Learn Less to Find Success & How to Use Game Theory, Risk, and Luck to Your Advantage

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Speaker 1 Today, on something you should know, what often causes people to cheat on their partners? Then, the secret of success may be to learn less and do more.

Speaker 2 It just reminds me of like, I went to school for five years, Mike, for architecture, and it was great. It was amazing, and I learned a lot.

Speaker 2 I learned more in my first month of being on the job as an architect than I did at five years of school because I was actually in the middle of it all, implementing it in real life.

Speaker 1 Also, is it ever illegal to go barefoot or drive barefoot? And you may not realize it, but the world of economics can teach you a lot and help you succeed.

Speaker 3 Yes, economics has a lot to say about the everyday choices that people make regarding their life, their career, just about everything, because economics is fundamentally about why people make the decisions that they do.

Speaker 1 All this today on something you should know.

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Speaker 1 Something you should know, fascinating intel, the world's top experts, and practical advice you can use in your life. Today, Something You Should Know with Mike Carruthers.

Speaker 1 What causes people to cheat?

Speaker 1 Well, that's an interesting question and one we're going to start with today. Hi, welcome to something you should know.

Speaker 1 So husbands and wives have affairs sometimes. But why? Well, a study at the University of Connecticut sought an answer and it seems money plays a role.

Speaker 1 The more financially dependent a person is on their spouse, the more likely they are to cheat. Even men who work but are not the primary breadwinner are prone to cheating.

Speaker 1 If both spouses work and the man makes about 70% of the total income, that's the sweet spot where he is less likely to cheat.

Speaker 1 The conclusion of this study is that we don't like to be in relationships where we feel like a loser. The author of the study says we like equity in our relationships.

Speaker 1 For example, we don't necessarily want to be with someone who is much more attractive, successful, or intelligent than we are, just the same as we don't want to be with someone who is is much less attractive, successful, or intelligent as we are.

Speaker 1 Still, it's important to understand that it is only a small percentage of people who cheat. Most people who are economically dependent are not cheating.

Speaker 1 Men have a 15% chance of cheating, but an 85% chance of staying faithful. So there's no need to freak out.
And that is something you should know.

Speaker 1 There is one difference today compared to a few decades ago, and that is the infinite amount of information that surrounds us.

Speaker 1 Today, there are so many things to learn in order to keep up, and no matter how much you learn about something, it seems there's always more to learn.

Speaker 1 And of course, if you spend all your time learning, there's no time for doing. But if you don't learn everything, you worry about what you're not learning.
What are you missing out on?

Speaker 1 It can make you crazy. So what do we do about this? Must we learn everything to be up to speed? What if we learned less, not more?

Speaker 1 Maybe that would be better.

Speaker 2 But how do you do that?

Speaker 1 Well, here to make that case is Pat Flynn. Pat is a serial entrepreneur, podcaster, and he has a podcast called Smart Passive Income that's really excellent.

Speaker 1 And he is author of a book called Lean Learning, How to Achieve More by Learning Less. Hey, Pat, welcome to something you should know.

Speaker 2 Mike, thank you so much. I appreciate it.

Speaker 1 So I really started thinking about this when I saw your book, that we have today more than ever before, if you go back through all of human history, never have we been so saturated with information that we feel like we need to learn.

Speaker 1 It's a very new problem.

Speaker 2 It's definitely a new problem for sure. I mean, we used to value just access to information because we didn't all have access to information.

Speaker 2 You remember the Encyclopædia Britannicas we had in our homes? It was like if you had one of those, you were, you know, higher class because you could afford information that others couldn't.

Speaker 2 And we almost treated it like a scarce food source. When you came across information, you hoarded it because you might not come across it again.

Speaker 2 However, we still continue to treat it the same way, despite the fact that we have unlimited access to all the information we could ever need about anything, really.

Speaker 2 And even more, we are getting force-fed information now by algorithms on these platforms that we didn't even know we needed. And as a result, we're tired, we're lethargic, we're heavy, if you will.

Speaker 2 It reminds me of,

Speaker 2 like, the solution is not more information, which, again, we always default to. It's the right information at the right time in the right way.
I was reminded from an old, old book.

Speaker 2 I mean, this is a study in Scarlet, which was the very first volume of Sherlock Holmes written by Sir Arthur Conan Doyle.

Speaker 2 And in it, This is where Watson discovers his new friend, Sherlock Holmes, and is learning about him.

Speaker 2 And And one thing he was fascinated about was the fact that Sherlock Holmes didn't know that the earth revolved around the sun.

Speaker 2 And when Watson was like, hey, Sherlock, didn't you know the earth revolves around the sun? And he was like, no, I didn't know that. And now that I do, I'm going to do everything I can to forget it.

Speaker 2 Because that had nothing to do with what Sherlock Holmes wanted to master, which was solving mysteries and murders and all this kind of stuff.

Speaker 2 And I thought that was like a perfect analogy because, again, how much stuff do we have in our our brains that literally is useless?

Speaker 2 You know, it might be fun if you're a contestant on Jeopardy, but if you're trying to change your life, if you're trying to add value into this world, like what does it mean to just have information anymore?

Speaker 2 It's not like it used to be.

Speaker 1 Right. Well, if

Speaker 1 information was the key to success, well, we'd all be geniuses because,

Speaker 1 you know,

Speaker 1 there's no way you can say, well, I couldn't find it. I couldn't find act.
I had no access to that information. It's everywhere.

