The Rich Don’t Penny Pinch
13th August 2021
enny pinching sounds like a good thing to do. Especially for important life decisions like money, education and life partners. Now I’m not here to tell you we should never slow down and assess a situation closely, but rather that it’s easy to do this in situations where it’s not appropriate. The reason it’s often not appropriate is because we almost never have access to the amount and kind of information that would make penny pinching an effective life strategy.
Any time we look into the details of something we are making a big assumption about how information maps to the future. We are assuming information can be tallied up and summed into some final answer that best tells us what to do in a given situation. But this isn’t how information works in complex situations. Under complexity information does not move from input to output as a linear sum of its parts.
Information works in nonlinear and highly opaque ways. The way information gets used under complexity is multiplicative, where bits of information interact with other bits of information in ways we will never know. We know this because this is a fundamental property of complex systems and thus situations. The causal chain that links inputs to outputs cannot be known.
The poor pinch pennies out of necessity, and they tend to raise their children to do the same. It is interesting to watch people who grew up poor and are now comfortably off resist spending money as if they didn’t know where their next meal was coming from. I suspect that most of the Hoarding Old People were of this stripe.