Money On The Ground

I hear the following joke far too often:

Economist 1: Look, there’s $20 on the ground!
Economist 2: No there isn’t. If there were, someone would have picked it up already.

It annoys me because it makes fun of a point of economic theory which, when phrased a little more realistically, is not only clearly correct but actually useful even in the context of this analogy.

Imagine the first economist had said “There’s $20 on the ground in the middle of Times Square, and it’s been there all week.”

It’s not so unlikely that you’re the first person to notice a bill that has just been dropped on the ground. It is so unlikely that a bill on the ground would go unnoticed for an entire week in Times Square, and if it looks like it has, you should start wondering if something more sinister is going on, like somebody spray-painting a picture of a bill on the sidewalk.

But that’s exactly what the original economic principle is trying to tell you!

So if there is what seems to be a drop-dead simple, no-risk money-making opportunity that no one has picked up on, and it’s been available more than a very short amount of time, expect it to be something more sinister.

57 thoughts on “Money On The Ground

      1. Armstrong For President 2020

        And thanks to those kinds of tactics which you look down on the NYPD for using, the city I live in today is much much safer than the one my father grew up in back in the 60s and 70s.

        For those of us who still have to to live or work in the city and lack the legal ability to carry arms ourselves, having police actually willing to keep order is a godsend. It’s easy to sacrifice distant people’s safety for your ideals when you don’t have to take any of the risks yourself.

        1. Matthew

          Except, as Kevin Drum has discussed extensively, crime is down all over the place, in cities that pursued all sorts of different policing methods, suggesting that policing techniques are not primarily responsible for the decline in crime rates.

        2. Ialdabaoth

          Just because you WANT it to be because of these practices, doesn’t make it because of these practices.

        3. Armstrong For President 2020

          The lead crime link is, at best, highly speculative and it predicts the decline in crime fairly poorly for a theory made in retrospect. Murders and property crimes in particular have only a weak relationship to lead in these studies, rich cities/nations with more automobile traffic were somehow less affected than poorer ones where public transit was the norm, the drop-off was much too fast given the supposed mechanism of action, and most tellingly there seem to be few signs of the nationwide (much less global) drop in IQ during the years where brain damage would logically have been the most common.
          (Pinker, Sailer)

          The law enforcement theory, on the other hand, also fits the data fairly well but has the added benefit of actually making sense.

  1. Anthony

    How long would a $20 bill stay on the ground at a back-injury rehab clinic?

    Sometimes, the startup cost is higher than it appears at first sight, and that’s why nobody has started making money that way. That’s not necessarily “sinister”.

    1. drethelin

      And let’s not forget all the times where we’re basically shredding extra 20 dollar bills as part of some necessary process. Nobody actually SEES 20 dollar bills lying on the ground until they look at the process and realize it could be 20 dollars cheaper.

  2. CAE_Jones

    The phrase “money on the ground” has popped into my head more than once when thinking about Electrovibration for haptics. Often punctuated with “Clearly there must not be money in it, otherwise it wouldn’t be 60 years later with no one but me and Ville Mäkinen displaying any interest”. This was, like, the first thing I thought of when we learned about Coulomb’s law in sixth grade, but I filed it under “Clearly the real scientists and engineers at the NIT are working on it, and it’s not that simple”, and went on being useless. Come to find out, you could have thrown together one of these the day electronic wave generators and transformers were commercially available. It’s just that no one’s that excited about it, and I didn’t realize I’d have to build one myself until falling into akrasia/lack of independence hell. It’s frustrating.

  3. Braden

    I always read this as poking fun at a naive overapplication–a reminder that easy opportunities are suspicious precisely because there are lots of people immediately claiming them.

    Speaking of which, Scott, I like describing your “all debates are bravery debates” meme as “the efficient marketplace of ideas hypothesis”. (Again, it is true because there are lots of pundits seizing on novel compelling arguments.)

    1. Valhar2000

      That’s the most sensible interpretation of the joke I’ve heard, and it certainly happens in real life. There are any number of people who apply rules they have learned in inappropriate situations because they memorized the rules but never understood how the rules were derived, or the principles they came from.

  4. Richard Gadsden

    Indeed, the availability of very-low-risk near-certain money-making opportunities that last a very short period of time is the foundation of the entire industry of high-frequency trading.

    1. lmm

      And the industry is putting itself out of business pretty quickly. Even at the millisecond scale, there’s a lot less opportunity than there used to be.

  5. Daniel Speyer

    I often hear claims that there are no $20 bills lying on the ground, and I often hear claims that the ground is covered with $20 bill, but I very rarely hear solid evidence either way.

