Russ Roberts | The Decisions that Define Us

Srini: Russ, welcome to the Unmistakable Creative. Thanks so much for taking the time to join us.

Russ Roberts: Great to be with you

Srini: Yeah, it is my pleasure to have you here. So I actually found out about you and your work by way of your publicist who sent me your book Wild Problems, which as I just mentioned before we hit record here, was probably one of my favorites.

I would say my top 10, one of my top 10 books of this year because it just resonated with me so much. But before we get into that, I wanted to start by asking you a question that might seem what somewhat bizarre to you, but to me makes sense given that I see you as a combination of both a social scientist and economist, and that is what social group were you a part of in high school and what impact did that end up having on where you've ended up with your life and what you've ended up doing?

I don't know if I can

Russ Roberts: answer the second part, but I could probably answer the first part. I went to a public high school in Lexington, Massachusetts. I went to Lexington High School and there were I hung out with. The kids that were like me. And the kids that weren't like me, I tried to stay away from, cause they were gonna hurt me, , they occasionally, even in suburban Boston and in the 1970s, they it was sometimes open season on nerdy intellectual types, which I was one.

So was that, did that go ahead? Affect my I don't know how that affected how I turned out. Most of my friends went on to Harvard and MIT and other Ivy League, like places I went to the University of North Carolina. So I went, I took a different path for most of my friends. So I'm not sure I can help you with that answer.

Yeah. I

Srini: can guide you through the rest of it. I did your parents encourage any particular career paths and you, what is it that prompted you to actually not go to the Harvards or MITs of the world given that was what your peer group was doing?

Russ Roberts: My parents wouldn't have paid for it.

Okay. They were from Memphis. They grew up in the south. They didn't see the prestige of the Ivy League as being was something worth paying for. They put very little pressure on me to follow a none to follow a particular career path. I ended up being an economics major because I took a class in economics in high school.

There was a standardized test in that class, and I did exceptionally well in it. And my teacher, which is weird in a way my teacher took me aside and said, I I want you to, She gave me Samuelson, the standard economic textbook of the day in college. She said, Why don't you read this chapter? And and maybe we'll talk about her.

Maybe. I made a presentation of the class and when I got to college, I thought I'm good at this. I should take it. And I took. Principles of economics class. And I did well in it, and then I turned out I liked it. So my parents never wanted me to do anything in particular. I never got pressured to go to law school or med school or any particular career.

My dad was a very serious reader. And my only intellectual aspiration in life was to be like him. Wow. To read. I'd look at his books and when I'd be home and I'd say, Someday I'll be able to read these. And I can't wait. And so that was what was modeled in my household.

Srini: What was the general narrative about education?

Did they place a as you mentioned, they didn't necessarily think it was worth paying for an Ivy League, but did they place a high value on education?

Russ Roberts: Not really. They placed a high value on reading. They're not the same thing, unfortunately. My my father was the first, maybe been the first person in his family to go to college.

He went to Memphis State and he went to University of Tennessee for a while. Graduated I think from Memphis State which is now called the University of Memphis. And then he went on to get a master's degree in psychology. And he's certainly the first person in his family to have a graduate degree. I had no aspiration for a graduate degree until I'd gone to college for a while.

And that's a longer story we can talk about if you want, but more interesting perhaps, is that my father told me that psychology was a waste of time even though he had a master's in and had open doors for him. But he said I only got those doors open because I had a master's degree, not because of the psychology I understood.

And and so even though I was an economics major and I had to take 10 classes in the social sciences to graduate, My father had poisoned me against psychology, sociology, and anthropology. So I ended up taking a lot of history and philosophy to fulfill my social science requirements, which ended up served me quite well.

And I do, I love philosophy and that's a lot of what I'm doing now. I'm a president of a college that philosophies at the center of Shale college in Jerusalem and this big part of my life. But I also learned that psychology has some value over the years. Yeah. Took me a while parental biases do have an impact sometimes.

And that was one of 'em that's an

Srini: understatement. Growing up in Indian family, I realized one of the biggest parental buy biases. I I wasn't even really aware of until the last couple years, was that there's almost an inherent prestige bias that we have. We look at people who come from elite schools and by default we think, okay, they're, they've done something right.

They're better people. . And like I have a really good friend, My best friend and I we're talking about this cognitive bias that we both have. We both talk about the fact that, yeah, as entrepreneurs we question the value of higher education. And then we both say if we saw a girl on Bumble who didn't have a college degree, we wouldn't swipe right?

And I realize I said, You realize we just contradicted what we just said with our own behavior. Even though we don't, we claim we don't believe that influences us.

Russ Roberts: Yeah, that's true.

Srini: So you being the president of a college, I wanna spend some time talking about education actually, which I never let any academic out of my conversations without hammering them with my questions about education.

But I wanna start with you in particular, cuz. I was an economics major. You had this moment so early where you discovered this thing that you liked, and I feel like that is one, either really rare, which is so often why you have these people who spend 15 years working only to wake up one day and discover they hate their life and they hate their job.

Or two difficult because what the hell does an 18 year old know about themselves when they have so few data points about their life? Yeah. So why is this like what do we do about this?

Russ Roberts: So many systems, educational systems in the world. I don't know them well. I know a lot about the American university system and now I know a little bit more about Israel's having been here now a year.

America's relatively unusual and that they expect you to take introductory classes in various fields and see what. You find interesting. Unless you're pre-med, and if you're pre-med, you have to put your notes to the grindstone right from the day one. But in general if you say to somebody who's a freshman in college in America, what's your major?

