Understand & Apply the Psychology of Money to Gain Greater Happiness | Morgan Housel

1. 0:00 – 2:13

   Morgan Housel

   1. AHAndrew Huberman0:00

      Welcome to the Huberman Lab Podcast, where we discuss science and science-based tools for everyday life. I'm Andrew Huberman, and I'm a professor of neurobiology and ophthalmology at Stanford School of Medicine. My guest today is Morgan Housel. Morgan Housel is a partner at the Collaborative Fund and an expert in private wealth generation and management. He is also the author of the spectacularly best-selling book, The Psychology of Money. And today, we talk about the psychology of money. We talk about how money can change your psychology. We talk about how most people tend to lie at the extremes of either saving too much money or spending too much money. And we talk about how most people get it completely wrong when it comes to framing in our minds what money is, what its real value is, and its ability to generate happiness within us. And no, I am not going to tell you and Morgan is not going to tell you that beyond a certain dollar amount, you don't increase your happiness, because as we all know, money cannot buy happiness, but it can buffer stress. We acknowledge that from the outset. And then Morgan goes on to explain that really what we're seeking when we talk about seeking wealth or money is freedom. Freedom is really about independence, and that if we are constantly in pursuit of wealth, well, then we are not truly free or independent. So today's discussion is as much about being happy, being free, feeling independent, feeling free of stress as it is about this thing that we call money. So in other words, Morgan explains not just how to generate and manage monetary wealth, he explains that, but he also explains how to organize your life in and around this thing that we call career, the pursuit of wealth, and happiness. And I can think of few topics as important as today's topic. I read Morgan's book, The Psychology of Money, and I loved it. I also love today's discussion because I'm certain that after it's done, you will realize that you've probably been thinking about wealth and money incorrectly in a number of ways, and you've probably been pursuing it incorrectly in a number of ways. But by asking yourself certain probe questions that Morgan raises today and answering those questions, you can arrive in a place where your relationship to money and your pursuit of it really clearly matches your particular goals.

2. 2:13 – 5:11

   Sponsors: Wealthfront & BetterHelp

   1. AHAndrew Huberman2:13

      Before we begin, I'd like to emphasize that this podcast is separate from my teaching and research roles at Stanford. It is, however, part of my desire and effort to bring zero-cost-to-consumer information about science and science-related tools to the general public. In keeping with that theme, I'd like to thank the sponsors of today's podcast. Our first sponsor is Wealthfront. I've been using Wealthfront for nearly a decade as my high-yield cash account, and I absolutely love it. Personally, I'm sometimes hesitant to invest money given the risks involved, so I often prefer to keep it in my Wealthfront cash account, where I'm able to earn 4.25% annual percentage yield on my deposits, and you can as well. With Wealthfront, you can earn 4.25% APY on your cash through partner banks until you're ready to either spend that money or invest it. With Wealthfront, you also get free same-day withdrawals to eligible accounts every day, even on weekends and holidays. The 4.25% APY is not a promotional rate. There's no limit to what you can deposit and earn, and you can even get protection of up to $8 million through FDIC insurance provided through Wealthfront's partner banks. For same-day withdrawals, just start your withdrawal as late as 9:00 PM Eastern to one of over 550 eligible banks and credit unions to get it the same day. And it takes just a few minutes to transfer your cash from the cash account to any of Wealthfront's automated investing accounts when you're ready. There are already over a million people using Wealthfront to save more, earn more, and build long-term wealth. Earn 4.25% APY on your cash today. If you'd like to try Wealthfront, go to wealthfront.com/huberman to receive a free $50 bonus with a $500 deposit into your first cash account. That's wealthfront.com/huberman to get started now. This has been a paid testimonial of Wealthfront. Wealthfront Brokerage isn't a bank. The APY is subject to change. For more information, see the episode description. Today's episode is also brought to us by BetterHelp. BetterHelp offers professional therapy with a licensed therapist carried out entirely online. Now, I've been doing weekly therapy for well over 30 years. Initially, I didn't have a choice. It was a condition of being allowed to stay in school. But pretty soon I realized that therapy is an extremely important component to overall health. Now, there are essentially three things that great therapy provides. First of all, it provides good rapport with somebody that you can trust and talk to about any and all issues you want to. Second of all, it can provide support in the form of emotional support or directed guidance. And third, expert therapy can provide useful insights. With BetterHelp, they make it very easy for you to find an expert therapist who you resonate with and can provide you those benefits that come through expert therapy. Also, because BetterHelp allows for therapy to be done entirely online, it's very time efficient. It's very easy to fit into a busy schedule with no commuting to your therapist's office or sitting in a waiting room or looking for parking. None of that. It's all done online. If you'd like to try BetterHelp, go to betterhelp.com/huberman to get 10% off your first month. Again, that's betterhelp.com/huberman. And now for my discussion with Morgan Housel. Morgan

3. 5:11 – 8:44

   Spending Habits & Cynicism

   1. AHAndrew Huberman5:11

      Housel, welcome.

   2. MHMorgan Housel5:12

      Thanks so much for having me. Happy to be here.

   3. AHAndrew Huberman5:14

      I'm excited that you have a new book coming out next year about the art of spending money. Is that right?

   4. MHMorgan Housel5:19

      That's right. You got it.

   5. AHAndrew Huberman5:22

      Today, I want to talk about how to think about money, like what is it, how do we frame it within our historical context, meaning our personal historical context, because I think we all and each think about money a little bit differently.

   6. MHMorgan Housel5:39

      Mm-hmm.

   7. AHAndrew Huberman5:39

      And then talk about what is the best use or in some cases, uh, not use of, of money. This is a topic that, you know, could go in any number of different directions, but my goal here is that people will get a better understanding of what money is, why they work for it, and really how to make it a true asset to their lives-... as opposed to something that, um, is forever out of reach in terms of amount or what they expect it to bring them.

   8. MHMorgan Housel6:10

      Great. Looking forward to it.

   9. AHAndrew Huberman6:11

      Great. So, um, your book starts off with this notion that, uh, people are not crazy. It's in fact the, the title of the chapter. Does that mean that people are rational about money?

   10. MHMorgan Housel6:23

       Oh, I think it's very different. What I meant by no one is crazy is that it is so easy for people to look around at society at how other people are spending their money and saving their money and investing their money, and say, "Why, why the hell would anybody do that? Why would you waste your money on this? Why would you hoard your money like that?" And I actually think if you peel back the onion layer of what's going on in those people's lives, no one is really that crazy with how they spend their money or save their money. It makes sense to them in that moment. My brother-in-law is a social worker. He works with very disadvantaged kids, kids who are abused at home, who don't have homes. And a lot of those kids, not surprisingly, uh, do very poorly at school. They misbehave. They get in fights. They don't go to school. And it is so common for those kids that the teacher will look at those kids and say, "Why, why are you acting like this? Why don't you do the right thing? It's so obvious." And he says there's a, there's a phrase in social work, "All behavior makes sense with enough information." That if you look at what those kids are dealing with in life, it would all make sense to you why they are misbehaving at school. And I think that's a powerful idea for a lot of things in life that all behavior makes sense with enough information. And you can really apply it to money too, that you could easily tie how I spend my money today and save my money today based off of the experience that I've had in life, how I was raised, where I was raised, how old I am, the generation I was born into, all things that are outside of my control. And it is very common to look at people who are spending a ton of money. Well, that... there's a story behind that. They're spending a ton of money because they want some s- you know, for a lot of 'em, they want some sort of attention. They're trying to get people's attention. It's maybe sometimes they're trying to cover up a hole, or maybe they are actually are really enjoying it. People who are hoarding a lot of money, there's a story there too. They experienced something that's causing them to do that. And I think that this is really important for two reasons. One, it forces you to realize that there is not one right way to manage money, to save it, to spend it. You gotta figure out what works for you. And what works for me might not work for you. There's not one answer, and it's not like math. Like in math, two plus two equals four for everybody. And in money, it's like you gotta figure it out for yourself. It's almost like your taste in food or your taste in music. Like, well just f- find out what you like and do that. The other thing is I think you become less cynical about other people's decisions, and you don't spend all your day saying, "Look at that idiot spending their money in a stupid way." You'll say, "No, it's just... you gotta figure it out for yourself." And I think you become happier when you're a little less cynical about how other people are doing it.

