Something You Should Know - Behind the Scenes at Your Grocery Store & The Difference Between Risk and Uncertainty

Episode Date: September 28, 2020

You may be a good driver but there are a lot of bad ones out there. So how do you protect yourself from those people? This episode begins with some interesting intel on where and how serious traffic accidents happen and how to avoid them. Source: Reader’s Digest & author of an article titled “How Good Drivers Get Killed”  Your neighborhood grocery store is a fascinating place. Did you know, for example, that some of the “fresh produce” could be over a year old? Did you know that selling groceries isn’t the only way your store makes money? Have you ever wondered why a store like Trader Joe’s has such fanatically loyal customers? Benjamin Lorr has taken a peek behind the curtain of the grocery business and you will be fascinated by what you hear in our discussion. Benjamin is the author of The Secret Life of Groceries (https://amzn.to/2RVd0Iy). Have you heard that a dog’s mouth is cleaner than a human mouth? Listen and find out if that could possibly be true. http://tristanmed.com/blog/entry/mythbusters-dogs-mouth-cleaner-than-humans It seems to be human nature to want to know what will happen in the future. That’s why we want experts to predict the stock market or why we try to choose winning lottery numbers. Of course predictions are usually wrong. Most of life is unpredictable. That is why it is pointless to try and predict it. So what’s a better strategy? Here to tell you that is John Kay, a leading British economist and author of the book Radical Uncertainty: Decision-Making Beyond the Numbers (https://amzn.to/32WqnP6). He explains how to prepare for the future even though you cannot predict it and he reveals the important difference between risk and uncertainty. Learn more about your ad choices. Visit megaphone.fm/adchoices

At Wealthsimple, we're built for whatever you're building. Built for Jane, who wants to break into the housing market. We're built for Ted, who's obsessed with what's happening in the global markets. And built for Celine, who just wants to retire and explore the world's flea markets. So take a moment and think about what you're building for. We've got the financial tools to help make it happen. Wealthsimple, built for possibilities. Visit wealthsimple.com slash possibilities. Today on Something You Should Know, you may be a good

driver, but how do you protect yourself from the bad ones? Then behind the scenes at the grocery store and the interesting things you never knew. I think as a consumer when you walk into the store you have no idea that apple you're about to bite into has been sitting around in some barrel for a year. Things like cherries and blueberries can be in storage for months at a time when you think of them as like the epitome of summer fresh products. Then is a dog's mouth really cleaner than a human mouth? Some people think so. And the important difference between risk and uncertainty.

Uncertainty is not knowing what's going to happen. And uncertainty may either be good or bad. And actually that is what makes life interesting. Risk, on the other hand, is something bad. You never hear someone saying, there's a risk I might win the lottery. All this today on Something You Should Know. This winter, take a trip to Tampa on Porter Airlines. Enjoy the warm Tampa Bay temperatures and warm Porter hospitality on your way there. All Porter fares include beer, wine, and snacks, and free fast

streaming Wi-Fi on planes with no middle seats. And your Tampa Bay vacation includes good times, relaxation, and great Gulf Coast weather. Visit flyporter.com and actually enjoy economy. Something you should know. Fascinating intel. the world's top experts, and practical advice you can use in your life. Today, Something You Should Know with Mike Carruthers. Hi, welcome to Something You Should Know. You know, I like to drive. I've always liked to drive, and I think I'm a pretty good driver. It's the bad drivers that worry me, because bad drivers, well, they cause accidents and they hurt good drivers. Research was done to discover how good drivers end up in serious accidents. And here's what they found. The most common way that good drivers get killed is in head-on crashes

on straight roads during daylight hours and with good weather. A distracted driver coming the other way swerves over and crash. In fact, 85% of all fatal crashes happen on two-lane roads, not on interstate highways. What can you do? Well, watch those oncoming cars, and when possible, travel on roads with center dividers like interstate highways. The second most common way good drivers get seriously hurt or killed is at stop signs. The advice?

