Stop Competing with Others – You’ll Always Lose in the End!

Interview with Prof. Adam S. Hayes, author of “Irrational Together”

If you could shout a warning to our readers – “Immediately stop doing that! Can’t you see it’s terribly wrong!” – what behavior would you be referring to, and why?

Borrowing money just to keep pace. Or borrowing to fund a standard of living — the newer car, the renovation, the holiday you photograph for people who are barely looking — with money you don't have, in order to match a reference group you never actually chose. That is the one I would shout at, because it is the rare piece of so-called irrationality that is both socially manufactured and financially fatal, and because the people caught in it usually can't see the mechanism, only the shortfall at the end of the month. In fact, these people often believe that they themselves are making these decisions without understanding the social influence at work.

René Girard called this mimetic desire. We want things because the people near us want them, and not necessarily because the things are good. The child who ignores a toy until another child picks it up — then suddenly must have it. Adults do the same thing with kitchens and postcodes.. there’s an old American phrase for it, “keeping up with the Joneses.” People everywhere though want to keep up with their version of the “Joneses.” But by doing so they might not keep up with the mortgage. Status is a matter of relative position, which means it has no finish line — there is always a Jones one street over, and the moment you draw level, the reference point moves.

Let me be careful about what the warning actually is, because the obvious version — “be more rational, run the numbers, be disciplined” — but this can be a trap. The instruction is to notice whose game you're playing and at whose expense you're keeping the score. Becoming a flawless calculator was never the point; most people who overspend in order to belong can do arithmetic perfectly well in every other part of their lives. What they can't easily do is see that the audience they're performing for is smaller, more distracted, and less impressed than the debt would suggest. The tragedy isn't a maths error. It's that the performance outlives the applause, and the invoice arrives anyway.

You introduce the idea that irrationality is often collective rather than individual. Could you share a vivid example that immediately comes to mind when you think about how group dynamics can override personal judgment?

The memestock saga, people maybe remember it being associated with GameStop, in early 2021. A dying shopping-mall retailer becomes the most heavily shorted stock in America, and so a few thousand small traders coordinating on a Reddit forum engineered a squeeze that sent the price vertical. At least one hedge fund loses more than half its money in a month. Then the brokerage app switches off the buy button, which is politics and choice architecture, not free market exchange. Congress holds hearings. The financial press delivers its verdict as an irtational mania.

But it was more than a blind mania. These people coordinated in the open, under their own names and avatars. They built a moral narrative — “David against Goliath,” revenge for the 2000s, when the big short-sellers got bailed out and their parents got foreclosed on. They invented a vocabulary and signs of solidarity: diamond hands, apes together strong, hold on for dear life (HODL). A great many of them said, in writing, that they knew they would probably lose money! That wasn’t the point, they held anyway. Holding to zero was legible inside that group as dues paid, loyalty made costly, and therefore made real.

Judge those traders by the rationality economics recognizes — instrumental, self-interested calculation — and they are fools. Max Weber gave us other types of “rationality,” and one of them, value-rationality, describes people acting on a commitment they consider binding regardless of the financial cost. Judge the “apes” as value-rational actors financing a moral position and the behavior becomes coherent, even disciplined. The crowd offered a different thing to be reasonable about — belonging — and belonging, priced in real dollars, is exactly what the economists’ models file under “error.” So the interesting question was never really whether the crowd was rational. It was which rationality that corner of the market was running on, and who got paid, and who got called stupid, when the rest of us misclassified it.

You describe the need for social belonging as one of the dominant mechanisms shaping our decision‑making and economic behaviour. Yet we seek belonging in societies woven through social conflict, inequality, misinformation, crime, and increasingly unhealthy ways of living. Is there a real chance for an individual to break free from destructive economic behavior if they feel they are already failing in so many other areas of life?

Breaking free by one’s willpower alone — the "just be more disciplined" prescription — is largely a comfortable person's fantasy. You calculate toward a future when the present is stable enough to stand on. A life plan turns out to be a luxury good. Sixty years later we run statistical models that show "present bias" in poorer populations and locate it, oof course, in the skull. I argue that it was never entirely in the skull. To overcome the pull of the present, a person needs some minimum control over the present, which is often out of their own hands, regardless of their discipline or motivation.

The behaviors that get labeled destructive or irrational are, for someone in precarity, very often adaptive — defensive strategies for coping with instability. Naming them as personal defects adds shame to hardship and collects no useful data. The word "irrational," used this way, does moral work dressed up as analysis, because it assigns fault and closes the case. Lifting that mislabeling doesn't pay anyone's rent, but it changes the terms of the struggle from "what is wrong with me" to "what is my situation forcing on me," and those are not the same fight.

Someone drowning in every other area rarely climbs out through heroic individual rationality. They climb out when the people around them, or an institution above them, hand them something to plan toward. The framing that the individual must fix themselves in isolation is not the solution to this problem. It is a large part of the problem.

What should we say about social groups with limited financial means – who, in many countries including ours, form the majority? How can someone with constrained resources change their economic behavior and avoid simply following the patterns of their social group? And how can they overcome the fear that “I’m not wealthy enough to experiment with my choices”?