Speaker 2 Right. And again, it's this idea of just-in-case learning, which is all what we've been doing, learning just in case we need the information

Speaker 2 versus just-in-time information and trusting, like you said, that the fact that when you need the information you need, it's going to be there.

Speaker 2 And by the time you need it, instead of learning it beforehand, by the time you need it, it's probably going to be better and more updated and more relevant. So

Speaker 2 it is a different way of learning. It's not anything revolutionary.

Speaker 2 It's just it's important now more than ever because especially with AI now and how quickly everything is changing, like what is value now?

Speaker 2 Value is not what you know, but how you implement and how you discover and how you learn.

Speaker 1 Well, do you think people, do you hear, do you know there's research that people feel overwhelmed by information? Or is it just that it seems like that would be the case?

Speaker 1 But do we know that people are walking around going, that's just too much information?

Speaker 2 I don't think we consciously think that. I mean, I think now that you and I are speaking about this, it's like, oh, yeah, of course.

Speaker 2 I mean, we, we feel it, but we don't go around complaining about it because learning gives us, in fact, a false sense of moving forward.

Speaker 2 It gives us a sense of accomplishment just by knowing new things.

Speaker 2 I mean, how many of us sit in our cars and we cannot sit without some audio book or podcast playing because we feel like it's wasted time. But there is something called overinspiration.

Speaker 2 We might get too compelled and learn too much that pulls us away from the commitments and the sort of direction that we've already been going down. I've personally felt that.

Speaker 2 And I know through conversations, at least with entrepreneurs and other very curious people, that there does seem to be too much stuff out there. And what we all want is just better focus.

Speaker 2 But the world's not set up for us to be better focused, unfortunately. And these apps and algorithms that thrive on...

Speaker 2 keeping your attention on these platforms by, you know, locking you in, if you will.

Speaker 2 Again, we're we're not set up for success here.

Speaker 1 Well, it does seem kind of like a dual-edge problem because sometimes you will do something or try to do something and you don't know enough.

Speaker 1 And people will tell you, you don't know enough about this to do this. But on the other hand, there are people who just want to know everything.

Speaker 1 And the sweet spot has got to be somewhere in the middle.

Speaker 2 It just reminds me of like, I went to school for five years, Mike, for architecture. And it was great.
It was amazing. And I learned a lot.

Speaker 2 I learned more in my first month of being on the job as an architect than I did at five years of school, because I was actually in the middle of it all,

Speaker 2 implementing it in real life. And there's something to be said for how education used to be way back in the day in the more apprenticeship type model.

Speaker 2 Like, how did a blacksmith learn to be a blacksmith? They didn't study by going to school for four years and then finally, you know, pounding something on an anvil. They were in there with

Speaker 2 a mentor, like maybe every once in a while getting burned a little bit and feeling the heat of the forge and all these things. I mean, this is real life.

Speaker 2 And unfortunately, we're in an age now where we just have, again, access to so much stuff that we feel like we just need to keep consuming it and keep consuming it. So

Speaker 2 this, again, this principle of just-in-time information. I'll give you a very specific example.

Speaker 2 When I first got laid off, when I got laid off for my architecture job, I used to be an architect and I got laid off during the Great Recession in 2008. And I was kind of of scrambling.

Speaker 2 I didn't know where I was going to go, but I eventually discovered this world of online business.

Speaker 2 And my first inclination when I decided that I wanted to be an entrepreneur online was to go to business school, you know, the thing that was going to take the longest and, you know, the most money to invest to actually get the result.

Speaker 2 But I didn't have the time. I was moving back in with my parents and I was getting married.
So I had something at stake. I had a reason to take action.

Speaker 2 And then I discovered

Speaker 2 the fact that I could take some information I had about a particular exam in the architecture industry called the LEED Exam and put it online. And that's what I did.

Speaker 2 And I started to gain a little bit of a following. I had a lot of traffic coming to my website about this exam because there wasn't a lot of information about it at the time.

Speaker 2 And then I was told, Pat, you should write a study guide for it. You should publish it as an e-book.
And I had no idea what an e-book was. This was, again, 2008.

Speaker 2 And so I went into, again, full learning mode, old habits. Let me learn about this whole process first before taking one step.

Speaker 2 And I started to learn about sales pages and copywriting and online marketing. And I just got completely overwhelmed by it.

Speaker 2 And I went an entire month of just learning everything I could and getting so disabled from it all. Until, again, I was living at home with my parents and I was just like, you know what?

Speaker 2 I have to take some action. So I decided to take it into chunks.
So the first thing I knew was that nothing was going to happen. I didn't need a sales pager.

Speaker 2 know how to sell this thing if I didn't have the thing to sell first. So I did what was easy, which was just write the thing.
I just opened up Microsoft Word.

Speaker 2 I said, I'm not even going to worry about how to format this thing, how to sell it. I just need to write this thing first.
That's step one. So that's what I did.
And so it took three weeks.

Speaker 2 I wrote 74 pages of notes in this study guy that was on a Word document. I said, okay, great.

Speaker 2 I have this thing, but okay, I don't need to know how to sell it yet because I need to know how to make this look good first. So then I found one resource.

Speaker 2 It was a YouTube channel that was about formatting Word documents to look nice. And I just studied that for about a couple of days.

