Recently, the reader of this outpouring may recall, I contributed to the Canadian innovation discussion, such as it is, with a lengthy letter to the Science, Technology and Innovation Council. That episode, which included some engagement on a LinkedIn forum as well, got me to thinking about how Canadian enterprises invest money that is provided via public largesse. It might be worth more consideration. If you feel like responding, feel free.  Here’s the notion:

Let’s say that your have a small business and that your household is financially solvent and able to do what it needs to get by day-to-day and perhaps even make some modest gains in the standard of living and wealth of the family. That is, you’re not having a hardscrabble life of hand-to-mouth where every penny available is a sustaining penny. Now let’s assume that some benefactor provides to you $1000/year to invest as you wish with only one condition:  whatever you invest in must be directed toward lifting your family toward a higher standard of living, nothing more.

Digression: because of the looseness of the definition, “lifting yourself to a higher standard of living” could mean making an investment that is expected to return some form of asset growth upon which you will eventually have considerably more income. It could also mean using the $1000 to increase your available cash flow by that amount–thereby increasing your standard of living. Only because it muddies the thought experiment, let’s say that everyone appreciates and pursues the first choice.

The question, then, is this:  What do you do with the $1000 per year that is essentially found money?  I’ve so far been able to identify four possible uses, although there may be more.  Ignore tax implications.

1.  You use it to pay down your debt, which will increase your bottom line because your monthly sustaining costs are being reduced.

2. You use it to buy guaranteed A or better debt, which will return a highly-certain but small ongoing addition to your annual income.

3. You use it to invest in stable, “blue chip” equities that are likely to go up within some reasonable range that is higher than the debt instruments but likely to average out not terribly higher on the whole.

4. You put $250 each quarter on a (potentially different every quarter) high-risk venture, all generally consistent with your business expertise and activity. To be clear, these are investments into relatively early innovations that seem like good ideas but are largely unproven sketches off the drawing board.

What do you do?  Why?

In a later post, I’ll reveal what I think should be done–knowing that the choice has a lot to do with the individual psychology of those responding:  stage of life, gender, experience, education, etc., etc., etc.

If anybody else wants to try, please feel free.

This article in the Globe & Mail (Does smoking pot make you skinny?) is too funny.  It quotes and references a study that indicates being a 3x per week dope smoker give you a higher probability of not being obese than your non-smoking friends.  Anecdotally, based on the size and shape of Iggy Pop, Keith Richards, Eric Clapton, John Lennon…, I’d say that the researchers need to step up their efforts to include heroin use.  The same might work for crack, though probably not cocaine use (caviar and Cristal are pretty high calorie munchies).

First session after the opening keynote at DreamForce ’11 is going on right now.  salesforce.com’s CEO, Mark Benioff is moderating a panel on “the digital agenda” with Vivek Kundra, Neelie Kroes, and Angela Ahrendts. Interesting how the two governmental representatives are speaking about how their governmental authorities are leaning toward social and cloud for different reasons.  In the first case, because they have no choice:  it’s happening, like it or not.  In the second, because it’s happened long ago behind the curtains of vendor relationships.  Oh yeah, and they’re broke too.  Very interesting.

So what’s depressing about that?

Nothing.

What’s depressing, to me, is that there is so much going on in this evolution of society, including government and business, and I’m dragging along behind.  Not that I don’t have the awareness or capacity, oh no.  That I have in spades (although I have been questioning if I’m already becoming generationally challenged for these evolutions).  But, how far and how quickly I am able to jump on and pursue these great developments is just a bit inhibited during the working day. That, despite the fact that the place I work is better placed than all but perhaps a small handful of other organizations to capture and even lead this change.

By the way, I was told that DreamForce and Benioff’s keynotes in particular were something to behold.  No kidding.  Moscone Centre opened in full, holding about 15,000 people, was the scene of what was part rock concert (complete with Neil Young in the audience), part old time evangelical revival meeting.  The people here, who were told by Benioff that they were part of what is now the largest technology conference in the world, are practically groupies.  It’s something all right.

So, below, I wrote a post with my thoughts about one specific experimental vignette in Dan Ariely’s recent book, The Upside of Irrationality.  Apart from the blog, I wrote a note to Dr. Ariely, who I am now going to take the liberty of calling Dan.  I asked if he would have a look and respond with a blog comment or some feedback to me directly.  The first response came from an autoresponder saying that Dan might not be able to respond.  This, as I read it, was to be expected.

For those unfamiliar with Dan’s biography, he is Israeli. As is required, he took a term in the Israeli military.  He had a deeply unfortunate accident that involved a phosphorous (I presume) flare, which ended up burning him extensively.  The long and the short of it, as the autoresponse email made clear, it is difficult for Dan to type so he doesn’t respond all the time.

But less than 24-hours later, up popped an email from… Dan Ariely. He voice recorded a response and explained why the official assessment (instead of mine) is the more reasonable one.  It involves a “hyperbolic discount rate,” the gist of which is that the mice [I called them rats] have a really, really short attention span despite being trained.  (Truth be told, I have to listen to the recording a few times and will probably have to do some further research on this to get it more deeply.)  It kind of feels like being a masters student getting a few minutes with the professor between classes.  And, since I’m fascinated by behavioural economics anyway, it just doesn’t get a whole lot better on an otherwise tedious Thursday afternoon.

Thanks Dan.

So I was listening to Dan Ariely’s book The Upside of Irrationality a little while ago… while I was on the treadmill at a hotel at 6:00AM.  I’m practically certain, although I have no way to prove it, that the only other person there ended up convinced I was mad.

The recording got to chapter two, relating a story about how rats were observed showing a preference for work, in an experiment that first conditioned them to press a bar to release food and then receive a bowl of food without having to “work” for it. In both cases, the food was taken away randomly and without warning. The conclusion, when the rats later opted to press the bar for food despite there being a full bowl in the cage, was that they “preferred” to “earn” their meals.  Therein proving the intrinsic value of work.  [It's been a couple weeks, I hope I recall it sufficiently accurately.]

If one takes the scientists’ assessment as related at face value, which is the intent I suppose, it indicates that rats–and by extension humans–are not efficient in this sense. That is, rational efficiency would suggest that a person or rat would do the least for the reward (food) and take from the available bowl rather than working at the lever if given the option.  It’s a rational conclusion, but it’s also the point at which I started making loud noises that sounded a lot like, “What a crock of shit!” — or something like that.

Far be it from me to challenge the conclusion of behavioural scientists or animal trainers . And I have no insight into the brain functioning of lab rats. But, while this is one conclusion for sure, isn’t it also a reasonable conclusion that a rat–or a person–presented with this same situation might be greedily preserving the food that was visible and “easy,” storing or saving it as it were, while pressing the lever (working) to get the food that was not visible and easy? Sort of the idea behind putting a little something away for a rainy day; keeping a bird in hand, creating a nest egg, and so on? It doesn’t require much more than primitive cognition and the type of training given the rats for even a rat to make this kind of connection does it?

So, of the two “conclusions”:  the official and scientific one and my galloping-wheezing on a machine alternative, which do we suppose Ockham would suggest more plausible?