   11. AHAndrew Huberman8:43

       For most

4. 8:44 – 16:07

   Tool: Money & Future Regrets

   1. AHAndrew Huberman8:44

      people, including myself, the whole notion of money and safety are very closely linked. You know, do we have enough resources to take care of ourselves, plus a bit extra one hopes? I guess I would include in taking care of oneself, um, buffering one's anxiety about not having enough money.

   2. MHMorgan Housel9:00

      Yeah.

   3. AHAndrew Huberman9:01

      That's part of the psychological care. Um, and also taking care of others that we might be responsible for or simply want to take care of. That's very closely linked to notions of how much and what type of education to get, right? I mean, I think everyone presumably at some point, um, goes through the, uh, mental gymnastics of, is it worth it to get an advanced degree? What major should I focus on? Is that... are there any jobs there? When I went to school to be a neuroscientist, a cardiologist, a friend of our family said, "Why would you go into neuroscience? There are no jobs in that." Um, there were plenty of jobs in neuroscience and still are. I wouldn't say that most of them are high paying jobs. So, you know, we know that higher education doesn't always scale with higher income. As we grow up and move into the world, you know, we're, we're thinking about how to integrate all these different things, what we want to do because it's interesting versus what will make us money. In your experience and observation and in writing your book, is there some sort of mental path to, to cut through these different considerations? I mean, when we talk about money and wealth, uh, you know, what should we really take into consideration? Is there some sort of checklist? I mean, it becomes a pretty vast space. Um, I believe that you get the best workout of yourself, uh, in terms of going after things that you're really interested in.

   4. MHMorgan Housel10:19

      Yeah.

   5. AHAndrew Huberman10:19

      But, you know, there may not be money in, um, things that are highly interesting to somebody.

   6. MHMorgan Housel10:25

      I asked Daniel Kahneman a very similar question about 10 years ago. Kahneman is a, a world-renowned psychologist, won the Nobel Prize in Economics, passed away a year or two ago. And, uh, he said, "The trait that you need to do well with money over time, no matter who you are, is a well-calibrated sense of your future regret." What are you gonna end up regretting in the past? I think at the highest level, that's how you should base all of your financial decisions, is, "Will I regret spending this or not spending this? Will I regret making or not making this investment?" Now, much easier said than done. I think most people do not fully understand their own sense of regret, what they're likely to look back and say, "I wish I had not have done this." The other thing is that it changes over the course of your life. I'll give you a perfect example. I'm a big saver, have been for my entire adult life. Um, w- if, if heaven forbid, if I were on my deathbed tomorrow, would I regret the vacations I didn't take, the cars I didn't buy? The answer right now is absolutely not. I would feel so good knowing that my wife and kids are gonna be okay, so I would take so much pleasure in knowing that I did not spend that money, I saved it for their protection. Will I still feel that way if I'm 80 years old? Then maybe I will look back and say, "I should have lived a little bit more. I should have given my money away while I could have seen it being given away." So, it changes throughout the course of your life. But I think if you're always thinking through the lens of "What am I gonna regret?" It's never about, uh, YOLO or about like, oh, you know, save, s- save today so, so you can have them for tomorrow. It's... I think that's too, too simple to think about it. You have to know what you're gonna regret in the future and look back. And back to everyone's different, what I will regret might be very different from what you will regret. Very interesting story from Jeff Bezos. He talked about when he started Amazon back in, I think it was 1994.... the reason he started it, and he knew that there was very little chance it was gonna work, uh, when he first started it. But he said, "If I do not try this, I will regret it. And if I try it and it fails, I won't regret that." That's an amazing story that talks about his entrepreneurial spirit. The other thing when I first heard that story is, bless him for thinking that. I do not have that personality. If I devoted my entire life and my family's money and my parents' money to a startup and it failed, I- I- I might regret that. I admire and I'm grateful for the people who do not have that vision, as he does, made the world better. But everyone's sense of regret's gonna be a little bit different.

   7. AHAndrew Huberman12:47

      And sometimes this sense of what one is likely to regret, if we have access to it at all, 'cause it sounds like we're not very good at anticipating this, as Kahneman pointed out. Um, uh, most people lack a well-calibrated sense of future regret. That's gonna change over time, so it's dynamic.

   8. MHMorgan Housel13:05

      Yeah.

   9. AHAndrew Huberman13:05

      And here we're talking about investing in two-year or four-year degrees. We're talking about investing in a- one's time, that is, in, uh, a particular profession. And, uh, I think we come up with all these explanations, uh, post hoc about, "Well, you know, I went to that, uh, company. I went into that line of work. I spent 10 years there," or, "The- the startup failed, but I learned a valuable lesson that then, you know, uh, really supported me in a future endeavor." And so we rationalize our poor choices from the past-

   10. MHMorgan Housel13:35

       Yeah.

   11. AHAndrew Huberman13:35

       ... in ways that allow us to, you know, connect the dots, to sort of steal from the- the famous Steve- Steve Jobs speech.

   12. MHMorgan Housel13:41

       Right.

   13. AHAndrew Huberman13:41

       Um, and yet all of this really says that we are very poor at placing our current experience and our past experience into any kind of future projection of ourselves. You talk a little bit about this in your book, and this really, um, you know, sunk in for me, uh, in a major way, that we don't really know or anticipate how we are likely to change-

   14. MHMorgan Housel14:03

       No.

   15. AHAndrew Huberman14:03

       ... as we get older.

   16. MHMorgan Housel14:05

       Right. So there's a thing in psychology called the end of history illusion, which means that you are very aware of how much you've changed in the last 20 years. You are maybe smarter, wiser. You have ... your beliefs about things in life have evolved. Uh, and that's true for most people. But most people, if you, if you actually dig into it, they think if you say, "Who w- who will you be in 20 years from now?" They think they'll roughly be the same person they are today. There's always this belief that, "I have grown so much in the past, but I'm done growing," 'cause you ... it's hard to project how you're gonna be different in the future. A lot of that is if I tell myself, "20 years from now, I'll have very different beliefs about politics," w- whatever it might be, what I'm effectively admitting is what I believe today is wrong. And you don't wanna believe that. Everyone wants to wake up and look in the mirror and say, "What I believe today is the right thing." It's just like a self-justification of your own beliefs to ... makes it easier to go about the day is, "What I believe right now is the right thing." And maybe you have a little bit of doubt around the edges, but most of it is, uh, "What I believe is true." So you don't wanna believe that you're gonna adjust and adapt those beliefs over time. So it becomes difficult to take a truly long-term view and make a decision today that is going to be something that you're not gonna regret in the future. As I've always framed this, I think the only antidote to this, of trying to get around this problem, is avoiding the extreme ends of financial planning, and a lot of people are on the extreme ends.

   17. AHAndrew Huberman15:22

       Mm-hmm.