Speaker 2 And eventually I had a landscape version, two columns that looked really nice. And I said, okay, great.
I have this PDF file now. I need to know how to sell this.

Speaker 2 Instead of spending months trying to figure this out, I just went to a person who had sold digital goods online before and asked, hey, how do you sell? your digital products.

Speaker 2 And they said, oh, there's a tool called eJunkie that if you put your download there, you can just get a button to put on your website. And it took me an hour to do that.

Speaker 1 I said, great.

Speaker 2 I have this button now, but now I need a sales page. I've never written a sales page before.
And again, my mind went to, okay, well, now I got to study to become a copywriter.

Speaker 2 No, I asked around and found out that there was a book called Moonlighting on the Internet. 99% of the book, like 200 pages, was about different ways to make money online from eBay to other things.

Speaker 2 I didn't need any of that.

Speaker 2 I just needed the sales page template in the back of the book, which was basically a Mad Lib style thing where I can plug and play my own product and features and and benefits.

Speaker 2 And I just pulled that, used that as my sales page. And that book has generated over seven figures since it launched in 2008.

Speaker 2 And it wasn't because I studied the whole thing and then figured it out, which is what most people do.

Speaker 2 It's because I figured it out as I needed it and found the resources that were available to me at the time when I needed it. That's lean learning.

Speaker 1 I'm speaking with Pat Flynn, serial entrepreneur, podcaster, and author of the book Lean Learning, How to Achieve More by Learning Learning Less.

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Speaker 1 So Pat, the story you just told is a great illustration of lean learning.

Speaker 1 And certainly in the online marketing world, and you know, you're one of the, I don't know if you're a pioneer, but you're certainly well known for online marketing.

Speaker 1 And that's a, that's an area where you could just absorb information forever and never know it all. I mean, it just new things keep coming out all the time.

Speaker 1 And that ability to focus in on what you need and ignore what you don't, that's hard for a lot of people.

Speaker 1 And in that world, I mean, that's just, I mean, I looked at that world myself and really, I think I fell victim to

Speaker 1 what you're talking about. I said, I'll never,

Speaker 1 I don't understand all of this. And so I walked away.
Yeah.

Speaker 2 And that's what most of us do, or we continue to learn because it feels like we're making progress.

Speaker 2 We understand on the surface many things, but it's when you start to go deep on few things that things start to work out. I mean, if a person were to ask me, hey, how do you make money online today?

Speaker 2 I mean, there's a million ways to do it. So the idea is pick the one that seems most interesting or maybe you feel like you have the best opportunity.
And then you leave everything else out.

Speaker 2 And then you go into it. And the hard thing about this, Mike, is we have FOMO.
I mean, I think that's a big part of this, of what we're dealing with.

Speaker 2 We're afraid that if we don't learn the the thing everybody's talking about right now, that we're missing out, that we're going to fall behind. And that's, that's a big struggle.

Speaker 2 And there used to be some, some studies on this, and there were, there were some even answers to this problem. And the answer was Jomo, joy of missing out.
And I never got on board with that.

Speaker 2 It's like, no, I'm not joyful that I'm missing out on what everybody else is doing. Like, I don't, I don't feel joy with that.
So I've rewritten.

Speaker 2 a solution that's similar, but it's the joy of opting out of those things, having the ability to go, I see that there,

Speaker 2 and that's not for me right now. I'm going to opt out of it and I'm going to be proud about that, which then helps me re-opt in to the things that I've already committed to.

Speaker 2 But even then, I was still struggling because, again, everybody's talking about this new resource or new book that came out.

Speaker 2 So what I've done is a little strategy where I take those new resources that are coming across my feed, my inbox, whatever it might be. And I just store them away for later.

Speaker 2 And I use air quotes when I say for later, because the truth is, I put them in there so it allows me to move forward from them. And I never go back to them.

Speaker 2 I literally never go back to my notion board full of resources of things that I thought were going to be important to me one day, because by the time I need them, there's usually a better resource.

Speaker 1 Can you take an example? Because the online world is a particularly meaty example for your definition here, but not everybody's into online marketing.

Speaker 1 Maybe something a little more mundane and apply this to that.

Speaker 2 So let's take take something like fishing. I don't know.
I'm just choosing this randomly because I went fishing last week and I love to fish. And I want to learn how to be a great fisherman, right?

Speaker 2 So, okay, let's learn how to fish. Well, which baits do I use? Well, I could use a jig.
I could use a spinner bait, a buzz bait, a surface bait, frog.

Speaker 2 Do I use a drop shot rig or a Carolina rig or a Texas rig? Already I'm getting overwhelmed from all of the options that are available to me, right?

Speaker 1 So

Speaker 2 I try to pick one to start with and just focus on that. And I ask around and get the right resources from people who are good.

Speaker 2 And I found, for example, that the drop shot rig, which is a rig that uses a weight and, you know, on the bottom and the worm, like a rubber worm with a,

Speaker 2 I don't need to explain it, but it's the one that's the sort of simplest to use and simplest to tie on. And it can get you going at least.
But it doesn't provide the most excitement. It doesn't

Speaker 2 normally give you the biggest fish. It's just the easiest, easiest, but it gets you going.
And that's where you start with. And you focus on that.
And that's all you need to worry about.

