there was an

553
00:33:33,680 --> 00:33:38,480
Speaker 1: ETF called Vice and it was alcohol, tobacco, gambling, but

554
00:33:38,520 --> 00:33:41,560
Speaker 1: it was all the vice docks. Yeah, because some people

555
00:33:41,560 --> 00:33:44,760
Speaker 1: had been shunning them. They had become cheap enough that

556
00:33:45,040 --> 00:33:47,560
Speaker 1: the IRA call for a while that portfolio was doing

557
00:33:47,560 --> 00:33:48,120
Speaker 1: really well.

558
00:33:48,440 --> 00:33:52,360
Speaker 2: It did, and perhaps still does, but most of it

559
00:33:52,400 --> 00:33:55,960
Speaker 2: really is directed that people who want to poke the

560
00:33:56,080 --> 00:34:01,240
Speaker 2: eyes or the socially responsible investors.

561
00:34:00,520 --> 00:34:05,280
Speaker 1: In finance, I've learned it's all marketing anyway, right, everybody's.

562
00:34:05,000 --> 00:34:08,319
Speaker 2: You know, you cannot take marketing out of finance, yet

563
00:34:08,680 --> 00:34:10,200
Speaker 2: how hard you try.

564
00:34:10,960 --> 00:34:14,160
Speaker 1: Let's talk a little bit about another quote of yours.

565
00:34:14,560 --> 00:34:19,640
Speaker 1: Often overlooked, the financial domain underpins all other domains of

566
00:34:19,719 --> 00:34:24,839
Speaker 1: life and well being, including health, relationships, and work. Financial

567
00:34:24,880 --> 00:34:29,920
Speaker 1: stability enables pursuing other aspects of a fulfilling life. So

568
00:34:30,000 --> 00:34:35,160
Speaker 1: you were discussing justice a little while ago. Isn't that obvious?

569
00:34:35,239 --> 00:34:38,239
Speaker 1: Do we really overlook that you need money to do

570
00:34:38,280 --> 00:34:40,759
Speaker 1: these other things? How do we find ourselves in this

571
00:34:41,200 --> 00:34:42,239
Speaker 1: state of affairs.

572
00:34:42,520 --> 00:34:47,080
Speaker 2: When you speak with ordinary people and you ask them,

573
00:34:47,280 --> 00:34:51,440
Speaker 2: is money all that matters in life? They would say no,

574
00:34:51,880 --> 00:34:56,600
Speaker 2: you know, family matters, and friends matter, and religion matters

575
00:34:56,920 --> 00:35:00,080
Speaker 2: and so on. It is just that when it comes

576
00:35:00,120 --> 00:35:04,919
Speaker 2: to both academics and finance, and also practitioners financial advisors.

577
00:35:05,480 --> 00:35:09,759
Speaker 2: Still to this very day, many financial advisors have the

578
00:35:09,800 --> 00:35:13,560
Speaker 2: attitude of I'm here to make you money. What you

579
00:35:13,760 --> 00:35:17,440
Speaker 2: do with it, that's none of my business. And so

580
00:35:17,960 --> 00:35:20,920
Speaker 2: you think about that and you say, this makes no

581
00:35:21,120 --> 00:35:25,280
Speaker 2: sense in many ways. That is, if a client says,

582
00:35:25,920 --> 00:35:29,520
Speaker 2: you know, my oldest son really annoyed me. I think

583
00:35:29,560 --> 00:35:32,839
Speaker 2: I'm going to write him out of my will. If

584
00:35:32,840 --> 00:35:36,600
Speaker 2: you're a financial advisor, are going to say, well, here's

585
00:35:36,640 --> 00:35:39,920
Speaker 2: the revision as signed the dotted line. I hope that

586
00:35:39,960 --> 00:35:43,959
Speaker 2: you're going to say, are you sure? You know? Yes,

587
00:35:44,000 --> 00:35:46,400
Speaker 2: you're going to be gone when they open the will.

588
00:35:46,920 --> 00:35:50,439
Speaker 2: Does it occur to you that now brother and sisters

589
00:35:50,560 --> 00:35:53,279
Speaker 2: are not going to speak to one another? You know,

590
00:35:53,320 --> 00:35:56,480
Speaker 2: you're going to try to reason with a person and say,

591
00:35:56,800 --> 00:36:00,200
Speaker 2: there is more than this financial decision. You have to

592
00:36:00,239 --> 00:36:03,400
Speaker 2: think about what kind of life well being it is

593
00:36:03,480 --> 00:36:04,160
Speaker 2: going to bring.

594
00:36:04,480 --> 00:36:08,399
Speaker 1: So I'm glad you brought up the concept of financial advisors.

595
00:36:09,080 --> 00:36:12,600
Speaker 1: My experience has been the best financial advisors are very

596
00:36:12,640 --> 00:36:16,959
Speaker 1: empathetic to people's whole life. But I want to again

597
00:36:17,080 --> 00:36:20,439
Speaker 1: go back to what you wrote. Good financial advisors must

598
00:36:20,480 --> 00:36:25,400
Speaker 1: evolve into well being advisors. They must form emotional connections

599
00:36:25,400 --> 00:36:31,160
Speaker 1: with clients and provide personalized guidance beyond just investment management.

600
00:36:31,520 --> 00:36:36,640
Speaker 2: Exactly so from a business side, the skills that financial

601
00:36:36,719 --> 00:36:40,440
Speaker 2: advisors have traditionally prized, that is, they know investments, they

602
00:36:40,480 --> 00:36:45,560
Speaker 2: know stocks, they know hedge funds. Robo advisors do that

603
00:36:45,719 --> 00:36:48,600
Speaker 2: work for a fraction of the fee. You want to

604
00:36:48,640 --> 00:36:52,680
Speaker 2: realize losses, they'll do it automatically for you. You want

605
00:36:52,680 --> 00:36:55,880
Speaker 2: to rebalance your portfolio, they'll do that. What it is

606
00:36:55,880 --> 00:36:58,080
Speaker 2: that you bring is, of course knowledge. You know, you

607
00:36:58,239 --> 00:37:03,239
Speaker 2: have to be teer of knowledge or finance, and I

608
00:37:03,440 --> 00:37:07,919
Speaker 2: like in financial advisors good financial advisors to financial physicians.

609
00:37:07,960 --> 00:37:10,440
Speaker 2: You know in the same way that, of course you

610
00:37:10,560 --> 00:37:15,160
Speaker 2: want a physician who knows medicine, but you also want

611
00:37:15,280 --> 00:37:17,759
Speaker 2: someone who is listening to you, who is asking you

612
00:37:17,760 --> 00:37:21,200
Speaker 2: a question, who listens between the lines, that you can

613
00:37:21,239 --> 00:37:24,719
Speaker 2: disclose to even embarrassing things about your health. And they're

614
00:37:24,760 --> 00:37:28,719
Speaker 2: embarrassing things about about our lives that you are not

615
00:37:28,800 --> 00:37:34,640
Speaker 2: disclosing to acquaintances, because a good physician is one when

616
00:37:34,640 --> 00:37:37,760
Speaker 2: you leave the office you have a sense that even

617
00:37:37,800 --> 00:37:41,040
Speaker 2: if the news, the medical news, is bad, at least

618
00:37:41,080 --> 00:37:44,720
Speaker 2: you can see what is coming. You get that sense

619
00:37:45,080 --> 00:37:50,160
Speaker 2: of empathy, that emotional contact is really what is going

620
00:37:50,280 --> 00:37:55,520
Speaker 2: to keep that physician as your physician. The same applies

621
00:37:55,800 --> 00:38:00,239
Speaker 2: to advisors. You know you cannot promise them I'll get

622
00:38:00,239 --> 00:38:03,240
Speaker 2: you a HIGHERY transit than the advisor down the street

623
00:38:03,360 --> 00:38:07,040
Speaker 2: because you cannot deliver that. You can say I care

624
00:38:07,160 --> 00:38:10,840
Speaker 2: about you and your family. You can disclose things to me,

625
00:38:11,320 --> 00:38:15,399
Speaker 2: and I'm going to guide you to of course take

626
00:38:15,440 --> 00:38:20,480
Speaker 2: care of your financial wellbeing, but also of your life wellbeing.

627
00:38:20,680 --> 00:38:24,000
Speaker 1: Huh. Really interesting, So you brought up a doctor. That's

628
00:38:24,040 --> 00:38:27,719
Speaker 1: a perfect segue to our next question. If any one

629
00:38:27,920 --> 00:38:31,480
Speaker 1: part of your well being isn't healthy, if your health

630
00:38:31,520 --> 00:38:34,000
Speaker 1: is suffering, if you have some sort of physical or

631
00:38:34,040 --> 00:38:38,319
Speaker 1: emotional setback, everything else seems to suffer. It seems that

632
00:38:38,520 --> 00:38:42,040
Speaker 1: all of these different parts that you've been describing our

633
00:38:42,080 --> 00:38:46,520
Speaker 1: financial health, our social health, our actual physical health, they

634
00:38:46,560 --> 00:38:50,080
Speaker 1: all seem to be inter related. How do we maintain

635
00:38:50,160 --> 00:38:54,120
Speaker 1: a healthy balance amongst all the different parts of our lives.