When you see someone approaching a four-way stop intersection from the side, look at the driver, not the car. You can get clues that will tell you if that driver is likely to stop. And that is something you should know. When you walk into your neighborhood supermarket, there are a lot of things going on in there, both right in front of you and behind the scenes. I mean, where does all that food come from? How long did it take to get that produce from the farm to your store shelf? Why is the store laid out the way it is? And how exactly does the store make money? And then there is Trader Joe's. It's not exactly a supermarket, but it's a very successful grocery store, and customers of Trader Joe's really love that store. Why? Well, as someone

who actually enjoys food shopping, I'm happy to get some of these issues out on the table with Benjamin Lohr. Benjamin took a really close look into the world of groceries and discovered a lot of amazing things. He's author of the book, The Secret Life of Groceries. Hi, Benjamin. Hey, Michael. Well, thanks for having me. So the supermarket itself is a relatively new thing, right? And was pretty revolutionary when it first arrived compared to the old corner grocery store. Well, the grocery store, going back to like the corner store, it existed in one form or another, like as a general store going back quite some time. But that was a, the general store implies something where you would get much more than food. You get boots there. You get specialized mostly in dry goods. There'd be barrels of fruit that people

would chisel out. And it was not what we think of as a grocery store. It was not even close to what we think of as a supermarket. That really came around in around 1914 when Clarence Saunders decided he would let customers touch the goods for the first time. The general store operated with a clerk behind the counter who would hand you everything. And this didn't matter because everything was generic at that time. There weren't really individuated products. There weren't brands. So it didn't matter what you asked for something and the clerk would hand you. But Clarence Saunders, founder of the Piggly Wiggly, noticed that branded products were becoming a thing.

Packaging had taken kind of big leaps and bounds with the Civil War, with the Napoleonic Wars. Canning was a thing. And all of a sudden you had products with individual names and personalities and people just wanted to reach their hands out and touch them. And so he redesigned the store, a single path through the store that would push you in front of all these objects. And that became the model for the grocery store of today, where people could touch the goods, and they'd empty out at a checkout register. Completely different from what had existed before. And then a guy named Michael Cullen comes along about 15 years later in 1930, and he basically just supersizes this. Like the most American thing you can imagine. He just says, what we need to do is add more of everything, more size, more products. And by doing that, we can shrink the margins down and offer food

so cheap, people are going to lose their minds. To announce his first store, it was King Cullen. He just took out advertisements where he listed prices up and down the face of the newspaper, and people lost their minds. They drove from miles away to come to his stores. It was a circus-like atmosphere because they'd never seen prices this low, which, you know, there was a variety of reasons, but largely came because he used volume to create low prices. And so that was the beginning of the modern day supermarket. And has it changed much since then other than just getting probably a lot bigger? Yeah, I think that the general recipe since then has just been inflate. And so, you know,

his stores were like 9000 square feet, I think. And, and that reliably increased every decade. And now, of course, we have super stores that are you know maybe hundreds of thousands of square feet i'm not uh completely up to date on what the biggest supermarket is in the world that should be but uh they're enormous and and what's funny is when the shoppers would go into the original king cullen you'd have news reports of like women feeling faint and dizzy at the size of it so there's been a lot of talk and we've've talked about it on this program, about the psychology of the supermarket and how they try to get you to stay in the store for as long as possible because the longer you stay, the more you'll spend and that kind of thing. When did that all begin? So I'd push back a little bit on that notion.

I don't think grocery stores are out to trap customers in there. They're really concerned with getting customers in and out who want it. So there was this idea that, oh, they put the milk in the back of the store, so you'd have to scour through the store. But that's really changed. And now often stores will have a grab-and-go section up front where they have the milk for those customers who just want to do a quick shop and come in and out. What I found talking to retail architects who design stores was just how much they're focused on targeting specific types of consumers and building a store that will be a reflection of a place that makes that person comfortable. It was almost the opposite of this kind of trapped, anxious feeling of a supermarket trying to sucker you into buying more than you

want. It was a store that was trying to do everything to make you as comfortable as possible to show off a selection of goods that made you feel at home so you would want to stay there and peruse. But the fact is that usually the milk is in the back. It's on the opposite side from where the fruits and vegetables are. There's some psychology there that's going to keep you in the store and make you walk around. I want you to pay attention to the next store you go into, especially a big suburban one. There will be the milk in the back and they will try to get you to go there, but there will also be milk offered upfront in kind of an open case. The grocery industry is becoming much more responsive to this customer who wants to stop in and make a quick purchase, not like a full laundry list.