Speaker 2 That's the only bait you're going to need to buy. Yet you look at everybody else's tackle boxes and what do you see? You see a million baits in there.

Speaker 2 And so how the heck are you supposed to figure out what to do if you have all these options? One principle I talk about is called the voluntary force function.

Speaker 2 And this is when you're trying to master something or get better at it.

Speaker 2 If it's a skill that you continually try, but then kind of pull away from because it's difficult, you try to put yourself in a situation of maybe heightened pressure or where you have no other options but to do that thing.

Speaker 2 So let's stay on the fishing example, for example.

Speaker 2 I wanted to learn this past year how to fish with a jig. And a jig is a particular bait that has a larger hook.
It has a skirt with a weighted head. And it's a little bit hard.

Speaker 2 It's actually a lot harder to use because there's a certain way to fish it, but it can get you much bigger fish. You just get usually fewer bites.

Speaker 2 And it's very hard to use because there's a certain way about it.

Speaker 2 And every time I would tie on a jig and fish with it, I'd go 15 minutes without a bite and go, oh, okay, I guess I'm just not good enough for this.

Speaker 2 So I'm going to go back to old reliable, the drop shot rig, and then catch fish and go and basically use confirmation bias to prove that I was never going to be a jig fisherman.

Speaker 2 However, again, I wanted to do it. So I went out on the boat one day, not too long ago, in fact, about six months ago.
And all I brought on the boat were jigs.

Speaker 2 I literally had no other option. Well, I mean, what was I going to do? Go home? No, of course.
I'm going to go fishing.

Speaker 2 You know, I cast my first jig out there, got no bites for 30 minutes, wanted to change something else, but I couldn't. I was forced to just continue to use it.

Speaker 2 And lo and behold, after a few hours, I finally got my first bite, which unlocked a certain confidence with it.

Speaker 2 And by the end of the day, I had ended up catching two jig fish with it, which was the first time that ever happened. And now it's my go-to.

Speaker 2 I always now fish with a jig because I've unlocked that confidence, but it was only because I forced myself to use it.

Speaker 2 So that's a maybe more analog version, if you will, of using lean learning to up-level your skills on something.

Speaker 1 In lean learning, you're trying to focus on what you need, what you want, and you ignore the rest.

Speaker 1 And it's that ignoring the rest part that to me would be very difficult because you worry, well, maybe I really need to know that.

Speaker 1 I mean, you said that you got that book and there was one chapter about sales pages, but there were a lot of other things in there.

Speaker 1 And you might think, well, maybe if it's all in the same book, maybe I need all of this.

Speaker 1 It's hard to know what to ignore.

Speaker 2 Correct. Oh, yeah.
Again, FOMO and what if the next page has the golden ticket, right? And it's very hard to do.

Speaker 2 So it's very important to know when we go into lean learning, which is, okay, what are we trying to accomplish here? And what is going to be my next step to do that?

Speaker 2 Knowing that that next step is going to be, in most cases, temporary because there will be another step after that is the key.

Speaker 2 So giving yourself a certain amount of time to remain focused on the next step or a certain amount of time to learn something to then implement is what helps me move forward in learning just the one thing for now.

Speaker 2 Because it's not a one thing forever. That's the next thing.

Speaker 2 It's a certain

Speaker 2 focus for a certain amount of time. that allows me to go, okay, in order for me to master this, I have to focus on this for now.
It's not saying no to that new piece of information.

Speaker 2 It's maybe I'll go back to it when the time is right later.

Speaker 2 The other thing is leaving some room for that curiosity. I have something called the 20% itchral.

Speaker 2 This is 80% of your time is dedicated to the commitments that you've already said yes to, the things that you know you need to do.

Speaker 2 Leave 20% of that time for some curiosity, for that experimentation, for maybe learning that other thing to to see if that actually does fit in or not.

Speaker 2 And giving yourself a little grace, a little bit of a Petri dish to try things in is really, really amazing. Google does this.

Speaker 2 They allow their employees 20% of their time to use their resources they have to invent new things that aren't even in their job description.

Speaker 2 And Gmail was something that was invented in that 20% of time, which is amazing to think about.

Speaker 2 And I often will give myself 20% of time, and basically that's Friday because Monday to Thursday is 80% of the week.

Speaker 2 Friday is used for experimentation, for play, for things that if even if they don't work out or if they fail, that's okay. Between 2017 and 2019, Mike, my 20% of time was

Speaker 2 given to an invention. So I've invented something called the switch pod.
It's a tripod for travel videographers. And those two years, every Friday, was dedicated to learning how to invent something.

Speaker 2 I never invented a physical product before.

Speaker 2 Now we have like a patent for it and everything and it's for sale now on Amazon and on our website and it continues to generate revenue for us every single month.

Speaker 1 So I have this theory that, you know, when people talk about, oh, there's so much and there's so much to do and I have to learn all this.

Speaker 1 And but built into that is that a lot of the time that you say you're working, you're probably being distracted because it is so easy to get distracted with gadgets and apps and social media and all that.

Speaker 1 How do you recommend people handle distraction? How do you handle it?

Speaker 2 That is a great question. That's probably maybe the biggest struggle out of all the things we've talked about today because again, these platforms are literally built to suck you in.

Speaker 2 Schedule your distractions. That's number one.
And I actually do that. If you look at my calendar, you'll see there are chunks of time every day to actually waste time.

