January 05, 2012


New: Understanding Our Need for Novelty and Change. By Winifred Gallagher. Penguin. $25.95.

The Smartest Money Book You’ll Ever Read: Everything You Need to Know about Growing, Spending, and Enjoying Your Money. By Daniel R. Solin. Perigee. $25.

     Plus ça change, plus c’est la même chose – literally, “the more it changes, the more it stays the same.” Or, as we usually put it nowadays, 163 years after Jean-Baptiste Alphonse Karr coined the epigram, “the more things change, the more they stay the same.” Things change faster than ever now – our world, and the information it gives us for processing, seem to run at hyperspeed all the time. Yet some things stay the same, and one of them, behavioral-science writer Winifred Gallagher argues, is neophilia – the human attraction to the new. Like so many human characteristics, this one has positive and negative aspects. Extreme neophiliacs (about 15% of the population, Gallagher estimates) can become so addicted to newness that they jeopardize their safety, fidelity in relationships, jobs and more – yet neophiliacs may also have a creative streak that makes them the first to see things in an entirely different way and create inventions of genuine value to humanity. At the other extreme, neophobes (another 15%, Gallagher says) can be the foundational rocks of society, handling everyday tasks with caution, care and concern, proceeding slowly rather than precipitately – but they can also be significant barriers to progress. Most people, of course, fall somewhere between the extremes, Gallagher says, but she deems it important to understand that we humans, by our very nature, are “hard-wired to be interested in new things.” And that can spell trouble in a world so packed with new information, new gadgets and new consumer products that even if we run twice as fast in an attempt to stay in the same place, we will still have a vague feeling of falling behind. Gallagher makes a series of good points. Some are direct – novel information is like food: some is nutritious and some is junk. Some are made amusingly and in passing – for all the benefits of walking upright, “we’re still paying the price for this handy bipedalism with our fallen arches, tricky knees, and bad backs, to say nothing of the world’s biggest butts, created by [our] ancestors’ repositioned pelvic muscles.” And some of her points are genuinely thought-provoking, such as her discussion of neophobia in an environment where one would expect neophilia: college. “The twenty-first-century college campus offers a dismaying and stunningly underremarked example of how anxiety about the risk associated with new ways of thinking can limit learning and stunt creativity,” writes Gallagher, then quoting a lecturer named Daniel Pink as saying that today’s students “aren’t good risk managers. They overstate the risk of novelty and divergence, and they understate the risk of being compliant with authority figures. It’s a colossal mistake – and frightening.” Frightening in another way is the preponderance of consumer addiction – and it is addiction – to ever-newer versions of products that were really just fine before. This involves the feeling that one must have an iPhone 4S to replace one’s iPhone 4. Patently absurd on the face of it and indicative of a society in which some people have too much discretionary money (or believe they do) and too little discretion in the use of it, this sort of newness addiction – Gallagher calls it the “new boredom” – contradicts and undermines the socially useful elements of neophilia, turning it into an inevitable losing attempt to have the newest everything all the time. What to do about all this? To her credit, Gallagher is prescriptive, not merely descriptive. Her recommendations probably won’t take hold – they are too common-sensical, too middle-of-the-road, in a sense too old-fashioned – but they are clear-headed and intelligent. They include taking time away from electronics and other things and just staring into space; asking whether you really need something before you buy or use it; considering the investment of mental resources in various new things, and deciding whether those resources could better be used elsewhere; and managing E-mail and other potentially useful potential time-wasters carefully and systematically. Good ideas, all of these, and following even a few of them can help our brains tune out some of the junk information in our environment so we will be better attuned to the nutritious stuff – that is, the data that feed creativity and improvement.

     And speaking of neophilia and junk information – there are few places more dangerous to become preoccupied with the unimportant (if attractively packaged) stuff than the investment world. And there are few bigger warning signs of financial neophilia than believing the oft-repeated phrase, “This time it’s different.” Fortunes can be and have been lost through precipitous investment in the latest, greatest, newest and soon-to-be-biggest new thing. In fact, it could be argued that the world’s recent deep recession came about in large part through major investors’ determination to put tons of money into such newly developed financial products as collateralized mortgage obligations (first created in 1983) and collateralized debt obligations with multiple tranches. You will find none of this stuff in Daniel R. Solin’s latest plainspoken and intelligent investment book, with a typically somewhat-too-self-important title: The Smartest Money Book You’ll Ever Read. In this (+++) book, Solin deals not only with investing but also with spending, including buying health and life insurance, getting out of debt, minimizing taxes and cutting college costs. He talks about whether it is better to buy a home or rent, how to handle estate planning, and how to go about “making your money outlive you” – always in easy-to-understand prose that tends to oversimplify but that is packed with good thinking and good advice. Each chapter – and the chapters are very short – ends with a comment in answer to Solin’s self-posed question, “What’s the Point?” Among those answers: “Budgeting is the first step toward getting control of your finances and increasing your net worth.” “In general, it’s best to avoid annuities, except for immediate fixed annuities.” “The enemies of high returns are high fees, costs, and taxes.” An occasional answer turns out to be at odds with Solin’s analysis elsewhere in the book. “Avoid debt, but if you do use credit, use it to finance only assets of equal or greater value,” he writes, but almost everyone must go into debt to purchase a home, and “owning a home can be gratifying, but as an investment it is overrated. …[I]t is a gamble as an investment strategy.” Taking these statements at face value would deter anyone from buying a home – although Solin does qualify them to a degree. Still, readers should not be fooled by the ease of reading this book or the brief length of its chapters into believing that the subjects Solin discusses are simple or have one-size-fits-all approaches. Actually, the most irritating thing about the book is not its once-over-lightly approach but its repeated references to Mint.com, a free financial-planning Web site that recommends the book and that (not as a result, says Solin) gets a series of “Mint Hints” throughout. True, there is not necessarily a quid pro quo here, but the repeated urgings to consult Mint.com for information and articles – with Solin saying, for example, that the site offers “several sound approaches to building a solid portfolio” – make it look as if there is a strong tie-in between what Solin is saying and what Mint.com says. Solin is no shill, but he comes perilously close to looking like one here, and that does neither him nor his readers any good. The appearance of lack of independence can sometimes be as damaging as actual lack of independence, and the fact that Mint.com is free and Solin has written other books without the tie-in does not change the appearance here of a relationship that is scarcely at arm’s length. Solin says directly that he “has no association with Mint.com, other than obtaining its agreement to use its logo in this book and to reference its website where appropriate,” but the many appearances of the site here – in boxes decorated with a sprig of mint and bearing the “Mint Hint” title – may well make some readers look askance at what Solin is saying. In fact, both Solin and Mint.com offer a great deal of value, not only within this book but also outside it. Readers should not, however, make money decisions based solely on this book or solely on the material at Mint.com – its subtitle to the contrary, Solin’s book does not provide “everything you need to know” about money. Further research, which may include Mint.com but should not be limited to it, is strongly advised.

No comments:

Post a Comment