Is the supermarket business a good business to be in? Do those guys make a lot of money? That is a great question that I don't have an easy answer for. So supermarket margins are extremely thin, right? Like the famous 1.5 to 3.5% margins. Again, because it's a volume game and they're trying to turn over as much product as possible. On the other hand, grocery stores make their money in alternative ways outside of profit margins. It was probably one of the most interesting things I learned was how much money these stores are making off the manufacturers, off the product makers themselves through different things called trade spend like

product fees slotting fees uh advertisement fees for their in-store radio free fill buy one get one freeze every time you see if someone's sampling a good at a store or there is a buy one get one free that's from the manufacturer and uh and the store is actually making a considerable profit off the manufacturers back in those instances. So those fees are very murky. Nobody wants to talk about them. It's one of the more secretive areas of a very secretive industry. And what type of margins they're making on that could be quite lucrative. I mean, I definitely talk to buyers who would refer to it as like rocket fuel to the bottom line.

Well, it seems to me that there used to be more options where I live in California. I remember there used to be a whole bunch of different supermarkets. There's now, I think, two. Yeah, I think that is certainly an industry-wide trend. There's been a huge consolidation and winnowing of the grocery field, especially depending how far back you stretch. If you go back up, they got bigger and bigger and it became more unsteady. There's only could be one or two stores at the top. And now we have Amazon and Walmart at the top. You have your Kroger and you have the few people who've scaled up and made it. who couldn't quite grow to be as big, who couldn't centralize their buying processes and maximize on volume, were suddenly competing with the Walmarts, the Amazons, the Targets, and these guys that were massive.

And it resulted in a collapse for a lot of those guys. So that's absolutely correct observation. What you do have is a lot of choice on the shelves, because that's what those big guys specialize in. So the options available to a consumer are probably unchanged, but the variety of stores is way cut down. But then again, we have stores like Trader Joe's, which started here. I'm not far away from the very first one. And we have Sprouts here that seems to do okay. So there are these smaller, seemingly successful chains that do okay, even though they're right next door to the big, big grocery stores.

Yes. And, you know, I spoke a lot to Trader Joe, Trader Joe Coulomb, who founded Trader Joe's, the chain. And and he really made Trader Joe's in opposition to the homogeny of the big grocery store. He was very acutely aware of the tradeoff we just talked about and saw it in the 1970s and actually in the late 60s that this was going to happen. He saw that there was really one path all the competitors were taking, which was this growth volume margin game. And he realized that he could try to compete on that, but it was pretty unsteady place. So he went the opposite direction and places like Sprouts are tacking in that way, too. But Trader Joe's is really probably the finest example of that. So he did the exact

opposite. He shrunk his offerings down to a really human scale. He empowered his buyers not to go out and try to fill their stores with every product on the planet, but to be very selective, think about who their customers were, offer things that they would find outstanding. That was his term for like the high value product that was better than anything and cheaper than anything that would be on a competitor's shelf. And so they kind of moved laterally in a really humanistic, creative way. Trader Joe's exists today has slightly deviated from that, but the essential DNA is still there. So I want to talk about some of the secret things. You've mentioned that it's kind of secret and murky in places at the grocery store. I want to talk about that.

My guest is Benjamin Lohr. He is author of the book, The Secret Life of Groceries. Bumble knows it's hard to start conversations. Hey. No, too basic. Hi there. Still no. What about... Bumble knows it's hard to start conversations. Hey. No, too basic. Hi there. Still no.