Speaker 2 Like that's where I get my fill, if you will.

Speaker 2 Those endorphin hits that I guess I crave because I'm on these platforms now, we all crave, means that when I feel compelled at a time where I shouldn't, I can tell myself, well, that's not for right now.

Speaker 2 I'll be able to get that later. And that's been really, really helpful for sure.

Speaker 1 Well, I really appreciate and enjoyed listening to you say all this because I can't tell you how many times I have tried a project.

Speaker 1 and gotten so buried by thinking, I've got, oh, there's so much to learn. I've got to understand this whole thing

Speaker 1 so you and as you're saying and you've proven because you've done it that a better way is to work as you go learn as you go and and that that's the better way to get to the end Pat Flynn has been my guest the name of his book is Lean Learning how to achieve more by learning less and and Pat's got websites and and YouTube channels and it would be fun if you appreciate what he had to say today.

Speaker 1 Just put his name in a search engine and you'll see all kinds of things about Pat Flynn. Thank you, Pat.

Speaker 2 Thank you, Mike. This is great.

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Speaker 1 I want to tell you about a great new podcast I think you'll like. I'm loving it.
So what happens when our passions become obsessions?

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Speaker 1 You'll hear David talk to comedian Tig Nataro about her complex passion for plant-based food. Actor David Arquette on his love of Bozo the Clown.
Paula Poundstone on her house full of cats.

Speaker 1 Celebrity chef and author Michael Simon discusses why he just can't quit the Cleveland Browns, even though they often make him miserable, and so much more.

Speaker 1 It's pop psychology disguised as conversations with the world's most fascinating people.

Speaker 1 You can listen to David Green is obsessed wherever you get podcasts.

Speaker 1 One very interesting way to look at your life and the decisions you make is through the lens of economics.

Speaker 1 Because through that lens, you can start to see your decisions differently and maybe make better decisions for yourself.

Speaker 1 And you're thinking, what?

Speaker 1 Really?

Speaker 1 Economics? I live my life pretty far from the field of economics. Well, hold on.
Meet Daryl Fairweather. She's going to explain this and tell you why it's so important.

Speaker 1 Daryl is chief economist at Redfin, where she analyzes U.S. housing markets and consumer behavior.

Speaker 1 She is a member of the Academic Advisory Council of the Federal Reserve Bank of Dallas, a former senior economist at Amazon and author of the book, Hate the Game, Economic Cheat Codes for Life, Love, and Work.

Speaker 1 Hey, Daryl, welcome to something you should know.

Speaker 3 Hi, thanks for having me.

Speaker 1 So let me ask you to explain the premise here because, you know, as I live my life and make the decisions I make, make, I so seldom say to myself, so I wonder what the world of economics has to say about this decision.

Speaker 1 It's just not something I do. So explain this

Speaker 1 and why this is important.

Speaker 3 Yes, economics has a lot to say about the everyday choices that people make regarding their life, their career, just about everything, because economics is fundamentally about why people make the decisions that they do.

Speaker 3 Now, all those decisions collectively constitute the economy, like the decision of what to buy at the grocery store or where to work or whether to own a home.

Speaker 3 Those are all individual decisions that can be modeled with microeconomics and even with game theory. But when you add it all up, it's the entire economy.

Speaker 3 But if you understand economics, you can understand how to make choices that will help you achieve your objectives.

Speaker 1 So give me an example of that. If you understand economics, it can help you make choices.
So, give me a choice and tell me how economics can help me.

Speaker 3 Sure. So, one example is the choice of whether to stay with a boyfriend or not, or a girlfriend, or whoever you might be in a relationship with.

Speaker 3 One of the examples I give in the book comes from this movie where it's called Who Can Play That Game, where it's Viveka Afox and Morris Chestnut.

Speaker 3 They're a couple, but Morris Chestnut starts flirting with other women and makes Viveka Afox feel like her relationship isn't as good as it used to be.

Speaker 3 And she, you know, her girlfriends, they might scream at their boyfriends or threaten to leave them, make their lives worse, but she was smarter than that. She seemed to understand game theory.

Speaker 3 And she went out and, you know, found other suitors and flaunted those suitors in front of her boyfriend so that he would understand that she does have better options outside of the relationship.

Speaker 3 And that seemed to scare him enough to get him to, you know, stop his philandering ways and commit to her.

Speaker 3 But really, what she was doing is she was understanding how negotiations work, how in order to get somebody to give you better negotiation terms, you have to improve your outside options.

Speaker 3 And that's a theme that's fundamental to economics. Understanding the opportunity costs, the outside available options can really help you understand how to go about a relationship.

Speaker 1 Well, that's a really good example. But see, I wouldn't think of that as economics.

Speaker 1 I would think of that as more human nature, that if you want someone to like you, be more attractive to other people and that makes you more attractive to that person.

Speaker 3 Yeah, I think what's going on an economic level is that, you know, the boyfriend in the situation, he had to decide whether he was going to try to improve the relationship or just move on from it.

Speaker 3 And that is an assessment of the benefits and costs, right? And benefits and costs are really what economics is all about.

