How to Know When a Risk Is Worth Taking

Is the “safe” choice still serving you, or just keeping you somewhere familiar? In midlife, taking a risk can feel like volunteering for another problem. You have bills, responsibilities, and a future you’ve worked hard to protect. But staying in a job, a place, or a plan you’ve outgrown comes with its own costs. Economist Allison Schrager joins Farnoosh to explore how to take thoughtful chances when you have more to lose. Allison is a Bloomberg Opinion columnist, a senior fellow at the Manhattan Institute, and the author of Worth the Risk: The Seven Myths That Keep Us from Taking the Chances We Need to Take. https://www.amazon.com/dp/0300266111?lv=shuf&channelId=500&plpRedirect=mhFallback Farnoosh shares why her advice for midlife is to “be mobile,” inspired by her immigrant parents’ willingness to move toward opportunity. Together, they examine what that advice means when changing direction involves a paycheck, health insurance, caregiving, or retirement savings. Topics include: Why you haven’t aged out of taking risks, and how experience can become an advantage. How to distinguish a familiar choice from a secure one. What to consider before changing careers or starting a business. The difference between feeling uncomfortable and being unable to afford a risk. How to test an idea before making a major commitment. Why the reward worth pursuing might be more time, flexibility, or freedom. Learn more about Allison and her book at allisonschrager.com https://allisonschrager.com/. How's midlife going? Fill out Farnoosh's survey https://www.jotform.com/build/262556781257063 and help shape the podcast in 2027. Hosted on Acast. See acast.com/privacy https://acast.com/privacy for more information.

• 0:00Speaker 00

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• 0:35Speaker 02

  Everybody, listen up.

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• 1:31Speaker 04

  I find the survey result in a lot of different surveys, and it's rather remarkable, of young people, Gen Z and young millennials, of what they most want out of a job right now. And it's all stability, security. When those are the years, if you look at wage growth over time, your 20s and 30s is concave. It's very, very, very, very steep. As you're learning skills, you're learning things, particularly if you're in college, you're new to the labor market. You have these very steep wage gains through your 30s, and it starts to sort of level off in your 40s and 50s. So these are the years you really need to be changing jobs. These are the years in which you need to be learning new skills and having these big job gains. But if you go for stability, it's remarkable. It's like twice as many young people say, "I want stability in a job," rather than "learning things."

• 2:14Speaker 04

  Or even, "I want to be at a fast-growing company." Like, if you're young, that will put you on a path to be a very high earner for the rest of your life if you're in a fast-growing company when you're young.

• 2:23Speaker 05

  Yeah.

• 2:24Speaker 04

  This is how people get rich.

• 2:26Speaker 05

  Welcome to So Money, everyone. I'm Farnoosh Torabi. A reporter the other day asked me about this new chapter of So Money that I'm building, and the one focusing on midlife. And what's a piece of advice I'd give someone at this stage that might be a little different? And my answer was, be mobile. In other words, be willing to change jobs, change your approach. Reconsider even where you live, how you're living. Maybe you're not into what you're working towards anymore, and that's okay. You can change that. And if your plan, which you crafted in 2007, isn't planning anymore, that's not a you problem. That's a plan problem, and you can revisit it. And I know that's very easy to say, because a lot of days in my life, I'm just trying to keep the ship from sinking, right?

• 3:11Speaker 05

  Like, this idea of changing my destination, I'm just like, can we first figure out the price of a new roof? Okay, because we need one of those. We have responsibilities. We have financial commitments. People are counting on us. So taking a chance can feel like we're just volunteering for another problem. But I also think about my parents. They immigrated from Iran, and this was many, many years ago when they were super young. But for years afterward, they didn't stay stable. They didn't stay put. We kept moving from town to town, from state to state. And I think, looking back, their willingness to move toward an opportunity without knowing exactly how it would work out was a key to their success. And they did this well into their 40s.

• 3:55Speaker 05

  So today, we're talking about risk and why it is worth it. And interestingly, why it's becoming something that few people are taking in this country. My guest today is economist Allison Schreger. She studies retirement and financial risk, writes for Bloomberg Opinion, and is a senior fellow at the Manhattan Institute. Her new book is called Worth the Risk: The Seven Myths That Keep Us From Taking The Chances We Need to Take. And one of those myths, that you're too old to take them. Well, Alison has explored how the experiences that we've accumulated can actually make us better equipped to take certain chances. And, really important, how to put protections in place so every change doesn't feel like we're betting our entire future. We'll talk about what brought her to this book,

• 4:40Speaker 05

  what surprised her about risk and age, and how to distinguish a thoughtful chance from a gamble that you can't afford. We'll get into changing careers, starting something of your own, and what playing it safe really means when the world around you keeps changing. Let's get into it. Alison Schreger, welcome to So Money.

