There’s this old joke.
Two economists are walking down the street when one points to the ground and says, “Look, a ten dollar bill!”
The second economist replies, “That’s crazy. If that was a ten dollar bill someone would have picked it up already.”
I love it because there’s a really interesting dynamic in it (beyond mocking economists) that seems increasingly relevant to me.
At the risk of getting pedantic, here’s what I think is so interesting about what’s going on in that joke. The second economist’s point is that if there was something easy and potentially lucrative out there, someone would have already done it. But the flip side is that someone is always the first person to spot the ten dollar bill.
I’ve been thinking about this issue a lot as I triage my journalistic life. People are always coming to me, trying to get me to pursue a story on what seems to them a vital and important truth. “If only they would do X,” the person argues…. “They” is typically the idiots in charge, and “X” is the obvious ten dollar bill on the sidewalk that my intrepid reader thinks he or she has spotted that will fix some societal problem.
If it’s on a beat that I cover with any depth, I usually know right away that it’s not really a ten dollar bill. Sometimes at this point I try to explain why it’s not really a ten dollar bill. This often does not go well.
If it’s not obvious to me right away that it’s not a ten dollar bill, I then face the triage decision – do I spend the resources necessary to bend over and try to pick it up and see if it’s real? The metaphor weakens here – ten dollar bill scrutiny usually takes a lot of work. In a lifetime of journalistic experience, I’ve learned that most things that look like ten dollar bills are not – that there is a perfectly reasonable explanation for why the idiots in charge haven’t done X. But on occasion, it’s really a ten dollar bill, which can turn into a useful journalistic contribution.
This comes to mind because I recently embarked on a long walk with a guy who seems to see ten dollar bills everywhere. I’m thinking I might need to cut the walk short.
That’s the point of the joke (or the logic behind it) — look carefully before you put in time/$ = a good way to cut your losses…
Here’s my classic example: http://www.aguanomics.com/2008/09/are-farmers-dumb.html
Back in the nascent days of the Web, there was a site that estimated Bill Gates’ net worth based on Microsoft’s stock price. (That was a cool feature back then.) One of its features was a calculation of the amount of money it would be worth Gates’ time to stop and pick up, on the theory that if it took him a second (say) to pick the bill up, and he was making $X million a day on average as MSFT’s price rocketed upward, it wouldn’t be worth his time unless the bill was worth more than 11.57*X. For example, if Gates made $10 million that day, the bill would need to be worth more than $116 or it didn’t pay for him to bother.
But the opportunity cost of picking up the $116 bill isn’t the money he makes when Microsoft stock goes up. The stock ticker will fluctuate regardless of if he is picking up money or the phone at his office or his dog’s poop. Thus the $116 bill would be a feather in the cap in addition to his stock earnings. Go for it Bill! But, it would make a better analogy to compare it to the average American finding a $116 bill on the sidewalk. The average American would surely pick up $116. But what about 1.46% of one penny? Would you waste your time for that? That is the wealth value equivalent using average american net worth vs that of Bill Gates. You’d have to pick up over 1,700 of these fractions of a penny just for a gumball at the supermarket. To put it in different terms, for Bill Gates to get as excited as the average American who found this phantom $116 bill, he would have to find…. Are you ready for this? $91.9 million!! For the visual image of what Mr Gates would see on the curb would be a stack of $100 bills 329 feet high; or if it were stacked in multiple stacks like a cube, it would be 3.2 feet for each length, width and height. “Hey, check out that cube of hundreds over there on the sidewalk! No man, if that were a real cube of hundreds, Bill Gates would have excitedly picked it up already.”
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