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This week on Pennies and Popcorn … you’re gonna need a bigger boat! We sink our teeth into Jaws this week. Too on the nose? (Sidenote, punching a shark in the nose is actually not the best way to fend him off. Go for the eyes and gills. Way more sensitive.) In any event, it’s time to talk about both money and sharks!
Jaws was too good
Jaws is maybe the only movie that I’d argue was too successful. It struck unnecessary fear into the heart of hundreds of millions of people. And it was responsible for a lot of shark hate that turned into actual shark deaths. The truth is sharks just aren’t that dangerous to humans. This is, of course, mainly because they live in the water and we live on land. But also, even when you’re in their territory (aka the ocean), you’re still super unlikely to be attacked.
In 2021, there were 81 shark attacks worldwide. Only 47 in the US. Think about how many millions and millions of people swim in the world’s oceans each year. Only 81 tangled with a shark, and only 9 were killed. Those are pretty good odds for us humans. And what a tragedy it would be if you missed out on the thrill of snorkeling with sea turtles or catching a wave on a boogie board or just basking in the cool ocean water on a hot day … just because you fear something that has a teeny weenie percentage of actually happening.
Sharks and … the lottery?
Now, let’s look at something else that has a really tiny percentage of actually happening to you: winning the lottery. Your odds of winning the Powerball jackpot are about 1 in 292.2 million. Can you even fathom that? I honestly can’t. I mean, if I were sitting in a room full of 1,000 people and someone said: “One of you is about to win ten thousand dollars,” I’d be like … well, cool, but it’s almost certainly not going to be me. Because one in a thousand are long odds. 999 people will be walking away empty-handed that day. But somehow, hundreds of millions of people play the lottery every day with way WAY worse odds than that. About half of Americans play the lottery, spending an average of $86 PER MONTH on tickets.
Conclusion: We’re bad at math
Takeaway: Humans suck at statistics. We have two examples here of people making genuinely awful decisions based on their ability to grasp simple, simple math. People who shell out $86 a month believing that something with a one-in-millions chance of happening will happen for them. And people believing sharks are horrifying monsters who must be hunted ruthlessly when in reality, they pose a one-in-millions risk of harming you.
I think the answer in both cases is that the perceived horror and, on the other hand, the perceived glee, that would accompany these events, loom so great in our imaginations that we lose all sense of rationality. The prospect of being gripped in the jaws of a Great White and thrashed about in the ocean while your blood spills out all around you is so ghastly and gory, that we can’t think rationally about it. It makes us feel to our bones just what fragile, fleshy, little creatures we are. And the prospect of winning millions upon millions in the lotto fulfills the deep, aching need that many humans feel to leave all their worries and responsibilities behind. To experience life without stress or fear. To be wrapped in the warm, fleecy luxury of not having to wake up to your alarm tomorrow and taking home every material thing you ever dreamed of.
These represent two ends of the same spectrum – pure bliss on one end, pure terror on the other. And when we humans are faced with those kinds of extremes, we go a little nuts. We can’t be bothered with numbers when something so powerful is at stake. Stop blabbering to me about statistics and just look at this picture of a freaking Great White shark!
Or: stop gabbing about numbers and odds and just look at what my life would be like if I won the lottery:
Tell your lizard brain to be quiet!
Yes, you have a visceral “AGHGHGH!!!” reaction to extremes like this. But if you put your actual brain into the “on” position and tell your little lizard brain to be quiet for a minute so you can have a think, you can overcome it.
And when it comes to managing your personal finances, you’d be very well served to do exactly that. Instead of spending $86 each month on lottery tickets, you could invest it each month into a US stock market index fund and wind up with well over six figures at the end of thirty years. Or … you could have zero. Hmmm … six figures … zero figures … six figures … zero figures. I think I’ll go with six!
To our lizard “gotta-have-it-now” brains, that’s boring. Thirty years is ages away. Our brains want to dream about being Paris Hilton in that photo RIGHT NOW. But the thing is … you won’t be. You just won’t. Just like you almost certainly won’t get killed by a shark no matter how many beach vacations you take. But you will have money if you start socking it away and investing.
Hell, if the odds of getting attacked by a shark were anywhere near as good as my odds of ending up wealthy by steadily saving and investing, I’d never set a damn toe in the ocean. But we’re crazy lucky. We don’t live on a planet teeming with monsters who want to hurt us. Instead, we live on a beautiful blue marble filled with creative humans who are constantly innovating and building new successful businesses that make our long-term investments soar.
So next time your annoying little lizard brain is having a strong, visceral reaction to something scary or amazing, take a beat. Run some numbers. Think big picture and long term.
Oh, and don’t forget. Sharks can be downright adorable.