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That's BetterHelp.com. So, Benjamin, talk about some of the things that go on in the grocery store that people might not be aware of. You mentioned some of the things are a bit secret and a bit murky. Talk about some of those. Well, you can put a lot of different types of produce in essentially suspended animation. They're stored for long periods of time before they get to the shelf. Then it's like the market leans over and gives them a kiss. And like Cinderella, they wake up and become fresh for the shelf. So like apples

are stored for over a year before, right around a year before they hit the shelf. Things like cherries and blueberries can be in storage for months at a time when you think of them as like the epitome of summer fresh products. You know, you have tomatoes that are hard as baseballs and they make the thud of a baseball when you drop it on the floor and they're sitting in these kind of warehousing spaces with temperature probes and gas probes. So they're perfectly regulated in this suspended animation and then brought to market right before they're needed on the shelf. And so that I think that type of technological control, which is now moved into packaging. So you have like meat packaging that's very active and regulates different gas levels to kind of keep the meat fresher,

or especially looking fresh by regulating like myoglobin content in ways that I think as a consumer, when you walk into the store, you have no idea that apple you're about to bite into has been sitting around in some barrel for a year. That is a real surprise, I think, to most people. I mean, very often you'll see, you know, a section of the store that says, you know, locally grown. It just, the pictures make it seem like this stuff was just picked yesterday. Yeah. And local is a really interesting thing because consumers do care about it and stores recognize they care about it, but nobody's regulating it. So one of the great kind of open secrets about American, this is not something the industry hides particularly, but the people who are actually making the food are co-packers and

manufacturers who, you know, they're the ones who are actually buying the ingredients and making these products in their factories. And so they're the ones in charge of sourcing the products. And you have some co-packers and manufacturers who care greatly about local foods. And you have others who don't. But is anyone looking at that? Absolutely not. It's really up to the store itself. And so often when you see a local product, it may mean that the manufacturer is local or that the entrepreneur is local, but it doesn't necessarily mean the ingredients that go into that are local.

I mean, sometimes it might, but it's just unregulated. So did you find it because you've said a couple of times, you know, there's very secretive things going on there. Did you uncover them? And if so, what else did you find? I mean, I think the pay to play system for getting products on shelf, which I call, I use the term trade spend for it, but it really goes into all the different ways that supermarkets kind of tax or get fees from manufacturers to put their products on shelves is fascinating, completely under the radar of most people walking down the aisles.

You think the store is making their money off of you, when in fact, the store is actually out to get you the lowest price possible. That's a great thing, and we all benefit as consumers. And they're making considerable money like a landlord renting out space to the manufacturer who is putting the products on the shelf. So I would talk to manufacturers who would say they were competing ruthlessly against the store itself, not against their competitors. They weren't looking over their shoulders. They were negotiating with the buyer around how much free product they would give them or how much they would pay for a corner of a freezer. And we're talking millions of dollars. So this is big money. And it was completely out of my mind when I go down the aisles. I think, oh, buy one, get one free. Like

the store is giving me this, but it's not the store, it's the manufacturer. And I think as a consumer, when you see these up and coming products, you don't realize the struggle that they're going through to get to shelf. So every supermarket, every big chain supermarket has their own brand of just about everything. Beans, soup, milk, bread, everything. And they often make it look as if it's very, very similar to the guy next to it on the shelf. Who makes those? The same people often are making those as they're making the product next to it on the shelf. And it's created a big shift in the industry.

There used to be, you know, Kellogg's would have its giant manufacturing plant that was optimized to make certain cereals that it could sell. But as products have differentiated more and they become more individual and they're smaller lines, that has been outsourced often to manufacturers. And so those manufacturers have all the capabilities they need to make a huge range of products. And grocers can go to them and ask for them to make a similar but parallel product. And so the very same industrial chefs that are responsible for the branded manufacturer product are making the product right next to it on the shelf in the very same facility. Now, the actual pricing structure of these may be different, and maybe they're buying higher quality things. And there's certainly r&d that goes into the great branded products and trade secrets that allow them to be not identical but when you're talking about the same food scientist

in the same processing facility things get pretty similar pretty quickly and it has resulted in a big shift in terms of power away from manufacturers who used to be kind of the dominant like species in the retail landscape into sellers, grocery stores, retailers who now wield a lot of that power and can kind of make manufacturers play off each other and reduce price. It does seem there has been less brand loyalty over the years that people aren't don't have to buy that brand of beans or that brand of pasta. It's kind of like become a little more homogenous. And what's interesting is at the same time that brand loyalty has shifted, it's created a new type of brand loyalty to different stores, which is why you get this kind of cult-like consumer frenzy around Trader