636
00:38:55,040 --> 00:38:58,800
Speaker 2: That really is an issue that I've encountered that others.

637
00:38:58,920 --> 00:39:03,000
Speaker 2: Our older daughter, for example, is living with with bipolar

638
00:39:03,000 --> 00:39:04,359
Speaker 2: illness and mental.

639
00:39:04,360 --> 00:39:08,880
Speaker 1: Discress it in the frankly before there was.

640
00:39:08,880 --> 00:39:12,200
Speaker 2: A diagnosis, when we just had kind of an inklings,

641
00:39:12,200 --> 00:39:16,759
Speaker 2: something is not going right, the therapist said that it

642
00:39:16,880 --> 00:39:20,120
Speaker 2: is our fault, you know that that we are perfectionists

643
00:39:20,160 --> 00:39:22,319
Speaker 2: or whatever. And it was just a matter of whether

644
00:39:22,440 --> 00:39:26,640
Speaker 2: Nava is to blame or or I Amava being my wife.

645
00:39:26,840 --> 00:39:31,080
Speaker 2: And so the family, the children part was damaged, and

646
00:39:31,120 --> 00:39:33,480
Speaker 2: then the marriage itself was was damaged.

647
00:39:33,520 --> 00:39:33,680
Speaker 1: You know.

648
00:39:33,719 --> 00:39:37,360
Speaker 2: We we let we let our anguish kind of seep

649
00:39:37,480 --> 00:39:42,520
Speaker 2: into our relationship. Uh. And and suddenly, you know, even

650
00:39:42,600 --> 00:39:44,680
Speaker 2: though I could see that I'll get to any or

651
00:39:44,719 --> 00:39:48,960
Speaker 2: that's not a problem, it just weighed on me. Uh.

652
00:39:49,000 --> 00:39:52,880
Speaker 2: And what I've learned over time is to separate things.

653
00:39:52,920 --> 00:39:55,799
Speaker 2: That is, I think now of life well being kind

654
00:39:55,840 --> 00:39:59,719
Speaker 2: of like a portfolio. It has stocks or the equivalent

655
00:39:59,760 --> 00:40:06,520
Speaker 2: of at domains, marriage, children, friendship, education, and so on. Now,

656
00:40:06,840 --> 00:40:09,680
Speaker 2: some stocks will do very well in your portfolio, some

657
00:40:09,760 --> 00:40:12,080
Speaker 2: will do very poorly. But you look at the portfolio

658
00:40:12,160 --> 00:40:14,279
Speaker 2: as a whole, and so we have to look at

659
00:40:14,280 --> 00:40:17,640
Speaker 2: the portfolio as a whole, and we can kind of

660
00:40:17,680 --> 00:40:22,279
Speaker 2: transfer returns in some ways, transfer well being from say

661
00:40:22,040 --> 00:40:26,160
Speaker 2: the work part to the I have a disabled child,

662
00:40:26,640 --> 00:40:29,480
Speaker 2: and you know the fact that my wealth is high

663
00:40:29,840 --> 00:40:34,640
Speaker 2: means that I can support that ill daughter without constraining

664
00:40:34,680 --> 00:40:37,719
Speaker 2: myself in terms of consumption. So that is a very

665
00:40:37,760 --> 00:40:40,840
Speaker 2: good thing. And so I think I think one is

666
00:40:40,880 --> 00:40:44,200
Speaker 2: really to learn to move life well being from one

667
00:40:44,280 --> 00:40:48,200
Speaker 2: domain where it is extra to one that is missing.

668
00:40:48,640 --> 00:40:52,040
Speaker 2: There's another one that is really important, and that is disclosure.

669
00:40:52,040 --> 00:40:55,320
Speaker 2: And I'm very happy that I disclose my own pain

670
00:40:56,000 --> 00:41:00,680
Speaker 2: because when you disclose your pain to people, the typical

671
00:41:00,800 --> 00:41:04,600
Speaker 2: response is they tell you about theirs and you might

672
00:41:04,880 --> 00:41:07,319
Speaker 2: have nothing to do with kids. Whatever it is.

673
00:41:07,480 --> 00:41:08,720
Speaker 1: They open up, they.

674
00:41:08,560 --> 00:41:12,920
Speaker 2: Open up, and suddenly you move from being an acquaintance

675
00:41:13,120 --> 00:41:15,879
Speaker 2: or a colleague to becoming a friend in an odd

676
00:41:15,960 --> 00:41:20,439
Speaker 2: way kind of like for free. You enhance the well

677
00:41:20,480 --> 00:41:24,600
Speaker 2: being of that new friend, and he or she enhances yours.

678
00:41:25,200 --> 00:41:27,760
Speaker 2: It didn't cost you anything. You know, you go home

679
00:41:27,800 --> 00:41:31,280
Speaker 2: and you say, I feel better just knowing that life

680
00:41:31,360 --> 00:41:34,320
Speaker 2: is like that. You know that I'm not the one

681
00:41:34,600 --> 00:41:39,040
Speaker 2: that God has chosen to inflict a handicap on that

682
00:41:39,400 --> 00:41:42,520
Speaker 2: is life, and people manage. And if you can help people,

683
00:41:42,560 --> 00:41:45,320
Speaker 2: of course, if you can help them in more direct ways,

684
00:41:45,560 --> 00:41:49,239
Speaker 2: that is wonderful. Nava. My wife has been a volunteer

685
00:41:49,280 --> 00:41:53,360
Speaker 2: at the National Alliance and Mental Illness NAMI for many years.

686
00:41:53,560 --> 00:41:57,719
Speaker 2: She has helped so many people and families, and I'm

687
00:41:57,800 --> 00:42:02,719
Speaker 2: so exceedingly proud of her for doing that, and so

688
00:42:02,800 --> 00:42:07,840
Speaker 2: it enhances her well being, it enhances my well being.

689
00:42:08,400 --> 00:42:12,000
Speaker 2: We know it gives meaning to life to know that

690
00:42:12,040 --> 00:42:13,080
Speaker 2: we are doing good.

691
00:42:13,320 --> 00:42:16,239
Speaker 1: Since you brought up your wife, let's talk about what

692
00:42:16,280 --> 00:42:19,959
Speaker 1: you write about marriage. I don't think i've ever heard

693
00:42:19,960 --> 00:42:24,359
Speaker 1: it described as the largest financial decision we make.

694
00:42:25,040 --> 00:42:28,640
Speaker 2: Explain that, well, if you can think about it, you

695
00:42:28,680 --> 00:42:31,480
Speaker 2: know that is of course, of course it is right.

696
00:42:32,280 --> 00:42:34,640
Speaker 2: It is not buying this stock or that of putting

697
00:42:34,680 --> 00:42:38,520
Speaker 2: money in your four oh one K. Marriage costs money.

698
00:42:39,000 --> 00:42:40,840
Speaker 2: It brings money, and it costs money.

699
00:42:41,040 --> 00:42:43,879
Speaker 1: It's also the partnership that you're going to face all

700
00:42:43,920 --> 00:42:46,520
Speaker 1: these financial challenges through your whole.

701
00:42:46,280 --> 00:42:50,120
Speaker 2: Lifetime, exactly. And so I tell my young students, they say,

702
00:42:50,400 --> 00:42:52,360
Speaker 2: you know I married. I was twenty two when I

703
00:42:52,400 --> 00:42:55,840
Speaker 2: got married and Nava was twenty one. Look around you

704
00:42:56,160 --> 00:43:00,480
Speaker 2: here on campus, you see men and women who worthy

705
00:43:00,520 --> 00:43:01,160
Speaker 2: of you.

706
00:43:01,160 --> 00:43:03,000
Speaker 1: You know, who do you want to spend the next

707
00:43:03,040 --> 00:43:03,920
Speaker 1: fifty years with?

708
00:43:04,160 --> 00:43:07,200
Speaker 2: Yeah? Who do you think? And if you think that

709
00:43:07,280 --> 00:43:11,800
Speaker 2: there is this giant marketplace online where there are people

710
00:43:12,880 --> 00:43:16,319
Speaker 2: someplace who I just your soulmate, forget that. You know

711
00:43:16,400 --> 00:43:20,360
Speaker 2: that is you build your life together. It is a

712
00:43:20,480 --> 00:43:25,200
Speaker 2: joint enterprise. Deciding to come to the United States from

713
00:43:25,280 --> 00:43:29,840
Speaker 2: Israel to study for the PhD. I can imaginally see

714
00:43:30,239 --> 00:43:34,080
Speaker 2: a wife who says, no, I don't want to separate

715
00:43:34,160 --> 00:43:36,440
Speaker 2: from my family and so on. But what would I

716
00:43:36,480 --> 00:43:41,440
Speaker 2: have done. I'm lucky that my wife went along, and

717
00:43:41,520 --> 00:43:45,120
Speaker 2: so yes, yes, yes, Speaking as somebody who has been

718
00:43:45,200 --> 00:43:48,920
Speaker 2: married for some fifty four years, I can tell you

719
00:43:49,000 --> 00:43:50,879
Speaker 2: that a good marriage is a wonderful thing.