    1. Peter Scott

      If the ground were actually covered in $20 bills, wouldn’t that be pretty easy to demonstrate? “I found this street that’s covered with money! Check out the pile of cash that I made to wallow in!” That would be very solid evidence.

      And then, if you don’t see someone building money-piles to roll around in, then why not? Absence of evidence would definitely be evidence of absence.

      (I know this is a metaphor and it gets more complicated when you bring the messy real world into it, but the general point still stands.)

      1. cookie

        I work for a sports betting company. The partners pretty much are rolling in money picked up from the street. Funny thing is, they’re not that bothered about disproving the efficient market hypothesis, especially since progress in this direction would increase competition for the dropped cash.

    2. Salem

      The people claiming that the ground is covered in $20 bills are very rarely sailing in yachts. So I don’t see why I should take their opinion more seriously than they do.

      1. Scott Alexander Post author

        Which raises the question of whether you should believe a billionaire who says the ground is covered in $20 bills, and who says “Look, I only have enough time to start, like, one or two wildly successful businesses a year, but there are more than enough around for the rest of you!”

        I would tend to believe that, if you have the skills of this billionaire, the ground is in fact covered in $20 bills. This is probably what being Elon Musk is like.

        1. Ken Arromdee

          That assumes the billionaire got where he did because of his skills. Maybe he did something that doesn’t work very well, and most people who try it end up in the poorhouse, and he’s the lucky one person out of thousands who didn’t,

          I’m reminded of the article where the founder of Paypal offered money to people to drop out of school and work on their ideas instead. Dropping out of school is a spectacularly bad idea, but you can get lucky with it.

  6. Charlie

    I’ve heard this joke often recently too, but only for the quoted to go on and defend the efficient market hypothesis.

    So, an anti-joke:

    Econnomist 1: Look, we can drastically improve outcomes by using checklists / roundabouts / Cochrane reviews!
    Economist 2: No you can’t. If something that simple and available really worked, everyone would be doing it already.

  7. BJ Terry

    Interestingly, when I was looking up the canonical version of that joke (Scott quoted my lovingly hand-crafted version [well, to be honest, he improved it slightly with an exclamation point]), the first result had 238 jokes by my count, and this one wasn’t included. For a brief moment I thought to myself, “Well, I guess this joke isn’t as common as I thought it was.” Then I realized that the authors of that page must have just thought to themselves, “Man, that’s too overused and hackneyed even for us.” Then I used it anyway.

    1. Itai Bar-Natan

      Actually, that joke is on that list. Near the end:

      Two economists are walking down the street. One sees a dollar lying on the sidewalk, and says so.

      “Obviously not,” says the other. “If there were, someone would have picked it up!”

      PS. Replace the dollar with a relevant research idea and you get a new joke.

  8. von Kalifornen

    There is, of course, the case where everybody has been so sure that the money must be fake, that nobody has actually picked it up. This becomes a real problem when the cost of picking it up is significant.

  9. Matthew

    This is also an argument against psi and other paranormal phenomena. If they were real, people would have figured out how to exploit them for profit (I mean directly, not via separating rubes from their money).

      1. Matthew

        Interesting. I suppose it’s possible you could have completely separate sets of fake delcared psychics and clandestine profit-reaping ones.

        1. @JohnWBH

          For example, if I had worked out a way to use psychic phenomena to predict future stock prices there’s no way in hell I’d tell anyone, I’d just claim to have invented a great new algorithm.

          For extra points: how do we know this hasn’t already happened?

      2. Said Achmiz

        The idea is not that individuals would be making a profit off paranormal phenomena, but that corporations, and the free market in general, would be doing so, on a large scale.

        It would be hard to miss that.

        1. Desertopa

          On the other hand, if only a limited number of people have access to the power at all, then making money for large corporations, rather than themselves personally, may not be in their interests.

          For a while now I’ve been tossing around the idea of writing an urban fantasy story which involves a relatively small community of magic users throughout the world, where a group of the most powerful ones police the others to make sure they don’t break the masquerade, because the most powerful magi are all multibillionaires whose income in a world where magic is kept secret completely overshadows what they could make using them openly, and they have more than enough resources to keep tabs on the sort of trifling practitioners for whom enticements like the Randi Challenge would be more than pocket change.

        2. @JohnWBH

          You could think up a game theory scenario where the abilities are only useful if they’re unknown, similar to encryption cracking mechanisms, if everyone knows you can crack encryption X they will stop using it.

  10. unclghost

    I always thought the joke is best understood as understanding and agreeing with the principle, but making fun of how economists (ostensibly) overapply the principle, but I could be wrong.