   18. MHMorgan Housel15:22

       Like, on one end, you have the FIRE movement, these people who save 90% of their income and they wanna retire at 28, kind of that kind of thing. And on the other hand, you have, like, the YOLO crypto traders who are like, "It doesn't matter. Like, just throw it all down and let's see what happens." Those extreme ends are w- you are most likely to regret at some point in the future. And the crypto ... Look, I- I think a lot of those people are young and they have time to make up for their mistakes. I did a lot of really dumb things with my money in my teens and 20s. But I think a lot of 'em, um, that's where they are most likely to look back. You know, it's- it's- it's one thing to lose a lot of money in your 20s and say, "Ah, it doesn't really matter." But then when you're 48 and trying to put your kids through college, y- that's when you're gonna look back and be like, "I wish I wouldn't ... I wish I hadn't done" something like that. So those extreme ends are, like, have the highest odds of future regret.

5. 16:07 – 23:17

   Money Management Extremes; Credit & Hope

   1. MHMorgan Housel16:07

   2. AHAndrew Huberman16:07

      In order to, as I described it before, carve a path through this for people, I'm wondering if people generally fall into either one or the other category of, as you described with Bezos, you know, not wanting to regret not having done something.

   3. MHMorgan Housel16:24

      Yeah.

   4. AHAndrew Huberman16:24

      Okay, so I think of that in sort of pseudo-neurobiological terms as being drawn toward the possible, uh, dopaminergic or other rewards of having succeeded. Really, that's what he's envisioning, presumably, is, um, the pain of having not had ... been given himself the opportunity to succeed.

   5. MHMorgan Housel16:41

      Yeah.

   6. AHAndrew Huberman16:42

      Okay, that's, uh, one way to put it. And then the other path would be just avoiding the pain of loss. And there are a lot of studies, I think Kahneman did some of them, in fact, that people work a lot harder to avoid the pain of loss-

   7. MHMorgan Housel16:55

      Yeah.

   8. AHAndrew Huberman16:55

      ... than to gain something. But in thinking about the people I know of across various wealth scales and different ages, it seems that some people are just more motivated to try new things because they like doing new things. They like the sense of reward that can come from doing those things. And so it really is painful for them to stay in the same place-

   9. MHMorgan Housel17:15

      Yeah, absolutely.

   10. AHAndrew Huberman17:15

       ... financially or otherwise. Other people, they like the sure thing. They like reliability. And you can see this in a lot of domains of their life. I mean, I don't wanna extrapolate this to all aspects of their life, but, you know, some people like dogs that, you know, the entire breed would, uh ... you know, is known for rarely ever having bitten somebody. Other people like to raise Cane Corsos, and while I'm sure there's some really nice, loving Cane Corsos out there, they occasionally bite, and when they bite, it's serious. So (laughs) you know, are we really talking about a propensity for risk versus safety, and do you think that people fall into more or less two camps on that?

   11. MHMorgan Housel17:50

       I think it's ... it- it's true that some people would go nuts if they took the safe path. And even if they're doing it in the name of like, "Oh, I- I don't wanna regret this," but they need some sort of variability in their life. They need to go out and do things. The other element is we don't know the paths that we didn't take, and I'll give you a personal example of this. Uh, 20 years ago, I was enrolled in Pepperdine, uh, but I- I didn't go. I was enrolled, and just at the last second, I transferred. So I never actually attended, but I was all enrolled. And of course, I think, "What would my life have been if I had gone there?"... 'cause the school that I transferred to, I met my wife, started my career there. And it's easy for me to say, "God, I'm so glad I did not go there 'cause my life would not be what it is today." But the truth is, maybe it would've been fine. It would've been better. Y- y- you, you never know the paths that you didn't take, where they're gonna end up. So back to Kahneman's point, a well-calibrated sense of your future regret, but nobody knows the paths that they didn't take and where those would go. So i- it just makes it very difficult to have any idea of, of which, which path you should be on, uh, in, in that end. So I, I think just avoiding those two camps of the extreme ends of it. But again, as I said earlier, I think that is actually more than half of people are on some sort of extreme end of spending way more than they can or saving way more than they need to. There's, there's a fat-tailed distribution in how people manage their money. And so that's quite a few people. And I think that's why... I think it's one of the reasons why we live in a society that is richer than it's ever been by far, not just at the top, but at the median level. The average family is richer than they've ever been. But because we manage it in such extreme ways, is it making people happier? Are we happier today than we were 40 years ago or 100 years ago? That, there's not a ton of evidence for, because managing it in a way that's actually gonna make you happier and reduce your regret and live a more meaningful life is much harder than earning it and accumulating it over time.

   12. AHAndrew Huberman19:37

       When I was growing up, you would see a mixture of newer cars, including some very nice cars, as well as a lot of older, kind of beaten-up cars driving around. Nowadays, of course, this varies by area, it's actually rare to see really old, beat-up cars. You see some really nice old cars that have been restored, but that's a different thing altogether.

   13. MHMorgan Housel19:59

       Mm-hmm.

   14. AHAndrew Huberman19:59

       And I assume this is because of credit, that people can now buy things on credit. How has the ability to purchase things on credit changed the way that we think about money generally? I know people who have tremendous credit card debt, and I think are now at the point where they figure that they're never gonna pay it off.

   15. MHMorgan Housel20:17

       Yeah.

   16. AHAndrew Huberman20:17

       They're just gonna probably not live long enough to pay it off, and they're sort of comfortable with that, which is kind of scary to see. And some of them aren't even particularly big spenders. They just accrued this debt early enough, and they can't seem to get out from the trap of that. I know other people who, you know, like myself, pay off my credit card bill every month. I'm like, you know, I hate the, whatever it is, 18-plus percent interest. Even if I'm one day late, I'm like, "Ah," you know? And, and at the same time, I'm not somebody who likes to purchase many things. I'm not a things guy. I, you know, I own, you know, one or two watches, one truck. Like, I'm just not a things guy.

   17. MHMorgan Housel20:52

       No.

   18. AHAndrew Huberman20:53

       But I certainly have my own psychological relationship with money that, after talking to you today, I'm sure I'm going to realize is not optimized either, right? So it's easy to point fingers at people in these different groups, but going back to this issue of credit-

   19. MHMorgan Housel21:05

       Yeah.

   20. AHAndrew Huberman21:06

       ... how has the ability to own and use things that we don't really truly own basically to exceed our income level in terms of the number and type of luxuries that we can enjoy changed the way that people think about money and use money? Because in today's discussion and in your book, we're talking about money as if it's something that we have-

   21. MHMorgan Housel21:25

       Right.

   22. AHAndrew Huberman21:25

       ... but credit basically is living outside your means.

   23. MHMorgan Housel21:27

       By definition.

   24. AHAndrew Huberman21:28

       Yeah.

   25. MHMorgan Housel21:29

       I think the knee-jerk response would be, "Oh, it helps you pull your consumption forward so you can have more toys that you would not have had in a different era." And I actually think, for a lot of people, it's the opposite, that there are a lot of people that have holes in their life, challenges in their life, and a very easy answer, if you, if you're not happy with your life and you have a hole you're trying to fill, is, "Well, if I had more money, this problem would go away." And in previous generations, previous decades, you could not just go out and have a ton of more money, that you, you earned your money from your paycheck. That was what you had. Today, it makes it easier to try to fill that hole in your life with money, and so you can keep on getting more and more and more. And for a lot of people, they will wake up and say, "Oh, if only I had that car, my life would be better." And they go buy that car, and they still feel the same. So then it's like, "Ah, you know what? If I had that car and that watch, then I'd feel better." They get the watch, they feel the same. "Ah, you know what's missing? A house. I gotta go get that fancy house." It's this continuous s- spiral, and since you can finance all of that, it makes it easier and easier to go on that spiral. Will Smith made this incredible realization I loved from his biography. He said when he was, uh, poor and depressed, he had hope 'cause he could tell himself, "One day, I'm gonna have money, and all these problems will go away." And then when he was rich and depressed, he was still depressed, and he lost all of his hope 'cause he, he had more money than he could ever spend. So he could not tell himself, "If only I had more money, these problems would go away." And so for a lot of people, the availability of credit is giving them, I think, a false sense of hope that's keeping them on this, on this hamster wheel of, "If only I had this bigger house, this nicer car, all these problems that I wake up with every morning would go away," and it keeps you on that path, which I think if you actually don't have access to that much money, you're more likely to wake up and say, "What is this hole? I need to fix it in a different way." It's health, it's relationships, it's purpose, whatever it might be, rather than trying to put a Band-Aid of credit over it.

