Wednesday, June 14: Money, pt. 1: 24/7 P.O.C.

So following up on my last post's motivation to take another plunge into higher stakes, I dove headlong into 80/160 games, and unbelievably found a 65/25 shorthanded fish who I followed from table to table for the better part of two days...and I was dutifully violated in the most uncomfortable of places. Well, I guess it was only 40 or so BBs, so perfectly reasonable variance over fewer than 1,000 hands, but frustrating nonetheless...watching this guy swim along also brought out in me some telltale compulsive gambling habits -- I made up some lie to get out of dinner with friends because I just had to keep playing with him, skipped the gym, and didn't leave my apartment all day, because damnit I just couldn't bear the thought of other people getting to this guy's money before me (and the secret was indeedout...the tables he was on had noticeable waiting lists.) I fell victim to this almost sociopathic ideology that every second that this guy was playing without me was costing me money...not the healthiest of mindsets to be sure, but it made me want to revisit a story that I actually wrote about a few months ago here, but which I've thought a lot more about, because I think it illustrates to succinctly the warped ideology I'm talking about, and the difficulties I think a good portion of the new generation of young and successful poker players is having trouble adapting to.

I bought my sister a camcorder for her birthday: $220, but it came with a $40 mail-in-rebate, so I was happy to get it for the reasonable price of $180. As I sat in my apartment cutting out the UPC code, printing out the rebate forms and such, however, it dawned on me that I was probably going to spend 2 hours of my life actually fulfilling this $40 rebate, after mailing all the stuff in and taking the check over to the bank, etc. And I couldn't help but think to myself: "Geez, did this rebate just SAVE me $40, or did it actually COST me several hundred, because I wasn't playing?!??" I know that may seem like a silly example, but the more I think about it, not only is it not silly, but rather it cuts swiftly to the very heart of the absurdity that is the poker mindset and lifestyle. Never before, I don't think, has there been any activity readily available 24/7 that has been as potentially profitable as online poker for those skilled enough to beat it consistently, and it's created this absurd pattern of thinking I call "poker opportunity cost", or POC, that encourages a perverse (but irresistibly rationl) compulsion to compare activities to the money the actor is foregoing by not playing online.

After several hundred thousands of poker hands played, I know approximately what my hourly win rate is, and sitting there filling out that rebate form (which I did dutifully complete) might have been one of the worst financial decisions I've made in my life. Clearly, though, it's not appropriate to evaluate EVERY one of your life undertakings based on what the financial opportunity cost is. Take, for example, the lavish wedding in Chicago I attended a few weeks ago for a good friend. Did the trip cost me the $1,000 I spent for the airfare, 4 nights accomodation, entertainment and other misc travel expenses? Or did it actually cost me in excess of $10,000 because of the POC?? Obviously, experiences like these one must consider to be, in some respects, priceless, right? I mean surely you can't put a dollar figure on having an outstanding travel experience to a new city and attending the wedding of a good friend. So those are two examples at the extremes of this 'opporunity cost' enigma: the rebate (because it serves as a means ONLY to a financial end) is a pretty clear cut case where it IS appropriate to compare the time you spend to the opportunity cost of not playing poker (also a purely financial activity), whereas it's equally clear, I think, that a 'once-in-a-lifetime' experience like traveling to a good friend's wedding is NOT really the best candidate for such an analysis. But those are the extremes, and I think the other 98% of my life is spent in the middle ground where the answer isn's quite so clear. Sure, you can't spend your entire life wondering "man, I can't believe the money I'm missing out on by doing this and not playing poker" or you'd be utterly paralyzed...but just where is the line between reasonable and absurd? Another somewhat silly-but-not-so-silly example: I stupidly left my suit in the coat-check closet of an airplane a few weeks ago, and they wouldn't let me back into the boarding area to get it, but told me I could return the next day and pick it up from the airport baggage office. Taking into account all the hassles of getting to and from the airport, that was a 3-hour endeavor...from a purely POC perspective, it would have made eminent sense to simply forget the whole thing, say goodbye to my suit and shirt, and just buy a new one when I needed it. But nope, I borrowed a friend's car, drove to the airport, and picked it up...bad decision or not? I just don't think the answer's so clear-cut, and it's this new mindset that I'm struggling to adapt to. Just what is the test to determine in what situations the POC-analysis is appropriate? How about watching a show you like on TV? Going to dinner with an acquaintance you don't really like, but feel required to do so out of obligation? The mail-in-rebate example is a particularly unique one because it does not bring ANY life satisfaction other than financial remuneration...in fact, I learned in a business school course that mail-in-rebates are actually a very elegantly-designed price differentiation mechanism that leverage the same financial-opportunity-cost mechanims I discuss here: retailers wanted to figure out a way to create the most economically efficient marketplace for their goods possible -- the seemingly impossible objective was to figure out how to get people who were willing or able to pay a HIGHER price for their good to pay that higher price, while getting people who would only pay a lower price (but still a profitable one for the retailer) to buy the good as well. The answer was the mail-in-rebate. They reasoned (correctly) that rich people wouldn't waste their time filling out a $20 rebate form, whereas less wealthy people would, enabling them to more optimally charge each and every customer the most they were willing to pay. Pretty sneaky when you think about it. Anyway, I digress. For a guy who was raised to clip coupons and drive across town just to save $10 on a gadget, and who worked in the campus snack bar for 4 years in college for spending money, adapting to this new mindset isn't as cut-and-dried as it might have seemed from my reasoning in this post. In fact, it's a transition that I think some people NEVER make. My dad recently flew down to take care of me after a second jaw surgery (yes, I had to have a second one, ugh, but it wasn't anywhere near as bad as the first one, when I had my jaw wired shut for a month), and I couldn't help but marvel at the care he took in evaluating the merits of two different toothbrushes at the pharmacy (he had forgotten his at home), finally deciding on one over the other because it was 20 cents cheaper. Or in finding a flight to come down and see me, he spent 2 hours on the phone with the airline because it enabled him to save $30 over the price that he had found online. In my head, I'm thinking: "jesus, you were a partner at a law firm, my mom owns her own successful marketing company, and yet you still expend so much mental energy in making these insignificant financial decisions!" I'm not bashing fiscal responsibility -- actually, I'm thrilled that it's something my parents saw fit to instill in me -- it's just hard to come to terms with how much collective brainpower our society devotes to decisions that will have negliglble impacts on their lives.

I have many more thoughts about these topics of money, which I'll try to pinch off in the next few days...in fact, this is one of the last topics that I've had on my "must-write-about" list for this blog...after that, I really will have set out what I intended to accomplish when I started this thing way back when. It also coincides nicely with my departure for Australia...I'm not saying that I'll be saying goodbye -- the encouraging emails I continue to receive from people for whom this thing has proved to be a valuable resource and worthwhlie endeavor on my part make me think that I shouldn't end things just yet...Perhaps it's also fuled by my own selfish search for significance: the belief sought by all that their life is 'worth living' and leaves a mark on others. Regardless, I'll end this post now...got to go chase that 80/160 fish again.