720
00:43:51,120 --> 00:43:53,839
Speaker 1: So now let's ask the opposite question, what does your

721
00:43:53,880 --> 00:43:59,440
Speaker 1: research say about divorce and subsequent well being? Not just

722
00:43:59,480 --> 00:44:02,160
Speaker 1: financial but total well being.

723
00:44:02,960 --> 00:44:06,160
Speaker 2: I think that lots of people are not fortunate enough

724
00:44:06,200 --> 00:44:10,719
Speaker 2: to find someone who is really a partner. I'm not

725
00:44:10,800 --> 00:44:14,880
Speaker 2: even talking about a bad abuse. I'm just saying that

726
00:44:14,960 --> 00:44:19,440
Speaker 2: people really go different in different directions, and it creates

727
00:44:19,520 --> 00:44:26,080
Speaker 2: strife now. Interestingly enough, when a couple says that they're divorcing,

728
00:44:26,239 --> 00:44:29,759
Speaker 2: say to their children. In many cases, the children are

729
00:44:29,920 --> 00:44:33,120
Speaker 2: relieved because they've lived with that strife for a long

730
00:44:33,200 --> 00:44:37,319
Speaker 2: long time and they're kind of anticipating that, and they

731
00:44:37,320 --> 00:44:41,279
Speaker 2: can see that actually going from father to mother is

732
00:44:41,320 --> 00:44:44,680
Speaker 2: not the worst thing. It is actually better than watching

733
00:44:44,719 --> 00:44:45,520
Speaker 2: them bicker.

734
00:44:45,640 --> 00:44:46,320
Speaker 1: It's a relief.

735
00:44:46,480 --> 00:44:49,040
Speaker 2: It is a relief exactly so when it comes as

736
00:44:49,080 --> 00:44:53,359
Speaker 2: a shock when you totally did not expect it as

737
00:44:53,360 --> 00:44:56,000
Speaker 2: a child, that is painful and it takes a while,

738
00:44:56,760 --> 00:45:00,880
Speaker 2: if ever, to heal. But when may gets to be

739
00:45:01,440 --> 00:45:05,160
Speaker 2: so bad that it really seeps into everything where you

740
00:45:05,200 --> 00:45:09,000
Speaker 2: think about it, at work, where it affects your health

741
00:45:09,719 --> 00:45:13,239
Speaker 2: and so on, there comes a time to like a

742
00:45:13,280 --> 00:45:16,839
Speaker 2: company that abandons a project without throwing good money off

743
00:45:16,880 --> 00:45:17,239
Speaker 2: the bad.

744
00:45:17,360 --> 00:45:19,759
Speaker 1: You know, well, some cost fallacy is a big deal,

745
00:45:19,840 --> 00:45:22,000
Speaker 1: right Yeah. At a certain point you got to take

746
00:45:22,040 --> 00:45:23,160
Speaker 1: the right down and move on.

747
00:45:23,480 --> 00:45:26,000
Speaker 2: And very often people will say, you know, I should

748
00:45:26,040 --> 00:45:27,839
Speaker 2: have made this decision five years ago.

749
00:45:28,080 --> 00:45:32,600
Speaker 1: Let's talk a little bit about education and a college degree.

750
00:45:33,040 --> 00:45:35,680
Speaker 1: Some people have argued that no one really needs a

751
00:45:35,719 --> 00:45:40,080
Speaker 1: college degree. Economists like Nobel laureate Angus Deaton has written

752
00:45:40,800 --> 00:45:44,560
Speaker 1: it's the single most important dividing line in terms of

753
00:45:44,600 --> 00:45:48,920
Speaker 1: lifetime wealth, happiness, well being, health even. What are your

754
00:45:48,920 --> 00:45:51,160
Speaker 1: thoughts on education and getting a college degree.

755
00:45:51,400 --> 00:45:54,440
Speaker 2: I definitely agree. You know, people say that the value

756
00:45:54,480 --> 00:45:58,160
Speaker 2: of college education has declined. I say to the contrary.

757
00:45:58,800 --> 00:46:01,880
Speaker 2: I remember in my first days at Columbia, I was

758
00:46:01,920 --> 00:46:06,600
Speaker 2: reading something, perhaps a newsweek, quoting an assembly line worker

759
00:46:06,600 --> 00:46:10,000
Speaker 2: at an automobile company saying, you know, I earned as

760
00:46:10,080 --> 00:46:13,080
Speaker 2: much as an assistant professor. And he was right. You know,

761
00:46:13,360 --> 00:46:16,040
Speaker 2: my first job at the City University of New York

762
00:46:16,120 --> 00:46:19,360
Speaker 2: in seventy five, I earned thirteen thousand, five hundred for

763
00:46:19,400 --> 00:46:24,000
Speaker 2: the year. But of course now I earned multiples of

764
00:46:24,080 --> 00:46:28,600
Speaker 2: what a blue collar person is earning. And on top

765
00:46:28,680 --> 00:46:32,440
Speaker 2: of that, my life well being is higher. That is,

766
00:46:32,880 --> 00:46:36,640
Speaker 2: I really enjoy reading books. I enjoy making sense of

767
00:46:36,680 --> 00:46:41,440
Speaker 2: the world. I enjoy teaching. There's nothing wrong about being

768
00:46:41,800 --> 00:46:45,880
Speaker 2: a handyman. I have the most wonderful handyman, both in

769
00:46:46,000 --> 00:46:50,040
Speaker 2: terms of skills and a person. But you know, he

770
00:46:50,160 --> 00:46:54,160
Speaker 2: does not have that college education. His range of interests

771
00:46:54,320 --> 00:46:58,799
Speaker 2: is different, not necessarily worse, it's different. I can see

772
00:46:58,800 --> 00:47:01,520
Speaker 2: that it would not have worked for me, and so

773
00:47:02,000 --> 00:47:07,480
Speaker 2: both in terms of financial wellbeing and in terms of

774
00:47:07,560 --> 00:47:12,960
Speaker 2: life wellbeing, you're really doing better as a college graduate.

775
00:47:13,520 --> 00:47:17,879
Speaker 2: And so if you are qualified, if it is for you,

776
00:47:18,840 --> 00:47:21,239
Speaker 2: do that, And if you are not sure, begin with

777
00:47:21,360 --> 00:47:25,040
Speaker 2: community college. Figure it out, work at it. You know,

778
00:47:25,080 --> 00:47:29,120
Speaker 2: it's not easy, that is, there are days when you

779
00:47:29,160 --> 00:47:33,560
Speaker 2: would want to quit. But give it a chance, because

780
00:47:34,239 --> 00:47:37,879
Speaker 2: without it, you're going to be at a disadvantage. Even

781
00:47:37,920 --> 00:47:40,840
Speaker 2: if you own three houses, even if you own a

782
00:47:40,880 --> 00:47:43,960
Speaker 2: business and you make a ton of money, there is

783
00:47:44,000 --> 00:47:45,560
Speaker 2: a sense that something is missing.

784
00:47:46,120 --> 00:47:49,960
Speaker 1: You devote an entire chapter to striking the right balance

785
00:47:50,040 --> 00:47:54,879
Speaker 1: between saving and spending. Why is it so difficult for

786
00:47:54,960 --> 00:47:59,680
Speaker 1: us to reach that sort of comfortable balance, especially when

787
00:47:59,680 --> 00:48:02,120
Speaker 1: you're younger, when you want to go out and have

788
00:48:02,160 --> 00:48:04,640
Speaker 1: a good time and buy things. But really, the sooner

789
00:48:04,719 --> 00:48:07,560
Speaker 1: you start saving, the longer it can compound.

790
00:48:07,600 --> 00:48:11,480
Speaker 2: For that is right. It is hard to save, especially

791
00:48:11,520 --> 00:48:15,360
Speaker 2: when you're young, because there are many needs, and there

792
00:48:15,400 --> 00:48:18,640
Speaker 2: are many temptations. If your friends are going to go

793
00:48:18,719 --> 00:48:22,160
Speaker 2: to this bar and it costs a good chunk of money,

794
00:48:22,600 --> 00:48:25,319
Speaker 2: saying you know, I cannot afford that. I think I'm

795
00:48:25,360 --> 00:48:29,480
Speaker 2: going to say goodbye now that is very, very painful,

796
00:48:29,840 --> 00:48:35,239
Speaker 2: and so we use techniques. Mental techniques are to help us.