   26. AHAndrew Huberman23:16

       So interesting.

6. 23:17 – 27:30

   Money as a Tool, Happiness, Independence & Purpose

   1. AHAndrew Huberman23:17

      I sometimes think about the phrase, "Money can't buy happiness," and my immediate impulse is to respond with, "Well, somebody with a lot of money probably said that."

   2. MHMorgan Housel23:28

      Right.

   3. AHAndrew Huberman23:28

      Not because I think money can buy happiness, but money can buffer stress.

   4. MHMorgan Housel23:33

      Yeah.

   5. AHAndrew Huberman23:34

      I have friends who've had children recently who have night nurses. They're looking a lot more rested-

   6. MHMorgan Housel23:40

      (laughs)

   7. AHAndrew Huberman23:41

      ... than the ones that don't-

   8. MHMorgan Housel23:42

      Right.

   9. AHAndrew Huberman23:42

      ... because they can't afford them, uh, and on and on. If, if you have a medical issue, right? I mean, there's this whole world within hospitals that, uh, won't talk about it in this episode, but there's this whole world about wealth and how one is actually even treated as a person in a hospital.

   10. MHMorgan Housel23:58

       Mm-hmm.

   11. AHAndrew Huberman23:58

       There's a lot of knowledge behind the scenes about people's income level when they come into a hospital. People are gonna really go wide-eyed when they hear this. They'll get shuttled to different rooms, different conditions that allow them to sleep better, recover better. Health outcomes depend on this. I mean, and on and on. So money can't buy happiness, but it certainly can buffer stress, and it can drive outcomes. So how should we frame that? E- especially if we are on the, um-... or in the pursuit of acquiring more money, more wealth.

   12. MHMorgan Housel24:28

       Because money-

   13. AHAndrew Huberman24:28

       Because a lot of people are.

   14. MHMorgan Housel24:29

       Money absolutely can buy happiness. It's often though an indirect path. And what I mean by that is, will a big fancy house make you happier? And the answer is probably yes. But the reason it might is because it'll make it more, y- it'll make it easier to host friends and family, and that's what's actually making you happy. It's those, those extra connections with those people.

   15. AHAndrew Huberman24:48

       Mm-hmm.

   16. MHMorgan Housel24:48

       Does going on a nice vacation make you happy? An expensive vacation? Yes, because you're going to form memories with your kids, with your spouse, with your friends while you're there. That's what's making you happy. So you can't say that money doesn't make people ha- H- It does. It obviously does. The other thing that's important is what really makes people happy in their core is some sense of purpose. There's a great quote from the movie Boiler Room where he says, "People who say money doesn't buy happiness don't have any." And I think that, I think there's a lot of truth to that, that people who become richer say, "Of course I was happier now than I was when I was poor. Of course, I would never want to go back there." But often what's happening is the reason that you are happier when you are rich is because the reason you got rich is because you found some sort of purpose. You built a business, you were successful in your career, and that gave you a good sense of purpose and identity. And where you see the opposite of that are lottery winners who become rich, but not because they made a good investment, not because they built a business, not because they're successful and their peers like them and whatnot, they just got lucky. And those are the people so many studies that, that winning the lottery will not make you happy. It might for a very short period of time, but over time it doesn't, because you didn't get any added purpose. You can't wake up in the morning and say, "I built this business. I did it. I..." You know, "I'm so successful. I got my PhD. I did..." There's none of that. You just got lucky. And so that's not going to bring you much happiness. So money does make you happier. I think it can for everybody if you learn how to spend it in your personality and whatnot. Uh, s- spending a lot of it, spending a ton of money can make you happier. I, I think, I think there's almost no limit to it, but it's different for everybody, and it's often a roundabout way. I think a lot about this when, if I go on an expensive vacation with my kids, let's say that's a, that's a 10, that's a 10 out of 10 in terms of just happiness, memories and whatnot. But actually what was making me happy was spending uninterrupted time with my kids. So staying home and playing LEGOs on the living room floor with them, that might be like an eight and a half, because, because that's what's making me happy. You just have to figure out like the actual purpose. I think a good formula for a pretty good life at the simplest level is independence plus purpose. You need to have a purpose that is bigger than yourself that you are chasing, family, religion, work, whatever it might be, different for everybody. And you need to have y- and you need to have the independence to make sure you can do it on your own terms rather than chasing somebody else's goal. That's like the highest level of psychological wellbeing, independence and purpose. And money is not one of those things, but you can easily see how money can help those things. Money brings you independence. It can allow you to find your purpose in a bigger way. You're not chasing, you're not, you're not at your boss's whim. You can do whatever you want. You're independent. So using money as a tool can make you happier. Spending money can make you happier, but it's not the thing that is making you happier. It's just a tool to do other things and acquire other things that are actually making you happy.

   17. AHAndrew Huberman27:29

       I'd

7. 27:30 – 30:11

   Sponsors: AG1 & ROKA

   1. AHAndrew Huberman27:30

      like to take a quick break and acknowledge our sponsor, AG1. By now, many of you have heard me say that if I could take just one supplement, that supplement would be AG1. The reason for that is AG1 is the highest quality and most complete of the foundational nutritional supplements available. What that means is that it contains not just vitamins and minerals, but also probiotics, prebiotics, and adaptogens to cover any gaps you may have in your diet and provide support for a demanding life. For me, even if I eat mostly whole foods and minimally processed foods, which I do for most of my food intake, it's very difficult for me to get enough fruits and vegetables, vitamins and minerals, micronutrients and adaptogens from food alone. For that reason, I've been taking AG1 daily since 2012. When I do that, it clearly bolsters my energy, my immune system, and my gut microbiome. These are all critical to brain function, mood, physical performance, and much more. If you'd like to try AG1, you can go to drinkag1.com/huberman to claim their special offer. Right now, they're giving away five free travel packs plus a year supply of vitamin D3 K2. Again, that's drinkag1.com/huberman to claim that special offer. Today's episode is also brought to us by ROKA. ROKA makes eyeglasses and sunglasses that are of the absolute highest quality. I'm excited to share that ROKA and I have teamed up to create a new style of red lens glasses. These red lens glasses are meant to be worn in the evening after the sun goes down. They filter out short wavelength light that comes from screens and from LED lights, the sorts of LED lights that are most commonly used as overhead and frankly lamp lighting nowadays. Now, I want to emphasize ROKA red lens glasses are not traditional blue blockers. They're not designed to be worn during the day and to filter out blue light from screen light. They're designed to prevent the full range of wavelengths that suppress melatonin secretion at night and that can alter your sleep. So by wearing ROKA red lens glasses, they help you calm down and they improve your transition to sleep. Most nights I stay up until about 10:00 PM or even midnight, and I wake up between 5:00 and 7:00 AM depending on when I went to sleep. Now, I put my ROKA red lens glasses on as soon as it gets dark outside, and I've noticed a much easier transition to sleep, which makes sense based on everything we know about how filtering out short wavelengths of light can allow your brain to function correctly. ROKA red lens glasses also look cool, frankly. You can wear them out to dinner or to concerts or out with friends. So it turns out it is indeed possible to support your biology, to be scientific about it, and to remain social after all. If you'd like to try ROKA, go to roka.com, that's R-O-K-A dot-com and enter the code Huberman to save 20% off your first order. Again, that's R-O-K-A dot-com and enter the code Huberman at checkout. I love the story

8. 30:11 – 39:04

   Unstructured Time; Independence, Identify & Money; Addiction

   1. AHAndrew Huberman30:11

      about spending time with your kids on vacation as unstructured time, as well as spending unstructured time with them playing LEGOs at home. My graduate advisor sadly passed away very young of cancer. She was 50, and I knew her kids w- really when they were in the womb 'cause she was pregnant-

   2. MHMorgan Housel30:25

      Mm-hmm.

