WFH: Deus Ex Machina

Money is an important driver of what jobs people take. Especially at the level where basic needs are at stake. But at some point, flexibility in location, hours, and benefits gain relative importance. The more negotiable the mix the better chance we have of creating sustainable work situations for people. Sustainable means less burn-out, less disability, less dissatisfaction, and more productivity.

The growth of remote work shades in a fuller menu of points along the efficient job frontier. It creates more shots at sustainability. You can choose to work for less cash if it means a better overall life fit. (I know of a few people, moms to be precise, who were thrilled when employers allowed them to work 4 days a week for a 20% pay cut).

Why Is Sustainability So Important?

When I introduced the Moontower Retirement Model, I mentioned “how destructive I think the whole vision of retirement is as portrayed by Charles Schwab commercials. The fact that it takes a moment to figure out if it’s a financial commercial or a Viagra ad is enough of hint that drugs are being sold in both cases.” The entire notion of retirement is unsustainable.

The average American’s savings are inadequate to even cover an emergency. Forget having enough savings and social security to survive with dignity from 65 to 85 or 90. The presumption that investment returns will make up the shortfall even if everyone invested is fragile at best and quite likely nonsense.

The classic idea of retirement has outlived its usefulness. It is a vestige of a bygone era and was targeted to people who did back-breaking work. The cost of this charade is staggering. Underfunded pensions even after a 10-year bull market. Politicians needing to kick all cans lest they be forced to do arithmetic that doesn’t work in plain view. Too many lonely, poor senior citizens.

What Is The New Retirement Look Like?

More working years. But of a different type. Working years that don’t just feel like a thing to get-over-with. The future of work has the chance to be more sustainable. The subject is vast, beyond the scope of this post. But an emerging efficient frontier trade-off between salary and location offers a promise of better-centered lives. We should agree that matching ourselves to our environments is a public good. A sustainable balance means we can work more years. A double bonus. We save for more years and withdraw for fewer years. It is the only viable solution to the pension crisis.

If remote work means more sustainable working lives then WFH will be the pension crisis’ deus ex machina. And that’s a bigger cause for hope than the short-run sprint of getting paid SF wages while Zooming from a lakeside cabin.

To learn more:

  • I’ve summarized the roots of the pension crisis as told by Charley Ellis. (Link)
  • Once Facebook tells you how much they’d pay you if relocate to Boulder, Asheville, Nashville, Summerlin, or wherever you’d like to be, check Atmos to see what you can rent or build. Find your own efficient frontier. (Link)
  • Matt Mullenweg, founder of WordPress, explains Distributed Work’s 5 Levels of Autonomy. What does it mean to jump from remote to remote-first? How about from asynchronous to autonomy? (Link)

For remote-work to truly sustain us, we should, when practical, aspire to the pinnacle of the pyramid — autonomy. Daniel Pink identifies autonomy as 1 of the 3 pillars of human motivation (the other 2 are mastery and purpose). If we can grease the rails of motivation maybe we can scrap the retirement parties that in hindsight turn out to be death sentences.

Moontower Money Wiki Update

I’ve completed the section Evergreen Beliefs That Work Together. It has 4 parts:

  1. The Gift Of Market Efficiency
  2. Investing Is A “Loser’s Game”
  3. Time And Human Capital
  4. Towards A Prescription

While the wiki is ultimately about investing your savings, this particular section goes nicely with the topic of today’s letter which is really about a chance to live our lives better by maximizing the returns to our human capital not our financial capital.

Check the wiki updates. (Link)

WFH: Be Excited Without Being A Sucker

Last week I riffed on geo-arbitrage. Twitter, Visa, Square, Spotify, Alphabet are all pushing their chips in on remote work. Lots of people are excited about a remote work future. Ramp Capital’s post The Death of Cities lists data points suggesting the TAM for remote work is a wide blue ocean. Less than 5% currently WFH but 80% want to. (Link)

I’m not going to make predictions. My understanding of remote work is a mix of hearsay and personal impression. So that’s what you’re getting this week. Opinions and a semi-rant in The Money Angle.

