...here's a story, true story from my family:
My paternal grandfather's younger brother owned the family gold business in a small village in India. [My grandfather was a failed architect. Failed in the sense that it was his passion but he couldn't make money doing it, so he left Ahmedabad and moved back to family village.]
Anyway, he -- my grand-uncle, that is -- found modest success with his small local gold business [which my grandfather and his sons (my dad and uncle) had divested from in favor of higher education].
So my grand-uncle thought to himself one day, what if, instead of waiting til I die, I pass along my sons' inheritance to them before that? Then I can die in peace and have a few years without the weight of that on me.
He gathered his three sons [btw, though Indian inheritance law now specifies shares to daughters too I am not if it was passed then or if he just chose to ignore it, given lack of enforcement in a small village] and told them, I'm giving you these three options to choose from:
[Let me tell you right now, to avoid letting you down later, that those three options were NOT a resurrection stone, an elder wand, or cloak of invisibility]
Anyway. He offered them:
1. his gold
2. his gold business
3. his house
1. his gold
2. his gold business
3. his house
The eldest son took the gold business. He didn't need a house, and his wife wanted him to quit his other job. And he'd lost a lot of money in the Indian stock market, so thought that was a stable option.
The second son took the gold. He had a house, and he made a lot of money in the Indian stock market, so for him gold was more appealing, perhaps a more tangible and generally always likely to appreciate investment.
The third and youngest son took the house. He didn't have much education, since the money had been spent on the older brothers. And his wife was fine living in the small village, whereas the other two brothers' wives were more into the bigger city.
So HERE'S WHAT HAPPENED NEXT.
A bigger gold business was set up next door, that inked a partnership with jewelers in the big cities nearby, so it became the go-to place; put everyone else out of business or only at the fringes of its business. [btw that other big gold business was my maternal grand uncle's;)]
So the first brother's business did not do well or make as much as he thought it would.
The second brother put a lot more money in the stock market, and hit a losing streak, so ended up with less money than before. The gold was no longer enough.
The third brother -- the least sophisticated, the small-town (really, small village) boy -- came out ahead, because the village became known as a local "silk capital" of sorts, and property values shot up significantly.
Now here's the catch. At the time of the choosing-of-the-inheritance, the value of all three options -- business, gold, house -- were equivalent. Then market forces, for better and worse, changed those values over time.
But the two older brothers didn't see it that way, and started fighting the younger brother for shares of the now-appreciated house. My grand-uncle died heartbroken seeing his sons fight over this.
The catch to all this of course is no one played out the counterfactual scenarios, like what if the gold business had grown? The gold value had gone up? And the house value had gone down?
But as we know from behavioral economics [note I'm not accounting for aspiration level here] the losses are felt far more asymmetrically than the gains, and so on and on...
The most fascinating thing however was witnessing all the local "pole" [I don't know why but our family street is called a pole there] folks -- as well as visiting relatives like my peace-making mom -- try to mediate the arguments among the three brothers
NO one, not even the benefitting third brother, could understand the logic of the symmetrical [note I'm not doing conditional probabilities here, assume sample without replacement please] fact that what goes up can also go down... they ALL felt it asymmetrically
So anyway. This story is ridiculous because had gained -- and apparently he did for a long time -- it was perfectly fine but now the emotional resonance to it is that they lost, yet it's told so asymmetrically: daringfireball.net/linked/2018/02…
...this btw applies to many other things too ofc. I just couldn't help think of it here. because the brothers made a choice. they picked. they decided. and whether you think of it as a dice roll or something you can control, mindsets still apply
Think about this for a moment. When reading that story, I bet your first instinct was to feel bummed, angry even, for the third brother. How unfair! They all started with equal shares. He made a choice that worked. Why should he now lose more just because his brothers lost?
Yet our emotions when reading stories like this Speiser's are like, damn, he lost. But what if he had gained?? Where is the anger about the same dynamics, in a different direction, there?
