It’s a Must-Have Book, Even if You Never Read It
I confess that for a stretch of time, I convinced myself that having The Economist lying around would make me smarter, even if I never picked it up. Just by being in the same room, I’d somehow learn by osmosis about the news in each issue. Also, I liked having people think of me as the kind of person who read The Economist. But the osmosis thing didn’t happen, and I finally stopped my subscription when I realized I’d probably never read it on a regular basis.
I remembered my failed theory when I saw all of the stories about Thomas Piketty and his book “Capital in the Twenty-First Century.” Less than a month ago, I suspect most of you didn’t know Mr. Piketty existed. Now, he and his book are everywhere. A good number of people will push through and read all 698 pages. Given its size and subject matter, however, Mr. Piketty’s book seems destined to land on many never-read piles. It raises the question: Why are so many people buying it in the first place?
Don’t get me wrong. The book’s data and concepts are important and worth discussing, but do they matter equally to both economists and noneconomists? That’s the kind of question most of us skip over when it comes to important and valuable information. So we buy the book (or subscribe to the magazine) because we don’t want to risk missing out.
We saw something similar happen with Michael Lewis’s “Flash Boys.” Mr. Lewis told a compelling story that, depending on who is asked, highlighted a big problem in the markets: high-frequency trading. The information was valuable, but much of the reaction to that information implied it should matter to all of us equally. For most investors, it matters more to buy good things and hold on to them for a long time (something not affected much by H.F.T.). But the noise around the book made it sound as if everyone should focus on high-frequency trading.
This happens with CNBC, too. While I’m not a fan of people living and dying by what they see and hear on the channel, it does share valuable information. Still, all too often no one bothers to check if any of the information that the channel shares is relevant only to professional traders and not average investors. That piece of financial news must be important and valuable to everyone, right? Otherwise, why would they be talking about it on TV?
It’s a fascinating phenomenon. We’re keen to follow the pack. It doesn’t matter whether we understand why we are following the pack in the first place, just so long as the pack’s proclamations qualify as important and valuable. And they may very well be important and valuable, but to whom? And why upend our financial plans for something that may or may not apply to us?
Let’s say you bought Mr. Piketty’s book, and you even read the book. It’s full of data, and it’s definitely igniting interesting discussions. Put that aside for a minute, and answer me this: Does it change the underlying principles of your financial plan? Does it change that you’ll reach your goals only by saving more, spending less and behaving well?
I imagine many “Capital” buyers really like the idea, even if it’s subconscious, that people will see the book sitting on their desks. We’re social creatures, and we care about how other people see us. That said, we need to learn to separate the information that’s actually valuable and important to us from the rest of the noise. Otherwise, we’ll end up with a big pile of books we’ve never read, magazines we’ve never opened and many financial decisions based on what matters most to other people.
This commentary originally appeared May 19 on NYTimes.com
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