797
00:48:35,640 --> 00:48:39,040
Speaker 2: I talked before about this framing and mental accounting and

798
00:48:39,080 --> 00:48:42,759
Speaker 2: self control. That is, if you contribute money from your

799
00:48:42,800 --> 00:48:45,400
Speaker 2: paycheck to the four O one K, you don't see

800
00:48:45,440 --> 00:48:49,480
Speaker 2: that money and so you don't spend that money. If

801
00:48:49,520 --> 00:48:53,560
Speaker 2: you follow the rule of don't dip into capital, it

802
00:48:53,719 --> 00:48:56,759
Speaker 2: means that the moment you say I think I'm going

803
00:48:56,760 --> 00:48:59,239
Speaker 2: to dip into my four oh one K, there's going

804
00:48:59,280 --> 00:49:01,520
Speaker 2: to be a voice you that says, no, I don't

805
00:49:01,560 --> 00:49:05,040
Speaker 2: think that that is the right thing to do. And

806
00:49:05,120 --> 00:49:09,560
Speaker 2: so young people figure out a way to use those

807
00:49:09,640 --> 00:49:14,680
Speaker 2: mental tools to get them to save and spend, but

808
00:49:15,080 --> 00:49:20,160
Speaker 2: spend sensibly. The problem arises when those young people get

809
00:49:20,200 --> 00:49:24,879
Speaker 2: older and now they find themselves as being as I am,

810
00:49:25,040 --> 00:49:30,919
Speaker 2: accidental wealthy people. And now it is a matter of hey,

811
00:49:31,040 --> 00:49:34,720
Speaker 2: but they relax, Okay, you don't have to buy stuff

812
00:49:34,760 --> 00:49:38,520
Speaker 2: on sale, you don't have to go for early dinner

813
00:49:39,280 --> 00:49:42,239
Speaker 2: at a discount. You can fly if it is a

814
00:49:42,320 --> 00:49:45,680
Speaker 2: long flight, you can fly business class, even if the

815
00:49:45,760 --> 00:49:51,080
Speaker 2: price is outrageous. For many people, saving and being frugal

816
00:49:51,560 --> 00:49:55,200
Speaker 2: turns into miserly and they find it really hard to

817
00:49:55,320 --> 00:49:59,160
Speaker 2: break that habit, and so it is really hard. And

818
00:49:59,200 --> 00:50:02,160
Speaker 2: I hope that they're kids or their friends are going

819
00:50:02,239 --> 00:50:04,839
Speaker 2: to say, hey, wely. In fact, I have a friend

820
00:50:04,840 --> 00:50:08,560
Speaker 2: who says, listen, if you fly economy, your son in

821
00:50:08,640 --> 00:50:10,160
Speaker 2: low will fly first class.

822
00:50:11,160 --> 00:50:12,440
Speaker 1: That'll that'll teach you.

823
00:50:12,440 --> 00:50:12,600
Speaker 2: You know.

824
00:50:12,640 --> 00:50:16,240
Speaker 1: I have a colleague, Nick Majulie, young guy in his thirties.

825
00:50:16,280 --> 00:50:21,400
Speaker 1: He's our quant and he has this mental device he

826
00:50:21,480 --> 00:50:23,440
Speaker 1: does if he wants to go out and buy something,

827
00:50:24,400 --> 00:50:26,759
Speaker 1: Let's say it's a piece of clothing or something, it's

828
00:50:26,760 --> 00:50:30,960
Speaker 1: five hundred dollars. However much that item is, he has

829
00:50:31,040 --> 00:50:33,440
Speaker 1: to match it with a contribution to his four oh

830
00:50:33,440 --> 00:50:36,560
Speaker 1: one K. So he'll say, if I'm going to spend

831
00:50:36,560 --> 00:50:38,600
Speaker 1: five hundred dollars on some piece of junk, I also

832
00:50:38,600 --> 00:50:41,319
Speaker 1: have to put five hundred dollars as an investment. And

833
00:50:41,400 --> 00:50:44,640
Speaker 1: it forces him to spend very responsibly.

834
00:50:44,840 --> 00:50:47,400
Speaker 2: That is a very good technique. Whatever works for you

835
00:50:47,719 --> 00:50:51,480
Speaker 2: For us, you know now that that we fly business

836
00:50:51,560 --> 00:50:55,240
Speaker 2: class when when we go to Israel, for example, we've

837
00:50:55,280 --> 00:50:59,120
Speaker 2: also increased our charitable contributions by at least that amount

838
00:50:59,600 --> 00:51:00,600
Speaker 2: and more so.

839
00:51:01,000 --> 00:51:05,240
Speaker 1: You're matching the expensive plane ticket with a charitable donation.

840
00:51:05,640 --> 00:51:08,799
Speaker 2: So I say, you know, I treat myself well, but

841
00:51:08,920 --> 00:51:12,120
Speaker 2: I'm treating those who have less well as well.

842
00:51:12,480 --> 00:51:16,200
Speaker 1: That's great. So I've seen some data that shows a

843
00:51:16,239 --> 00:51:20,480
Speaker 1: correlation between the time people spend with friends and families

844
00:51:20,880 --> 00:51:24,520
Speaker 1: versus the time they spend working with coworkers and the

845
00:51:24,640 --> 00:51:30,200
Speaker 1: impact on overall happiness and life satisfaction. Tell us a

846
00:51:30,239 --> 00:51:34,479
Speaker 1: little bit about social capital and how people use that well.

847
00:51:34,840 --> 00:51:38,240
Speaker 2: Social capital has to deal with your circle of friends,

848
00:51:39,000 --> 00:51:42,719
Speaker 2: close friends, and acquaintances that you can rely on it.

849
00:51:42,800 --> 00:51:45,759
Speaker 2: And so some of them are really close. Some of

850
00:51:45,800 --> 00:51:49,160
Speaker 2: them are close enough such that you can say, I'm

851
00:51:49,280 --> 00:51:52,319
Speaker 2: short off money to pay the rent, can you lend

852
00:51:52,360 --> 00:51:57,919
Speaker 2: me two thousand dollars? In some cases they're going to say, sure,

853
00:51:58,640 --> 00:52:01,440
Speaker 2: they can do that, and they and they will do.

854
00:52:02,360 --> 00:52:07,479
Speaker 2: But then there are also acquaintances. For example, if you've

855
00:52:07,520 --> 00:52:11,000
Speaker 2: lost your job, you know that there are other professors

856
00:52:11,280 --> 00:52:14,600
Speaker 2: who you know, and you can call and you say, hey, Joe,

857
00:52:14,600 --> 00:52:18,439
Speaker 2: do you know of any openings, Or if your son

858
00:52:18,560 --> 00:52:21,719
Speaker 2: is going to apply for college as a professor, you

859
00:52:21,760 --> 00:52:25,200
Speaker 2: can call and say, give me some pointers as to

860
00:52:25,320 --> 00:52:28,520
Speaker 2: how to write an essay that is going to be

861
00:52:28,600 --> 00:52:32,840
Speaker 2: compelling to the admissions people, and so there's kind of

862
00:52:32,880 --> 00:52:37,279
Speaker 2: a range of people who are friends. And one of

863
00:52:37,320 --> 00:52:42,800
Speaker 2: the things is really for higher socio economic people, that is,

864
00:52:42,840 --> 00:52:46,880
Speaker 2: people with higher education and higher income, they have many

865
00:52:46,960 --> 00:52:51,040
Speaker 2: more of those casual friends that they can call for

866
00:52:51,239 --> 00:52:55,560
Speaker 2: bigger net preferences, exactly a network, whereas for the people

867
00:52:55,920 --> 00:53:00,480
Speaker 2: lower ones, there is a tighter, smaller but tight er,

868
00:53:00,600 --> 00:53:04,440
Speaker 2: closer a circle of friends where you can say, you know,

869
00:53:04,600 --> 00:53:06,840
Speaker 2: can you give me a ride to the doctor because

870
00:53:06,880 --> 00:53:10,640
Speaker 2: my car broke down or something of that kind.

871
00:53:11,280 --> 00:53:13,920
Speaker 1: So that's social capital. Tell us a little bit about

872
00:53:13,920 --> 00:53:14,800
Speaker 1: cultural capital.

873
00:53:15,040 --> 00:53:20,799
Speaker 2: Well, cultural capital is about knowing what is the right thing,

874
00:53:20,840 --> 00:53:24,080
Speaker 2: what is acceptable, and sometimes it can be confusing. That

875
00:53:24,440 --> 00:53:27,279
Speaker 2: is here we are at the time when you're not

876
00:53:27,400 --> 00:53:31,480
Speaker 2: really sure if you should appear with a tie or without,

877
00:53:31,960 --> 00:53:36,200
Speaker 2: if you're going to go on television. You're concerned that

878
00:53:36,520 --> 00:53:38,239
Speaker 2: if you have a tie on, you're going to be

879
00:53:38,280 --> 00:53:41,280
Speaker 2: the only one with a tie on or the only

880
00:53:41,320 --> 00:53:44,400
Speaker 2: one without a tie on. And so you need to

881
00:53:44,560 --> 00:53:48,719
Speaker 2: know what are the things that are acceptable, What kind

882
00:53:48,760 --> 00:53:52,000
Speaker 2: of clothing, what kind of books, what kind of movies?