And you say, I don't know. It's not embarrassing, it's not a big deal. But in a lot of parts of the world it's not. You can't do that. You basically apply for a major at 18. And that's a little bit weird for exactly the reason you said you don't know yourself. You don't know what you like or don't like.

You're basically are getting on a pretty fast moving train. You can get off it you can change. But sometimes that's costly or very costly. And I guess I've come to believe that real education is not, at the undergraduate level, is not about mastering the facts behind a particular discipline or understanding some of the theories.

It involves, it should involve more fundamental skills, which is what we try to do here at . Where I'm at, It's learning how to read, write, think, listen, converse. And those skills emerge from small conversations about great texts. They're not taught. Those skills can, are very difficult to teach. And the standard western model of a really smart person at the front of the room talking for an hour and quarter while people take notes is is a bizarre model.

It, nothing goes, very little goes in. You get exposed to some ideas. You will learn something. A much of what you learn will be forgotten and it's not transformational. And they, people say yeah, that comes in graduate school and what they've done in most programs in America.

Undergraduate education is a dumb down version of graduate education, which is weird. Most people aren't going to graduate school . Why would you do it that way? Astronomy is a dumb down version of graduate astronomy. Economics is typically not, I think some people, not a teacher, but typically a dumb down version of a, of graduate economics, and that's not useful to someone who's not gonna go to graduate school.

It's not, what's the, it's not the magic or perspective that you can get from a real economics education. It's a tragedy.

Srini: I can relate 100% because I was an econ major at Berkeley, which has a world class economics department, and when I graduated I didn't know a damn thing about economics. I ended up being an environmental econ major cuz my grades were so bad.

And I remember sitting in this class my senior year, Listening to a professor talking about how to use a utility function to maximize the amount of milk that you could get out of a cow. And I'm looking at him thinking, When the fuck am I ever gonna need to know this? But funny enough, I, after writing it off and hearing Naval Robbie Con on a podcast talk about it was a podcast titled How To Get Rich Without Getting Lucky.

And he said, If you wanna understand anything, go read the original text in a given field. He said, If you want to understand how business works, read the Wealth of Nations and you'll learn more about business than any other business book will teach you. And of course, you notice the Wealth of Nations is a bitch to read because it's archaic.

The language is complicated and oh my God I walked out of reading that book with so many ideas. That I now actually apply to how I design systems for how I use technology and how I think about my own business. And the whole idea of division of labor and looking at the lens of division of labor through the combination of dividing labor between technology and people.

It was like just this sort of flurry of insights. And I'm like, wait a minute. I never got anywhere near this level of understanding of economics from being at Berkeley where Laura Tyson, Clinton's economic advisor was teaching introductory economics. Yeah. In theory you got a world class education.

Russ Roberts: Yeah, exactly. Say Berkeley in reality, not so much. Exactly. And I think tragically that's true in many places. I wanna put in a word for the world wealth, the nation. There are harder books to read and many chapters of the Wealth nations are, can be read with delight. Some can't be.

Yeah. If you're hearing this and thinking, Oh, wonder if that's worth reading after that rave review when you get to the chapters you can't read, just skip them. There's plenty worth reading there. That's it's in between. Totally. Yeah.

Srini: No, that, that's kinda, I think more or less the approach I ended up taking is that I took, But I think the other thing that I realized, and I'd be curious to hear your take on this I just finished writing this piece titled Advice to Freshman Who Are Starting College that I published on a Medium.

It was based on a conversation that I had with my cousin's friend's son who was going to be a freshman at uc Riverside, where my dad is a profess. And he and I talked for 20 minutes and I told him everything that got you to where you are that made you a straight A student in high school will not work when you get to college.

Because in high school I finally realized, I was like, I wasn't a straight A student in high school because I had any level of intelligence. I had discipline. I was like, any idiot can get straight A's in a high school with a bit of effort and discipline. And so what I realized, I think, particularly after reading the Wealth of Nations, is that nobody really teaches you how to learn.

Because what ends up happening is you're presented all these different concepts, you do all these problem sets, then you get to an exam. And the real test is whether you can apply it in a context that you've never seen before. And I wonder, one, you know how you get students to really understand that? And two, this is a big question and one I ask everybody, and everybody seems to have different answers.

It's the ridiculous because we could talk about now for hours about this, but if you were tasked with redesigning the American Education System from the ground up, how would you change it?

Russ Roberts: I wanna first say something about the basic question of what someone is starting a college experience and your observation that you don't learn how to learn.

That's certainly true. I think what real education can do for you is teach you how to read. That's no small feat. It sounds silly, of course I know how to read, but how to read thoughtfully, how to be skeptical, how to integrate what you've read with other things you've read. That's learning for me to a large extent.

There are other parts of it, but that's a huge part of it. What I've just outlined, and I'm gonna say something a little strange maybe, but one way that many of us learn how to think and read is by. . And so I think one of the mistakes that students make when they design their college experience, many students stay away from classes that have writing cuz they're afraid of 'em.

And they think, Oh, I don't wanna have to write. Then you're not gonna get better at it. And it's really an important skill. It's a surprisingly important skill in 2022 even. And you can think of it as communication, which is a central skill in any a anything you do doesn't matter whether it's business. Nonprofit government, being able to write is an important gift and it requires effort and it requires the honing of that ability.

And the only way you do it is by one of the only ways you do it is by doing it, practicing it, working at it. Start a blog if you're gonna write a blog, even nobody visits it. Just write often and you will get better. You do have to do it thoughtfully, but just by writing often you will get better.