First, my take on remote work in advice format: Be excited without being a sucker.

Don’t Be Pollyannish About Remote Work

  • Sahil Lavingia, founder of Gumroad, tweets: Everyone loves remote work until they realize 7 billion people will soon be competing for the job they have.
  • If you choose to work remotely somewhere especially somewhere remote, you need to appreciate its full costs. This Wall Street Playboys post was terrific when it was published pre-covid. Now it’s a must-read. One of the reasons why companies are allowing people to work remotely is so they can’t move, get paid less and they know they are stuck and can’t do much about it! I will add that this is valid not just for remote workers but for anyone who chooses to work for a company that’s far away from the center of their industry. The I-banker in Denver has limited opportunities if he loses his job. Don’t think his boss isn’t aware of that. (Link)
  • Zuckerburg nixed the pure geo-arb. The SF salary requires you live in the Bay. Byrne Hobart explains Facebook plans to adjust salaries based on cost of living. He also thinks the effect on expensive cities to be muted. Superstar cities will be less affected since many are dual income and it pays to be close to the office. (Link)
  • Working remotely can also be awful. I have a relative with a bird’s eye seat in a major CRE brokerage. One of his clients is a Fortune 50 company with a WFH culture. He describes it as “truly backwards. The culture causes bureaucracy and weird politicking. You have people trying to assert their domain virtually and put as many traps and stops around their domain as possible.”

So working from home isn’t just work-without-pants. It has its share of downsides. It’s crucial to be aware of them and how the negatives compound over time by compromising your negotiating position and limiting your options.

But if you can be honest about the negatives you deserve to be honest about the positives. Not commuting, living where you want. All great. These are the details of something even greater which excites me about remote-work.

Why I’m Excited About The Impact of Remote-Work

I’m excited about choice and its downstream effects. Geo-arbitrage is the wrong model for how to think about an explosion in remote work. Sure in the near-term there might be low-hanging geo-arbs. But arbs never persist. Hobart explained that Facebook is a price-setter. As a large and growing employer their behavior leads. There’s no economic basis for employers to allow the employees to capture all the surplus in a geo-arb.

Instead as Hobart wrote:

tech workers will be teleported back about half a century, to a time when your standard of living was the same whether you lived in the Midwest or California, but you could choose CA because the weather was better.

Instead of geo-arb, I recommend thinking of the new world as an efficient frontier of combinations of job and location. Make $150k in SF or $100k in Raleigh. There’s no magical arbitrage point available beyond the envelope of the frontier but there are many more points lying on the efficient curve. When many of you were designing your life you used to feel like there were just a few choices. NYC, SF, DC, Boston. Maybe Austin. 5 cities. Now you have 50 states.

Even if this was a choice before, it might have been harder to find. The growth of WFH will lead to continued innovation in WFH practices to reduce the frictions. The experience will improve and that will feedback into even larger remote work menus. The more granular we can make location/comp tradeoffs the better.

Covid accelerated the growth of WFH. But more importantly, it accelerated our understanding of what it can mean.

WFH Is Not Just About Preferences. It’s About Priorities.

Covid has been a “great pause” (at least for office workers). You rediscover omitted joys. You redefine what is and isn’t essential. A moment to catch the sunset. The stillness where you notice the pebbles in your shoe. Their all-in costs are suddenly more legible.

Many people have created new habits they want to preserve (Yinh and I want to be less scheduled when “normalcy” returns). We all have a golden opportunity to affirm our priorities. It won’t be easy. During this timeout, your conscious mind decided you don’t want to slide back into all your old patterns. But muscle memory is strong like bull. You can’t re-program by words alone. It will take action. Turns out there is a big one available.

Where Do You Need To Be?

By disentangling work from location, we (are forced?) get to make choices that we felt were made for us. If I want to do X, I had to live here. Given the chance to be remote, you may suddenly find that simply maintaining one of these new-during-Covid habits is like buying a fern. It’s a half-measure at best. What you really want is a whole new scenery. Aligned with the values that you finally had a moment to reflect on.