   3. AHAndrew Huberman30:25

      ... with the first one, and I attended the memorial service there. And, um...... it was an incredible thing because people gave up, gave their speeches and, um, and her kids got up and by then they were, I think, you know, about eight and 11 or so. And... (smacks lips) I'm sure they had a great many thoughts and feelings that they didn't share, but the one thing that really stood out is they appreciated how much unstructured time their mom had spent with them.

   4. MHMorgan Housel30:51

      Yeah.

   5. AHAndrew Huberman30:51

      It wasn't this, like, big event or something. It was all the unstructured time that she had spent with them.

   6. MHMorgan Housel30:56

      Yeah.

   7. AHAndrew Huberman30:56

      And that was very inherent to the kind of person she was. And so, that really stuck with me. And God willing, you live a very long time-

   8. MHMorgan Housel31:02

      Yeah.

   9. AHAndrew Huberman31:02

      ... but I think for anyone listening to this, and because of the statement that Kahneman made where, that we are not well-calibrated to sense, uh, future regret-

   10. MHMorgan Housel31:08

       Mm-hmm.

   11. AHAndrew Huberman31:09

       ... you know, that unstructured time is perhaps one of the most valuable things that we can give our relationships, both the people we engage in them with and ourselves.

   12. MHMorgan Housel31:17

       Yeah.

   13. AHAndrew Huberman31:17

       And it's, I don't think it's, uh, I don't think it's discussed enough.

   14. MHMorgan Housel31:20

       There's a g- a gerontologist named Karl Pillemer who wrote a bo- great book called 30 Lessons for Living. And what he did is he interviewed about a hundred centenarians and he just said, "Tell me about your life. What, what, you know, what, what advice do you have for the rest of us?" And there's a section of his book about money. And he says of the, of the 1,000 people, it was 1,000 people he interviewed, of the 1,000 centenarians he interviewed, not a single one of them looking back at their life said, "I wish I earned more money." Not a one. But virtually every one of them said, "I wish I spent more time with my kids. I wish I was nicer to people. I wish I spent more time with my friends and my family." That was universal. But earn more money was not in there whatsoever. That stuck with me.

   15. AHAndrew Huberman31:57

       Mm-hmm. And as you point out, however, earning money allows for the opportunity to spend time with-

   16. MHMorgan Housel32:04

       Yeah.

   17. AHAndrew Huberman32:04

       ... kids and loved ones of all kinds. It, it-

   18. MHMorgan Housel32:07

       Right. It can, but I think there are a lot of people for whom it's the opposite. If you are a partner at a law firm, you're earning a ton of money. Congratulations. Great. You probably have a big house and a nice car. You're also probably working 100 hours a week. And the things that might fill your soul, it's different for everybody, this is not universal, but what might actually make you happy, spending time with your friends, your family, exercising, sleeping late, uh, is not available to you. So that's why it's independence plus purpose. And I think there are a lot of people who make millions of dollars per year and have no independence whatsoever. They are completely tied to their boss's whims, to their work, to their employer. They might love it. I'm not saying you shouldn't do that. But they have no independence at all. I think there are billionaires who have no independence because they are so tied to doing things whether they like it or not. And that's, I think a lot of people go crazy in that situation because they're like, "I'm making $5 million a year, but it's not making me any happier." It's like, yeah, what, what would make you happier is independence and you are pushing yourself away from that. You were probably more independent when you were 15 and had no money than you are at 40 making millions of dollars a year.

   19. AHAndrew Huberman33:06

       So then in an ideal world, which of course doesn't exist, one would find a vocation or a pursuit that they found really meaningful, would work really, really hard, would make enough money to then, I guess, retire and spend unstructured time with the people you love and then simply stop working. I- in this model that clearly is an artificial model that I'm creating here, um, because it seems like after a certain point, provided you earned that money through an effort that you felt was meaningful, um, presumably with people you enjoy or even if it wasn't and you found it meaningful, you make that money, then it seems that it's all about human interactions at that point.

   20. MHMorgan Housel33:45

       Yeah. And what's, what's true is that, that, that scenario, that, that, you know, dream scenario might be true for 1% of the people, that they can earn enough money to retire young and then pursue whatever they want. There's an entrepreneur named Felix Dennis who wrote a book many years ago called How To Get Rich. And there's a quote in that book, he says, uh, he was at the time maybe in his 70s and worth about a billion dollars, something like that. And he said, "If I knew what I knew now and I could do life over again, I would make as much money as I could, retire at age 35, and plant trees and write poetry." And he's like, "Looking back, that's, that's what I should have done, is do..." But let's leave aside that of course not everybody can do that.

   21. AHAndrew Huberman34:20

       What did he do? He kept working.

   22. MHMorgan Housel34:21

       He kept working. He was an entrepreneur.

   23. AHAndrew Huberman34:21

       Even though he didn't need more money?

   24. MHMorgan Housel34:23

       Absolutely.

   25. AHAndrew Huberman34:24

       This is interesting because people who do achieve a high degree of wealth at a young age seem to keep going and we could make all sorts of assumptions about why it is that they do that, expectations that they, uh, from others, um, that their ego, uh, literally their sense of self in some way-

   26. MHMorgan Housel34:41

       Yeah.

   27. AHAndrew Huberman34:41

       ... or perhaps entirely is, um, is tied to the sense that they're still in pursuit, um, that it's somehow a failure to opt out at that point.

   28. MHMorgan Housel34:48

       Yeah.

   29. AHAndrew Huberman34:49

       Um, I mean, we can speculate, uh, all day, but, um, what this guy Felix said really rings true.

   30. MHMorgan Housel34:56

       Yeah.
9. 39:04 – 47:42

   Longevity, Health & Money

   1. MHMorgan Housel39:04

   2. AHAndrew Huberman39:04

      I fundamentally believe that all forms of addiction, all forms of addiction, are fundamentally a fear of death, their way of-

   3. MHMorgan Housel39:14

      Mm-hmm.

   4. AHAndrew Huberman39:14

      ... shrinking our, uh, aperture on time perception so that we're in pursuit of something. And for people that can place their addiction within work, it has this feedback of being f- quote unquote "functional" as opposed to dysfunctional. This is also true for people that are continually, uh, seeking awards within their profession. I mean, there are these professions, academia included, but other professions where people are constantly pinning awards on one another, and it gives this illusion of progress when, in fact, there's a whole world of things happening. Now, these people often have quite healthy families and relationships, so they're not mutually exclusive.

   5. MHMorgan Housel39:49

      No.

   6. AHAndrew Huberman39:49

      But, you know, I think... I know a few billionaires, not, not many, but I know some that are very happy. They tend to be the people that are still working and in pursuit of new things-

   7. MHMorgan Housel39:57

      Yeah.