• 4:58Speaker 04

  Thanks so much for having me.

• 4:59Speaker 05

  Worth the Risk. This is your new book, The Seven Myths That Keep Us From Taking The Chances We Need to Take. Risk is something that we often talk about on the show. Not a whole episode on it, though. So I'm really looking forward to learning from you and understanding all of the ways that we can have a better relationship with risk. I thought it was interesting that you opened your book by saying that you are not a risk taker. So is that right?

• 5:29Speaker 04

  I am and I'm not.

• 5:30Speaker 05

  Yeah.

• 5:30Speaker 04

  I think one of the myths, although it's not an explicit one, I dispel that, is that we tend to want to put people in buckets. Like, you're risk averse, you're not.

• 5:39Speaker 05

  Yeah.

• 5:39Speaker 04

  Like, even when you go on any sort of financial planning website, it's always like trying to figure out how risk tolerant you are. And I think I find in my research that everyone has their domain that they're comfortable in. And usually, it's a domain in which they're actually a very good risk taker. They're knowledgeable. They understand risk management. I have one chapter about Nick Willenda. He's this famous tightrope walker. Comes from a long line of tightrope walkers. He's telling me about, he's walking across a tightrope across the Grand Canyon and Niagara Falls. Again, I said, "I'm not a risk taker when it comes to anything physical."

• 6:10Speaker 05

  Right.

• 6:11Speaker 04

  I won't even ski. I think that's insane. And yeah, so I would never do any of these things he's talking about. But he also tells me he's nervous about investing, about taking financial risk.

• 6:22Speaker 05

  I was gonna say, yeah. So the irony, right? I feel like tightrope-ing across two buildings is probably the craziest thing. I will never jump out of an airplane. I'm not, I won't even go into the ocean. Okay, Alison?

• 6:35Speaker 04

  I'm getting that way, yeah. I kind of like, people get swept away all the time.

• 6:40Speaker 05

  But I'm like, sure, sign me up for that hot stock. But you know, let's diversify. And so that's interesting. I was, I also kind of came to this realization yesterday thinking about my own family, my parents, immigrants. Immigrants have to take on such risk, right? Leaving, as much as maybe their homeland is not a sustainable situation, coming to America or going anywhere, it requires a level of braveness and an appetite for risk. And yet, my dad, who did that, was not somebody who felt comfortable investing in the stock market, because it wasn't something that he grew up learning about. And so what has your research revealed as far as our relationship with certain types of risk as adults and how it traces back to maybe even the way that we were raised?

• 7:23Speaker 04

  Well, I mean, how we were raised certainly has a big impact. Nick Willenda, one of the reasons he's terrified of financial risk is he grew up in the circus, because I guess that, I don't know if it's still, it was a thing when he grew up. I don't know if it's still a thing. They had these incredibly financially precarious lives, because circus folk, I guess, don't have a lot of financial stability, which is why they say in the Willenda family, because I guess their circus acts go back centuries, there's life on the wire and there's everything else. And because I think it's like, you're raised as well. Like, probably the risks you saw your parents taking, you know, you understood how to feel comfortable with those risks, because you see them being managed. It's not just a matter of like, let's just take risk. It's like, understanding which risks are worth taking, be able to sort of collect data, have the knowledge, and then figuring out how to manage risk.

• 8:07Speaker 04

  Like, when you said you'll invest in a hot stock, but you'll diversify it. You'll adjust your portfolio around it. Like, that's a smart managed risk versus just saying, "Yeah, I'm just gonna go all in on betting markets" or, you know, out-of-the-money put options with no other strategy. So I think definitely with what we're raised in, you don't even think of it as a risk. You just think of it as smart risk-taking. Like, if you were raised by immigrants who, you know, had, you know, a store, that's actually a very risky business.

• 8:38Speaker 05

  Mm-hmm.

• 8:39Speaker 04

  But you might not think of it that way, because to them, it's normal, and it's how you're raised and how you think about things. Like, why the Willendas think, you know, tightrope-walking isn't risky, but stock market investing is.

• 8:50Speaker 05

  You said something interesting about managing the risk, and I think that's so on point. What, you know, and if people would just kind of continue to sit with that risk idea, to think about the kind of like, how can I do this, but still feel comfortable and kind of have a safety net and a fallback? After all, your book is called Worth the Risk. So it's a reframe, or maybe not even a reframe. Like, how would you describe that? That's more just kind of like, you know, thinking it through some more, which we sometimes don't do because the fear just shuts us down.