Your actual desires are more apparent with the fog of FOMO lifted. Trying to decide if you want to build a pool when it’s 90 degrees out is not a good way to make decisions. Don’t waste this chance to think clearly.

When we are in the environment we want to be in, whether it’s in urban jungles or just jungles, we can live in closer accordance to what we need. As you’ll see this is much more than a personal victory…

Deus Ex Machina

This not a reference to that movie with the hot droid. It’s a reference to the meaning of that strange Latin phrase. From Google’s interception of Wikipedia, deus ex machina is a “plot device whereby a seemingly unsolvable problem in a story is suddenly and abruptly resolved by an unexpected and unlikely occurrence.”

In this week’s Money Angle, find out why WFH can be the deus ex machina to a wider American problem. (Link)

Origin of the Pension Crisis

Investor Charley Ellis is deeply concerned about pensions being underfunded as we approach peak boomer retirement years. He discussed it with Ted Seides on the Capital Allocators podcast which I summarize in full here.

The roots of our pension crisis can be traced back to 19th-century European rail workers! Here’s a summary of the problem, how we got here, and what to do about it.

The Pension Crisis

Scope of the Problem

Public pension plans are impossibly underfunded

If you look at what are the biggest problems we as a nation have in the investments world, it’s pensions or retirement security. You can see it easily in the state and city funds that are seriously underfunded. They need 7.5% rate of return which they’re not going to get because they’ve got 25% in 2.5-3% bonds. They’re just not going to get it.

Households are underfunded

If you look at individuals, half the population does not have a retirement plan. For those that do 401k is increasingly dominant, taking over from defined benefit system. The average person approaching age 63.5 which is the retirement age in this country is thinking:

“I’ve got 165,000 smackers in my account. Why my wife and I are going to Florida to play some golf, some tennis, have some fun. We’re gonna have great years. We’ve earned it. It’s been a long long working run, but we’ve earned it it’s going to work out just fine.”


Anybody with any knowledge about investing knows right away — $165,000 if you take money out, from 63 years old to 85 or 90 is not enough. You’re not going to have anywhere near enough per year, cobbled together with social security to make anything like a decent connection.

Something over 65% of your life time health expenses are spent in your life six months. Well, that’s where half the bank for personal bankruptcies come from all kinds of trauma that goes with that as well assisted living expensive and dementia. So we’re going to have a real problem with old age, retirement security.

Political nightmare

So what are people gonna say?

“God damn it. I worked hard all my life I played by the game rules as everybody laid them out. And I was supposed to be able to retire at a decent age and enjoy retirement. That’s part of the deal.”

But the answer they will get back?

“Sorry, but nobody else understands that to be the part of the deal. And you’re on your own.”

So you will have a giant generation that is angry, focused, and motivated to do something about this false promise.

If you think we’ve had divisive politics in the past, imagine what it would be if you had millions of people and their relatives all saying “It isn’t fair. It isn’t right. These guys got screwed.” I think we’re going to have a terrible societal problem, political problem.

How Did We Get Here?

The retirement problem is rooted in an era of different needs and circumstances.

History of the retirement age

  • Age 65 came from Social security which dates back to 1935,

which came from:

  • Railroad Retirement act in 1923,

and even before that:

  • Churchill and Chamberlain jointly put forward in the United Kingdom retirement at 70, but people thought that was unfair because the Germans used 65.

And here’s where we get to the root…

  • German’s retirement age dates back to early 1880s

Baron Von Bismark tried to unify the German municipalities via technology namely the telegraph and the railroads. The telegraph combined with the post office allowed instantaneous communication anywhere in Germany.

We’re going to bring coal and iron ore from the rural and other areas to where the steel mills are and we’re going to build steel mills and have tremendous industry. And then railroads are going to be able to bring people from the cities out to the countryside for weekends, vacations  can be normal, and we will bring from the countryside, fresh fruit, fresh vegetables, all kinds of wonderful things that for people to eat, it’s going to make everything terrific. That’s great.

But where are you going to get the workers to work on the railroad?

Offer lifetime employment.

