Jacqueline Passey responds to Greg Mankiw

Jacqueline Passey responds to Greg Mankiw's comment that professional poker players ought to be doing something else that contributes more to the economy:

Well, Greg, what does the economist in you (is he still there? is there room for him? it seems crowded in there) have to say about people responding to incentives? Terrence easily makes 10-20 times more per hour as a professional gambler than he could in a regular job. I don't make nearly as much as he does but I still make at least twice as much per hour gambling than I could in a regular job. This is in addition to all the less tangible benefits like choosing our own schedules, only having to work part time, being able to live where we want and travel frequently, not having bosses to answer to or obnoxious coworkers or customers to deal with, etc. The market clearly values us more as gamblers than it does as anything else. If you really think we should be in more "socially valuable" careers, please be pointing to all these great jobs that pay as well as gambling and offer as many benefits as gambling that we are qualified for. I don't think that any exist.

This is my point exactly, labor markets are inefficient because they don't provide high paying jobs for intelligent capable people unless they have the right educational track (see my post High IQ does not result in higher income, part II).

These posts inspired me to play some poker online this weekend, and I made $20. Nothing worth quitting my job over, but it seems to pay as well as working at McDonald's, and I'd have to pick playing a game on my computer over being a McDonald's worker any day.

UPDATE

Just played another hour at the $0.50/$1.00 limit tables, and lost 12 cents. Maybe McDonald's pays better after all.

Comments

[mickslam]

Go ahead, make the rest of the auguement. I know you are chomping at the bit to do it. I'll sketch out the basics:

1. Robots/computer programs are soon (20-30 years) going to be able to do a substantial portion of work in the world.
2. Smart people can't find work, as our current system doesn't fully reward intelligence or value, but rather certifications and CYA style behavior.
3. As a result there is currently tons of wasted potential that is not being used, and this will only grow.
4. There are hard limits to the amount of change societies can bear. Additionally, there are hard limits to incremental growth at the current stage of first world standards of living.
5. Our civizilation is completely dependent on energy consumption. You can roughly determine someones standard of living by how much energy they consume. To raise the standard of living on a global basis, we must either become better consumers of energy or find ways to product much much more energy.

Now taking into account 2 and 3, it seems pretty likely that 1 and 4 are going to result in many, many displaced, smart and unhappy people who are largely working at things that have no impact on solving 5.

And...

[michael vassar]

Actually, energy consumption per capita in developed East Asian countries is fairly low. Everyone globally could probably consume as much energy as the South Koreans or Singaporese without causing disruption. They could definitely out-consume the population of Thailand.
There's lots of room for increased energy efficiency AND for nuclear energy etc to solve energy problems.

[Hoser]

while comparing poker playing to mcdonalds is a little funny...i think it is quite predictable that Ms. Passey runs straight for the 'my life is so easy and i make a lot of money' arguement.

the original comment shouldn't have been:
"...professional poker players ought to be doing something else that contributes more to the economy."

But rather:
"...professional poker players ought to be doing something else that contributes more to SOCIETY".

and don't go off on the 'i pay more taxes due to my higher income' rant...i'm talking about somebody on this planet directly benefitting from your intelligence/skills.

it is amusing how justifying gambling comes off sounding just like an alcoholic justifies drinking or a smoker justifies that vice....

[Half Sigma]

Hoser, The professional poker players are publicity for the online (and offline) casinos, because people hear about how you can make so much money playing poker and they want to try too.

So the professional poker player is no worse for society than anyone else who works in sales or marketing. Of course I argue a lot in my blog about how our economy is full of people making money from zero sum and negative sum activities.

[The Superfluous Man]

Mickslam, smart people can find appropiate work, but they often have to jump through Ivy League loops and unpaid internships to get them. Some reject that path, and a few less able take what they would have gotten. Your #4 is vapid and thus meaningless. (What about the rapid use of cars in the early 20th century?) And there is plenty of energy. The reserves of easily drilled cheap oil may disappear within a couple decades, but other costlier oil will replace it. The USGS estimates there is 1 trillion barrels of known reserves and about 3 trillion barrels of total reserves. These don't include unconventional oil, like shale and tar sands, which, while costlier to produce from, are much more numerous (see article below). Furthermore, natural gas may supplement it. And there's always nuclear energy for stationary objects.

See here: http://www.ncpa.org/pub/bg/bg159/
and http://en.wikipedia.org/wiki/Oil_reserves#World_oil_resources

[spungen]

As Jacqueline pointed out, there has yet to be any explanation of which "socially valuable" jobs are going begging because her boyfriend chooses instead to make money playing poker.

[nobody]

MickSlam's point about society can only take so much change at once has merit. Rapid change tend to lead to instability. There is no way around it. It is the price we must pay for "progress". Without these change, things might be worse in term of efficient use of human talent.

By definition, these so called smart people who have not found an optimum position in life can't be that smart. They only smart enough to know there is a problem, but not smart enough to know the solution. We expect smart people to find those solutions.

If the system is truly inefficient, and there are such large supply of "smart people", they will find a way to game the system and profit from it. But we are not seeing that. A possible explanation is that these inefficiency can not be easily exploited due to various barrier to entry.

The truly gifted (Mozart, Einstein, etc) will rise to the top. It is too hard to deny their talent. But the rest of the mundane "smart" people, their best chance to find a job that can use all their intellectual power is in those fields with continous change. The change often weakens the barriers to entry and opportunities often presents itself to those who are paying attention.