Victoria Coren: the cause of the crisis

There is a gap in the many analyses of the financial crisis: none of them, as far as I know, have blamed it on Victoria Coren. Let me remedy this omission.

Start with the premise that the crisis was due in part to a decline in trust and trustworthiness. The spread of self-certification mortgages - "liars' loans" - allowed mortgage borrowers to overstate their income. And mortgage originators were content to lend to bad risks in the belief that they could sell on bad loans. Untrustworthy behaviour thus contributed to high leverage. And then the collapse in interbank lending and freeze in the mortgage derivatives markets reflected a decline in trust; banks just didn't trust other banks or the assets they had created.

But what caused this decline in trust and trustworthiness? In Animal Spirits, George Akerlof and Robert Shiller point to a curious coincidence - that in the 00s more people played poker and fewer played bridge.This, they say, is culturally significant. Whereas bridge requires cooperation between partners, poker is a more individualistic game, in which bluffing is important.

It could be, then, that the rise of poker and decline of bridge is a sign of the growth of distrust and individualism that contributed to the crisis.

A new paper corroborates this. Italian researchers got bridge and poker players to play trust games, in which one player decides how much to send to a partner and the experimenter then triples the sum sent, and the trustee then decides how much to return. They found that bridge players were significantly more likely to trust their partner in the trust game than poker players. On average, they sent 17% more than poker players, and 31% of bridge players sent everything whereas only 20% of poker players did.

This difference was not because bridge players are more altruistic or risk-tolerant; in fact, the researchers show, they are less so. Instead, it reflects the fact that bridge players are more like "we-thinkers" than poker players; they are more inclined to trust others in the belief that trust pays.

We know that culture affects economic outcomes. So isn't it plausible that a less trustworthy culture might have contributed to the crisis?

But is the rising popularity of poker merely a symptom of a growing untrusting culture, or is it a cause?

This is where Ms Coren comes in. She is, econometrically speaking, an instrument. Her success and her best-selling book, have helped popularize the game, independently of other cultural developments doing so. And it's plausible that playing poker doesn't just attract untrusting individualistic types but helps to create them. As Screwtape said, "All mortals tend to turn into the thing they are pretending to be."

In this sense, therefore, Ms Coren deserves some blame for the crisis. She is arguably an even greater blight upon the economy than Konnie Huq.

* Cynical readers might think this post is motivated by the jealousy of a spurned admirer. Would I be so desperate? I obeyed the injunctions. What more could I  do?

Comments

[Nick]

Bridge has its own lessons for the brittleness of intimate co-operation too. I understand that divorces have been been triggered by bad bridge plays.

[Will]

Poker isn't any more individualist than stock market trading, an area with a much more obvious link to commercial banking. Maybe this is why the UK government seems to keen to keep investment and commercial banking apart?

In my experience poker doesn't especially make you inclined to use its self-serving frameworks in the outside world. But it's almost impossible to play for any length of time without experiencing contempt for humanity. 95% of players think they're far, far better at it than they are- the propensity to attribute winnings to skill and losses to luck is remarkable. In no other game do you hear players insist that the reason they couldn't win was because their opponents were "too bad" (and thus kept calling when they 'should' have folded). If poker players seem like assholes- and they do, as a short visit to two plus two will confirm- it's because that's what they're used to dealing with.

[Jonone100]

There is a point in poker where mutual trust is rewarding. Near the end of the game (in tournament poker), where all players are cashing, an 'all-in' from a short-stack (a player with only a few chips left) is often called by many other players 'behind' (acting after) the short-stack. These players then often check through their hands - i.e they make no aggressive moves to win the pot. The point of this is to increase the chances of the short-stack being knocked out resulting in the remaining players being ranked one place higher in the final results.

The reason co-operative behaviour occurs at these late stages of the game stems from the large increase in prizes in line with ranking. There's a life changing difference in earnings between finishing 8th and 4th out of a few thousand players.

Sorry for the poker terminology but the basic point is that where trust leads to a significant increase in real cash returns poker players will co-operate. (What I describe here is not classified as collusion). Poker players will trust when it pays.

I think businesses operate in a similar way. That is they co-operate to ensure the demise of minor competitors whilst competing for the larger share of the market.

I've only played poker against Victoria Coren once.

She was extremely well stacked and she beat me. :o|

[http://www.sacburberryecharpe.org]

"Its consistently good to discover tips just like you share intended for blog publishing. As I just started publishing comments intended for blog along with facing dilemma of a great deal of rejections. I feel your suggestion could well be helpful personally. I enables you to know should its work with me way too. "

[A student of 'SWL']

Ah Chris, I'd wager you share my appreciation of Ms Coren/ Mrs Mitchell. An intelligent buxom blonde who (despite my political leanings) has an alluring RP accent.

Sadly not all eccentric gadflys can bag women with the success of Mitchell and Brooker, but-on a slightly more serious note, and despite the appeal of their smarts- I really do just objectify them and don't really want a relationship.

/endconfessional