You get them to come out of the forest because they can get lifetime employment. That’s terrific. What do you call that? That’s guaranteed. This is a commitment. It’s the honor of Germany. Okay. Let’s go.

So what happened?

Well after a couple of years there were accidents on the railroads. Trains ran into each other, people were killed. Public outrage and scrutiny.

What’s going on?

Well, let’s send a study group and find out what the heck is going with these accidents. Well, we found out what the answer is in the work. Laying tiles, lifting heavy ties, brailles, shoveling coal, all kinds of heavy work. They’re saying to the older guys in their late 50s and 60s, your too old for this kind of work. You take the easy job. You’ll be in charge of the switches.

Then what happened?

So the switches are being manned by guys in their early 60s. A beautiful summer’s day and no trains coming in for the next couple of hours, why not take a little nap? And they’re just taking a nap, forget to wake up, and the accident happened. 

The solution?

Guarantees for life. Pay them not to work. To be cost effective find the min-max where it costs not too much to solve most of the problem. And the answer was 65. Most people don’t live to 65 in those days in Germany, but those who do are really doddering, so they will only last for another couple years after 65 anyway.

An obsolete model

We have inherited and retained a retirement model that is a poor fit for our post-industrial circumstances.

    • People live longer now. The ratio of non-working to working years has increased.
    • People are able to work longer as manual labor’s share of the economy has declined.

Dealing with the Crisis

Extend your savings

  • Take social security later…instead of 62 if you wait until 70.5 you make 76% more inflation-protected for the rest of your life. If you wait, you have fewer years in retirement, so they’re willing to give you a larger amount.
  • Continue funding your 401k in your 60s. These are the easiest years to save money. So you can ramp up your savings, dump it into the 401k as fast as you could. (also there are catch-up allowances)

Do all of these things and your chances of being in serious financial trouble in retirement go from awful to not too bad. So if we act soon, we could make a big, big difference in what could otherwise be one of the worst problems our society has ever faced.

Why has this been so challenging to solve?

The big problem is nobody’s paying attention to it. It’s too late. Congress is dealing with politically urgent issues. We need to agree to raise the retirement age to 70 but it’s easy to say that when you are not a ditch digger or coal miner.

Trying Too Hard

Excerpts from Dean Williams speech: Trying Too Hard

Effort to output in investing is weakly linked compared to other endeavors

“We probably are trying too hard at what we do. More than that, no matter how hard we try, we may not be as important to the results as we’d like to think we are.”

Worthless predictions

“One of the most consuming uses of our time, in fact, has been accumulating information to help us make forecasts of all those things we think we have to predict. Where’s the evidence that it works? I’ve been looking for it. Really…The
consolation prize is pretty consoling, actually. It’s that you can be a successful investor without being a perpetual forcaster.”


“Confidence in a forecast rises with the amount of information that goes into it. But the accuracy of the forecast stays the same. And when it comes to forecasting—as opposed to doing something—a lot of expertise is no better than a little expertise. And may even be worse.”

Related: Horse bettor example

Adam Robinson on the diminishing returns of data. Confirmation bias increases your confidence without increasing your accuracy

    • Study of horse handicappers found that the accuracy of their predictions did not improve from the original 5 variables they selected from a large menu of data. As they were given more variables there confidence went up (confirmation bias effect) although their accuracy did not!
    • In addition, the handicappers with only 5 variables were well-calibrated. They were close to 2x better than chance at predicting winner 20% vs 10% and they estimated their confidence as such. When they were given more variables their accuracy remained 20% but confidence grew to 30%!

Gather the right type of info — namely how to measure value (Me: this is how I trade)

We have security analysts. We get research reports from brokers. We get forecasts about the economy, interest rates, the stock market. We process that information and act on the basis of it. For all of that to make any sense, we all have to believe we can generate information which is unknown to the market as a whole. There is an approach which is simpler and probably stands a better chance of working. Spend your time measuring value instead of generating information. Don’t forecast. Buy what is cheap today. Let other people deal with the odds against predicting the future.