• 9:22Speaker 04

  Absolutely. Because you can't ever completely manage risk, you know, by definition, you know, there's uncertainty, it could go wrong. But you can certainly make the odds it will go better, if you're investing in the stock market, rather than investing in a single stock and have your whole portfolio right on that. You can invest in an index fund and you have all the stocks. I mean, there's still a risk the stock market is going to crash. There's certainly a risk you're going to lose money, but the odds are you're going to lose a lot less. And then I think that skill, because we've sort of become much more risk averse in a lot of ways, is sort of waning. And a lot of people have asked me, how do you square that you're arguing young people are getting so much more risk averse, yet with this growth in sports betting or prediction markets?

• 10:06Speaker 05

  Right.

• 10:06Speaker 04

  And I think that's, that's part of it, which is because we've sort of, for a variety of reasons, either the way we raise the kids, or the sort of structure of the economy that makes it much more expensive and difficult for them to take the risks they normally would take at that age. I think they, they end up having this outlet instead, because it's available to them, when healthier, more productive risks just aren't.

• 10:26Speaker 05

  Yeah, even for someone a little bit older who has built a life, who's lived through various economic cycles, the pandemic, they may say, you know what, Allison, my caution is well earned. What do you say to that person? Why is risk worth it for someone in that camp still?

• 10:43Speaker 04

  Well, again, it depends on what they're talking about. A lot of people would say, I'm irrational for not skiing, but-

• 10:49Speaker 05

  We're very alike.

• 10:50Speaker 04

  Well, again, because we have our thing, I guess. Or maybe, I would argue, actually, we're sensible. You know, looked at the statistics, I don't see enough upside from skiing. Although maybe, I guess it's a social thing, maybe I'm missing out on that. Maybe I would have been happier, more successful. But, but, but the thing is, like, they can say they've earned their risk aversion, and then that's a choice. We do, I think, there is some variation in how much risk people can live with, for sure. But you have to understand what you're giving up. It's a trade off. It's like, if you want more safety, that's fine, that's your choice. But you have to understand what you're giving up, which is less upside, less growth, you're choosing stagnation. As I write about, and this is becoming a much more popular choice, you know, you could say, I don't want going out for the evening, I

• 11:34Speaker 04

  have to get into a car, car could break down, I could have an accident, or I could just go to a party and feel socially awkward. And none of those risks are risks I want to deal with. So I'm just going to stay in and watch Netflix, and, or watch my favorite movie that I've seen a million times. That feels risk free. But if you do that over and over again, you'll never expand your life. You'll never make new friends. Or if you're single, you'll never meet the love of your life. You're just sort of choosing this risk free option, and you're giving up really sort of having any sort of community or life for that.

• 12:02Speaker 05

  It's so true. I remember a conversation with my husband years ago, when we were both still at the beginnings of our, like, professions, and he was unhappy at his job. And it would became kind of a recurring sentiment. Every time we would like, sit down for a meal, it would come up, like, oh my God, my job's the worst. And I remember saying to him, if you are still unhappy in a year, because you haven't switched your job, it's not the job anymore, it's you. It's you. Because the job has told you everything you need to know about it. And yes, being like, it's not to undermine your discomfort, unhappiness with the job, but like, if in a year, you're still complaining about your job, it's not

• 12:44Speaker 05

  the job's fault. Because you've had the time and you've gotten the messages. What would you say to somebody who is like, feeling stuck, and is, is more leading with emotion in terms of how to assess the next step? We love comfort. What, what, what do you find, what have you found in your research to be a great carrot for people to make actually the move that they, they should make to, to be more prosperous in their careers, or even in their financial lives?

• 13:12Speaker 04

  Well, the research finds that people are changing jobs a lot less, and people dramatically overestimate how rare a stable job is. We're staying in jobs much longer than we were before.

• 13:22Speaker 05

  Interesting.

• 13:22Speaker 04

  Anyway, we tend to think, like, we're living in these times of great uncertainty.

• 13:25Speaker 05

  If we can get the job.