883
00:53:52,719 --> 00:53:56,640
Speaker 2: Are the kinds that you can talk about with your friends,

884
00:53:56,640 --> 00:54:01,120
Speaker 2: whether people in your circle. But when when I came

885
00:54:01,400 --> 00:54:06,279
Speaker 2: from Israel, I did not really know. You know, Americans

886
00:54:06,320 --> 00:54:09,200
Speaker 2: were were like like a tribe in the Amazon, that

887
00:54:09,680 --> 00:54:13,080
Speaker 2: is what is it that makes them a tick from

888
00:54:13,160 --> 00:54:15,720
Speaker 2: for small things to large.

889
00:54:15,640 --> 00:54:19,200
Speaker 1: Very different country than Europe and elsewhere.

890
00:54:19,320 --> 00:54:22,560
Speaker 2: Yeah, I grew up in Israel. You know, people say,

891
00:54:22,880 --> 00:54:28,440
Speaker 2: aren't Americans very materialistic? And you say, well, you have

892
00:54:28,480 --> 00:54:31,719
Speaker 2: to go to Israel and or at least a dead

893
00:54:31,760 --> 00:54:37,160
Speaker 2: age because a dead age getting a car was a

894
00:54:37,160 --> 00:54:40,239
Speaker 2: big deal. Not in the United.

895
00:54:39,960 --> 00:54:43,239
Speaker 1: States, you know, especially today.

896
00:54:43,400 --> 00:54:47,080
Speaker 2: Well, yeah, we had this kind of joke, half joke,

897
00:54:47,160 --> 00:54:51,160
Speaker 2: how serious uh do you have for micai idio kitchen?

898
00:54:51,239 --> 00:54:53,840
Speaker 2: You know, because it was you buy an apartment, but

899
00:54:54,000 --> 00:54:57,440
Speaker 2: can you afford? Also, at that time it was fashionable

900
00:54:57,560 --> 00:55:01,759
Speaker 2: to have cabinets kind of dominated with formica.

901
00:55:02,239 --> 00:55:06,320
Speaker 1: Now it's the granite countertops with the nice wood cabinet.

902
00:55:06,440 --> 00:55:10,080
Speaker 2: Exactly. You have to know those things. Even if you

903
00:55:10,120 --> 00:55:13,640
Speaker 2: are going to go against that grain, at least you

904
00:55:13,800 --> 00:55:16,160
Speaker 2: know that you're against the grain. You know. My mom

905
00:55:16,160 --> 00:55:19,520
Speaker 2: would say, listen, suppose that you're going to be the

906
00:55:19,640 --> 00:55:23,560
Speaker 2: Israeli ambassador to Moscow and they call you to the

907
00:55:23,680 --> 00:55:28,239
Speaker 2: Torah and you don't know what to say. Think about it. Yeah,

908
00:55:28,800 --> 00:55:31,400
Speaker 2: that is knowing what to say when you are called

909
00:55:31,400 --> 00:55:35,520
Speaker 2: to the Torah is part of cultural capital that you need,

910
00:55:36,160 --> 00:55:40,279
Speaker 2: not necessarily just as an Israelian Jew, but really as

911
00:55:40,360 --> 00:55:43,080
Speaker 2: one who strives for a particular position.

912
00:55:43,440 --> 00:55:45,759
Speaker 1: So I want to ask you a question because it's

913
00:55:45,800 --> 00:55:50,000
Speaker 1: an election year and the chapter you wrote on societal capital,

914
00:55:50,520 --> 00:55:54,560
Speaker 1: you write liberals tend to define fairness in terms of equality.

915
00:55:55,239 --> 00:55:59,720
Speaker 1: Conservatives tend to define fairness in terms of equity or opportunity.

916
00:56:01,000 --> 00:56:04,120
Speaker 1: What are these two tribes doing so differently and is

917
00:56:04,160 --> 00:56:07,239
Speaker 1: there any chance of common ground between them?

918
00:56:08,160 --> 00:56:12,480
Speaker 2: Conservatives generally say, you're going to be paid as much

919
00:56:12,640 --> 00:56:16,680
Speaker 2: as you put in, so if you put in a

920
00:56:16,800 --> 00:56:19,560
Speaker 2: larger portion of the pie, you will get to eat

921
00:56:19,600 --> 00:56:23,480
Speaker 2: a larger portion of the pie. Liberals say, you know

922
00:56:23,600 --> 00:56:26,240
Speaker 2: there are some people who say disabled, or some people

923
00:56:26,320 --> 00:56:29,360
Speaker 2: who for some reason or another not because of laziness,

924
00:56:29,840 --> 00:56:33,279
Speaker 2: are not going to contribute as much. Well, you know

925
00:56:33,560 --> 00:56:36,320
Speaker 2: they might not get as large a piece, but surely

926
00:56:36,400 --> 00:56:40,719
Speaker 2: you don't want to condemn them to starvation. How much

927
00:56:40,880 --> 00:56:46,839
Speaker 2: responsibility do you have for others? And so you have

928
00:56:47,520 --> 00:56:52,600
Speaker 2: the difference in points of view, and it really varies

929
00:56:52,880 --> 00:56:57,640
Speaker 2: in Europe, for example, people are more content to pay

930
00:56:57,760 --> 00:57:02,759
Speaker 2: higher taxes that pay not just for their services but

931
00:57:02,840 --> 00:57:05,719
Speaker 2: also for the services of people who are less fortunate.

932
00:57:06,160 --> 00:57:10,239
Speaker 2: In the United States, there is less of a willingness

933
00:57:10,480 --> 00:57:14,359
Speaker 2: to do that socialized medicine. I mean, what can be

934
00:57:14,440 --> 00:57:16,240
Speaker 2: worse than socialized medicine.

935
00:57:16,560 --> 00:57:18,400
Speaker 1: Dealing with an insurance company is.

936
00:57:18,400 --> 00:57:21,120
Speaker 2: Dealing with an insurance company precisely.

937
00:57:20,720 --> 00:57:23,760
Speaker 1: Well, although there's a series of trade offs that when

938
00:57:23,760 --> 00:57:26,840
Speaker 1: you have private medicine, you have options and you could

939
00:57:26,880 --> 00:57:30,360
Speaker 1: do different things. People in Canada, I know, complain about

940
00:57:30,400 --> 00:57:32,720
Speaker 1: long wait for very simple services exactly.

941
00:57:32,760 --> 00:57:36,960
Speaker 2: And there are drawbacks to socialized medicine, and there are

942
00:57:37,040 --> 00:57:43,400
Speaker 2: drawbacks to capitalistic or private enterprise medicine. And some people

943
00:57:43,400 --> 00:57:46,240
Speaker 2: are going to say, well, everyone has to wait if

944
00:57:46,240 --> 00:57:50,280
Speaker 2: it is not urgent surgery, and others say, hey, you know,

945
00:57:50,520 --> 00:57:53,640
Speaker 2: I can get the surgery in the United States the

946
00:57:53,720 --> 00:57:54,360
Speaker 2: following day.

947
00:57:54,760 --> 00:57:56,880
Speaker 1: So before we go to our favorite questions that we

948
00:57:57,080 --> 00:57:59,280
Speaker 1: ask all of our guests, I just have to ask,

949
00:57:59,360 --> 00:58:01,400
Speaker 1: I know you've been speaking to people about the book.

950
00:58:01,680 --> 00:58:03,720
Speaker 1: How's it going. What's the reception been like so far?

951
00:58:03,840 --> 00:58:07,640
Speaker 2: It is a very very good reception, you know, in

952
00:58:07,680 --> 00:58:10,440
Speaker 2: some way, what I say, is not new, and in

953
00:58:10,880 --> 00:58:12,439
Speaker 2: other ways it is very new.

954
00:58:12,720 --> 00:58:15,320
Speaker 1: The way you've structured it, in the way you tell

955
00:58:15,360 --> 00:58:20,120
Speaker 1: the tale and organize this feels very new, even though

956
00:58:20,440 --> 00:58:23,040
Speaker 1: I recognize a lot of the concepts from your earlier books.

957
00:58:23,160 --> 00:58:26,280
Speaker 2: That is right. So there is a lot of literature

958
00:58:26,720 --> 00:58:32,840
Speaker 2: about life well being, say, done by psychologists, done by economists,

959
00:58:32,880 --> 00:58:37,040
Speaker 2: done by sociologists. People in finites don't know this literature.

960
00:58:37,600 --> 00:58:40,800
Speaker 2: And of course, like all academic literature, it tends to

961
00:58:40,840 --> 00:58:44,520
Speaker 2: be kind of general that in general divorce does not

962
00:58:44,720 --> 00:58:49,560
Speaker 2: necessarily harm well being. But tell me a story, illustrate

963
00:58:49,680 --> 00:58:53,000
Speaker 2: it so that it kind of brings it to life.

964
00:58:53,320 --> 00:58:57,480
Speaker 2: And so my task was to learn and bring the

965
00:58:57,600 --> 00:59:01,960
Speaker 2: academic literature the general literature, and then marry it with

966
00:59:02,200 --> 00:59:04,200
Speaker 2: stories from everywhere.

