The odds are you won't know when to quit. The truth is that there are no foolproof methods for knowing when to hold'em and when to fold'em.According to Harford, psychologist Angela Duckworth " has plausibly argued that grit is more important than talent, in predicting a successful life." He continues:
The idea is appealing in principle but one must ask what Duckworth's brief "grit" questionaire is measuring. (Perhaps I am just sore because I took the questionare and discovered I have less grit than the average marshmallow).He made me laugh with that last observation! But his humorous point is an apt reminder of the importance of the cards one "holds" in the first place, for the game of life. Consider personality, for instance. If this attribute isn't necessarily an ace, at the very least it's a king or queen. Some of us lack communication skills (cough cough), hence may end up in repetitious cycles, trying to make up for what is really an initial shortcoming.
Just as Tim Harford explains, loss aversion is a real problem, for not knowing when to quit. It will cause individuals to persevere on a chosen course of action, long after it is logical to continue doing so. I realize now how unsettling the "grit" discussion can be. Progressives and conservatives alike built (and benefit from) a massive edifice everyone needs to scale, in order to gain economic access to general equilibrium. But while progressives may remain convinced "grit" means an ability to reach the ultimate economic goal, conservatives are more likely to say, no, there is precious little room left.
Loss aversion turned out to be a substantial problem for me in earlier business ventures - not once, but twice. Both times, I had the option of selling my retail business inventory to others, only to turn them down. Why? I enjoyed the work so much, that it was worth whatever risk I had to take, to maintain what was also a lifestyle preference. And I craved a workplace which allowed me to partially make up, for the social interaction that was getting progressively harder to find as I aged.
As a result - among other things - I finally lost the majority of the inventories which mattered to me most: at least thirty thousand non fiction (and some fiction) books, along with a sizable fraction of songbooks. The first loss was almost twenty years ago, the second just prior to the beginning of this project. More than anything else, those losses hardened my resolve to find better methodology for stop loss potential. From Harford's suggestions:
...look resolutely away from sunk costs and towards future prospects...persevere flexibly rather than stubbornly...view decisions as experiments.Harford encouraged me to pin down some legal specifics. Can any institution help to make up for the fact we simply don't know when to quit trying, to "call it a day"? Once, bankruptcy provided means for individuals to start over, but much of the remaining flexibility in this regard is intended for corporate structure, rather than the economic life which involves individual effort. A new institutional structure is needed, which could make it possible for individuals to start over - when necessary - from an economic position of still remaining relative strength. Otherwise, society ends up supporting too many individuals who had more than a chance of supporting themselves, given means to do so.
Greater flexibility is particularly needed for property ownership. Populations are entering a period in which the idea of product is gradually evolving, from the production of "stuff" to the production of what is often time based knowledge use. Yet today's costs for knowledge product are also associated with rigid requirements in both building components and infrastructure, in general equilibrium settings. And in contrast to earlier forms of factory precision (extended to schools and hospitals) which required large groups to come together at the same time, today's services structures would benefit from individually designed and dispersed activity - both spatially and in terms of time use. Such changes in production and consumption for service product, could also point the way towards more carefully thought through ownership patterns.
New corporate structure needs greater flexibility for land use options. Those who participate, would benefit from property use potential that isn't crippled by the decision making processes of competing owners - especially those of family co-ownership. It is particularly difficult for lower income levels to manage the legal maintenance necessary to coordinate co-owned assets. Greater flexibility in land holding is all the more important, since family structure now serves mostly consumption functions instead of production functions, at all income levels.
Consequently, property holdings in knowledge use systems would be individually based, through existing contractual arrangements between individuals and communities for mutually desired economic outcomes. Think of it as a process of communities once again becoming more economic in nature, as families continue to become less economic, given present day economic circumstance. The process of individual land holding creates an automatic stop loss function for anyone born into the system - one which lasts for the course of a lifetime.
From a young age, matched time value (time arbitrage) would accrue to two sets of local holdings for one's eventual living and working needs. These property holdings don't necessarily represent a specific property, since individual to community contracts would reflect property use that is well suited to one's living and working preferences as they change. Those preferences would also reflect both long term and short term economic changes among local citizens.
Once one's personal work space is acquired and put to good use (before adulthood), time arbitrage would also begin to accrue toward space one eventually may seek for separate living quarters. By the time adulthood is reached, one's goal is to have a basic set up for both, so as to make this life transition easier. Once purchased through time arbitrage, this amount of square footage (not necessarily the specific geographic land holding) belongs to the individual for the course of their lifetime, before reverting back to the community.
What if someone does not want to live in a hometown all their lives? Property owners would have an unimpeded legal right to rent their personal holdings of square footage, should they decide to live with others either locally, or perhaps travel and live elsewhere. This right - along with a lifelong ability to match economic time value with local residents - would provide means for individuals to start anew, when the choices of discretionary income in other aspects of life turn out to be too much risk.
Rental of property (not building components) would often provide an initial source of discretionary income beyond the internally based wages of time arbitrage. In other words, rental of land serves as the primary connection point between the local currency of new corporate structure, and the surrounding currency of state and nation. Economic mobility is important for all concerned: renters would not necessarily desire the square footage which comes available for instance. When owners make the decision to rent their property holdings, other areas would be explored to find the best property match, to assist newcomers who "sample" living opportunities in a given community through rent.
Building components would be approached differently, in that they likely would not be available for rent or considered a permanent part of a particular piece of land. Many building components would be locally bought and sold, given the fact little incentive has ever existed for landlords or renters to maintain rented structures. However, matched time value could accrue for building components when they are locally purchased, locally manufactured or are otherwise part of local recycled components made new again with 3D manufacture.
Some exceptions may apply in which local value for building components is provided from exogenous (or discretionary) income. While individuals wouldn't need to personally will property to offspring unless those offspring were incapable of time arbitrage (communities might make exception for property reversion in this instance), they would be able to will anything they desire to offspring that results from discretionary or exogenous income.
While the aforementioned rental possibilities are individually held property, rental pools are another possibility. These groups would gain exogenous or discretionary income, by utilizing time matched property holding for commercial purposes. However, local corporate structure would seek to maintain balance between time and resource use, so that individuals would not eventually be questioned as to their ability to contribute to community outcomes. In other words, time value in relation to local resource value, would serve to preserve the integrity of full employment.
Tim Harford's post was helpful for me, because it gave me further rationale to begin exploring some legal concepts I've been trying to determine how to present. Even though I never sat at the gambling tables like some I've known over the years, my life otherwise has been a complete gamble. While a new corporate structure would not put all the "right" cards into one's hand, better provisions for stop loss could definitely help the hand that some are dealt in their lives.