Sources of edge

“There are two ways we can try to gain an edge over the market. The one that most of us choose is to try to generate superior information. To know more than anyone else. The other choice is to be better at measuring value than others and not to care very much about what other investors think they know. To hold cheaper securities by today’s standards and to let the future speak for itself.”

Growth describes a phase not a category of company

“It is generally recognized that growth stocks produce a superior risk-adjusted rate of return. However, this is only true for stocks that are expected to grow in the future, and correlations between past growth and future growth are low”. There is no such thing as a growth stock. Only passing phases of growth in almost every company’s life. Phases whose beginning and end usually appear in disguise.”

Regression to the mean

The tendency toward average profitability is a fundamental, if not the fundamental principle of competitive markets. It is an inevitable force, pushing those profits and their valuation back to the average. It can be a powerful investment tool. It can, almost by itself, select cheap portfolios and avoid expensive ones. Its plain English equivalent is that something usually happens to keep both good news and bad news from going on forever.”

Riffs on Geo-Arbitrage

The Cul-De-Sac Reaches Out From The Past

Anytime you’re on a trip with friends, someone will always whip out the Zillow app and announce “hey look what you can get for $X here!” as you all think about that fat NYC or CA state tax your paying to live in a place that makes you feel like you are the villain. Places where the cover charge for a 2nd bathroom cost $1mm (clarification: half-bath). Alas you x out the Zillow app with a resignation that whispers “in my next life”.

Well, it’s starting to look like that next life might not require incarnation.

Twitter announced all employees can work from home forever. Many desk workers are finding out they can WFH. Elon Musk and Joe Rogan are the latest Californians contemplating moves to Texas. I saw that 400k people left NYC during Covid to hunker down elsewhere. The prospect of geo-arbitrage has many excited. Bigger house, more acres, lower costs, and less traffic while maintaining a big city salary. It’s the life I envision Chicago people have but without bone-chilling winds for most of the year.

An assortment of real estate riffs as they relate to geo-arbitrage:

On the high price-tag of real estate

• Is the price expensive or “high”?

CA has a high cost of living. However, I’d push back a bit on the idea of housing being expensive versus just high. Expensive implies an expected return is very poor going forward. People like to point to near-zero cap rates to claim CA homes are overpriced. That might be true but it’s hardly obvious. Real estate is priced according to supply which is pathologically constrained in SF and LA and demand which is dictated by job prospects. Low cap rates imply price appreciation not stupidity. Higher cash-flowing properties have lower or zero expectations of appreciating because of the supply/demand outlooks. This is basic finance. You are free to have an outlook on the supply/demand factors but zoomed out expensive is expensive for a reason and cheap is cheap for a reason. Markets are smart.

• Minimum Ticket Size Frustration

Real estate prices that are high are mostly annoying because they force you to put a lot of eggs in one basket. This can be true even if the prices are high but cheap (a house on Carbon Beach for $3mm is cheap even if the price is “high”). If you are worth $1.5mm and own a house worth $1mm it’s hard to diversify. Your home is 2/3 of your assets. Many homeowners are even more concentrated than that. The high price might not be a problem from an affordability point of view but it’s a problem from a risk or portfolio point of view. So when you live in a high cost of living area, the minimum acceptable house forces you to concentrate wealth more than you’d like to.

Here’s another way to look at it. Imagine if the lowest-priced stock in the world was $50,000 a share and there’s no way to buy fractional shares. We don’t need to make a statement about whether the stock is cheap or expensive (that depends on its earnings and how many shares outstanding there are) to be frustrated that the price is high even if it’s not “expensive”. We would just be frustrated that creating a diversified portfolio would be difficult if the minimum purchase prices were so high.

It’s important to differentiate “high” from “expensive”. I’d find Bay Area prices frustratingly high even if I was bullish.

• Location, location, location

When I lived back East I remember a trader friend commenting on how NJ suburb pricing was efficiently sorted according to commute times to NYC. I grew up in NJ, this sounds right. My family settled purposefully where the Academy bus line ran. People like to gawk at what $500k can buy you in the middle of nowhere as if to say “look what you can buy if you didn’t care where you lived”. As if the “where” wasn’t THE ENTIRE BASIS OF HOW REAL ESTATE IS PRICED! It’s all about location. Not the price of wood.