Joe's, which is what actually sparked me into this whole book. I just wanted to understand why people were so excited by Trader Joe's. I kind of loved how excited they were, and I wanted to understand. And what Trader Joe's has done is essentially branded themselves. They created an identity around the Trader Joe's product that was similar to what the great manufacturers did around individual products, but they've done it for the entire store. So you walk in and you just trust Trader Joe's knows what you like. They know, you know, they buy the certain niche things that will make the Trader Joe's shopper happy. And it's usually, they refer to it as like the overeducated, underpaid shopper. It's the kind of Volvo driving professor is kind of the

Trader Joe's archetype. And that person has a discerning palate, but they also have a budget. And they know that wherever they go in that store, they're going to find things that kind of tickle that palate and that exercise their intellect. So I think you're absolutely right. It's just been a shift in where that brand identity is located. Well, I think it's so interesting, all the things that are going on and ways the stores make money and how they get food from here to there and onto the store shelf. It's really, really interesting. Thanks for sharing it, Benjamin. Benjamin Lohr has been my guest. The name of his book is The Secret Life of Groceries.

And you will find a link to that book at Amazon in the show notes. I appreciate you being here, Benjamin. All right. Well, thank you so much. People who listen to Something You Should Know are curious about the world, looking to hear new ideas and perspectives. So I want to tell you about a podcast that is full of new ideas and perspectives, and one I've started listening to called Intelligence Squared. It's the podcast where great minds meet.

Listen in for some great talks on science, tech, politics, creativity, wellness, and a lot more. A couple of recent examples, Mustafa Suleiman, the CEO of Microsoft AI, discussing the future of technology. That's pretty cool. And writer, podcaster, and filmmaker John Ronson, discussing the rise of technology. That's pretty cool. And writer, podcaster, and filmmaker John Ronson discussing the rise of conspiracies and culture wars. Intelligence Squared is the kind of podcast that gets you thinking a little more openly about the important conversations going on today.

Being curious, you're probably just the type of person Intelligence Squared is meant for. Check out Intelligence Squared wherever you get your podcasts. Since I host a podcast, it's pretty common for me to be asked to recommend a podcast. And I tell people, if you like something you should know, you're going to like The Jordan Harbinger Show. Every episode is a conversation with a fascinating guest. Of course, a lot of podcasts are conversations with guests. But Jordan does it better than most.

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Harbinger Show. There's so much for you in this podcast. The Jordan Harbinger Show on Apple Podcasts, Spotify, or wherever you get your podcasts. It does seem to be human nature that we want to know what's going to happen in the future. So much do we want to know that a lot of times we just make it up. We predict the likelihood or we assign a probability. What are the chances? And in some things like gambling, that can actually work pretty well. But in real life, it doesn't work very well at all. That's why the people who predict where the stock market is going are usually wrong.

It's why your winning lottery numbers almost never win. You cannot predict life. Things will happen, but you don't know what will happen, when it will happen, or where it will happen, but you don't know what will happen, when it will happen, or where it will happen, and neither does anyone else. It's called uncertainty. Life is uncertain, and trying to predict it gets us into trouble, according to John Kay. John is a leading British economist and co-author of the book Radical Uncertainty, Decision Making Beyond the Numbers. Hi John, welcome to Something You Should Know, Decision Making Beyond the Numbers. Hi, John.

Welcome to Something You Should Know. Good to be with you, Michael. So I hadn't really thought about this too much before, but it is true that we love certainty, even though in most cases we cannot get it. I mean, the fact that people are often so wrong about the future and what is going to happen doesn't stop us from continuing the quest to find out or asking someone else what's going to happen because the last guy got it all wrong. We keep looking for certainty or at least people want to assign probability to how likely something is or isn't going to happen. And we don't think you can. And the areas where you can't resolve uncertainty by getting more information

