wealth – Pertinent Observations

Status and money

Over the last week or so, I’ve been discussing this post by Robin Hanson with just about anyone. The first paragraph is the one that caught my attention.

Having a romantic partner is useful in many ways. You won’t be as lonely, you can ask them for advice, you can do activities together, and you can share transport and even a household with them. But if you look carefully, you will notice that many people don’t choose such partners mainly for their promise in such roles. They instead seek high status partners, who make them look good by association. Partners who are hot, funny, rich, powerful, etc.

Nevertheless, I urge you to read the whole thing. Hanson goes on to talk about status in several other fields, such as politics or in organisations.

Broadly paraphrasing (you should still read the whole thing), he says that people want to be associated with people with high status, or people who add status to them. So politicians who can project higher status will get elected. Organisations will appoint people who can further increase the status of the organisation.

I was thinking about this today from the point of view of last night’s post, where I had compared my life in my (current) full time job to that of a consultant, which I had been for nine years prior.

Sometimes it is common for us to comment, or gossip, that someone got hired purely on the strength of their reputation, and that their abilities are not extraordinary. Sometimes, reputations can be self-fulfilling – if you can somehow get the reputation of being good at something, more people will start with the Bayesian prior that you’re good at that, and as long as you don’t suck at that thing, the prior will continue to hold. And so more people will think you’re good at it, and so on.

So when I think of my own career, basically I realise the way to go is to get into a position that my sheer presence adds status to the organisation I’m associated with. That way, they will be more forgiving of the work that I do (or don’t do). At the same time, from my own perspective, the organisation also needs to (at least marginally) add to my status – at some level I may not want to join a club that wants me as a member.

I remember back in the day when I was consulting – one of my clients, during the negotiations prior to the engagement, had wanted me to put on LinkedIn that I was working for them. Now when I think of it from the point of view of Hanson’s post, this was the client leveraging my then reputation in data to further their own status.

This is what I need to bring to my employers as well (I have no clue if I do already with my current ones – though I’m not so popular within my (data science) domain in india). The target, if I were to think of it, is to get into that self-fulfilling space when it comes to status – that people want me just because I’m me and bring along a certain (positive) status.

Now that I’ve identified the target, I need to figure out how to get there. I know in his famous podcast, Naval said that we should optimise for wealth (a positive sum game) rather than for status (a zero sum game). But Hanson’s post, and my analysis of it, suggests that status can also lead to wealth. I need to figure out the tradeoff now!

More on status and wealth

Playing zero-sum status games is down to our animal instinct. We have evolved to play those. But the way we can be more human is to seek wealth.

Last week, an old friend from high school sent me this podcast, based on all that I’ve been writing here of late on status-seeking, wealth-seeking, and zero and positive sum games.

I haven’t listened to the full conversation, but only a small snippet (the bit that my friend asked me to listen to, from minutes 20 to 30).

Then, on Sunday night, I started re-reading Jordan Peterson’s 12 Rules For Life. I’m in the middle of the first chapter now (one of my favourites from the first reading, and which I’ve read multiple times). This is the one about depression and serotonin. And that triggered further thoughts on status and wealth and all that.

So some pertinent observations based on these:

Mating is a status game. Across species, creatures desire to mate with the highest status members of the opposite sex. And you maximise your chances of that by increasing your own status.
A high status individual (of whatever species) will have greater access to mates, and greater access to high-quality mates, and thus greater chance of propagating their genes.

Thus, we have evolved to seek status, not wealth
You may argue that in human society, wealth is also an avenue for getting superior mates. However, the problem with this is that we are simply using wealth to buy status in this case. The fundamental reason your mate wants to mate with you is your status, which, in this case, you have got on account of your wealth.
Status seeking is zero sum, as Naval Ravikant says in that viral podcast. As the above linked podcast (which is about Rene Girard and mimetic desire) says, when we seek status, we seek to imitate people with higher status than us.
There are two problems with this kind of approach. Firstly, by doing things that higher status people have done, we don’t necessarily get that kind of status. Especially when the things we do are things that involve power-law payoffs.

Secondly, if everyone imitates the same kind of high status individuals, everyone ends up seeking the same thing. If you and I are seeking the same thing, we don’t trade with each other. And thus we don’t make each other better off.