The other thing I would say to the entering, first entering college student is take the best teachers, not the best classes. Yeah. You find a great teacher, take everything they teach. Doesn't matter what the subject matter is, they'll make it interesting. They'll break your brain bigger. And so often I think people either look for easy classes or they look for subjects that interest them, subjects That interest is not a bad

,

idea, but a subject that interests you, that's stopped by a bad teacher is a nightmare.

And a subject that doesn't interest you, that's stopped by a master is gonna be life changing. Doesn't almost doesn't matter what it is. Yeah. But now to your other question, what we do to overhaul the college system or the K through 12, which one do you want? Let's do a little bit of time on both and then we'll get into the book a little bit.

So on K through 12, I think Of course the problem is just a, in most settings, not every school, but in most the settings, most high schools, most middle schools and most grammar schools, they have a version of what we're talking about here. That doesn't work very well. What I call I like to quote blue Tark.

He didn't say it cuz he didn't write in English. And it turns out even in English, it's a slight corruption of the translation. But he said the mind is not a vessel to be filled, but a fire to be kindled. And I don't think many K or 12 teachers schools think of it that way. They think of it as what do our students need to learn to move to the next level?

So if you're gonna study calculus, you better learn some geometry and then you gotta learn algebra, maybe a different order, and then precalc, tri, et cetera. And now you're ready cuz you know this other stuff. Going back to your point about thinking how to learn or being able to think there's a lot of recipe driven math.

Learn how to manipulate the equations. Fundamental understanding is takes too long. And so just, there's just a failure at so many levels of both that kind of tool acquisition by, in, in say STEM classes and in that English and other in history classes, just not learning how to read thoughtfully. I have a person here on our staff who teaches to the local high school and she told me, she reads books in a very different way than her colleagues.

I said, How do you read them? She said we read the first page and then we talk about it. And I said, Then why? So when we read the second page, , now the magic is in the talking about it. If the talking about it is. Yeah. What'd you think? You don't get very much out of it. If the talking is about does this character strike you as someone you should admire or would you be afraid of this person if you met him in real life?

How does this person's decision making relate to what you do as a decision? There's so many thoughtful questions that a great teacher learns to ask and you have to learn how to conduct a conversation. There's not a lot of that going on in K through 12 education in the United States, or unfortunately in the university level.

So the simple answer, since I don't know how to build an education system and nobody does actually, yeah, it would be great to have a system that was responsive to what parents want. Now you can argue that parents don't know what they want. I think that's true to some extent. They also can't des desire design a system, but they can choose things that make sure that their children aspire to greatness, aspire to excellence, aspire to grow.

And we fail at that. So often, I think in the United States, at both K through 12 and the college level, there's an emphasis on credentialing. There's an emphasis on being in a hurry. There's an emphasis on don't expect too much. The students will, won't this is a YouTube generation, the TikTok generation, they can't read a whole book, Give 'em an excerpt and don't pick a great book that stood the test of time.

Pick a book that'll appeal to them that has that's hip or that's maybe even better modeling vulgar they'll think it's on the edge, it's edgy, and I just it's just so sad. So there's a lot of things that have been lost. Yeah. And I don't know if there'll be a pendulum swing back at either the K two 12 or the university level in the United States.

The humanities. Which are at the center of the college I'm in the shale, the hum. The humanities in America are dead. They're dying and soon to be dead. They've dwindling numbers of students. The people who teach it, it don't believe in the, in it. They've made it an ideological or I know ideological, the best word driven process.

The idea of reading a great book like The Odyssey by Homer for what it tells us about the human heart is just out of fashion. And there's still people around the world who teach that way and help you explore it and do so and again in small groups. But that is not the mainstream of American education and hasn't been for a while.

Yeah,

Srini: I would in a lot of ways it sounds like I am literally asking you what the solution as to what you call wild. I, It's funny to listen to you describe reading that way because I, it just sparked this insight for me that, wow, this explains why I absorb information from the books that I read in a way that I never did before.

Because I have the good fortune of getting to talk to somebody like you about the book that I just finished reading, which forces me to ask a whole set of different questions that I wouldn't be asking if I didn't. Just if I just went through the motions and read the books, highlighted a bunch of passes

Russ Roberts: and called it a day.

Yeah. If you had been given this book by a friend and said, I really like this, I think you'll enjoy it, You'd read it, you might enjoy it, You get something out of it, probably. I like to think you would, but if I said to you it was, I do the same thing cuz I have a podcast. If I said to you, you've gotta interview this person and you better find interesting things to talk about related to the book.

You read it totally differently. Yeah. In some ways it, it when I get a book, I try to read every book by my guess that we're talking about I don't get a set of prescripted questions from the publicist. I refuse them. If I get them. I don't look at 'em but I try to read every page.

Now, don't read every word necessarily. If I've under, if I get to a pass set of passages where I'm pretty sure we're not gonna talk about it, I will skim them. Cuz I wanna make sure I don't miss something that the author is gonna say and then misunderstand their point. But I might not read every word.

On the other hand, there are many books I read for my, for by my guests, or I read every word. So I savor them as a reader and I'm reading them for what can I ask about this might take different, what do I have to say that's could challenge this? And that's you could call that real reading.