   8. AHAndrew Huberman39:58

      ... avid learners. But perhaps by virtue of the work that I do, which is focused on science but also health, you know, the modern billionaires that I'm aware of seem to be very focused on not just making money, but also trying to secure their place on the planet for a very long time.

   9. MHMorgan Housel40:19

      Mm-hmm.

   10. AHAndrew Huberman40:19

       Not through legacy, although I think many of them like to provide for n- the next generations in their family, surely, not so much by putting their names on the sides of buildings anymore, this used to be the way it was done, but rather trying to secure their health status, because the one thing that money can buy sort of is better health care-

   11. MHMorgan Housel40:39

       Right.

   12. AHAndrew Huberman40:40

       ... but money can't buy you more years of your life, except by virtue of the things that you are willing to not do and do behaviorally.

   13. MHMorgan Housel40:47

       Yeah.

   14. AHAndrew Huberman40:47

       You still have to exercise. You still have to get your sleep. You have to avoid certain things. Um, and so n- the modern billionaires often are talking about what they're doing for their health as opposed to their yacht, their car, et cetera. This has now become the kind of metric for comparison. Blood profiles become a sort of point of bragging for people.

   15. MHMorgan Housel41:08

       Yeah.

   16. AHAndrew Huberman41:08

       It's pretty interesting, uh, especially given that you just look back about 50 or even 100 years and, and, and further back, and the more wealthy people were, the less physical labor they were doing. Now, they're doing more physical labor-

   17. MHMorgan Housel41:19

       Mm-hmm.

   18. AHAndrew Huberman41:19

       ... to try and live longer.

   19. MHMorgan Housel41:20

       Yeah.

   20. AHAndrew Huberman41:21

       So what are your thoughts on the, on the relationship between physical health and, and money? I mean, obviously there's a, there's a sweet spot there, but, um, there's no pill that people can purchase to live longer.

   21. MHMorgan Housel41:32

       Right. I, I, I view it in the negative sense of the people who work to get money so hard that it takes a physical toll on their body, and that is so incredibly common, and that's another form of debt, that you can very easy- m- you can easily measure your net worth and your income. You can put a number on it, very clean to measure. How do you mea- It's much harder to measure your health. And it's, I think it's easier for people to say, "Yes, I'm only sleeping five hours a night, and I'm, I'm getting... I'm, I'm on my third divorce and I'm overweight, but I'm making a lot of money this year," because one is very easy to measure and the others are, are much harder. Your happiness, your health, whatnot, it's harder to measure that. And I, I, I do think too that if you are very wealthy, particularly the very, very wealthy, you get so accustomed towards, "I can snap my fingers and literally get anything, a Gulfstream jet, a mansion, whatever, I, I can get it right now." But health is like this last elusive thing that's gonna, that by and large you cannot purchase, and I think that drives a lot of people crazy. And that's why if you can have anything in the world by snapping your fingers and getting it, then you eventually move towards what's the thing that you don't have? And that's immortality. And I think that's... There's a long history of that going back to the robber barons. Uh, John D. Rockefeller was obsessed with it. Andrew Carnegie was obsessed with it. If you can have everything material in the world, you're still gonna have desire. And ordinary people can sit around and dream and say, "One day I'm gonna have the mansion. O- or not even a mansion. One day I'm gonna have a house of my own. I'm gonna have a car. I'm gonna send my kids to college."... everybody wants to dream. So if all that is a given, you have all the money you could ever spend, you still want to dream. So what do you dream about? You dream about immortality. And so I think that's, that's been the case for a very long period of time. What's interesting too is that there was a, uh, there was a historian who looked back at the British peerage. He got a lot of data on how long people lived in, uh, in various points of the U- UK economy. And what he found was until about, I think it was 1750, the richest members of the UK had among the shortest lives. The poorest people were some of them who were living the longest. And he dug into it, said, "How could this be? The richest people die the fastest." And what he found is the richest people were the only ones who could afford all the quack medicines and the sham doctors who were just poisoning them. They were poison

   22. AHAndrew Huberman43:39

       Mm-hmm.

   23. MHMorgan Housel43:39

       ... hands back in the day when we knew nothing about medicine. So I think the idea of, uh, of, "I want a better life and I should be able to buy that," like there's a long history of that backfiring on people as well.

   24. AHAndrew Huberman43:49

       Yeah, there's a lot of excitement right now about stem cells and treatments that currently are not available in the United States that are, are available out of country. And, um, I get asked about these a lot. Um, most of them don't have FDA approval yet. Um, some of them probably never will have FDA approval. Uh, we'll probably talk about stem cells another time.

   25. MHMorgan Housel44:07

       D- do you think you see this though, where the wealthiest people are spending money on treatments that you either know are not gonna work or are of, of very questionable-

   26. AHAndrew Huberman44:16

       Yeah.

   27. MHMorgan Housel44:17

       ... work? And, and, and-

   28. AHAndrew Huberman44:17

       All the time.

   29. MHMorgan Housel44:18

       And, and that might backfire on you, that might make you less healthy?

   30. AHAndrew Huberman44:20

       Uh, oh, absolutely. I mean, I, I'll just point out, I, I don't have anything against stem cell therapies. I think they h- hold great potential. Um, but there is a true story about a stem cell clinic down in Florida prior to the FDA, um, you know, bringing the gavel down on them, of injecting stem cells into the eyes of wealthy people who could afford the treatment. Um, these people had certain markers for, uh, macular degeneration and other things that can cause blindness. And guess what happened to these people? They all went blind.
10. 47:42 – 53:37

    Ambition, Social Media, Fame & Social Debt

    1. AHAndrew Huberman47:42

       that there's a possibility you could get it. The, uh, the dopamine circuit loves you want what you feel is just out of your reach, but might be possible to achieve.

    2. MHMorgan Housel47:52

       Yeah.

    3. AHAndrew Huberman47:52

       I mean, this is why people throw so much money away gambling.

    4. MHMorgan Housel47:54

       But maybe with social media, it makes it seem so that there are ... virtually anything is within your reach. Because it used to be before social media that your view of the world was mostly your neighbors and your coworkers and your siblings.

    5. AHAndrew Huberman48:05

       Mm-hmm.

    6. MHMorgan Housel48:05

       And now everybody's view of the world is a curated highlight re- uh, reel of the most extreme events in the world.

    7. AHAndrew Huberman48:12

       Mm-hmm.

    8. MHMorgan Housel48:13

       So if you are 15-year-olds scrolling through In- Instagram, then what is within your reach, what looks within your reach, is a Ferrari, and a private jet, and a mansion, in a way that didn't exist when you and I were kids. And I think it, it makes the aspiration level that much harder.

    9. AHAndrew Huberman48:26

       And real examples of people who went from nothing to immensely popular or wealthy, et cetera. I mean, gosh, I would say about once a month, somebody walks right up to me and says, "Just watch. Someday I'm gonna have the top podcast in the world on-"

    10. MHMorgan Housel48:44

        Mm-hmm.

    11. AHAndrew Huberman48:45

        "... blank." And they're, they're trying to seed this thing that they've seen on social media, which are examples of people, you know, kind of ... it u- used to be called rags to riches, but-

    12. MHMorgan Housel48:53

        Right.

    13. AHAndrew Huberman48:53

        ... you know, it ... there are parallels-

    14. MHMorgan Housel48:54

        Yeah.