Speaker 3 You can put those benefits and costs in monetary terms like dollars, but anytime there's a benefit and a cost there is like this implicit price associated with it so give me another example of that because that's uh that's different because that's that starts to get you thinking and so keep me thinking yeah so another example comes from the housing market if you are a buyer trying to decide what offer to make on a home it's good to understand what options are available to you so for example right now in the housing market there are more sellers like homes for sale than there are buyers looking for a home to buy which means that the buyer has more negotiating power because if one homeowner doesn't want to offer a reasonable price there's probably another home seller out there who will offer a more reasonable price and that means that home sellers they need to understand that they can't be demanding these super high prices they need to lower their prices and meet buyers where they're at because if they don't you know make good on an offer, they're probably not going to get any offers at all on their home.

Speaker 3 So understanding like like how many options are available to both you and the person that you're negotiating against can help you understand how far you can push a negotiation.

Speaker 3 And that's true both in the housing market. It's also true in the job market.
And it might seem a bit callous, but it's also true in dating markets.

Speaker 1 Well, there is that phenomenon that, you know, if you're selling your house and you've lived in it a while and you have a lot of great memories in that house, you've put some work into that house, you know, maybe you put on a new roof on that house,

Speaker 1 You value the house as the seller more than a prospective buyer who's never seen this house before will ever value it.

Speaker 3 What you're describing is the endowment effect.

Speaker 3 When a person owns something, and especially something that they're really attached to, they've lived in like a home, they tend to value it more than the average person would or how they would themselves value it had they just come to the home, you know, fresh without having any of that association with it.

Speaker 3 There's a lot of experiments that demonstrate this, and it definitely shows up in the housing market because you oftentimes see that sellers are very reluctant to accept that buyers aren't willing to offer the same price that they internally value their home at.

Speaker 1 So you said that the buying decisions we make when we go to the store, it's all part of the economy and it's all economics.

Speaker 1 And so, so like when I go to the grocery store, I get that it's part of the economy, but explain what you mean by that.

Speaker 3 Sure. So, I mean, when you go to the grocery store, you're just one of maybe thousands of people who shop at that store.

Speaker 3 But when you decide to buy a product, you're increasing the demand for that product and contributing a little bit to that product, maybe being priced a bit higher the next time it's sold at that grocery store.

Speaker 3 Or if you decide not to buy a product, that means that that product's going to linger on the shelf a little bit longer, which costs the grocery store money.

Speaker 3 And the grocery store might decide to lower the price on it to get that product moving more and more. But you, at at an individual level, you're also making economic choices.

Speaker 3 When you decide to say, buy the organic milk instead of the regular milk, you have to make some determination about how much you value organic versus the regular. Maybe that has to do with like.

Speaker 3 I don't know, your health situation or how much money you have. All that goes into that decision.

Speaker 3 And that money that you might be spending extra on organic milk versus regular milk, it could be going towards other things, right?

Speaker 3 Like you could be spending it on something else in the grocery store or something entirely different you could be saving the money for example so even though it seems like a really small decision all these little decisions add up and can determine you know how much savings a person has over their lifetime or how healthy they are um so many different outcomes can can happen

Speaker 1 so you talk about overthinking and i think that that that's a thing that that really messes people up and and so i'd like to get your take on it through an economic lens of overthinking

Speaker 3 sure so in economics there's this concept called diminishing marginal returns, which basically means that the more you do of something, the less beneficial it is, like the longer you do it or the more you do of it.

Speaker 3 And, you know, this can apply to, say,

Speaker 3 going to an all-you-can-eat buffet. That first bite of food is going to be a lot more satisfying than the last bite of food when you're already stuffed.

Speaker 3 But it also applies to something like how much time you put into a decision.

Speaker 3 The first 10 minutes you spend thinking about, you know, the choice of whether to buy that organic milk at the grocery store is going to be a lot more useful than the next 10 minutes.

Speaker 3 There's only so much information that's out there. There's only so much you can really ruminate on a situation and get new insight on it.

Speaker 3 So at a certain point, at a certain point, you just need to kind of

Speaker 3 have a stopping point and move on, or else you're going to be wasting your time that could be spent on other things.

Speaker 1 Yeah, and wasting other people's time because you know the person at dinner who can't decide what to choose off the menu. And oh my gosh.
Exactly.

Speaker 3 That's so true.

Speaker 1 It makes it drives everybody else nuts because it's just a meal. It's probably everything on this menu is probably pretty good.
Pick something and people will just overthink it.

Speaker 3 That's so true. Yeah.
Just make a guess. It's probably the first impulse you have is probably the right one, especially for something inconsequential like what to order on a menu.

Speaker 1 How does economics,

Speaker 1 an example would be great, of a play in with family?

Speaker 1 And you, I know you talk about that, but like, how does, how does that work?

Speaker 3 Yeah, so economists have modeled family dynamics, you know, using the principles of economics.

Speaker 3 You can think of a family as a kind of firm where the things that you produce are maybe, you know, satisfaction, like having good times with your family, but it also might mean, you know, producing children that are one day going to be high earners that could help you in retirement i mean that's a strategy that some families use they they put a lot of money into their kids so that they can do well in the next generation and all these choices uh can be eliminated with economics there are benefits and costs to things to decisions like you know how many children to have or how much time to spend with your children how much time to spend working versus uh you know taking care of your children whether it's the whether one spouse works or one spouse stays at home versus hiring help to take care of children, all that can be illuminated with economics and understanding the costs and benefits associated there.