I had Agnes Callard on my program and she said great education teaches you how to talk to dead people. So when you're reading something by Homer or Plato or Shakespeare or Jane Austin she's, or he's not just talking to you, you're talking back like, You sure this is true? Wow. Is that normal for a human being or is that really just gonna be Achilles

And that's a totally different kind of reading, and it's talking to dead people. And it's, I wanna say two things about that. You could ask me about my book if you want, but talking to Dead People's really fun because some of the most interesting people of all time aren't alive, unfortunately.

So the only way to talk to 'em is through their books. And it's an amazing human experience to be able to read Adam. I wish I could interview him for econ talk, but , at least I can re at least I could talk to him and read his book and draw lessons from it and challenge it and think about it and as if I read it with other people really spar and grapple with the ideas with another person that's even better.

But the other part is, it's powerful cuz they have a lot of wisdom. It's not just that they're part of their classic cannon and Western thought. There's a recent, they're part of the cannon. They have things to teach us. So here you have these great people you can hang out with. You go to the bar and schmooze with them over a drink while you're reading their book.

And why wouldn't you? They stood that, I like to say this when I was a when I was younger, I read pretty much a book a week and. And then I had children and I read a book a night, but they had a lot more pictures and I read books to my kids. It was harder for me to find time to read, but if you're a serious, pretty serious reader, you might be able to read a book a week if you really Amazing.

You read two books a week, right? You really have some spare time. You're a fast reader. Think about that. You might have 50 years of reading in your life. 20 to seven age, 70, 50 books a year. A book a week. That's 2,500 books. That's not a lot of books. No. Read the good ones. Don't waste time on fluff.

You don't have time. Don't waste that time. Yeah, occasionally. I read plenty of fluff by the way. I don't wanna suggest that she'd only read Shakespeare or Homer or Adam Smith. It's okay to read for pure pleasure and delight in the thrill of a good story. But You should pay attention to what you choose to read.

It's not unimportant. You're speaking of my language is the guy who I it like, I'm very lucky because I, as a part of my job get to read books. So I think I average about a hundred a year. And even then, I probably won't get to that thinking 2,500. I think, I guess I was like a thousand books in the last 10 years.

Srini: And I think one of the reasons that your books really. Struck me so much as it summarized a lot of what has been on my mind lately as I've thought about self-help books. And in a lot of ways your book would be potentially categorized as a self-help book, but through the lens of an economist thinking and you open the book by saying, Wild problems are the big decisions all of us have to deal with as we go through life.

The wild problems, whether to marry who to marry, whether to have children, what career path to follow, how much time to devote to friends and family, how to resolve daily ethical dilemmas. These big decisions can't be made with data or science or the usual rational approaches. Wild problems resist measurement.

What works for you might not work for me. And what worked for me yesterday might not work for me tomorrow. Wild problems are untamed undomesticated, spontaneous organics complex. And I think the reason that stood out to me and immediately I was like, Oh my God, I love this book, was, Wait a minute, somebody has written a self-help book about every one of these wild problems is an attempt to actually help people solve them.

Do you bookmark articles that you never read? Do you download a ton of free eBooks that you never open? Do you collect quotes? Highlight passages and books, and take notes on online courses and even episodes of this podcast that you can either never find or use or disappear into a black hole of information on your hard drive or note taking app.

We live in a world where we create and consume more information than anyone could possibly use in a lifetime. But what if I told you there was a way that you can stop collecting quotes and start using your notes to create content, to build a body of work, and to grow your business? Our free course on how to take smart notes isn't just gonna give you another life hack or get another tool to manage, but don't take my word for it.

This is what one of our students from our Personal Knowledge Management course said,

Russ Roberts: This is a completely different way of learning how to actually use your content instead of collecting and hoarding your content. It's how to turn it into your own content and use it in a way that you can build your body of work, your body of knowledge, your unique, different way of looking at things, and share it in a cohesive way that other people can

Srini: understand.

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Russ Roberts: I when I was younger, the idea of a self-help book was to me unattractive and This is my second self-help book. I wrote a book called How Adam Smith Can Change Her Life, which is essentially a self-help book, as is this current one, Wild Problems.

And I justified that to myself saying I write self-help books for people who don't like self-help books , because I'm as because I have a certain snobbish side to me. But it turns out I actually like self-help books. I think I've gotten older and wiser, I think, I hope, and I realize somewhere along the line took me a while that self-awareness does not come easily to human beings.

And the real value of self-help books isn't to help you often in the way that the author is trying to help out. But

,

a good self-help book forces you to be aware that you do not fully understand yourself. And part of what I'm trying to do in this book, I can't give you an algorithm or an equation for who to marry or whether to have children or how much time to devote to friends and family versus work or pleasure, but I try to give you some ways to think about it.

In those ways, focus on who you are and who you might become. The subtitle for the book is a guide to the decisions that define us. These decisions determine who we are and who we will be. And that's something that's not easy to pay attention to. It's something that's easily forgotten.

It's part of just easy to go through life, not paying attention. And I think a lot of the value of the self-help literature to the extent its quality, is force you to pay attention. It's not a skill that most of us have it, you can cultivate it. But a lot of people never learned to cultivate it, and I certainly didn't for a long time.

I, I spend a little more time now. Thinking about my shortcomings, my flaws, my biases and my weirdnesses, the things that were you open this conversation talking about my parents so many things my parents did unintentionally that were glorious, and a few that maybe weren't so glorious.

And I can see them now. I didn't see them for a long time. Things that are inside me that I'm now aware of, that I think came from the way I was raised or what I signals and incentives that they put in place that I never saw until they arose of my own behavior. And being aware that's very powerful.