The dominant remedy for the poor is financial-literacy education, and the best evidence we have finds that these courses explain actually very little in terms of outcomes. We keep prescribing spelling lessons for a broken arm. If your group's economic patterns look "wrong," the first thing to consider is that they are adaptive to constraints you share, and the second is that the standard fix barely works, so the failure is not entirely yours.

Second, spend energy where the leverage actually is, which for people with little means is structural and relational rather than heroic. Your weak ties matters enormously here: your close circle recycles the same information and the same limited menu, while a distant acquaintance in a different world can hand you an opportunity your tight network simply cannot contain. Widening those bridges is a realistic way to stop merely repeating your group's script. And on the specific fear of experimenting, there is one genuinely democratizing development I document — the automated, low-cost investing platforms like roboadvisors that let a small account sit almost exactly where a rational, optimally diversified portfolio would sit. With those fintech applications, you do not need wealth or expertise to reach a near-optimal outcome cheaply; the machine does the correct calculation. The catch is that it does so by asking you to hand over agency, and in some regions where trust in financial institutions was hard-won and easily lost, that trade-off deserves scrutiny.

How does cultural inheritance influence financial decisions in ways people rarely notice? And which examples from different countries stand out to you the most?

The reason it goes unnoticed is that culture is the operating system running in the background, not an app you can see running. You notice everyone else's operating system and mistake your own for plain common sense. My mother would not extend a nearly-paid-off mortgage to eliminate high-interest debt, even after I did the arithmetic on a napkin — because for her the paid-off house was the American Dream made solid, the culmination of a life's work, and no interest-rate differential could touch that. She experienced her refusal as obvious prudence. It was inherited symbolism, invisible to the person carrying it and glaring to the economist across the table.

A few cross-country cases illustrate this. Bourdieu's Kabyle peasants in Algeria didn't distinguish between productive and unproductive work; a vendor who lost money every day still showed up, because idleness was a moral failing and working at a loss beat not working. They lent oxen to one another through an informal system built on honor rather than contract, and openly self-interested calculation was, in Bourdieu's phrase, "sharply reproved." Try to price that behavior with a spreadsheet and you get nonsense; understand the inheritance and it's perfectly coherent. The ultra-Orthodox Haredi men I studied in Israel invert the Western script entirely: masculinity there is staked on religious scholarship and asceticism, so the men in full-time religious study are the most financially risk-averse and least financially literate group I have ever measured — and every one of them holds unquestioned authority at home. Playing the market wouldn't read as virile in that world; it would read as time stolen from study.

Even something as small as tipping norms is an inheritance. Americans hand strangers billions of dollars a year, after the service is rendered, at diners they'll never revisit, and no one at the table is confused — while a visiting American in France or Switzerland or Denmark stands baffled that the gesture isn't expected. And tastes we treat as timeless are historical as well as geographic deposits: lobster was once poor-man's food, fed to prisoners, before it was reclassified as luxury in the late 19^th century. What each culture files under "obviously the thing to do" is precisely the deepest inheritance, and the hardest to see, because it feels like reality. Readers in a post-socialist society may carry their own version of this — dispositions toward cash, toward property, toward institutions — that will look like simple prudence from the inside and like a specific historical formation from anywhere else.

What role do online influencers play in shaping modern economic behavior? And do you believe their impact will eventually fade, once people grow tired of being sold false idols and empty packaging?

The "finfluencers" have become a real conduit for financial information and indeed behavior, especially for the young — so many young people now take their financial cues primarily from social media, and around sixty percent of Americans report having acted on a tip they found online. When my collaborators and I researched the content of finfluencer posts, we found the advice was quietly gendered in ways the audience doesn't always consciously register. Male influencers lean more on numbers, ticker symbols, "secrets revealed," and appeals to fear and greed — the get-rich-quick register. Female influencers lean more on budgeting, debt reduction, empathy, and anti-shame, sharing their own histories. Then we anonymized the posts, stripped the identities, and showed them to viewers: men still rated the masculine-coded content higher, women the feminine-coded content, even though nearly everyone insisted the posts were gender-neutral and that they themselves preferred neutral advice. People act on a preference they can't perceive and would even deny having.

That finding is why I doubt the impact will fade in the way your question hopes. The premise of the question is that people will eventually see through the empty packaging and lose interest. But our data suggest people don't see the packaging at all — they experience gendered, identity-loaded advice as neutral information. You can't grow disillusioned with a manipulation you never noticed.

Individual idols will absolutely churn — a specific grifter gets exposed, a specific guru's fund blows up, a trendy influencer becomes passe — and the audience moves on. But the format is now load-bearing because it satisfies a demand traditional advice failed to meet, which is not really a demand for better information. It's a demand for belonging and for a self that is worth imitating, running at the speed of a feed. That appetite doesn't exhaust itself; it's older than markets. Predicting that influencers will burn out once people tire of false idols is a little like predicting fashion will end because everyone got fooled by last season. The packaging was the product.

