At Some Point You’d Have to Choose Being Happy Over Being Correct
Or, the difference between private and public decisions
👋 Hey there! My name is Abhishek. Welcome to a new edition of The Sunday Wisdom! This is the best way to learn new things with the least amount of effort.
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Today, let’s talk about decision-making. A friend of mine is planning to buy the house he’s currently living in. While discussing we figured that it made more sense not to buy it right now since he can easily get a better place by waiting a couple more years. But then he mentioned something that changed everything.
He said it’s the first place he and his partner had moved in together, and therefore it has sentimental value. Well, in that case I thought it made perfect sense to buy the place.
Financially, it may not be the most rational thing to do, but sometimes, instead of being coldly rational, one has to be psychologically reasonable. Any decision that lets you sleep well at night is a good private decision, even if it isn’t the most rational one.
A private decision is something that affects only you (primarily). For example, if you want to experiment with food this evening — knowing very well that it may end up ruining dinner for you — it’s okay to go ahead if you are alone. You may end up consuming what you cook (if its edible) or order from outside. Either way, you’ll be the only person to face the consequences. It would be considered a private decision even if more than one people — say you and your partner—are in it together, as long as neither of you are compromising for the other.
A public decision, on the other hand, affects others as well — who don’t take part in the decision-making process. For example, if you have invited your friends over for dinner, it may not be a great idea to experiment with food tonight. If it doesn’t go well, it would ruin dinner not only for you, but for your friends as well. Not the best way to treat guests in my opinion!
But as much as we would like to believe it, we don’t make decisions on a spreadsheet. Therefore, even though it makes a lot of sense, it’s hard to be rational all the time.
For example, I’m somebody who is extremely wary of taking loans. If I ever buy a house, I would prefer it without any loan. I am just not comfortable with the idea of monthly payments. Eliminating it would make me feel more independent. Any rational advisor would recommend getting a cheap loan and investing extra savings in assets that would generate better returns, such as stocks. But since it’s a private decision, I would prefer my psychological independence over any sort of maths.
On paper, it’s defenceless, but it works for me. I like it, and that’s what matters. Good private decisions aren’t always rational, but they let you sleep peacefully. At some point you have to choose being happy over being correct. That, however, doesn’t mean that I would use all my savings to get a house just because I want to avoid a loan. That would be foolish. Being reasonable doesn’t mean being irrational.
But not all decisions are private. The case flips when other people come into the picture. For example, if I’m running a business, all my employees will be affected by my decisions.
If I’m running a hedge fund, my clients’ money will be affected by my decisions. If being reasonable would help me sleep well at night but keep others awake, it would be irresponsible to optimise my psychological comfort over others’. When making public decisions, being coldly rational is the way only way forward.
For example, a financial advisor cannot let their own financial history get in the way of suggesting a financial plan to a client. The leader of a country cannot let their private views get in the way of doing what’s good for the nation. A lawman cannot let their personal biases affect how they judge criminals.
Doing this, giving your personal preferences more importance over public good while making a public decision, is equivalent to asking others to pay for your sins. Nassim Nicholas Taleb calls this transfer of fragility, and there aren’t many vices more dishonourable than this. While ruining dinner for friends may not be the same as not hiring a good candidate because of their gender, race, or ethnicity—they have similar roots.
Having said that, reasonable decision and rational decisions aren’t mutually exclusive. Most of our day-to-day decisions — both private and public — would be both reasonable and rational at the same time. For example, you can keep Saturdays for food experiments so that you don’t end up ruining every day’s meal. And if you want to avoid having meetings in your business, you can create a work culture that revolves around async communication.
One advantage of being reasonable is that you are emotionally invested in your private decisions. Even if things go south, you are emotionally invested enough not to get completely derailed. But human beings aren’t perfect. Now and then we’ll come at a crossroads where we would have to choose. If it’s a private decision, it’s okay to be more reasonable and less rational as long as you aren’t being irrational. If it’s a public decision, it’s okay to be reasonable as long as you are not being irresponsible. Otherwise, being rational is the only way forward. Because with great responsibility, comes cold rationality.
Interesting Finds
I.
