By: Laura Walton AFC®
I love to gamble; fortunately I hate to lose money more than I love to gamble. When I’ve been at a table, I’ve noticed that whether it’s blackjack or craps, you can tell something about a person watching them play. Kenny Rogers had it right, “you gotta know when to hold ‘em, know when to fold ‘em”.
That’s why a recent Freakonomics podcast caught my attention. Steven Dubner interviewed Maria Konnikova about her new book, The Biggest Bluff. A writer with a Ph.D. in Psychology, she took up the game of poker to better understand whether our lives are driven more by skill or by chance.
Her chosen game was No Limit Texas Hold’em. Each player has two cards for his eyes only while the table shares five cards dealt face-up and betting occurs along the way. She sees it as a metaphor for life: “…life is a game of incomplete information. You never know everything, and you are able to control a good amount of decisions leading up to the end because you can control how you present yourself. You can control whether or not you play,…how you play,…but, ultimately, you can’t control the cards.”
She talks about the ‘locus of control’. There are two types, internal and external. If you practice internal control, you take credit and blame for outcomes; with external, you give credit and place blame elsewhere. She explains it’s not good to be 100% either internal or external but, instead, important to recognize that both exist. In other words, evaluate outcomes by asking yourself what you controlled, what was out of your control, and how might you have affected the outcome? In short, honestly evaluate your role in the outcome and, in the world of poker (and life), use that information to play the next hand.
She describes victors and victims. The victor might say: “I made the correct decision. Sure, the outcome didn’t go my way, but I thought correctly under pressure. And that’s the skill I can control…If you keep thinking correctly, eventually it will even out. These are the seeds of resilience…”
A study noted in the book found that the best poker hand won just 12% of the time! That suggests to me that winning takes more than luck, it takes skill and attitude. The player with the bad hand can still win, in fact they do win 88% of the time. It’s not the cards you’re dealt, it’s how you play the hand.
To bring this concept current, I happened to catch a recent interview with Paul Romer, economist and co-recipient of the 2018 Nobel Prize in Economics Science, who said “No matter how bad the circumstances are that we find ourselves in, there are things we can do to make our circumstances better. We need to avoid the apathy, the passivity, and the paralysis that can come from a crisis and need to look carefully at, first, what do we do to share the pain, what do we do to help recover, but also what do we do to actually come out of this with more goods and services, but even better, how can we come out as better people?” In other words, how best to play the hand we find ourselves holding.