• Property Taxes

Here’s another difference in CA real estate. It’s a call on inflation because Prop 13 limits how quickly your property taxes can increase. Consider a state with high property taxes like NJ that get re-assessed as your property value increases. An apples-to-apples comparison would require amortizing the higher property tax value into a mortgage. So a $1,000,000 NJ house with a 2% property tax is equivalent to about a $1,220,000 CA house (An extra 10k per year in taxes corresponds to about a $220,000 mortgage). But as a CA property appreciated the tax rate falls as a proportion of the property. (The homeowner’s gain comes at the expense of everyone else but that’s another conversation).

The great-schools premium

I live in Lafayette, CA which is similar to neighboring Walnut Creek. But Lafayette homes command maybe a $250k premium because the schools are rated 10. When you sell your home you get the premium back in the sale price. So you can think of the cost as the additional interest costs on the $250k, as opposed to the full cost of $250k. So about $11k per year at current mortgage rates. The more kids you have the more value you get from the premium. Pretty obvious.

Beware, if the schools get worse the premium can erode by the time you sell.

How to spot a contractor shortage

If there is a large spread between newly finished homes and older homes of similar size, location and acreage you are looking at a market with a contractor shortage. That market is daring you to buy a fixer. It could also be a market like SF with a draconian permit process. Same thing. Go ahead and try to fix up a place. If you are especially handy and connected these make for good markets to be a flipper.

Migration patterns and doom loops

While I don’t have a high conviction view on CA real estate I can envision a nightmare scenario. Businesses leaving the state followed by well-paid employees. A shrinking tax base is asked to pay for the state’s bloat, leading to more fed up residents leaving, and so on. Doom loop. Imagine CA  with even higher income taxes or perhaps less services like police and fire (services that CA desperately needs even more of as things stand today). In such a downward spiral can you imagine state exit taxes? The US has one if you try to renounce your citizenship. Desperate times will call for desperate measures.

For all the Medium posts by techies thrilled to be leaving for Austin or Seattle, CA still sees a net inflow of people. But this will be an important flow to keep an eye on. Will the remote work momentum free people from the Bay or will the outperformance of tech during covid indicate even more magnetism to Silicon Valley?

For more on CA real estate and economics, I encourage you to check Byrne Hobart’s amazing post, Peak California (Link)

For The Cancelled Reunions

Exactly 20 years ago my college friends and I were soaking up the remains of Senior Week in Ithaca. Larry Johnson and the epic Knicks payoff run were the backdrop to our pre-game before we’d go out. Frequently ending with the sun coming up, I’d need to check the $150 of film I developed that summer to really recall that week. (I vaguely remember that a neighbor had rented an outdoor hot tub for a party. Shiver. I also recall having Sun-In-Gone-Wrong orange hair, a pierced Labret, and discovering I was allergic to Parrot Bay rum. Don’t judge. We all mature at different speeds.)

The most memorable part though was relishing the last of our college days with my closest friends. If you had a similar experience you may remember the conversations where you agree to all buy homes on the same cul-de-sac so your children can grow up besties too. This was 2000 so we were all cannon-launching to NYC for finance, Bay Area for dot-coms, or med schools in a major city. Our plan to re-convene, though well-intentioned obviously ignored path-dependence. Nostalgia is best in small doses. Class reunions and rock tours. You can’t build a future on an era frozen in time.

Fast forward.

My kids have so many aunties and uncles who look nothing like them. I’ve been tremendously fortunate to stay close to many of my college friends. Yes, it takes effort to stay in touch. Making it to destination weddings, annual get-togethers in random cities, guys and girls trips. It also helps that many are concentrated in popular hubs like SF, NYC, DC. Friends and spouses we have met since graduation have become honorary “Corndogs” (how Yinh, a Cal alum, refers to the Cornell crew). On Friday, 5 of us Zoomed to work on a fitness game app some of them are pet-projecting and on Saturday a flip-cup Zoom birthday party for Brook. These are people I have been lucky to know for almost 25 years.