It's being able to step outside yourself and look at yourself in a thoughtful way is for me it's part of growing up. Yeah. And. For some people it takes a while, and some of us probably never grow up. Not the worst thing in the world. I don't wanna oversell how important it is, but it's delicious when you can see your buttons being pushed and you can realize oh, I know that button.

I'm not gonna let it get pushed. I'm just gonna watch and I'm gonna, I'm gonna slow it down and not respond that way. That I'm, that I've responded 25 times before. One of the challenges I think we have in our relationships with the people around us is that there's no script, but often there's an effectively a script.

We have certain modes of interaction with our, their spouse or our best friends, or our cousin or our siblings or our parents or our children. And sometimes you can actually break out of them, but the other people don't know that they think you're still doing the same old script. So being open to those, to the other people, changing the script and hoping that they can understand that you sometimes could change the script.

Is a superpower. really hard to do, but it's a superpower.

Srini: Yeah. Speaking of changing the script you give us this sort of macro level look at decisions by talking about the difference between a scaler and a matrix. And then looking at that on top of what you call the cost benefit approach to making decisions or for people who don't understand that term, the pro and con list that we tend to make.

So can you first explain the difference between a scaler and a matrix for people who are listening and where they've probably seen it without necessarily even knowing

Russ Roberts: it? Yeah it's a math. Those are two math terms that are a little bit scary, but they shouldn't be. Scaler just means a number like seven or 43 or 62 or 150.

And if I have two things I want to compare and let's pick vacation. I'm gonna go on a vacation. I could choose between a vacation at the beach or a vacation in the mountains. Or actually a better choice would be a vacation at the beach where I'm gonna sit there and do not very much. Versus a vacation in a city with lots of museum tours and night clubs and restaurants versus sitting on the beach and hanging out and chilling.

So we understand that there's pros and cons for each of those vacations, and that often they're very sensitive to our own nature, right? For some people sitting, doing down thing at the beach is heaven, and for other people it's hell. Similarly intense urban vacation. For some people, that's not a vacation.

I, I need to relax. For other people, it's incredibly stimulating and it, they come back totally different person. So we can think about those things, but wouldn't it be great if there was a single number you could use, like a vacation in the city's a 17. A vacation on the beaches in 11. So I'll choose the city.

And I suggested the book that a lot of times we wanna boil down our choices to a number a single number that abstracts from all the complexity, all the different aspects of a choice. And that way we could make the right choice. We could just choose the one with the higher score. So to take a trivial example, height is useful in basketball.

So in general, people who are putting together professional basketball teams choose the taller players relative to people who aren't tall, right? People who are five foot five very rarely make it into the National Basketball Association. I think there's one or two in the last 50, 40 years. They're not always very successful and most people know that, so they don't start with them.

And how do they know? Cuz that's a pretty powerful scaler, just number of inches from the bottom of your feet to the top of your head. Goes a long way. Then there's a, another scaler that people use, which is wingspan. Be having extra long arms relative to your height is very important in basketball because often your wingspan the length from fingertip to fingertip of your extended arms allows you to play as if you were taller.

So a lot of thoughtful people in basketball realize that and they go okay. So that's a good number to know. I'll use that to help me make a decision about who to choose in the draft or who to start or who to play. And we get that. I have a house, I'm looking at two houses. What's the scaler? I wanna use square footage and that's easy, which is the bigger house, and I'm at one and I want a big house.

So that's a good, it's just don't necessarily always use the bigger scaler, but each room has its own size and yet often as a starting place, I'll bold boil down the size of the house with single number. How many square feet is it? How big's the lot, How many square feet's? The lot the yard, right?

The footprint. And yet in many decisions, I don't just care about the total, I care about the different pieces. I might want a really big kitchen cuz I like to entertain or cook, in which case the square footage of the kitchen don't literally need the square footage. I can see it. Usually that's gonna matter independently of the size of the house.

And the matrix is a set of scales, a set of numbers. So if I said to you here's the person you're thinking of, a hiring for your company. You might say, Okay, I wanna, They have different characteristics, different attributes. There's intelligence, there's reliability, there's do they show up on time?

Are they a good writer et cetera. Are they a good team player? Is there ego get in the way? And I could make a score for each of those. And once I've done that, You might be higher on the score than me on some things that I might be higher on others. So which one should I choose? And would it be great if I could just boil it down?

I could take an average, I could take a weighted average. And we have an incredible impulse, I think, as human beings to do that. And economics, the most obvious example, this is gross domestic product. Tdp. What a scaler. What a simplification. The dollar value of all the goods and services. It abstracts from all the complexity.

So if I say, Oh, the economy got 3% bigger this year compared to last year, could be their parts of it. They shrunk parts of it that went up by 6%. And we say, Oh yeah. But we decided just, I just wanna general feel for the overall picture. It's pretty effective. It's a pretty informative number.

Is that the only thing we care about? Would we really be comfortable and happy if the economy's a whole grew 3%, but they're half of it shrunk? People were struggling, would that, wouldn't that be worrisome? And so if we're not careful, we abstract from all that complexity and just focus on that one number.

And I think we have a human inclination that way. And so part of what I write about in the book, and I've written about this in another, in an essay that I published, A Medium, is that it's not that scales are wrong, but that they're limited. And if we're not careful, we'll forget they're limited. And the pro con list that you mentioned, or the cost benefit analysis.

Cost benefit analysis is an attempt to take all the complexity out of all the costs, all the benefits, the cost, have a negative sign, the benefits, have a positive sign, add 'em up. And if it's a positive number after you've taken away the costs, it's good doing. And that might be true, but it's usually on a good starting point if we're not careful.