If we are seeking wealth (an unnatural thing, as explained above), rather than status, we go about it in our own ways, and that makes it easy for us to trade and all get ahead towards our respective goals.
The podcast talks about how people with conditions such as Asperger’s (or anything on the spectrum, or anything that reduces empathy) have inferior empathy, and that means they see less need to conform, or to imitate. And this can lead to them achieving superior outcomes since they do things their own way (I add that this can also lead to them achieving inferior outcomes – basically “vol goes up”).
Sounds good to me 😛
When we imitate others too much, they become rivals to us. Whether you consciously think of them that way or not. And this can lead to misery to all parties (unless you are high-status, or wealthy, enough to not care)
At the beginning of Pink Floyd’s Keep Talking (Division Bell), Stephen Hawking comes on and says “for millions of years, mankind lived just like the animals. Then something happened which unleashed the power of our imagination. We learnt to talk”.
And when we learnt to talk, one of the powers of our imagination that got unleashed was the ability to trade. We figured out that by trading, we can build wealth. And by building wealth, we have an easy means of cooperation. And the ability to play positive sum games. And not having to futilely play status games all the time.

In some sense, trade, commerce and wealth are the fundamentals of what makes us human. It just happens that we’ve evolved to seek status instead, and so we keep pulling each other down.

Fifteen years of professional life

I was supposed to begin my first job on the 1st of May 2006. A week before, I got a call from HR stating that my joining date had been shifted to the 2nd. “1st May is Maharashtra Day, and all Mumbai-based employees have a holiday that day. So you start on the second”, she said.

I was thinking about this particular job (where I lasted all of three months) for a totally different reason last night. We will talk about that sometime in another blogpost (once those thoughts are well formed).

The other day I was thinking about how I have changed since the time I was working. I mean there are a lot of cosmetic changes – I’m older now. I can claim to have “experience”. I have a family. I have a better idea now of what I’m good at and all that.

However, if I think about the biggest change from a professional front that has happened to me, it is in (finally, belatedly) coming to realise that the world (especially, “wealth games”) is positive sum, and not zero sum.

The eight years before I started my first job in 2006 were spent in insanely competitive environments. First there was mugging for IIT JEE, where what mattered was the rank, not the absolute number of marks. Then, in IIT, people targeted “branch position” (relative position in class) rather than absolute CGPA. We even had a term for it – “RG” (for relative grading).

And so it went along. More entrance exams. Another round of RG. And then campus interviews where companies came with a fixed number of open positions. I don’t think I realised this then, but all of my late teens and early twenties spent in ultra competitive environments meant that I entered corporate life also thinking that it was a zero sum thing.

I kept comparing myself to everyone around. It didn’t matter if it was the company’s CEO, or my boss, or some junior, or someone completely unconnected in another part of the firm. The only thing that was constant was that I would instinctively compare myself

“Why do people think this person is good? I’m smarter than him”
“Oh, she seems to be much smarter than me. I should be like her”

And that went on for a while. Somewhere along the way I decided to quit corporate altogether and start my own consulting business. Along the way I met a lot of people. Some were people I was trying to sell to. Others I worked with after having sold to some of their colleagues. I saw companies in action. I saw diverse people get together to get work done.

Along the way something flipped. I don’t exactly know what. And I started seeing how things in the real world are not a zero sum game after all. It didn’t matter who was good at what. It didn’t matter if one person “dominated” another (was good at the latter on all counts). People worked together and got things done.

My own sales process also contributed. I spoke to several people. And every sale I achieved was a win-win. Every assignment came about because I was adding value to them, and because they were adding (monetary) value to me. It was all positive sum. There were no favours involved.

And so by the time I got back to corporate life once again at the end of last year, I had changed completely. I had started seeing everything in a “positive sum” sort of way and not “zero sum” like I used to in my first stint in corporate life. That is possibly one reason why I’m enjoying this corporate stint much better.

PS: If you haven’t already done so, listen to this podcast by Naval Ravikant. It is rather profound (I don’t say that easily). Talks about how wealth is a positive sum game while status is a zero sum game. And to summarise this post, I had spent eight years immediately before I started building wealth by competing for status, in zero sum games.

JEE Rank, branch position, getting the “most coveted job” – they were all games of status. It is interesting (and unfortunate) that it took me so long to change my perspective to what was useful in the wealth business.

PPS: I’ve written this blogpost over nearly two hours, while half-watching an old Rajkumar movie. My apologies if it seems a bit rambling or incoherent or repetitive.