    1. suntzuanime

      This is my take on it as well, although as has been repeatedly discussed on this blog, the line between “mocking people who take idea X too far” and “mocking idea X” can be terrifyingly thin.

  11. Ialdabaoth

    Heh. Personal experience with this trope:

    Back when I was jobless, suicidal and desperately hungry, I was wandering around and came across a $10 bill laying folded up on the ground. Of course, I immediately picked it up…

    … to discover that someone had smeared diarrhea on the inside of it, and folded it up along the diarrhea.

    This did not help my mood.

    1. Jimmy

      I also came across a shit dollar once, but since there were other people around who hadn’t picked it up, I knew something was fishy.

      Sure enough, some kid picks it up and there’s poop on it.

      1. Error

        This sort of thing always feeds my inner misanthrope. There’s a certain sort of person who will be an asshole just for the sake of being an asshole; not because they feel they’ve been slighted or wronged or their target deserves it or anything like that.

        I have a short list of these people I keep for the event of civilization (and thereby law enforcement) collapse.

        1. Ialdabaoth

          My frustration with the “shit on a 10 dollar bill” joke was that there wasn’t really anyone around to *notice* it. They didn’t even bother to stick around and extract entertainment from my suffering; they just left it there and ditched. What does that even GET them?

  12. Chris Hallquist

    The thing I always think of, when I hear this joke, is those religious tracts disguised to look like money. Makes me want to make some of those, but with an explanation of the efficient market hypothesis. Instead of urging people to accept Jesus into their hearts at the end, you could urge them to buy index funds.

    1. Anonymous

      But those religious tracts are not meant to be left on the ground, but to be used as a tip.

        1. Ialdabaoth

          Wouldn’t help – you don’t leave the tip until AFTER you’re completely done eating. The waiter wouldn’t know who to express displeasure towards until it was too late.

      1. Matthew

        People tend not to be particularly accepting of arguments received while pissing them off. If you want to persuade people, tricking them in a way that dashes their hopes of a windfall right before you make your point is probably not the way to go.

        1. Peter Scott

          When I was about eight years old, some of my Halloween candy turned out to actually be an inedible illustrated pamphlet explaining that dinosaurs and cave men lived at the same time, a few thousand years ago, and anybody who says otherwise is lying and possibly Jewish.

          I have never experienced less convincing propaganda, before or since. It deprived me of candy that I never even had, and then said wrong things about dinosaurs. When I was eight, these were cardinal sins.

        2. AG

          On the other hand, when people receive an unsolicited gift, they feel an automatic desire to reciprocate, e.g. by hearing out the gift-giver. Makes one wonder if stapling rationality leaflets to actual real dollar bills and littering them about large population centers would be a cost-effective way to raise the sanity waterline.

        3. Nornagest

          I don’t think that would psychologically qualify as a gift, unfortunately. There needs to be another person involved.

          On the other hand, people standing on street corners and handing out pamphlets along with small gifts is a well-established tactic of the Hare Krishnas, among others; Cialdini talks about it in Influence. Oddly, I don’t think I’ve ever seen a Christian sect doing it; I’ve seen them handing out miniature Bibles, but that seems more tracty than gifty.

        4. nydwracu

          To me, Bibles would be more gifty than tracty, unless they’re abridged to the point of uselessness or a really bad translation. But I am probably out of the ordinary here, in that I don’t already have one but I’m not allergic to them.

          Standing on street corners signals ‘cult’; rationalism already sees itself as having a signaling problem along those lines, and rationality would probably not benefit from that selection mechanism. Leaflets with dollars is something that isn’t done (but the Futurists came close — they dropped leaflets from airplanes!), so it could maybe get into the news.

        5. Nornagest

          At the time I wasn’t familiar enough with the Bible to say for sure (I’ve since read one version through, and parts of several others), but it’d be hard to fit a full-length one into the volumes they were handing out: about the size of a pack of cards, but less thick. My guess would be that it only contained the Gospels.

          And yes, I’m fully aware of the cult connotations and don’t endorse this as a tactic; the Hare Krishnas aren’t exactly the group to emulate if you’re going for mainstream respectability. I just don’t think pamphlets with small amounts of cash would be substantially more effective than pamphlets alone: I’d expect a small improvement in general disposition, but nothing in terms of obligation, which is what the Hare Krishnas are banking on.

    2. Nestor

      I once dropped a note and realized it 15 minutes later. I backtracked my path and found my money, no doubt thanks to the prevalence of false money pamphlets on the ground desensitizing people to the presence of my real moolah.

Comments are closed.