It's the ending point. And in these big decisions that I'm talking about, while problems making a ProCon list of things that can't be quantified and trying to weigh them against each other to come to a rational, rational decision about what's the best thing to do is a crazy misleading and dangerous idea.

What I suggest in the book is that so often we forget about some of the things that belong in the ProCon list because they're hard to think about. They don't really match the other things. I'll just put them to the side. I'll think about them later. I'll add them in later. I'll maybe I'll forget about 'em, in which case make a bad decision.

Yeah. Wow.

Srini: One other thing that you say in the book is that we're always searching for a formula, a calculation that will remove the uncertainty. Formulas are simple, that's a feature, but also a bug. Life is complicated. And I think that the other reason that struck me so much was because of the fact that there's always this sort of idea that people think that, Oh, if I do what this successful person did, I will get the results that they got.

And of course survivorship bias kicks in and that's not how it works. It never turns out

Russ Roberts: like that. Yeah. There's nothing more at the end of ads for investments or financial services that we say past results are not a guarantee of future success. And if I ask you, Is that true, you'll say, Of course it's true.

Of course, past results are not a indicator of future success. Of course, tomorrow isn't necessarily gonna be like yesterday That will be absurd. Of course, sometimes it is true that a trend continues and I think when we see that, we see those trends continue, we tend to get seduced and we think, Wow, I see how this is going.

Housing prices go up every year. I don't, it's no risk in buying a house. There's no risk in buying a house I can't really quite afford, cuz eventually, soon even it'll be worth more than I paid for it by a lot and I can take money out of it if I need to, and there's no risk here, which would be very dangerous.

And so that seductiveness that idea that we, it's that often we wanna forget that trends need not continue is incredibly important to be sensitive to and aware of it, but it's very. We all like patterns that we like trends, and it's very normal to think that way. So let's

Srini: talk about this idea of flourishing because you say a well lived life is something more than a pleasant life.

The Greeks called the condition of a well lived life. Ut mania, that word is sometimes translated as happiness or contentment. Contentment. Those words fall short of capturing utopia. Flourishing is a better translation, and the word I'll use here and you say to flourish as a human being is to live fully.

That means more than simply accumulating pleasures and avoiding pain flourishing. Invol includes living and acting with integrity, virtue purpose, meaning dignity and autonomy. Aspects of life that are not just difficult to quantify, but that you might put front and center regardless of the cost. And you're right, those are incredibly difficult to quantify.

So how does one live a life that allows them to

Russ Roberts: flourish? One of the themes of the book is thinking about who you wanna become. One of the shortcomings of economics is that the economic problem is how to get the most out of your scarce resources. It's important, I think that way in some settings, but if ultimately what the economist model of satisfaction is taking what you care about, what are, what economists call your preferences.

You know what you like and how much you like those things, and then making sure you spend your money wisely to take that into account your preferences and the idea that your preferences could change and that you could change what you like. You could change what you care about. Does not fit into the economist model very easily.

It could be done, but it's not easy and as off, almost always ignored. And what I'm suggesting is that you, who you are today, the by who you are tomorrow, obviously example would be. Let's say you don't like opera. When I was younger, I didn't like opera. My father sent me a Madame Butterfly and he asked me to listen to it.

And I didn't do that for a while. And finally I listened to it and I thought it's okay. And then I, some reason, I don't know why I went, decided, I'd give it a real quote, Real listen, kinda like we're talking about a real reading of a book and the music sublime. But most people would, and for most of my life, I just missed it.

There's something beautiful out there that didn't seem beautiful. A trivial example, this in daily life is might be a smokey scotch. First time you taste smokey scotch, it's awful. Tastes like an ashtray. Why would you pay a lot of money? My joke with my kids is don't try it until you're at least 40 cuz it's too expensive a habit to to have.

But smokey scotch is delicious once you work, if you work at it. And I would suggest who we are and our character, which is more important than whether we drink SCO or not. Our character is something we can work on, We can refine, and I'm not suggesting you spend all, every moment of your life trying to figure out how to be a better person, a more interesting person, a more thoughtful person, a more complete person.

But to the extent that you devote some effort to paying attention what we talked about earlier, and think about who you might aspire to be. And I think that is a, This is a different way to think about how to make decisions, particularly the decisions we're talking about marriage, children, career, and so on.

Who do I wanna be? Who do I wanna become? What am I gonna do today that enhances that opportunity or hampers it first? To do that you have to understand yourself. You have to understand your strengths, your weaknesses, your limitations, biases we were talking about earlier may be embedded in you from your childhood and your, or your genetics.

But it's more than that. It's not just enough to understand yourself. You have to understand

,

something about what you might become. And I I think I wrote a paragraph or two, not more to how you might start thinking about that. Historically in human experience, people use religion to aspire to something.

They use meditation. They might use therapy, they might read reading literature. These are all ways that we discover other people. We might be other hats we might put on, other uniforms we might wear. And my only suggestion is to give it some thought. Again, don't devote every waking minute to it. It's probably not the right way to do it, right anyway.

But don't just go through life like a cork bobbing on the ocean and find end up where you might end up doesn't mean you should have a plan. I spent a lot of time in the book talking about the. Having a plan is overrated, but it also doesn't mean you just randomly bob about and do whatever comes your way.