967
00:59:04,240 --> 00:59:08,919
Speaker 1: So it's data plus anecdotes. Someone I know has a

968
00:59:09,000 --> 00:59:11,560
Speaker 1: child that's going to go to grad school next year.

969
00:59:12,320 --> 00:59:15,840
Speaker 1: This person has ten million dollars worth of stock, cash,

970
00:59:16,320 --> 00:59:19,120
Speaker 1: real estate in the bank. All he does is complain

971
00:59:19,200 --> 00:59:21,960
Speaker 1: about this kid's going to cost me one hundred and

972
00:59:22,000 --> 00:59:25,720
Speaker 1: fifty thousand dollars a year. And my argument with them

973
00:59:25,800 --> 00:59:30,440
Speaker 1: has been, aren't you saying this backwards? Shouldn't be saying boy,

974
00:59:30,720 --> 00:59:33,640
Speaker 1: I'm fortunate that I could spend one hundred and fifty

975
00:59:33,680 --> 00:59:37,200
Speaker 1: grand on my's youngest son and it's not even going

976
00:59:37,240 --> 00:59:39,680
Speaker 1: to move the needle in my bank account. Are people

977
00:59:40,280 --> 00:59:43,760
Speaker 1: so obsessed with money that they forget what a privilege

978
00:59:43,760 --> 00:59:45,800
Speaker 1: it is, what a joy it should be to say

979
00:59:45,840 --> 00:59:48,520
Speaker 1: you want to go to grad school? Done?

980
00:59:48,800 --> 00:59:52,960
Speaker 2: Absolutely? Yeah. I saw an article just recently about someone

981
00:59:52,960 --> 00:59:55,480
Speaker 2: who says, how is it that people who are very

982
00:59:55,520 --> 00:59:59,560
Speaker 2: wealthy in three generations? It's kind of from shirt sleeves,

983
00:59:59,680 --> 01:00:03,280
Speaker 2: shirts sleeves, and so he says, maybe you should have

984
01:00:03,360 --> 01:00:08,280
Speaker 2: fewer kids, And I say, WHOA, You really got it backwards.

985
01:00:08,360 --> 01:00:11,560
Speaker 2: You know, the wealth is for people. People are not

986
01:00:11,680 --> 01:00:16,479
Speaker 2: for building wealth. And if you're lucky enough, talented enough,

987
01:00:16,560 --> 01:00:21,200
Speaker 2: hard working enough to accumulate that wealth, be grateful and

988
01:00:21,920 --> 01:00:25,560
Speaker 2: have your kids live a bit better now, Help them

989
01:00:25,600 --> 01:00:29,000
Speaker 2: find the vocation. Okay, of course you care about them

990
01:00:29,080 --> 01:00:33,720
Speaker 2: not growing up to be spoiled brands. Help them as

991
01:00:33,760 --> 01:00:36,840
Speaker 2: you can. You know, the last thing you want is

992
01:00:36,880 --> 01:00:40,560
Speaker 2: to hold on to that wealth. You die at ninety five,

993
01:00:41,000 --> 01:00:44,560
Speaker 2: the kid is sixty five. Now he gets that money, Well,

994
01:00:44,600 --> 01:00:46,760
Speaker 2: thank you very much. You know it's still good to

995
01:00:46,840 --> 01:00:50,640
Speaker 2: get ten million dollars even when you're sixty five. But

996
01:00:50,760 --> 01:00:54,560
Speaker 2: it is their twenties and early thirties is when they

997
01:00:54,640 --> 01:00:57,160
Speaker 2: need that money. This is the time to give it

998
01:00:57,200 --> 01:00:57,520
Speaker 2: to them.

999
01:00:57,720 --> 01:01:00,680
Speaker 1: So let's talk a little bit about that struggle. Warren

1000
01:01:00,720 --> 01:01:04,520
Speaker 1: Buffett very famously has said, you know, his kids are

1001
01:01:04,560 --> 01:01:07,080
Speaker 1: going to get a couple of million dollars, but they're

1002
01:01:07,120 --> 01:01:10,000
Speaker 1: not going to be wealthy, and he's giving away most

1003
01:01:10,000 --> 01:01:12,920
Speaker 1: of his money to charity. At what point do you

1004
01:01:13,160 --> 01:01:15,880
Speaker 1: run into the risk of spoiling the kids.

1005
01:01:16,320 --> 01:01:19,240
Speaker 2: I think that that that these are not two things.

1006
01:01:19,640 --> 01:01:23,760
Speaker 2: They really come together. That is, you have to help

1007
01:01:23,800 --> 01:01:28,080
Speaker 2: your kid if you can buy a house or pay

1008
01:01:28,120 --> 01:01:33,560
Speaker 2: for education. At the same time, you want to say

1009
01:01:33,760 --> 01:01:36,680
Speaker 2: to the kid, I'm paying for college or for most

1010
01:01:36,680 --> 01:01:41,760
Speaker 2: of college. Here's your responsibility. Your responsibility is study hard. Okay,

1011
01:01:41,760 --> 01:01:44,960
Speaker 2: this is not a time just for play. It is

1012
01:01:45,000 --> 01:01:47,800
Speaker 2: the time for you to study so that you can

1013
01:01:48,280 --> 01:01:51,920
Speaker 2: develop as a person and as a professional, so that

1014
01:01:52,000 --> 01:01:55,880
Speaker 2: you have a vocation. Those things go together. Kids kind

1015
01:01:55,920 --> 01:01:58,800
Speaker 2: of get the message, this is not free money. My

1016
01:01:59,640 --> 01:02:03,800
Speaker 2: parents are trying to guide me towards financial well being

1017
01:02:04,120 --> 01:02:06,440
Speaker 2: and also life wellbeing, and what I have to do

1018
01:02:06,520 --> 01:02:06,960
Speaker 2: my share?

1019
01:02:07,080 --> 01:02:10,000
Speaker 1: What do you think about the parents who say, all right,

1020
01:02:10,040 --> 01:02:12,560
Speaker 1: we're going to pay for your room and board and

1021
01:02:12,600 --> 01:02:16,080
Speaker 1: tuition and books. But you're half the bargain, as you

1022
01:02:16,080 --> 01:02:18,800
Speaker 1: have to maintain a B plus, so I know you're

1023
01:02:18,840 --> 01:02:21,600
Speaker 1: not just out having too good a time, you're actually working.

1024
01:02:21,920 --> 01:02:24,680
Speaker 2: I think that that is reasonable. I think that it

1025
01:02:24,800 --> 01:02:28,680
Speaker 2: is reasonable to set expectations where you do it with

1026
01:02:28,760 --> 01:02:32,320
Speaker 2: a great point average or other ways. It is really

1027
01:02:32,360 --> 01:02:37,880
Speaker 2: important for people to help their kids. I'll tell you

1028
01:02:37,920 --> 01:02:41,440
Speaker 2: a quick story. I was listening to a session that

1029
01:02:41,520 --> 01:02:44,960
Speaker 2: had to do with very wealthy people speaking to other

1030
01:02:45,120 --> 01:02:49,320
Speaker 2: wealthy people, and one of them had a daughter who

1031
01:02:49,400 --> 01:02:53,000
Speaker 2: was not interested at all in academic studies, but she

1032
01:02:53,160 --> 01:02:56,160
Speaker 2: was really very interested in art. And in an earlier

1033
01:02:56,240 --> 01:03:01,160
Speaker 2: session that they somebody came to speak about arts and investment,

1034
01:03:01,680 --> 01:03:04,840
Speaker 2: and that gave him an idea, and he said, what

1035
01:03:04,960 --> 01:03:08,040
Speaker 2: if I open a gallery for her? It will really

1036
01:03:08,360 --> 01:03:11,200
Speaker 2: be the right thing for her. Will it make money

1037
01:03:11,280 --> 01:03:13,480
Speaker 2: or not, I don't care. I have plenty of that,

1038
01:03:13,880 --> 01:03:16,400
Speaker 2: but it's going to be a vocation for her. He

1039
01:03:16,560 --> 01:03:20,320
Speaker 2: had tears in his eyes. He was so relieved that

1040
01:03:20,520 --> 01:03:24,200
Speaker 2: part of his well being that was so low is

1041
01:03:24,240 --> 01:03:27,880
Speaker 2: now going to be high. And I was thinking, that

1042
01:03:28,160 --> 01:03:30,760
Speaker 2: is wonderful. You know, this is why I repeat this

1043
01:03:30,920 --> 01:03:33,640
Speaker 2: story because it really touches me deeply.

1044
01:03:34,120 --> 01:03:36,640
Speaker 1: A clever solution. All right, so we only have about

1045
01:03:36,680 --> 01:03:39,440
Speaker 1: ten minutes left. Let me jump to our favorite questions

1046
01:03:39,800 --> 01:03:42,600
Speaker 1: that we ask all of our guests, starting with what's

1047
01:03:42,640 --> 01:03:45,520
Speaker 1: been keeping you entertained these days? What are you watching

1048
01:03:45,640 --> 01:03:46,280
Speaker 1: or listening to?