We may have been wrong about living on the same block but we also didn’t anticipate how technology and the ease of flying (I know flying can suck but keep some historical perspective here) would actually be serviceable substitutes. Think of how different this is from people who graduated in the 1960s. Flip your tassel, turn to your bro, and say what…”I’ll call you?” Spend 75 cents a minute to be tethered to a phone?

When your problems are too much screentime and always “being connected”, I say count your blessings.

Bohnanza Is A Great Trading & Business Game


Bohnanza is a card game for 2 to 7 players. It was created by Uwe Rosenburg years before he published Agricola, an epic worker-placement game, enshrining him in the pantheon of boardgame design.

Bohnanza according to BoardgameGeek:

The cards are colorful depictions of beans in various descriptive poses, and the object is to make coins by planting fields (sets) of these beans and then harvesting them. To help players match their cards up, the game features extensive trading and deal-making.

Bohnanza according to the publisher:

Ever imagined you were a bean farmer. Sure, who hasn’t. You got your Red beans, your green beans, your black-eyed beans, your coffee beans. But where to plant them. In this card game, smart sowing lets you reap big rewards. Plant The beans you do want, and trade the beans you don’t want to the other players. Adding to the realism of the game, The one who ends up with the most money wins.

I recommend the Dice Tower tutorial to get familiar with the game. (Link)


Re-skinning Bohnanza


I think the business mechanics behind this game warrant mentally re-imagining it to make the lessons easier to map to microeconomics. When you stare at the down-to-Earth bean farming theme hard enough you ironically start seeing the game more abstractly. Like tacked on symbolism to computer code.

Instead give me a chance to re-skin it to see if the game’s appeal moves you more than the bean-based descriptions.


The Concession Stand Theme

You are operating a concession stand at a professional sports game. You can only serve 2 items at any point in time. Say beer and pretzels. Or nachos and hot dogs. There are many different kinds of refreshments, but you can only serve 2 types. If you decide to sell something else, you must close down one of your product lines, although you may always re-open it later.

The order of cards you are dealt cannot be modified. This looks like a queue as opposed to a typical hand. You can think of this as the line of customers at your concession stand with the bean on the card representing the type of refreshment the person demands. Here’s the catch, if a customer wants beer and you only serve nachos and pretzels you must shut down one of those lines and start serving beer.

This is where trading comes in. You can basically offer to send your customers to other concession stands in exchange for your competitors directing customers you’d like to your stand. In the phase of a turn where 2 cards are dealt face-up, you can imagine that 2 brand new customers showed up and you can tell them to come to your stand and skip the line or you can send them to other stands. Likewise, you can send customers queued at your stand to competitors as well if they are willing to accept them. Why would you do this?

The economics of the game imply that as you sell more of an item your unit economics improve. This creates tension. As you serve more people hot dogs you saturate the demand for people who want hot dogs. So you need to balance when you shut down your profitable hot dog operation to serve the wave of nacho customers you see either queueing in your hand or, if you are doing a good job tracking the deck, can anticipate showing up. Adding another wrinkle is that some refreshments are also higher margin (there are fewer customers but they offer higher profit margins…think of the cocoa beans in the game as the craft IPA at Yankee Stadium).


Why Bohnanza is great

Too much randomness makes a game pointless and too little makes it deterministic. If you prefer that there are many games (ie chess) to scratch that itch.

Bohnanza balances this well. There is randomness. The customers that show up in your queue. The customers that show up to the arena on your turn. But the primary engine of this game is trading customers. Every individual trade is fairly low stakes but the game is long (about an hour) and demands many trades. This creates a very satisfying experience. Being adept at deal-making and surfing the waves of demand maps well to the final scores.

I’ve written about why I think Monopoly is not a great trading game. If you want a fun, satisfying trading experience scoop up Bohnanza. If the bean theme was a turn-off, hopefully I’ve convinced you to reconsider.




Thoughts About Monopoly As A Teaching Tool

We have been playing Monopoly with my 1st grader.