or by finding some sort of probability distribution, which you can do when you're weather forecasting or talking about mortality, but you can't do it generally. That's radical uncertainty. But there is a tendency to use probabilities to make decisions, and maybe false probabilities in the sense that, you know, I guess the easiest example is if you flip a coin 10 times and they all come up heads, well, now you're thinking, well, it's got to be tails the next time because it's been heads so many times,

but really the chances are still 50-50, it'll be well the two things that are wrong there uh one is that if you flip a coin and it comes up heads 10 times then you should be pretty suspicious about the coin and that's a pretty good lesson for people actually the other is of course you're right that if it is actually a fair coin then it's no more likely to come up tails next time heads or tails next time but the truth about that is that people are people are seeing patterns where they don't exist and there's a disturbing human tendency actually to do that. And there are so many examples of people doing that, particularly in areas like gambling. So what works better? I mean, maybe it doesn't work, but you got to have something.

You absolutely do need something. And that's why people go down the route of attaching probabilities to more or less everything. Why people want predictions about what will happen to the economy of the stock market next year, or how many people will contract COVID-19 or whatever, when these predictions simply aren't available. Well, a story you tell that illustrates this really well, I think, is the story of when President Obama was going after bin Laden and trying to decide whether to raid that compound where it was thought he was. And after intelligence failures in the Iraq war, intelligence agencies in the U.S. were told from now on, you have to express your judgments in probabilistic terms. So they did. And they came along to the meeting in the White House with estimates of the probability that the man whom the spy satellite had identified in that compound was bin Laden.

And the probabilities ranged from 25 to 95%. And at the end of it, Obama said, look, guys, it's a flip of the coin, isn't it? It's 50-50. By which he didn't mean it was a flip of the coin or it was 55-50. He meant that we just didn't know and he had to make a decision anyway. Obama said afterwards that people were trying to give me these probabilities, which will serve to disguise uncertainty rather than to illuminate it. That's not the way you deal with uncertainty, by making these numbers up.

We have rather different views about how it should be done. How should it be done? Let's start by saying that people now use words like risk and uncertainty. And that's completely, this is completely true in the world of economics and finance. They talk about risk and uncertainty as if they were the same thing. They're not. Uncertainty is not knowing what's going to happen. And uncertainty may either be good or bad. You go to a new restaurant, it may be good or it may be bad. You don't know. And actually, that kind of uncertainty is what makes life interesting, having new experiences. Risk, the other hand is something bad. Risk is,

you never hear someone saying there's a risk I might win the lottery or even there's a risk that I might not win the lottery because they don't really expect to win the lottery. Risk is what happens when you're derailed in your plans by something you didn't expect. So the way real people think about risk, people who haven't been trained in probability and statistics, people who haven't done economics or statistics 101, the way they think about uncertainty is in terms of stories, not in terms of mathematics. And we describe this

as people trying to construct a reference narrative. That's my business strategy. That's my retirement plan. That's my political manifesto. And what I mean by risk then is that this might not actually happen. And that's a good way to do it, or that's not a good way to do it? That's the way people do it, and broadly it's a good way to do it. And the mistake people make is thinking that what I need is a forecast of the future, what I need is to evaluate the probabilities of various contingencies and so on. And then they make up numbers in order to try and solve that. You need to approach these things in much more qualitative ways. And this is a story very much about robustness and resilience.

And one of the things we've learned in the last few months, and actually COVID-19 is a great example of radical uncertainty we actually say in the book which we obviously wrote last year that the world will be will suffer a pandemic from some virus that does not yet exist we didn't know that we were within a few months of it actually existing, but we were. And that's an event that was likely, but you can't attach a probability to it. You can't predict it. You can't say there's a probability of something or other that that virus would break out in Wuhan in December 2019.