There's certain paying attention that should take place as you go through life and learn about who you are and who you might become. And then finally, I would just say most of the ways we learn about ourselves or through living, and that's the paying attention part of noticing what certain experiences mean to us which ones are transcendent versus merely pleasant.

Which ones are worth making sacrifices for? All those things require paying attention.

Srini: What you make this distinction in the book between the brighter and the better path that you said you observed Adam Smith observed two ways. One way is to be rich, powerful, and famous. The other is to be wise and virtuous.

And then you say the glittering brighter path is a seductive one. The better path is in the shadows and harder to remember. If you care about flourishing, you have to work hard to keep it front and center. And I think the reason that struck me so much is that you're right, the glittering writer path is incredibly seductive, especially much more I think, in a world when the parade of everybody's accomplishments is on public display constantly.

Yeah. Yeah. How do you keep the better path that is in the shadows front and center when you're constantly blinded by the brighter path?

Russ Roberts: The easy answer, of course, is spend less time on social media. Yeah, of course. , spend less time where people consuming what people claim they've achieved or how attractive they are or how how much money they've earned and so on.

It's pretty clear to most of us that the pictures that people paint of themselves on social media have a lot of illusion, right? They're not accurate. We all understand that because we are, many of us are doing the same thing on our pages. And so how do you remember, this is back to the paying attention idea.

How do you remember that? That's not exactly who they are. I don't, you don't have to be jealous of them. That's a fake photo that's been photoshopped, right? That image of themselves is photoshopped. It's funny, my Adam Smith says his, he was a strange bird in certain dimensions. I'm sure he knew a lot about women.

He lived with his mom for a while, for a good chunk of his life. He never married. He never had children. And at one point in his book, he just, in the Theory of Moral Sentiments, his other great book with the Wealth Nations, he says, Why is anybody wear makeup? Mainly women in his day? Of course, because it's a lie

It's not who you are. But of course, we're all wearing makeup, we're all got masks on, and we're all in our armor. And it's hard to remember that you're not the only one. The other people are doing it too. It's not the real them, it's a deception, not necessarily a cruel deception. It's not necessarily a manipulative deception, but you're not seeing the full story.

And so on the jealousy side or the sparing side, I think remembering that is, it's not easy to remember, but it's important. It's clearly one way that I think we can insulate ourselves from the degrading aspects of social media. And having said that, I think Twitter's fantastic. I learned so many interesting things, on Twitter.

I don't spend any time on Facebook. I don't use Instagram. I don't I don't do anything else really besides Twitter, but Twitter's is, has its own brutality. It's it's a very cruel place in many cases. But to come back to your fi try to give more of a conclusion to the answer I'm trying to formulate here to your question about people waving all their accomplishments about the glittering path.

Those things I was talking about before, religion, therapy, meditation, literature, They all help with that. Go read The Death of Ivan Eich by by Leo Tolstoy. It's not a riveting tale. It is not a page turner, so you may struggle to get through. But it will remind you of what is important, what is not important.

You get to the end of that if you could work your way through. It's about a life of a person that isn't as self-aware as it could have been. And it's about a man living a life of illusion from himself. He's not seeing who he really is. And it's a masterpiece. I love that book. Read Master In Man By Tall Story.

Another short story, a little shorter than The Death of Ivan Village. The Master in Man is another. It'll shake you up. It'll remind you about how important unimportant money is relative to other virtues and other things. It's a masterpiece. Read it Master in.

Srini: I wanna finish by talking about one sort of final area that really struck me.

And it was this whole idea of settling. And you say that I'm not encouraging you to settle. I'm telling you that you have to settle. The best spouse, partner, career city doesn't exist. And it's not just because they're hard to find. It's not a meaningful concept. Settling means to willingly accept an inferior option when it comes to marriage or all kinds of wild problems.

Inferior is rarely on the table. And I think that is such a hard thing for people to grasp, particularly when it comes to a decision like marriage where David Brooks said, he's That is the most important decision you will ever make in your life,

Russ Roberts: Might be the second most important. I had a, I had an economist colleague at the University of Rochester, Walter Oy, who said, You most important decision in your life is choosing your parents. It was tongue in cheek. Of course you don't choose your parents, but what he meant was, who you are descending from both genetically culturally is an enormous determinant of who you're gonna be.

The spouse is the next one. With have one at all is a big choice. And then which one, , They won't all take you. Of course, you have to find one who will take you who accepts you and agrees to marry you. It's a really important decision and it's interesting to me. I don't remember if I wrote about this in the book or not, but we don't talk to people or train them in how to think about that decision.

I have a lot of cultural weirdness about love and yeah, I saw her across the room. I knew she was the. Most of the time that's not gonna be the case. And the mo in the movies, it has to be that usually cause only have two hours. So developing a real friendship with the person you're gonna end up airing and learning to understand them and realizing how they're going to be important in your life.

You can't do that in a movie was really hard. It's one movie I think that does it a little bit, which is my fur lady. I think that's a masterpiece for lots of reasons. But one of them is, I think it's one of the few cinematic treatments of love, get debate, whether it's a very good treatment or not, but it does try to actually look at it deeply and it's tough.

It's scary, it's hard, it's easy to postpone, procrastinate, make a decision by not making one. It's very common and I think it's increasingly common for young people today. It's very hard to, they're not could get married. The marriage rate among people in their twenties is way down compared to 50, 60 years ago.

Maybe even 20 years ago. I think. So it's a real thing. Let's finish by talking about this idea of life with a guidebook. Cause you say life is a lot like trying to plan a trip to Rome without a guidebook. Even if all you care about is having a good time during all too short time on the earth, you'll struggle to anticipate what it is that will bring delight, pleasure, and contentment.