What worries me then is not that people will wise up too slowly, but that the incentive structure rewards precisely the fear-and-greed, get-rich-quick content that does the most damage — and there is no real gatekeeper at the moment, only perhaps a "this is not financial advice" disclaimer stapled to what is, unmistakably, financial advice.

There is a phrase widely attributed to Wallis Simpson, the Duchess of Windsor: “You can never be too rich or too thin.” How do we recognize the moment when our pursuit of financial security – for ourselves, our children, and our loved ones – crosses the line into a destructive cycle of competition and endless comparison with what others have?

You can name a point at which you have enough money to be secure and comfortable — it's a number, and you can figure it out, and you can probably even reach it. You cannot name the point at which you have enough status, because status is relative position, a measure of where you stand against others rather than what you possess in yourself. It’s about the “Joneses,” remember. Security is an absolute target. Comparison is a positional one, and positional targets recede as you approach them: reach the level of the people you were measuring yourself against, and the relevant people are now the ones above them. The Duchess understood that a positional appetite has no natural stopping place, which is what makes "too thin" belong in the same breath as "too rich" — both name a pursuit that turns on the pursuer. Ask what a further increment would actually change. When more money still changes how you live — a safer neighborhood, a medical bill covered, a debt cleared, a vacation able to be taken — you are pursuing security and a certain level of comfort, and the pursuit of that is answerable. When more money no longer changes how you live but only changes where you stand relative to other people, you have crossed into the other thing, and the other thing does not satisfy, because its whole logic is comparative.

Our culture makes this especially hard to see because it conflates wealth with worth — treats money as a proxy for intelligence, virtue, skill, success at life as such — so that falling behind in the positional race feels like a verdict on your value as a person rather than a fact about a leaderboard you never had to join. Sometimes the rational move is to accept being average, but a society organized around exceptionalism cannot stomach that. The inability to accept "enough" is not the engine of the destructive cycle. It *is* the destructive cycle. The moment to worry is the moment "enough" stops being a figure you could write down and becomes a moving target you can never occupy, because by construction someone is always occupying it above you.

To make thoughtful and sound decisions, people need reliable information. But where can they find it, when the media are financially dependent, financial institutions and corporations pursue their own interests, and online forums often reflect a cross‑section of society – meaning people caught in various misconceptions?

I'll disappoint you slightly by saying that information is always socially filtered, so there is no view from nowhere to retreat to. Your personal network (or your social media algorithm these days) curates what reaches you and what feels credible before you've consciously evaluated anything. Your question assumes objective, reliable information is out there and merely hard to locate. The harder truth is that “objective” and "reliable" are partly a position you occupy, not a source you find. take a Bulgarian saver hearing officials call a shaky bank perfectly sound. A younger depositor treats it as optimistic information. Anyone who lived through 1996–97, when the banks failed and the lev collapsed, hears the same sentence as a signal to withdraw everything before the doors close. Same words, different histories, different actions, different outcomes. And the features meant to certify the message — that it comes from the central bank, from the institution with the mandate — are what actually mark it as suspect to the people who were told the same thing before the last collapse. Credibility isn't in the information. It depends on where the information comes from and where the listener stands.

Within that constraint, a few things are genuinely actionable. Some come from behavioral finance and psychology: Distrust anything that flatters what you already believe — confirmation bias is real and can also be quite costly — and distrust anything riding this week's headline, which is availability bias wearing the costume of urgency. But there’s also sociology here: Recognize that a forum is not the wisdom of crowds. Crowds are wise only when their members judge independently; a forum destroys independence by design, which is the entire lesson of the meme-stock episode, where dissenting voices were dismissed as manipulation or "fake news" and the echo chamber amplified itself into a bubble. A cross-section of a misinformed society, densely networked, doesn't average out toward truth. It compounds.

For personal investing specifically, the book's most useful answer is almost boringly liberating: you usually don't need better information, because trying to be better-informed is often a pursuit of vanity. Most professional fund managers fail to beat the market in a given year, and the outperformers in any one year mostly don't survive the next decade. The epistemically humble move — passive, diversified, automated index investing — works precisely because it stops requiring an information edge. Notice that the craving for privileged information, for the secret, is exactly the appetite that professional trading desks—and certain finfluencer feeds—rely on. Give it up and much of the reliability problem simply dissolves.

For the larger decisions, where no algorithm helps, the best single predictor of behavior I know is the answer to one question: who did you call first? So the practical work is curating whom you trust and deliberately widening that set beyond just the people who comfort you or confirm your ideas — think about the weak ties, again, that bridge into worlds your inner circle can't see. In a low-trust society, where institutional distrust is well-earned and kinship trust fills the gap, that's harder and more important at once, because the substitute for corrupt institutions tends to be an insular network, and insular networks have their own way of getting things confidently wrong. The realistic goal isn't a trustworthy source. It's a wider and more independent set of sources than the ones that make you feel at home — and, where markets are concerned, the discipline to stop hunting for the secret that the whole system is built to sell you.

Interview by Vladimir Tsankov