You can't talk about it in these terms, but you can talk about it as a likely event. And you can ask, do we have strategies that are robust and resilient to something like that happening? And we learned that we didn't. And I hope that's a lesson we'll learn from what has been going on in the last few months. So you more or less predicted that this would happen, but based on what? We didn't predict that this would happen. We said from what we know about the world, this is an event that is likely. That's different from predicting it. We didn't say in 2020, the world economy is going to be thrown into chaos by this virus. We said we know from what we know about pandemics and viruses that this is

very likely to happen one day. And a lot of things that are very likely to happen one day, it was in fact the one that affected the global economy this year was this coronavirus. It might, for example, have been a cyber attack, either a malicious cyber attack, or it might have been a cyber attack that resulted from an electric magnetic storm that was won 150 years ago, just before it mattered. Now, if you had a storm like that, it would break down the global electricity network. And we just have to start thinking about what life would be like if that happened. There are loads of things that are likely in this sense, they're going to happen one day. And what we need to do is to, insofar as we

can, try and learn about more about when they would occur, what they might do, and build worlds that are robust and resilient against these kind of developments. Okay, well, those are big global things, but how does this relate to individuals' decisions and choices and things like that? Well, let's talk about individual choices. Financial choices, for example. Most people have to do or they certainly should do some kind of planning for retirement. And if you go online

or you consult a financial advisor, he will ask you a series, you'll be asked a series of questions. What do you think you're going to earn over the rest of your life? How much are you going to need? How much money are you going to need in retirement? How risk-averse are you? And the advisor will probably ask you some rather silly questions to try and get an idea of how risk-averse you are. All this is trying to make up things we don't know and can't know. If I'm making my financial plans, what I will say to myself, and I do, is what I want to do is make sure that I can maintain my kind of standard of living for the rest of my life. And then I ask myself, that's what I call my reference narrative. And then I

ask myself, what are the kinds of things that might upset that? What are the kinds of things that might stop that happening? And I think about that in terms of financial issues. I think about that in terms of health issues and I ask what can I do to give myself the degree of protection against these. What I'm trying to do in my life, or should be trying to do, is to reduce, manage risk, and then I can enjoy uncertainty. That's a very deliberate process, yes? It's a deliberate process, yes. But it's not making up numbers. In people's real lives, they don't make up numbers. A few people go to financial advisors, and if you ask a financial advisor the kind of question I've just asked,

he will start setting up a spreadsheet and making lots of numbers for you. That isn't going to help. But that's relatively rare for people in their individual lives. It's very common, however, for people in the world of business, finance, and politics. They set out scenarios which are full of invented numbers. And our argument is that you can't validly invent these numbers. You have to think about these problems in different and more qualitative, as I'm describing, ways. But it seems like you could sit down and imagine all kinds of things that could happen, that might happen, that might not happen and my experience anyway has been that no matter like how you sit

down and try to figure out what's going to happen the things you think might happen never happen it's always something else then i think you haven't thought about these things very well i think i've just described the the three or four main things that are going to affect you. Now there are going to be smaller things that you can't see happening. And that's good. You know, someone will come to you with a job offer you didn't imagine or a book proposal that's much more exciting than anything you'd ever thought of before. That's good uncertainty. What you want to make sure is

that you can benefit from that good uncertainty by having what I'm describing as a secure reference narrative. You're pretty confident that your world is not going to be thrown upside down by some of the events I've just been talking about. So the mantra in this sense is manage risk and enjoy uncertainty. Well, I like that. Manage risk and enjoy uncertainty. Because you can't plan for everything because you just can't, because you can't predict the future. Absolutely, of course. That's the whole point. You can't predict the future, so you shouldn't

try. That's what I meant by saying we didn't predict the coronavirus. We said this was a likely event. This is the kind of thing that could happen one day. And of the half dozen things that might be major disruptions for the world economy, this is one. That was not hard to pick. This one, as things have worked out, this one has happened. And we can say rather smugly that it is something we identified as something that was likely to happen, which, as I say, was not the same as predicting it. If you identify, if you were, I mean, let's just say you're a restaurant owner

and you do go through this process and you identify these potential risks, well, the only way to mitigate the risk that you'll go out of business for many restaurant owners would be to leave the restaurant business because there's not much else you could have done because the government shut your business down and you're out of business. Well, there are a couple of things you could have done. One is you can have enough capital in your business to be able to survive a month or two without revenue coming in. And some restaurant owners are able to do that and some are not.

And others, well, I'm sure you know restaurants that have adapted very well in the circumstances of this kind of thing, people who are quickly able to start bringing meals to your door and people who have just closed. But I agree that if you're a small restaurant business, this kind of thing is probably beyond your capacity to cope. So you've mentioned that, you know, we should have a secure reference narrative, but I don't think I really know what that means.