• 13:26Speaker 04

  Yeah. But you're less likely to lose a job, once you have it, too. A lot of that sort of decline in job hopping is also like, it tends to be more voluntary. If people do leave a job, it usually tends, like, involuntary job loss is less likely now. Yet, we also see this been, this big decline in wage variability. So if you look at your wages like an asset, like a stock market, a stock, you know, you assess how risky that stock is by how much it moves around in a given year. And you can do the same thing with wages. And we see wage variability going, trending down over the years for everyone but the top 5% of earners. And, but that's, the flip side of that is wage stagnation. Wages are not growing as fast as they did before. And the reason why is that, you know,

• 14:07Speaker 04

  before, most job, sorry, pay increases come from changing jobs. Like, it's a really healthy, normal thing to change jobs. A, it expands your network, you learn new things, and also it tends to be associated with a wage jump. So people taking fewer job changes has also resulted in more job, wage stagnation. So I find this survey result in a lot of different surveys, and it's rather remarkable, of young people, Gen Z and young millennials, of what they most want out of a job right now. And it's all stability, security. When, those are the years, if you look at wage growth over time, your twenties and thirties is concave, it's like, very, very, very, very steep, as you're learning skills, you're learning things, particularly if you're in college, you're in the labor market, you have these very steep wage gains through your thirties, and it starts to sort of level

• 14:51Speaker 04

  off in your forties and fifties. So these are the years you really need to be changing jobs. These are the years in which you need to be learning new skills and having these big job gains. But if you go for stability, like, it's remarkable. It's like, twice as many young people say, I want stability in a job, rather than learning things. Or even, I want to be at a fast growing company. Like, if you're young, that will put you on a path to be a very high earner for the rest of your life, if you're in a fast growing company when you're young.

• 15:17Speaker 05

  Yeah.

• 15:18Speaker 04

  Like, this is how people get rich.

• 15:19Speaker 05

  Interesting.

• 15:20Speaker 04

  But like, it's not even like, close. It's like, twice as many say, no, I'd rather have stability.

• 15:25Speaker 05

  That is really fascinating. And it goes back to what you said earlier about, you know, our, our relationship with risk currently in the modern times. It's a confluence of many, many factors, you know, one, how you were raised. What is it about you think the Gen Z popul, and I don't know if you're talking more like Gen Z or early millennial, what do you think it is about the, the trends in how we raised them, that let, or maybe the world? And was it COVID, you know, because that was a huge, just seismic, required change in pace in life and everything. And like, I can see where that fear has lingered into this feeling that like, I just want to know what's going to be my life tomorrow, because

• 16:08Speaker 05

  COVID was such a time of uncertainty. But what, what do you think it is about that particular generation?

• 16:13Speaker 04

  Well, there's a lot. I don't want to be one of these young people today, can't take risks like we did. Because I think we took fewer risks than the generation before us, who took fewer risks than the generation before them. This has been building. And each generation becomes more risk averse, and they raise their kids to be even more risk averse. So it's sort of, it's not like, I mean, it's very easy just to like, blame young people. But they were, they were legitimately raised to be not as good a risk takers. They were exposed to less risk as children. A lot of this developmental things that happen in childhood and adolescence, train you how to tolerate uncertainty, how to tolerate ambiguity, and also make a good assessment of what's a good risk and what's a bad risk. And a lot of them were robbed of that. That whole helicopter parenting thing is real.

• 16:56Speaker 04

  Obviously, it's not true for all of them. I think what is also distressing is the policy choices we've made, too, that for, for the young people who actually are open to taking more risk, it's really much harder for them. It's, getting health insurance is hard. If you want to just pick up and move to a big city and make your way into it, rent is crazy.

• 17:13Speaker 05

  Right. The cost of the risk is, would you say, greater now than it's ever been?

• 17:19Speaker 04

  Because I don't think the downsides are as bad as people think. But I do think taking on risk feels a lot more expensive, a lot more uncertain. And anyway, like, if you look statistically, you know, the odds are it will work out for you and you'll be okay. But I, I think it does feel a lot more overwhelming for them, which is, I think, another reason they feel the economy is broken. You know, you hear that over and over again from young people, that they feel like the economy's broken, that they were sold this raw bill of goods. And, you know, to some degree, they were. And, you know, because you could look at the economy as being broken, and you think, that's ridiculous. You know, things certainly could be better in a lot of ways.

• 17:55Speaker 05

  Yeah.

• 17:56Speaker 04

  But in a lot of ways, you know, we've never been richer or more prosperous, and honestly, safer, in a million ways.

• 18:01Speaker 05

  Mm hmm, mm hmm.