Speaker 1 Yeah, well, that's, you know, I hadn't really thought about that. I mean, I have children, but I never thought, well, let's let's invest in them so they can take care of us when we're older.

Speaker 1 I did, I, you know, I guess I never thought that far ahead. I don't know.

Speaker 3 Well, maybe another way to think about it is that you don't have to keep taking care of them the older they get. So it's another flip to it.

Speaker 1 I want to talk about optimizing your life because I'd like you to explain what you mean and then talk about examples of that and how people can maybe use those principles.

Speaker 3 I think for the first

Speaker 3 decades of a person's life, they're probably most concerned with earning more money, which is really about optimizing your career to have the highest paying career, the career that gives you the most satisfaction, where you can stay in it the longest and get to a point where you feel like you've really made it.

Speaker 3 But you also have to think about the other time you spend outside of your career, whether that be time spent with your family or time spent on leisure or traveling. And that is,

Speaker 3 I think, actually more complex than just going after income, going after money. You have to have to decide how to spend that money, how to invest it.

Speaker 3 And also, how are you going to actually turn that into life satisfaction? And I think that involves evaluating really what it is that you value in life, like what brings you joy, what are your goals?

Speaker 3 And And that doesn't really seem like an economic decision, but there is some insight from economics there. There's research about how much money it takes to achieve happiness.

Speaker 3 There is like a cutoff where having more money doesn't really bring you a lot more happiness.

Speaker 3 And at that point, I think it's more about having the kind of awareness to know how to bring yourself that satisfaction, not having it come just from money.

Speaker 1 So talk about game theory and how we can apply that to our lives.

Speaker 3 Yeah. So game theory, it's like the building blocks of economics.

Speaker 3 any negotiation is a negotiation game and can be modeled with game theory and all those negotiations end up determining prices like when a buyer and a seller are negotiating on the price of a home it ends up being a piece of what makes up you know national home sale prices um when we measure it uh in economics but

Speaker 3 There are all types of games that you interact with in your career. So interacting with your boss and

Speaker 3 like, as an employee, you have an objective. You probably want to earn more money, you want to get promoted, but your boss has different objectives.
They want you to produce as much as possible.

Speaker 3 They want to make sure that you're not slacking off on the job. And those objectives can go into conflict with one another.

Speaker 3 And there's this game called the principal agent game or the principal agent model that illuminates how those situations play out and how a boss can better align

Speaker 3 their goals with the goals of an employee and vice versa so that they're both getting what they want out of the relationship.

Speaker 3 But understanding that that interaction is just a game and it's imperfect and there are things that can go wrong, I think, can help people understand how to get their objective of a promotion or a raise.

Speaker 1 So tell the story of Destiny's Child and how that relates to economics. That's the Destiny's Child, the girl group that Beyoncé was in.

Speaker 3 Sure. So in the early 2000s, Destiny's Child had just broken out.
They just had put out a couple of great hits that were rising in the charts, but they were still, you know, not exactly established.

Speaker 3 They were new on the scene. Beyonce was starting to break out as the star.

Speaker 3 Her dad was the manager of the group, which some of the members of the group saw as the reason why Beyonce was getting much more attention than they were.

Speaker 3 Latavia and Latoya, they went to Beyonce and the rest of the group and issued them an ultimatum saying it was either them or the manager, Matthew Knowles, Beyoncé's dad.

Speaker 3 And I think the reason that their negotiation was rejected, why those two women were, you know, basically kicked out of the group, was that they thought that they had more leverage than they actually did.

Speaker 3 They thought that if they threatened to leave the group, that would mean that the end of the group if they actually left.

Speaker 3 And they would surely agree to this negotiation because they wouldn't want the group to break up. But what they misunderstood was that Beyoncé was already kind of destined to be the star.

Speaker 3 In music, if one artist has just a little bit more popularity, that popularity tends to grow exponentially. This is something that Alan Kruger talked about in his book, Rockonomics.

Speaker 3 And Beyonce already was breaking out as the star. So she was already on this path where she was going to be the main anchor of the group and would be on the trajectory to have her own breakout career.

Speaker 3 And it didn't really matter who the other members of the group were because she was that breakout star. I think they just overplayed their hand in that moment.

Speaker 3 And I liken it to this example of me asking for a raise when I was in my first job out of grad school and getting rejected because I similarly, you know, thought I had more power in the negotiation than I did.

Speaker 1 But in that situation, how do you determine what your value is, what you can push and what you can't push?

Speaker 3 This is why it's so important to understand the objectives and the options that your negotiating partner have.

Speaker 3 So in the example of Destiny's Child, the two girls, Latavia and Latoya, misunderstood what the objective was of Destiny's Child, what the objective was of the manager, Matthew Knowles, and what the path was for Beyoncé.

Speaker 3 They thought they were all equal members and it was a girl group that was supposed to be intact, but it was really just a vehicle for Beyonce to be a breakout star, the same way that Diana Ross broke out of the Supremes and how Michael Jackson broke out of the Jackson 5.

Speaker 3 Like this, the girl group was just a means to an end end for Beyoncé to be the star. So they basically misunderstood like what the value of the group was.
And I had a similar misunderstanding.

Speaker 3 I thought that the my value in the company was impressing the client, was doing a good job on the project and making sure the project would be successful.

Speaker 3 And if I left, I knew that the project was not going to be as successful, that the company was going to have a really hard time impressing the client without me.