    15. AHAndrew Huberman48:54

        ... in different universes. But there's a famous musician, I think his name is Ed Sheeran, who there's still a video of him early on saying like he knew he was gonna make it. If you watch the Conor McGregor documentary, it's amazing. I think it's called Notorious on Netflix. Even if people aren't into, to MMA they should, they should at least watch the first part. He was videotaping himself very early on, and he made this prediction that he was gonna be a world champion, and then he ends up being a world champion, right?

    16. MHMorgan Housel49:18

        Yeah.

    17. AHAndrew Huberman49:18

        Um-

    18. MHMorgan Housel49:19

        This is great anecdote-

    19. AHAndrew Huberman49:20

        Yeah.

    20. MHMorgan Housel49:20

        ... that Kanye West used to practice his Grammy speech when he was walking to the train 'cause he couldn't afford the car.... like, when he was an absolute nobody, he was practicing-

    21. AHAndrew Huberman49:28

        Mm-hmm.

    22. MHMorgan Housel49:28

        ... his Grammy acceptance speech of just, like-

    23. AHAndrew Huberman49:30

        Mm-hmm.

    24. MHMorgan Housel49:30

        ... absolute ambition of where you're going.

    25. AHAndrew Huberman49:31

        Yeah, and I don't know if this anecdote is true, but there's the, the anecdote that I heard that, you know, Matt Damon and, um, uh, Ben Affleck practicing their Academy Awards acce- acceptance speech on the school-

    26. MHMorgan Housel49:42

        They were nobodies.

    27. AHAndrew Huberman49:42

        ... in the schoolyard when they were kids-

    28. MHMorgan Housel49:44

        Yeah, I love it. Yeah.

    29. AHAndrew Huberman49:44

        ... and then they gave their speech and they were, you know, laughing about that.

    30. MHMorgan Housel49:46

        Yeah.
11. 53:37 – 55:24

    Sponsor: Function

    1. AHAndrew Huberman53:37

       a quick break and thank one of our sponsors, Function. I recently became a Function member after searching for the most comprehensive approach to lab testing. While I've long been a fan of blood testing, I really wanted to find a more in-depth program for analyzing blood, urine, and saliva to get a full picture of my heart health, my hormone status, my immune system regulation, my metabolic function, my vitamin and mineral status, and other critical areas of my overall health and vitality. Function not only provides testing of over a hundred biomarkers key to physical and mental health, but it also analyzes these results and provides insights from top doctors on your results. For example, in one of my first tests with Function, I learned that I had too high levels of mercury in my blood. This was totally surprising to me. I had no idea prior to taking the test. Function not only helped me detect this, but offered medical doctor informed insights on how to best reduce those mercury levels, which included limiting my tuna consumption, because I had been eating a lot of tuna, while also making an effort to eat more leafy greens and supplementing with NAC and acetylcysteine, both of which can support glutathione production and detoxification, and worked to reduce my mercury levels. Comprehensive lab testing like this is so important for health. And while I've been doing it for years, I've always found it to be overly complicated and expensive. I've been so impressed by Function, both at the level of ease of use, that is getting the tests done, as well as how comprehensive and how actionable the tests are, that I recently joined their advisory board, and I'm thrilled that they're sponsoring the podcast. If you'd like to try Function, go to functionhealth.com/huberman. Function currently has a wait list of over 250,000 people, but they're offering early access to Huberman Lab listeners. Again, that's functionhealth.com/huberman to get early access to Function.

12. 55:24 – 57:52

    Resume Virtues vs. Eulogy Virtues

    1. AHAndrew Huberman55:24

       One thing that, um, I wish somebody would do, maybe it's been done, is you mentioned earlier this, uh, not typical, but-... I guess, semi-common thing of an article will come out and say, you know, the- the five things that, um, people say on their deathbed or that they... and they look back and- and they mention that they wish they'd spent less time at work, they wish they had spent more time with their kids, or more time in nature perhaps. Has anyone ever just asked people directly, um, what were the things that they are most proud of or the things that they really feel brought them tremendous meaning then and as they're passing away? Uh, because it's- it's- it's related, but it's kind of the inverse of the same question.

    2. MHMorgan Housel56:07

       Yeah. Warren Buffett brought this up one time. He said, "A good way to think about life is, uh..." It's- it's- it's kinda grim, but he said, "Write what you want your obituary to say and then work backwards to live up to it." And in that situation, if you were to write, like, what do you want your obituary to say? Most people would say, "Oh, I- I- I hope it says Morgan was a good father, he was a good husband, he helped his community, he was admired by his coworkers." That's what I want it to say. And for a lot of people, it's different for everyone, but it'd be something like that. And why Buffett said it was important is because nobody who's writing their preferred obituary would say, uh, would, uh, include the size of their house, how many horsepower their- their car had, how nice their clothes were, 'cause everybody knows that doesn't matter. And it's like, uh, f- forget who made this idea, there's a thing of between resume virtues and eulogy virtues.

    3. AHAndrew Huberman56:54

       Yeah, that was, uh, David Brooks.

    4. MHMorgan Housel56:55

       David Brooks said that, thank you. Resume virtues are, you know, uh, how much money you make, uh, your degrees, everything. Eulogy virtues is he was a great father, he was a great friend, he helped his community, he was funny. And I think most people really aspire to have eulogy virtues, but they spend all their day chasing resume virtues. Resume virtues can be great. I want a good education, I want a good income, but what you're really trying to chase is to use those things to gain more resume virtues at the end of the day. So I think if you think about it through that lens, a lot of these things become clear. And that's why, like I said, going on a great vacation with my kids, if that's a 10, what's really fun about that is- is spending time with them when I'm detached from work, I'm not checking my phone every seven seconds, I'm just spending hours with my kids, giving them my full attention. That's what made me happy. The view was great, on the beach, cool, but that's what made me happy, and I can do that at home, can't I? And so that's- that's the difference between, like, going to Maui is a resume virtue, spending time with your kids is a eulogy virtue.

13. 57:52 – 1:01:42

    Compound Interest, Math vs. Behavior

    1. AHAndrew Huberman57:52

       Why is it, do you think, that even though we've perhaps all heard by now that, you know, compounding interest is great, right? You put in, let's say, a small or a moderate amount of money into even just a savings account that's accruing couple percent, you know, varies year by year and with the economy, of course, or into the markets that over time if you, quote unquote, set it and forget it, just kinda like put it there and walk away, that you're likely to make X percent over time. And you can look at the plot, you can- you can look at that line upward into the right, it almost always is jagged line drifting upward to the right, and even just scroll over and see, okay, at age whatever I'm gonna have X number of dollars. And that value is often very high relative to where one's current wealth is, even if they're a student or they have very little put away. We- we all hear this, we can see it, you can run the models, it's almost trivial, and yet people don't do that even if they have the income to save. Is it that hard for us to project our emotional state and the sorts of things that we integrate in terms of life meaning and value into the future that most people just don't do that? And why do you think that is? I mean, I'm not asking you to play neurobiologist here. I mean, I think we both agree that- that, uh, time perception is- is a complicated thing. Um, but y- you would think that people would just sort of get it, but we're not rational. Most people aren't rational in that way. They don't save, they don't invest, and they don't compound interest. And so they end up with a lot less money than they could have and a lot more regret.

    2. MHMorgan Housel59:22

       Yeah. I think there's two ways to think about this. One is, uh, my friend Michael Batnick, uh, phrased it this way. He said, "If I ask you what is eight plus eight plus eight plus eight, you figure that out in five seconds." That's an easy one. If I said, "What is eight times eight times eight times eight times eight?" Even if you're a math nerd, that's- it's- it's too hard, you can't figure it out. We're not wired for exponential thinking, we just can't do it.

    3. AHAndrew Huberman59:42

       Mm-hmm.