A hierarchy of useful lessons

  • Arithmetic

I make Zak be the banker so he gets lots of practice making change. It’s harder than 1st-grade math worksheets so you can have fun AND cross an item off your homeschool list.

  • Probability

Dice frequencies. The first-grader knows considers stretching to build houses when you are 6,7, or 8 spaces away from his property.

  • Ownership and investment returns

Ask your child how many times a property needs to be landed on to breakeven on the purchase. For older kids, discuss investment returns as a percentage.

  • Borrowing, collateral, and interest

The whole mortgage and interest mechanism. Borrowing against incomplete property sets to improve completed sets.

  • Operational leverage

Do you stretch to buy houses? If so, your small cash cushion can get wiped out by a mistimed Chance card forcing you to fire sale your houses for half price. Throw in some dice probability discussion and the game fosters a rich learning environment.


What about trading?

I actually think Monopoly falls flat here. Deals are sporadic but highly impactful. Since the luck of the dice creates large disparities in what properties players are naturally endowed with, the prevailing logic behind too many deals is “well, if I don’t do anything I have zero chance”. The prospect of raising your odds from zero to 5% does not make for inspired dealings.

If a deal is fairly priced there’s a lot of variance around its outcome.  A dice game has too much of that already. That means the returns to skill are not only low but low resolution. Awful for learning.

In the case when deals are lopsided the game is brutal for everyone else. Worse yet, if the potential to exploit a weak player exists the game devolves into politics of “like” and may even import baggage from real life. Surely these are useful lessons but not quite what I have in mind when I want to use a game as a teaching tool.

(Monopoly would be more interesting with a side betting market on who was going to win the game. That market would suddenly spring to life when two people were negotiating a trade as the rest of the players would basically be casting their bids in the side market. The result would be a realtime “fair value” meter presiding as judge over the trade. As you tweak the cash and property sweeteners in the deal, see if everybody thinks you are overshooting fair value. For advanced players, a whole meta strategy would unlock since the side market influences the real game.)

For Mother

Yinh and I are big fans of Patrick O’Shaughnessey’s Invest Like the Best podcast. One question he asks every guest, “What is the kindest thing anyone has ever done for you?”. Listen to the show enough and it’s impossible to not wonder how you would answer if you were in the hot seat. I think I know my answer.

In the fall of 1995, I visited Cornell’s campus. For years I had known about Cornell. For whatever reason, as I was growing up my mother always spoke of me going to Cornell. I don’t know why. It’s almost like Cornell was the last name of the immigration officer when she arrived in the U.S. and when she heard there was a college with the same name it meant destiny. Whatever the case, her dream became mine. So when I visited the campus I felt like it was already familiar.

I applied early decision to maximize my chance of getting in. My safety schools were Villanova (it was a popular destination for kids in my HS) and Rutgers, my state school. In reality, my strategy was Cornell or Rutgers. Dream school or good value. I got into both and here’s where the twist came. Rutgers offered me a full scholarship. And on the other side of the ledger, Cornell sent hard numbers of what this private education was going to cost. The price spread between my two choices shook me.

I picked Rutgers. I knew I could get some loans from Cornell but I also knew my mother was going to need to come up with about 10k per year. That felt impossible. Prioritizing education my whole life, I went to Catholic school for K-12. This was going to cost 2x and things were already super tight especially with my sister about to enter HS herself.

As the day to send my letter of intent approached, my mother simply couldn’t bear this decision. She called me in to say that she’d find a way to make it work. It was a rare opportunity. Jump. If there’s a will there’s a way basically. We agreed we’d split the costs (I never worked as many hours as I did during my college summers) and she treated getting grants like a full-time job. She was tireless in writing letters about financial hardship and calling the aid office. Her persistence was epic.

That was the kindest single thing anyone had ever done for me. Not because it was Cornell. Because this was an example of what she always did. Everything she ever did was to give my sister and me a shot (my sister would attend Cornell 4 years later).

In truth, I have a bigger example of her sacrifice. But it’s not a story I’ll tell. But if she’s reading this she’ll probably know.

5’2″ and a force of nature.

Happy Mother’s Day to all the mama’s out there.