1049
01:03:46,640 --> 01:03:50,720
Speaker 2: The podcast that I'm interested in are ones that have

1050
01:03:50,800 --> 01:03:55,000
Speaker 2: to deal with society, so Ezra Kline, for example, Sure

1051
01:03:55,240 --> 01:03:58,880
Speaker 2: who has podcasts about society and how society operates and

1052
01:03:58,920 --> 01:04:03,040
Speaker 2: how government? This really resonates with me because this is

1053
01:04:03,320 --> 01:04:06,840
Speaker 2: something that I would like to know. I'm less interested

1054
01:04:07,440 --> 01:04:11,760
Speaker 2: in the usual fiction series and so on, which is

1055
01:04:11,800 --> 01:04:15,000
Speaker 2: not a very good idea because that's part of cultural capital.

1056
01:04:15,040 --> 01:04:18,600
Speaker 2: And so people make references to shows I've never seen,

1057
01:04:19,040 --> 01:04:21,680
Speaker 2: and it kind of puts me in a defensive position.

1058
01:04:21,760 --> 01:04:24,520
Speaker 1: You don't strike me as like a Bridgerton sort of guy,

1059
01:04:24,680 --> 01:04:27,440
Speaker 1: like you're not streaming that sort of stuff on that? No,

1060
01:04:27,560 --> 01:04:29,840
Speaker 1: I don't, you know, and it's cotton candy. Some of

1061
01:04:29,920 --> 01:04:34,280
Speaker 1: it's delightful, I'm sure, and really kind of like golf,

1062
01:04:34,320 --> 01:04:37,680
Speaker 1: It's not my thing, But I don't resent people for

1063
01:04:37,800 --> 01:04:42,080
Speaker 1: whom it is their thing. So let's talk about mentors

1064
01:04:42,080 --> 01:04:44,440
Speaker 1: who helped to shape your career.

1065
01:04:45,200 --> 01:04:48,680
Speaker 2: Well, I can think of Eli L. Harris, who was

1066
01:04:48,760 --> 01:04:51,400
Speaker 2: my teacher in high school, and he came from the

1067
01:04:51,480 --> 01:04:56,080
Speaker 2: United States. He graduated from Harvard, and he is a Zionist.

1068
01:04:56,760 --> 01:05:01,360
Speaker 2: Before he came, my teachers of English, and both elementary

1069
01:05:01,400 --> 01:05:04,680
Speaker 2: school and early in high school taught it through grammar.

1070
01:05:04,840 --> 01:05:08,080
Speaker 2: I cannot take grammar, not even in Hebrew.

1071
01:05:08,600 --> 01:05:10,240
Speaker 1: But by the way, I just finished a word with

1072
01:05:10,280 --> 01:05:13,040
Speaker 1: a preposition. In the back of my head, I see

1073
01:05:13,080 --> 01:05:15,320
Speaker 1: that little x that you're not supposed to end a

1074
01:05:15,360 --> 01:05:18,240
Speaker 1: word with a sentence with the word too, And at

1075
01:05:18,320 --> 01:05:19,439
Speaker 1: sometimes it just happened.

1076
01:05:19,480 --> 01:05:23,520
Speaker 2: Who cares? And so the first assignment he had was

1077
01:05:23,560 --> 01:05:26,520
Speaker 2: to write an essay, and suddenly I moved from the

1078
01:05:26,560 --> 01:05:29,560
Speaker 2: bottom of the class to pretty much the top of

1079
01:05:29,720 --> 01:05:33,160
Speaker 2: the class. And students came to him and said, why

1080
01:05:33,200 --> 01:05:36,800
Speaker 2: did I get a C minus? I had no spelling mistakes,

1081
01:05:36,840 --> 01:05:39,680
Speaker 2: and he said, that's not what mattered. An essay has

1082
01:05:39,720 --> 01:05:43,360
Speaker 2: to be interesting. On one of my essays, he wrote

1083
01:05:43,840 --> 01:05:46,680
Speaker 2: very good, indeed, and I didn't know what indeed meant.

1084
01:05:48,280 --> 01:05:51,200
Speaker 1: That's great. Let's talk about some books. What are you

1085
01:05:51,280 --> 01:05:53,360
Speaker 1: reading now and what are some of your favorites.

1086
01:05:53,880 --> 01:05:58,880
Speaker 2: So I'm reading now or read recently, Streets of Gold.

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01:05:59,360 --> 01:06:03,720
Speaker 2: It's about immigration into the United States, the waves of immigration,

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01:06:03,880 --> 01:06:08,480
Speaker 2: immigration laws, and it begins it with the story of

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01:06:08,600 --> 01:06:12,480
Speaker 2: someone at the turn of the century, the twentieth century,

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01:06:12,920 --> 01:06:16,560
Speaker 2: and he said, they told me that in America streets

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01:06:16,600 --> 01:06:20,640
Speaker 2: are paved at Gold. Well, I found three things. One,

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01:06:21,640 --> 01:06:24,960
Speaker 2: the streets are not paved in Gold. Second, the streets

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01:06:25,000 --> 01:06:27,840
Speaker 2: are not paved at all through they expect us to

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01:06:27,920 --> 01:06:28,400
Speaker 2: pave them.

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01:06:29,240 --> 01:06:30,000
Speaker 1: That's very funny.

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01:06:30,240 --> 01:06:34,480
Speaker 2: And so you kind of learn that the immigrants themselves

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01:06:34,840 --> 01:06:38,520
Speaker 2: did not really move from rags to riches, but their

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01:06:38,600 --> 01:06:42,120
Speaker 2: kids have done better than American kids.

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01:06:42,720 --> 01:06:46,040
Speaker 1: Of why is that. I've watched that firsthand, and I'm

1100
01:06:46,080 --> 01:06:49,880
Speaker 1: always I just always assumed the parents said, hey, this

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01:06:49,960 --> 01:06:52,840
Speaker 1: is an opportunity we can't have back home, take advantage

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01:06:52,840 --> 01:06:53,040
Speaker 1: of it.

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01:06:53,200 --> 01:06:55,640
Speaker 2: That I think is a big part of it. Really,

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01:06:56,120 --> 01:06:59,840
Speaker 2: there are those expectations that you place in your kid,

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01:07:00,280 --> 01:07:03,160
Speaker 2: or it may be the kids themselves kind of get

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01:07:03,240 --> 01:07:06,400
Speaker 2: without being told. You know that the uber driver who

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01:07:06,480 --> 01:07:09,960
Speaker 2: took me yesterday from the airport, he said, you know,

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01:07:10,360 --> 01:07:13,080
Speaker 2: he works as an Uber driver. He does not earn

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01:07:13,120 --> 01:07:15,920
Speaker 2: a ton of money. Uh, And he said, it's for

1110
01:07:16,080 --> 01:07:20,240
Speaker 2: my kids. And indeed they're going to get better education

1111
01:07:20,360 --> 01:07:23,720
Speaker 2: and have better chances than they would have had in

1112
01:07:23,840 --> 01:07:27,640
Speaker 2: his home country. And so if you look at immigrants today,

1113
01:07:27,920 --> 01:07:32,160
Speaker 2: it's the same story. That is, people are afraid of

1114
01:07:32,240 --> 01:07:35,560
Speaker 2: immigrants and and so on, but immigrants, you know. And

1115
01:07:35,640 --> 01:07:38,760
Speaker 2: of course I'm an immigrant, so I'm biased, but I

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01:07:38,800 --> 01:07:43,640
Speaker 2: think that immigrants add a whole lot more than they

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01:07:43,680 --> 01:07:47,040
Speaker 2: take away, especially if you count their second generation and

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01:07:47,080 --> 01:07:48,200
Speaker 2: the generations that fall.

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01:07:48,360 --> 01:07:50,640
Speaker 1: So Streets of Gold is one book, give us one

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01:07:50,680 --> 01:07:50,880
Speaker 1: of them.

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01:07:50,880 --> 01:07:55,760
Speaker 2: I'm also rereading a book that is called The War

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01:07:55,920 --> 01:07:59,840
Speaker 2: of Return. It is about Israel Palestine, and it's about

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01:08:00,160 --> 01:08:04,200
Speaker 2: the demand of Palestinians to go back.

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01:08:05,040 --> 01:08:09,360
Speaker 1: This is before the current, long before conflict, this is decades.

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01:08:09,640 --> 01:08:13,520
Speaker 2: There are something very anomalous about this notion of refugees.