    4. MHMorgan Housel59:42

       And therefore, a lot of th- even if you show you the numbers, hey, invest a small amount, retire with a million dollars, I think it's so counterintuitive, uh, that most people see that and they're like, "Ah, okay, that doesn't- doesn't really seem right." It doesn't really pass the sniff test how big the numbers can get, how quickly the numbers can get big. The other thing is if you tell a young person, "Hey, you have 50 years in front of you to invest. That's great. Time's on your side. When you're- when you're 70 years old, you're gonna have $10 million." 50 years from now might as well be 10,000 years from now. You're talking about people who are- who don't know what they're gonna eat for dinner tonight, and you're talking about like, "Hey, let's- let's talk about the year 2077." Like, it's so far out of there. Even if that's the right way to think about it, it's- it's a tough way to think about it. And time perception, you mentioned, is so difficult for people. If I said, "You're gonna get punched in the face in 10 seconds," like, that's a fear. And you're like, "Oh, I don't..." But if I said, "Someone's gonna punch you in the face 50 years from now," you're like, "Ah, I'll deal with it when I get there." It's so easy to put out of sight, out of mind. And so... And the other thing is, Warren Buffett talked about this a lot. He said... Uh, actually, it was Charlie Munger who said this. He said, "When teaching finance to young people, people either understand it instantly or never."

    5. AHAndrew Huberman1:00:47

       Mm-hmm.

    6. MHMorgan Housel1:00:48

       He's like, "Some people are just wired to get it and some people aren't." And that's always been the case. Munger al- often said all the time, he said, "The iron rule of math is only 1% of people can end up in the top 1%." And that's why for a lot of people, yes, you should save and invest for 50 years. Let's not pretend that that is easy or that everybody is psychologically able to do it. Some people are wired differently, of course that's the case, as they are with health and intelligence and lots of other things. So I do think there's a thing for financial education with getting people to understand what is possible, but I don't think we'll ever live in a world where everyone gets it and does it. I don- I don't think... That world has never existed and I think will never exist because it's not math, it's not a spreadsheet, it's behavior. And we now live in a world where we understand the dangers of smoking and highly processed foods and whatever it might be, but even if we know it, people still do it because it's behavioral, it's not intelligence. So showing people the numbers and getting them to do it is night and day.

14. 1:01:42 – 1:09:58

    Dopamine & Time, Marshmallow Test & Distraction

    1. AHAndrew Huberman1:01:42

       ... do you know how they got people to stop smoking, in particular young people? It wasn't by scaring them about their health. Turns out the most effective campaign to get, especially young people, to stop smoking was to hijack the inherent rebellion of youth and to display ads of wealthy older people in rooms full of smoke.

    2. MHMorgan Housel1:02:03

       Mm-hmm.

    3. AHAndrew Huberman1:02:03

       So it became, uh, us as the youth rebelling against them, the older generation that are trying to take our money. It had nothing to do with health.

    4. MHMorgan Housel1:02:10

       I love that.

    5. AHAndrew Huberman1:02:10

       And it absolutely worked.

    6. MHMorgan Housel1:02:12

       Yeah.

    7. AHAndrew Huberman1:02:12

       And, uh, I have friends that work on this sort of thing in the context of public health as it relates to all sorts of public health initiatives. And the effective way to change human behavior as it relates to health is to incentivize aesthetics, to incentivize fear, uh, or to hijack fear of dying. But even fear of dying is not sufficient, uh, as compared to, um, hijacking these, uh, cross-generational, uh, let's just call them frictions, um, that exist.

    8. MHMorgan Housel1:02:46

       Yeah.

    9. AHAndrew Huberman1:02:46

       So I found that to be interesting. You used a math example of eight plus eight plus eight plus eight, versus eight times eight times eight times eight.

    10. MHMorgan Housel1:02:52

        Mm-hmm.

    11. AHAndrew Huberman1:02:52

        And you said that the human brain is not capable of exponential thinking, or most people's brains are not capable of exponential thinking.

    12. MHMorgan Housel1:02:59

        No.

    13. AHAndrew Huberman1:02:59

        I think, um, you either intentionally or inadvertently hit on something really important. I don't know that the dopamine reward system, which is the fundamental currency of pursuit and reward-

    14. MHMorgan Housel1:03:11

        Mm-hmm.

    15. AHAndrew Huberman1:03:11

        ... across all timescales. It's kinda wild, right? One neuromodulator, and there are other things involved that modulate that modulator, but one neuromodulator is involved in reward pursuit across all timescales. Whether or not we're playing a, let- let's say we're both competitive enough to play a game of chess or checkers, dopamine is motivating the pursuit for the win.

    16. MHMorgan Housel1:03:33

        Mm-hmm.

    17. AHAndrew Huberman1:03:33

        Or a four-year degree, or an eight-year degree, or why you would want maybe your kids to win a soccer game. Like it, now you're like a third person in dopamine, right? It's across all timescales, all scenarios. It's incredible, and across many species. So it makes me wonder, and I'll have to ask some of my colleagues that, uh, work on these dopamine reward schedules, uh, uh, for a living, whether or not the dopamine reward system actually can do exponential math.

    18. MHMorgan Housel1:04:01

        Yeah.

    19. AHAndrew Huberman1:04:01

        It might not be able to do exponential math. It might be that the pursuit of water, the pursuit of mates, the pursuit of food, the pursuit of shelter, which is what these dopamine circuits evolved under the constraints of, whether or not they're even capable of doing exponential thinking.

    20. MHMorgan Housel1:04:16

        Or if it's like the marshmallow test, which got misconstrued in many ways, but it's like, yeah, would- would- would you rather have one right now or two in the future? It's, I think for a lot of people, it's- it's just like there. There are some people for whom, like, they're wired so differently for this. So you hear stories about like the old, the- the- the old very wealthy people, the old billionaires of when, when they were 20 years old, they would not get a haircut because they knew that $3 haircut would compound into $100 by the time they're older. They were just so wired from birth to understand this-

    21. AHAndrew Huberman1:04:43

        Mm-hmm.

    22. MHMorgan Housel1:04:43

        ... and to have a very long perception of time to do it. By definition, that's the rarity. Most people are not like that. And I- I don't know if they should be either. I don't know if you should be the kinda person your entire life who is always saving for a future and- and never enjoying what you have too. Like that could lead to a lot of regret as well.

    23. AHAndrew Huberman1:04:58

        Mm-hmm.

    24. MHMorgan Housel1:04:58

        And there are those people.

    25. AHAndrew Huberman1:05:00

        So let's parse the marshmallow test. The marshmallow test, I think initially done at Stanford, um, I think it was at Bing Nursery School or something like that, or maybe somewhere at Stanford. If I'm wrong, someone will- will correct me in the comments. Of course, for those that don't know, is you, they brought these really cute kids into rooms and they put the marshmallow in front of them and they told them they could eat it now or they could wait and they could get two marshmallows later, and then they videotaped them and the- the videos are absolutely delightful of the kids-

    26. MHMorgan Housel1:05:25

        Right.

    27. AHAndrew Huberman1:05:25

        ... you know, like distracting themselves or having the marshmallows talk or taking a little piece of the marshmallows. I mean, it reveals as much variation on human self-constraint behavior as you could possibly imagine. And, and they're really interesting, as you know. I would like to know whether the children that were able to wait and therefore get two marshmallows were trying to resist the temptation-

    28. MHMorgan Housel1:05:48

        Mm-hmm.

    29. AHAndrew Huberman1:05:48

        ... or whether or not they were being pulled forward by the anticipation of two marshmallows.

    30. MHMorgan Housel1:05:53

        My understanding, and maybe this is-

Episode duration: 2:15:35