It required several days of Spock memes flitting across my iPhone screen to produce a greater appreciation of the absolute genius of the character called Spock. He's a character who tells us what it is like to be human without fully embracing humanity. He is free to proclaim that something is illogical while fully embracing it's reality. Humans don't have that freedom. When something is illogical we typically come up with a worldview premise that allows our conclusion to flow logically.
I assume this "story making" functional requirement in humanity is the reason that classical and behavioral economists don't get along so well, and it is one of the top reasons that I've pursued a career in retail analytics rather than moving on to grad school (the other top reason being making money seems superior to spending it).
But that is neither here nor there. We're talking about my Facebook feed as it relates to Leonard Nimoy's death.
I inexplicably have over 1000 friends on Facebook that I have no intention of contacting, but I remain "friends" with them because they are so dang interesting. One poor sap tends to clutter my feed with his inability to get a girlfriend (classic friend zone) and Singaporean politics, and in a recent post, he quoted Spock saying, "She is yours. After a time, you may find that having is not so pleasing a thing, after all, as wanting. It is not logical, but it is often true." Poor guy, I hope he gets a girlfriend soon.
Just two days later, one of my favorite bloggers (Penelope Trunk), posted a link to an article from the Atlantic about why wanting expensive stuff makes you happier than buying it, and the first comment quoted Spock again.
Isn't that crazy? Oh you want to get married? Wanting to get married will make you happier than getting married (after a time- PS we're still shooting for marital bliss). Buy a new car? No, just looking at them on the internet will likely make you a happier person.
Yet this reality explains why I have not one, but two friends who will chat at length about their upcoming travel plans rather than reveling in prior travels. But if they're so happy planning travel they should just plan it rather than book the tickets. Booking the tickets practically makes them sad.
We suffer from illogical consumption dissonance. Logically (and in traditional economic theory), consumption makes each person uniquely happy. Some consumption makes you happier than other types of consumption, but whatever consuming you do, the first unit of consumption will logically make you happier than subsequent consumption until the point that further consumption actually makes you more unhappy. (One drink too many?)
Your Marginal utility curve supposedly looks like this (Thanks Paint for making this easier than Excel)
What a paradox.
In my mind, C.S. Lewis came up with one of the simplest story making mechanisms for the real utility curve when he said, "If we find ourselves with a desire that nothing in this world can satisfy, the most probable explanation is that we are made for another world." In an ultimate sense I agree, but I'm still wondering whether or not I should buy a Diet Coke at the gas station to feel better next time I am down (Note- I should not. I have to walk or bike at least 3 miles to get to a gas station that has a fountain Diet Coke. WTF Raleigh?)
So what am I supposed to do about this? Do I spend time trying to quell my desires? Do I spend time thinking about consumption up until the point where I can barely resist and then put the kabosh on those desires once and for all? What is most logical? What's a personal finance nerd to do?
Stay in the green with research based investments!
I know that the Bogleheads and everyone who is smart will tell you to just go with an index fund and automate your finances, but this is one case where I'm all about doing what makes me excited! So for me, I will spend a lot of time researching the exact index fund that I'm going to purchase before actually purchasing it (note this is for after tax investments only- my 401K is automated).
Additionally, I spend a lot of time on Zillow.com for being a person who isn't exactly planning to buy another rental property in the next three years.
By researching my investments, I get to stay on green side of my marginal utility curve, and I can give into my desires and move on with my life without any buyer's remorse. That's pretty neat!
Purchasing an investment is pretty boring (more VTSMX?), the research is really fun, and that is how I keep on the green side of the Marginal Utility curve.
(Please note that money actually has its own utility curve despite being a so-called modicum of exchange).
So do you research your investments? Does it make you super pumped or am I just a nerd?