Thorstein Veblen, an economist and sociologist, made his observations about social class in the late nineteenth century. His key idea was that because we can’t be certain of the financial standing of other people, a good way to size up their means is to see whether they can afford to waste money on goods and leisure.
This explains why status symbols are so often difficult to obtain and costly to purchase. These include goods such as delicate and restrictive clothing like tuxedos and evening gowns, or expensive and time-consuming hobbies like golf or beagling. Veblen’s famous “leisure class” has evolved into the “luxury belief class.”
Luxury beliefs are ideas and opinions that confer status on the rich at very little cost, while taking a toll on the lower class.
In the past, people displayed their membership of the upper class with their material accoutrements. But today, luxury goods are more affordable than before. This is a problem for the affluent, who still want to broadcast their high social position. But they have come up with a clever solution. The affluent have decoupled social status from goods, and re-attached it to beliefs.
For example, top university graduates not only want to be millionaires-in-the-making; they also want the image of moral righteousness. For these affluent social strivers, luxury beliefs offer them a new way to gain status.
It seems reasonable to think that the downtrodden might be most interested in obtaining status and money. But this is not the case. Human beings become more preoccupied with social status once our physical needs are met. Relative to lower-class individuals, upper-class individuals have a greater desire for wealth and status. That’s why only the affluent can afford to learn strange vocabulary because ordinary people have real problems to worry about.
But like artists who want to differentiate themselves from what’s been done before and what others are currently doing, moral fashions for the affluent change over time for the same reason. Moral fashions can quickly spiral as more and more members of the chattering classes adopt a certain view. Once the view becomes passé, the upper class, aiming to separate themselves, then update their moral inventories.
Unfortunately, many of these beliefs end up causing social harm. Take polyamory for example. It is the latest expression of sexual freedom championed by the affluent. They are in a better position to manage the complications of novel relationship arrangements. And if these relationships don’t work out, they can recover thanks to their financial capability and social capital. The less fortunate suffer by adopting the beliefs of the upper class.
The economist and social theorist Thomas Sowell once said that activism is “a way for useless people to feel important, even if the consequences of their activism are counterproductive for those they claim to be helping and damaging to the fabric of society as a whole.” The same could be said for luxury beliefs.
— Thorstein Veblen’s Theory of the Leisure Class—A Status Update
II.
When I hear MVP, I don’t think Minimum Viable Product. I think Minimum Viable Pie. The food kind.
A slice of pie is all you need to evaluate the whole pie. It’s homogenous. But that’s not how products work. Products are a collection of interwoven parts, one dependent on another, one leading to another, one integrating with another. You can’t take a slice of a product, ask people how they like it, and deduce they’ll like the rest of the product once you’ve completed it. All you learn is that they like or don’t like the slice you gave them.
How do you know if what you’re doing is right while you’re doing it? You can’t be. You can only have a hunch, a feeling, a belief. And if the only way to tell if you’ve completely missed the mark is to ask other people and wait for them to tell you, then you’re likely too far lost from the start. If you make products, you better have a sense of where you’re heading without having to ask for directions.
People often want certainty ahead of time, but time doesn’t start when you start working on something, or when you have a piece of the whole ready. It starts when your version 1.0 hits the market.
If you want to see if something works, make it. The whole thing. The simplest version of the whole thing — that’s what version 1.0 is supposed to be. If you want answers, you have to ask, and the question is: Market, what do you think of this completed version 1.0 of our product?
III.
Why would anyone waste time on made-up stuff when there’s so much real stuff to learn about the world? That’s a fair question. Well, one good reason to read fiction is that it enhances our ability to detect and understand other people’s emotions. In literary fiction, the incompleteness of the characters turns your mind to trying to understand the minds of others. They help us develop empathy.
We all know that true creativity springs from unexpected connections. So, if innovators really want to create something world-changing, they might want to aim for a more varied fictional diet.
For example, the best crime novels can offer a rigorous neural workout, exercising our brains’ pattern-recognition abilities. Even romantic beach reads can provide an insightful window onto a particular generation’s aspirations and anxieties.
Talk to Me
Send me tips, comments, questions, and your favourite decision-making frameworks: abhishek@coffeeandjunk.com. 🤜🤛
Until next Sunday,
Abhishek 👋