And like, how do I do that? Because I sit down and ask myself what what do you think your life is going to be like in five and ten years time what do you want it to be like in five or ten years time you're doing financial planning uh what's going to happen to you in retirement these are the questions you need to be asking and when i talk about a reference narrative i'm just formalizing in a sense the process of asking these kind of questions and then once i once i have that once i know what where i want to be five ten years from now now what do i do right so uh i'm asking i'm going to ask next what can go wrong with Now, what you're doing in that process has to be realistic. And it can't be too specific. It's're asking, what kind of life do I want to be

having there? Is it rather like I have now? It depends how old you are. If you're my age, you probably do. If you're much younger, you don't. You want to be moving to something different, something better. And then you ask, how could I achieve that? And what can go wrong with that? Well, it's interesting how there is this attitude, certainly here in the US of, yeah, well, you never know, you're gonna live your life, you can't always worry about bad things happening, bad things will happen. But it's almost as if it's just too random to do anything about, you just never know, so don't worry about it. I know a lot of people who think like that, and I suspect a lot more people think like that in the US than do in Europe, which is why in Europe people have done rather more to prepare, it were safe to social security type safety nets

than has happened in the united states but that's back to this uh manage risk enjoy uncertainty point well i do like that advice manage risk and enjoy uncertainty it certainly beats trying to predict the future and it seems to work pretty well doesn't it my guest has been john k he is a leading british economist and the name of his book is radical uncertainty decision making beyond the numbers and you will find a link to that book in the show notes i bet you've heard the saying that a dog's mouth is cleaner than a human's mouth. Well, that's just nuts. Have you ever smelled a dog's breath or seen where a dog puts its tongue from time to time?

Plus, they eat out of the garbage and they drink out of the toilet. So, no, a dog's mouth is not cleaner than a human mouth. Probably how that started was people observed that dogs sometimes lick their own wounds and figured that there must be some kind of cleaning or healing properties in a dog's saliva. There is not. A dog's tongue is rough, and by licking the wound, they scratch away dead tissue, which does help in the healing process. Now it does appear that you can actually get sick from getting germs from your dog's mouth into your system. So, as a general rule of thumb, dog saliva should stay in the dog's mouth, not yours.

And that is something you should know. You know, we have terrific advertisers on this podcast that sell great products and services. And when you do business with them, they continue to advertise. And that's what supports this podcast. I'm Micah Ruthers. Thanks for listening today to Something You Should Know. Hey, hey, are you ready for some real talk and some fantastic laughs? Join me, Megan Rinks. And me, Melissa D. Montz, for Don't Blame Me, But Am I Wrong? We're serving up four hilarious shows every week designed to entertain and engage and,

you know, possibly enrage you. In Don't Blame Me, we dive deep into listeners' questions, offering advice that's funny, relatable, and real. Whether you're dealing with relationship drama or you just need a friend's perspective, we've got you. Then switch gears with But Am I Wrong, which is for listeners who didn't take our advice and want to know if they are the villains in the situation. Plus, we share our hot takes on current events and present situations that we might even be wrong in our lives. Spoiler alert, we are actually quite literally never wrong. But wait, there's more. Check out See You Next Tuesday,

where we reveal the juicy results from our listener polls from But Am I Wrong? And don't miss Fisting Friday, where we catch up, chat about pop culture, TV, and movies. It's the perfect way to kick off your weekend. So if you're looking for a podcast that feels like a chat with your besties, listen to Don't Blame Me, But Am I Wrong? on Apple Podcasts, Spotify, or wherever you get your podcasts. New episodes every Monday, Tuesday, Thursday, and Friday.

Hi, this is Rob Benedict. And I am Richard Spate. We were both on a little show you might know called Supernatural. It had a pretty good run, 15 seasons, 327 episodes. And though we have seen, of course, every episode many times, we figured, hey, now that we're wrapped, let's watch it all again. And we can't do that alone. So we're inviting the cast and crew that made the show along for the ride.

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