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01:08:13,760 --> 01:08:17,080
Speaker 2: That is, my parents were refugees when they escaped from

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01:08:17,160 --> 01:08:22,360
Speaker 2: the Nazis from Poland. They were refugees in the displaced

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01:08:22,360 --> 01:08:26,000
Speaker 2: persons camp in Germany, where I was born. But they

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01:08:26,080 --> 01:08:29,559
Speaker 2: ceased being refugees when they came to Israel. And of

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01:08:29,600 --> 01:08:34,120
Speaker 2: course my children and their children are not refugees somehow

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01:08:34,600 --> 01:08:40,240
Speaker 2: a nations, it has come that Palestinians are refugees, even

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01:08:40,360 --> 01:08:43,920
Speaker 2: if they were not among those who were made refugees

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01:08:43,960 --> 01:08:47,840
Speaker 2: in nineteen forty eight. So it's their children and grandchildren,

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01:08:48,040 --> 01:08:50,479
Speaker 2: and they still have this notion that they're going to

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01:08:50,560 --> 01:08:55,760
Speaker 2: go back to Ashkelon and Jaffa and Haifa and so on,

1136
01:08:56,120 --> 01:08:59,680
Speaker 2: and you know, the censes really that unless we kind

1137
01:08:59,680 --> 01:09:02,280
Speaker 2: of get away from that and we get to know

1138
01:09:02,520 --> 01:09:05,840
Speaker 2: that people make their lives where they are, they will

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01:09:05,840 --> 01:09:06,599
Speaker 2: never be peace.

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01:09:06,840 --> 01:09:09,840
Speaker 1: That's a big challenge. All right. Our final two questions,

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01:09:10,479 --> 01:09:13,000
Speaker 1: what sort of advice would you give to a recent

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01:09:13,040 --> 01:09:18,400
Speaker 1: college graduate interested in a career in either investment, advisory,

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01:09:18,600 --> 01:09:20,960
Speaker 1: finance or academics.

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01:09:21,840 --> 01:09:24,559
Speaker 2: Well, what I would say to people really is what

1145
01:09:24,640 --> 01:09:29,360
Speaker 2: I'm saying to interns when I send them into internships.

1146
01:09:29,439 --> 01:09:34,360
Speaker 2: I say, think about serendipity, think about zigs and zags.

1147
01:09:34,840 --> 01:09:38,559
Speaker 2: That is the most important thing when you get out

1148
01:09:38,600 --> 01:09:42,479
Speaker 2: of college is get a job. Any job. You're going

1149
01:09:42,520 --> 01:09:44,719
Speaker 2: to learn from it. And if you hate this job,

1150
01:09:44,840 --> 01:09:48,360
Speaker 2: that's a very good lesson because you've learned something not

1151
01:09:48,479 --> 01:09:52,519
Speaker 2: to go there. And so life is going to take

1152
01:09:52,520 --> 01:09:58,000
Speaker 2: you in many directions. Keep your eyes open. Learn not

1153
01:09:58,120 --> 01:10:02,160
Speaker 2: just about the world, learn about your now. Academics turned

1154
01:10:02,200 --> 01:10:06,920
Speaker 2: out to be the right way for me. I'm a professor.

1155
01:10:07,160 --> 01:10:11,240
Speaker 2: This is my vocation, but it is not for everyone.

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01:10:11,439 --> 01:10:13,840
Speaker 2: You know, if you are a financial analyst and that

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01:10:14,000 --> 01:10:17,240
Speaker 2: is what you do, you may aspire to be the

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01:10:17,320 --> 01:10:22,840
Speaker 2: chief financial officer, maybe the CFO of a company. Good

1159
01:10:22,840 --> 01:10:25,360
Speaker 2: for you. There are going to be many surprises that

1160
01:10:25,400 --> 01:10:30,880
Speaker 2: you're going to encounter. Do that, and so don't try

1161
01:10:30,920 --> 01:10:38,599
Speaker 2: to trut your life in career too far ahead. Just

1162
01:10:38,600 --> 01:10:42,360
Speaker 2: just let things develop where you figure out the world,

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01:10:42,439 --> 01:10:43,759
Speaker 2: then you figure out yourself.

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01:10:44,080 --> 01:10:46,680
Speaker 1: And our final question, what do you know about the

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01:10:46,680 --> 01:10:51,479
Speaker 1: world of behavioral finance today? You wish you knew forty

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01:10:51,479 --> 01:10:54,479
Speaker 1: four years ago or so when you were first starting out.

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01:10:55,120 --> 01:10:57,360
Speaker 2: Well, you know, in a way, I would like to

1168
01:10:57,439 --> 01:11:00,960
Speaker 2: have known everything I know now a way, I'm really

1169
01:11:01,280 --> 01:11:04,080
Speaker 2: happy I did not that That is, in a way

1170
01:11:04,320 --> 01:11:07,880
Speaker 2: I'm happy that that I let things develop, that I

1171
01:11:07,920 --> 01:11:10,840
Speaker 2: discovered them as I did. It's kind of like like

1172
01:11:10,840 --> 01:11:15,160
Speaker 2: like opening gifts one at a time, one one every

1173
01:11:15,240 --> 01:11:20,760
Speaker 2: year and be surprised and be delighted by them. Uh,

1174
01:11:20,840 --> 01:11:22,680
Speaker 2: and and that that is what happened. You know, if

1175
01:11:22,720 --> 01:11:25,880
Speaker 2: if you think about those generations of behavioral finance and

1176
01:11:25,880 --> 01:11:30,520
Speaker 2: and the subjects that that that you have, the new ideas,

1177
01:11:30,680 --> 01:11:33,320
Speaker 2: you know, things I could not understand that night when

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01:11:33,320 --> 01:11:37,280
Speaker 2: I'm tired and ready to sleep. I wake up in

1179
01:11:37,320 --> 01:11:40,200
Speaker 2: the morning and I get that that so so I

1180
01:11:40,640 --> 01:11:44,320
Speaker 2: actually I just thought recently about this idea of well

1181
01:11:44,360 --> 01:11:45,480
Speaker 2: being as a portfolio.

1182
01:11:46,320 --> 01:11:46,719
Speaker 1: Uh.

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01:11:46,800 --> 01:11:49,120
Speaker 2: And I was just corresponding with an editor of a

1184
01:11:49,240 --> 01:11:52,360
Speaker 2: journal and she said, I really like this idea. Yeah

1185
01:11:52,400 --> 01:11:54,400
Speaker 2: you can. Can you write? Can you write a paper

1186
01:11:54,439 --> 01:11:59,000
Speaker 2: about that? And and and tell advisors how they can

1187
01:11:59,160 --> 01:12:03,040
Speaker 2: use that in a the station. I'm up to this challenge,

1188
01:12:03,080 --> 01:12:07,040
Speaker 2: you know, say is yeah, this is the kind of thing.

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01:12:07,160 --> 01:12:10,559
Speaker 2: So so for me, one of the pleasures of life

1190
01:12:10,800 --> 01:12:15,200
Speaker 2: is really discovering new things, making connections that other people don't.

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01:12:15,280 --> 01:12:17,880
Speaker 2: This is my comparative advantage.

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01:12:19,040 --> 01:12:22,479
Speaker 1: Well, that's just delightful. Thank you, Professor Statman for being

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01:12:22,520 --> 01:12:26,720
Speaker 1: so generous with your time. We have been speaking with

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01:12:26,840 --> 01:12:30,320
Speaker 1: Professor Meyer Statman, author of a new book, A Wealth

1195
01:12:30,360 --> 01:12:34,639
Speaker 1: of well Being, A Holistic Approach to behavioral Finance. If

1196
01:12:34,720 --> 01:12:38,160
Speaker 1: you enjoyed this conversation, check out any of the five

1197
01:12:38,240 --> 01:12:42,000
Speaker 1: hundred previous discussions we've had over the past ten years.

1198
01:12:42,400 --> 01:12:46,320
Speaker 1: You can find those at iTunes, Spotify, YouTube, wherever you

1199
01:12:46,400 --> 01:12:50,320
Speaker 1: find your favorite podcast. Check out my new podcast At

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01:12:50,320 --> 01:12:55,080
Speaker 1: the Money, short ten minute questions with experts about topics

1201
01:12:55,120 --> 01:12:58,559
Speaker 1: related to your money, earning it, spending it, and most

1202
01:12:58,560 --> 01:13:02,240
Speaker 1: importantly investing it. At the Money, in the Masters and

1203
01:13:02,280 --> 01:13:06,479
Speaker 1: Business feed, or wherever you find your favorite podcasts. I

1204
01:13:06,520 --> 01:13:08,400
Speaker 1: would be remiss if I did not thank the Crack

1205
01:13:08,439 --> 01:13:11,760
Speaker 1: staff that helps put these conversations together each week. John

1206
01:13:11,880 --> 01:13:14,720
Speaker 1: Wasserman is my engineer. A tick of Albroun is my

1207
01:13:14,840 --> 01:13:20,000
Speaker 1: project manager. Anna Luke is my producer. Sean Russo is

1208
01:13:20,080 --> 01:13:23,800
Speaker 1: my researcher. Sage Bauman is head of Podcasts at Bloomberg.

1209
01:13:24,360 --> 01:13:27,759
Speaker 1: I'm Barry Ridolts. You've been listening to Masters in Business

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01:13:28,320 --> 01:13:37,280
Speaker 1: on Bloomberg Radio