Srini: And it was funny because it clearly, I must have internalized this because in that piece about my advice to freshman, they said knowing what you wanna do with your life is overrated because you've hardly lived any of it yet. So don't be too committed. Believe it or not, the less com committed, you are path, the more likely are to find one that leads you to where you want to go and makes you very successful.

And countless books and research have now proven this. David Epstein wrote Range where he talked about this. And Steven Cotler talked about this in his most recent book, The Art of Impossible, where he says you look at peak performers, they tend to seem directionless earlier in their careers.

And yet all the research seems to show that they just skyrocketed off the charts

Russ Roberts: later.

Yeah. I think that's probably selection bias to some extent. I don't I think one has to be, one has to be careful. You made a great point earlier. I didn't fully bring my point back to it, which is as an idea that imitating someone successful is a natural response that I was trying to make.

The point about trends that I was, I never made it get to the punchline. Imitating someone is akin to assuming that a trend will continue. It's this worked for that person, then it'll work for me. I worked yesterday, it'll work tomorrow. Not necessarily, in fact, often not the case. So what was your question this time?

I'm glad I got to make that point, but that was the question. Yeah. I forgot already.

Srini: I guess it wasn't a question as much. It was an observation about that one. Yeah. What was it that this whole idea of planning life, because I think it in a lot of ways brings us full circle because you were talking about the fact that in America we have this freedom when you go into the education system to explore.

Yet that freedom to explore also coexist with this tremendous pressure to know what you want to do with your life. I think part of that is because I was raised in an Indian family where you're prescribed a life path, doctor, lawyer, engineer, pretty early in life and you're being forced to choose from the options that are put in front of you and blinded to the possibilities that surround you.

Russ Roberts: Yeah. I, in the book, the planning's overrated. And I also say that ways get you, helps you get from A to B as quickly as possible, but it doesn't tell you whether you should get to B in the first place. And I think that's the same issue here that you're talking about, the reason planning's overrated is exactly what you said.

You don't know who you want to be. You don't know who you are very, what you don't know very much about who you are when you're 18 or 19 or 20. And what is the, So then what, So what's the lesson? And the, for me the lesson is, it doesn't mean, Yeah. Just wander around and don't worry about it. Take the pressure off.

That's not what I would say is the lesson. The lesson is worry lesson about going somewhere quickly and more about getting better at going get better at exploring, get better at growing your capabilities. Yeah, there's a famous example. I don't like it but it's an example of what we're talking, what I'm trying to say.

Steve Jobs studied calligraphy, I think, in college for a while, and that paid off for him finally because he ended up paying a lot of attention to fonts when he was designing the app. Okay, That's nice. Is that really the reason I, Maybe it's okay. But the lesson there is not

about fonts. The lesson is grow as a human being and you'll be amazed at what the applications are later on. Get good at stuff. Learn how to write, learn how to read, learn how to think, help other people practice things get better at something, almost doesn't matter what it is. Have a craft that you try to excel at.

It is amazing how many times things you did when you were younger that at the time seemed worthless. Maybe even economics, maybe in Berkeley turn out to have a payoff later on. I'm not saying you're gonna end up at a dairy farm where you're gonna apply those lessons, but so many things that we as you as when we're young, say what's this good for?

And the answer might be, You have no idea. Wait and see. And a lot of the skills do pay off, I think. It's hilarious. At least in my life. I'm surprised.

Srini: Yeah. It's funny cuz I remember telling that story to my roommate and he said, Dude, he said, You create an online course called Maximize Your Output Now like Jesus.

Okay. Like I guess it did come full circle in a very unexpected wear . This has been just an absolute pleasure. I have one final question for you, which is how we finish all of our interviews at the Unmistakable Creative. What do you think it is that makes somebody or something unistaff.

Russ Roberts: Explain.

Srini: When you read a book called Unmistakable as you know, because we both I think are in the same imprint, you have to actually define what the hell you're talking about. So I define unmistakable as something that is so distinctive that nobody else could do it but you in the way that you do it.

It's something that is immediately recognized as your work. So much so that you don't even have to put your name on it. So what's the question? What do you think makes somebody unst?

Russ Roberts: I don't know. But if we think about what we've been talking about, I'm thinking about some advice I read once from Kevin, I think it was Kevin Kelly and said, Do the things that only you can do, just one of the things you're essentially talking about.

What are those things? Is there a sense in which you're meant to do some things that fulfill who you are, fulfill your uniqueness as a human being? If you can find those things, you're going to have a very good life. You'll have a meaningful life, a purposeful life, a life that brings deep satisfaction.

And I wouldn't overemphasize that. I wouldn't say you should spend a lot of time trying to discover what that is, but you should spend a lot of time with your eyes open to notice it if it comes along. And those are two different things. They look similar, but they're different. And I think a lot of what we've been talking about today is being able to notice when things come along that are meant for you.

Beautiful.

Srini: I've enjoyed talking to you so much. This is just a Absolutely brilliant thought provoking and insightful. Where can people find out more about you, your work, the book, and everything that you're up?

Russ Roberts: I archive all my work@russroberts.info. So that's the easiest place on Twitter at econ talker.

My podcast is Econ Talk. All 850 episodes going back to 2006 are available without charge. And have a page at Medium, so with essays, but you can find those at Russ Robert Stein info.

Srini: Amazing. And for everybody listening, we will wrap the show with that.