Speaker 3 I misunderstood that, you know, it wasn't just about this one project.

Speaker 3 It was really about for my boss having a company with employees that he could control because I think he was a bit of a control freak in retrospect.

Speaker 1 So you say that you can use the economic principle of game theory with bird behavior. So can you explain that?

Speaker 3 Sure. So there's this one game theory model called the hawk dove game.
And basically,

Speaker 3 the way it works is that if one bird has a piece of food, another bird might challenge them for that piece of food.

Speaker 3 And they can act aggressively like a hawk and hurt the other bird and steal the food. Or they can act like a dove and basically submit and agree to share the food and act docilely.

Speaker 3 If two doves interact with one another, then they just share the food and nobody gets hurt. If two hawks interact, then they fight, both birds end up hurt.

Speaker 3 And, you know, the bird that's slightly stronger gets is the winner and gets the reward. If a hawk and a dove interact, then the dove gets hurt and the hawk gets the entire reward.

Speaker 3 there's this type of bird in Australia called the Goldian finch, where birds of the same species, some of them act like hawks and they're always stealing food or trying to steal food.

Speaker 3 And some of them act like doves and they're always cooperating and trying to share.

Speaker 3 And you see these fluctuations in the number of like hawk-like behaviors versus dove-like behaviors in the population, depending on how scarce food is.

Speaker 3 When food is really scarce, and the hawks, they end up like destroying the flock with their bad behaviors. They just end up hurting the flock and the whole flock suffers as a result.

Speaker 3 And then those hawks, they can't survive to the next generation. So you get more doves.

Speaker 3 But then once food becomes more abundant, you start to see more hawk-like behavior because they can get away with it. And I liken this to what I've experienced in

Speaker 3 my career in workplaces. You know, some workplaces, there are a lot of bullies.

Speaker 3 And oftentimes that's because the consequences for being a bully aren't very high, or there's a lot of, you know, there's a lot to go around so there you can kind of get away with it like people aren't really noticing the bully behavior because the company is still doing well even with it going on but in some types of companies it's really those kinds of bullies are much less tolerated because maybe the company has a lower profit margin they really can't tolerate any kind of like um destructive behaviors and so it's it's so it's punished much more and understanding like how how much a company tolerates bullying, I think is really crucial to understanding like which environments you personally are going to do well in versus which environments you might face a lot of like aggression from your coworkers.

Speaker 1 Talk about the time consistency, or maybe it's time inconsistency bias that I'm sure everybody has come up against in life.

Speaker 3 People often will make choices that are not the best choices if the consequences come in the future.

Speaker 3 So for example, you might sign up for a gym membership because you are really excited about the idea of getting in shape, but then when it comes time to actually go to the gym, you might not actually want to go.

Speaker 3 So understanding that that's a bias that people have, you know, if somebody promises you something and the consequences come in the future, you should probably put an extra

Speaker 3 chance on that person not falling through with their commitment because they committed to something where the consequences weren't in the immediate present.

Speaker 1 So in other words, you do a favor for somebody now, in return for a favor they're going to do for you in the future, there's a good chance that future favor never happens.

Speaker 3 Exactly.

Speaker 3 And I think this happens a lot with like bosses and employees, that the boss might make a promise of, oh, I promise to put you up for promotion next year, but then maybe when it comes time to do that, the boss is busy with other things.

Speaker 3 They don't want to incur this cost of going through the hassle of trying to put somebody up for promotion.

Speaker 1 Well, I must admit, this is not a perspective. the economic perspective that I've typically looked at my life through.
So I appreciate you coming on and explaining it this way.

Speaker 1 I've been speaking with Daryl Fairweather. She is the chief economist at Redfin and author of the book, Hate the Game, Economic Cheat Codes for Life, Love, and Work.

Speaker 1 And if you'd like to read that book, there's a link to it at Amazon in the show notes. Daryl, thank you.
Thanks for being here.

Speaker 3 Great. Thank you so much.

Speaker 1 There are certainly pros and cons of going barefoot in the summer, but one of the cons is not that it is illegal. It's not illegal anywhere.
It's not illegal to drive barefoot in any state.

Speaker 1 Nor is it illegal to go into a restaurant or a gas station or any other place barefoot. Nor does it violate any health code anywhere in the United States.

Speaker 1 No bare feet may be the policy of the establishment and they're within their rights to require that.

Speaker 1 But it's not illegal, and if the sign in the window says it is against the law to go barefoot, the sign is wrong.

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Speaker 1 So it is recommended that if you are a big fan of going barefoot, be careful where you step and keep your tetanus shots current. Teens and adults need a booster about every 10 years.

Speaker 1 And that is something you should know.

Speaker 1 If you're a fan of this podcast, if you find the things we talk about interesting, you learn new stuff, it'd be great if you could share your opinion and post a review on Apple Podcasts, Spotify, Castbox, wherever you listen to this podcast.

Speaker 1 Ratings and reviews help us, makes us more visible, and well, and we like to read them. I'm Mike Carruthers.
Thanks for, and we do read them. I'm Mike Carruthers.

Speaker 1 Thanks for listening today to something you should know.

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Speaker 1 The Infinite Monkey Cage returns. Imminently.
I am Robin Ince and I've sat next to Brian Cox who has so much to tell you about what's on the new series. Primarily eels.
And what else?

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