• 18:02Speaker 04

  And I think COVID certainly, I think we're still unpacking what COVID meant to that generation, because that was a choice of, let's, let's double down on this one area of safety, which is, no one gets this virus as much as we can control it. And you know, there's a cost to that. And those costs were probably disproportionately borne by those young people, who also probably faced the less risk from it. And what, how, what that's going to mean for them is still unclear. It, it varies a lot by age. I find when you talk to young people who missed out on their first year of college, their senior proms, their graduations, they, they have a different view than someone who maybe was in kindergarten, and maybe missed out on, you know, a lot of in-person learning that was important for them developmentally.

• 18:42Speaker 05

  Yes.

• 18:43Speaker 04

  But I, I think that the, the results of that are probably going to be felt for decades.

• 18:48Speaker 05

  Yeah, I agree with you. Parent who raised two young kids during the time and then continuing to see, you know, what we think might be, we don't know for sure, but we're like, hmm, is that, was that, was that bad parenting or just COVID?

• 19:01Speaker 04

  Well, I was talking to a fourth grade teacher and now she has a class that was in kindergarten during COVID. And she says it's the hardest class she's ever had to manage in terms of behavior, in terms of self-regulation.

• 19:13Speaker 05

  Yeah.

• 19:14Speaker 04

  Because, you know, they didn't have that, that kindergarten, which is largely about socialization and teaching you how to sit quietly and play with people and all those sorts of important things.

• 19:23Speaker 05

  Exactly.

• 19:23Speaker 04

  They just didn't get that.

• 19:24Speaker 05

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  I've got big news. I switched to Verizon and got the new iPhone 18 Pro. Shh. I can keep my old phone and I also get the latest iPhone every year. Shh, anything else? Verizon let me choose Apple Watch Series 12 or iPad on them.

• 22:58Speaker 02

  Everybody, listen up.

• 23:00Speaker 01

  Shh. Switch to Verizon and get the new iPhone 18 Pro now. No trade-in needed. And the latest iPhone every year with Simplicity Plan. Plus, choose Apple Watch Series 12 or iPad on us. Simplicity Plan with Simplicity Pro required. Plan and device payment purchase are separate agreements with separate terms. Service plan for watch or iPad required. Additional terms apply for all offers.

• 23:18Speaker 05

  I want to shift gears to talking a little bit more about investing because this is an area that you know well, I know well, and my audience. For as much as I think, I'd like to think that podcast listeners, listening to a financial podcast, understand the risk rewards of investing. I do still think, I get a lot of questions that are fear-laced around investing and how much risk to take. And I know there's this adage of like, I'll invest when I'm rich. Because it seems like the thing that you do, once you're, all your ducks are in a row. Once your debt's out of the picture, once you have the rainy day reserve, once you have the stable job. And I want, and this is a myth that you cover in your book. Myth number three, you shouldn't take risks until, unless you're rich. So dispel this for us.

• 24:03Speaker 04

  Yeah, it's a rather remarkable thing that we've made it so much harder for people who have less money to take risk in a lot of ways. And they feel they can't because traditionally, throughout history, it was, you know, being poor meant you had to deal with more risk. And we even see this certainly with new immigrants who are not like the Silicon Valley immigrants, but the lower-scale immigrants, tend to often be business owners because they're shut out of the formal labor market. Like, they don't really have a choice. But for a lot of other people in America, we've made it very expensive. The way we structure benefits, both in-job or out-of-job. And so, and then there's this message that you, you take risks and everything's in place because you can't afford to lose. Even the conversation around baby bonds, which are now Trump accounts.

• 24:45Speaker 04

  That was a big shift. I think people didn't really notice because it was originally a democratic idea. Like, it was Cory Booker's baby, his baby bonds. But it was a very different in that the idea was that because a lot of these were low-income people, they should be all in safe assets. So they didn't have to lose money. And often, when you see states putting up with retirement accounts for people who don't have them on the job, because they don't have a job that is well-paid enough to have benefits, that they should be in assets that don't have any chance of loss. But all that does is really doom these people to, you know, never getting wealthy either.

• 25:17Speaker 05

  Right.

• 25:18Speaker 04

  Because, you know, higher-risk assets have a higher, you know, higher expected return. So it's this idea that, oh, you can't afford to, to lose money. And even in retirement account, retirement investing, and I've thought a lot about this, you know, as I've built retirement programs for people. You know, do you want the risky portfolio to vary with income? Like, should we put lower-income people in low-risk assets? Because, I mean, if you only have $10,000 in savings and you have very variable income, which lower-income people tend to do, you lose it. It's a real problem. On the other hand, it also shuts them out of wealth accumulation.

• 25:54Speaker 05

  Right. But if you're just thinking about this money as your future wealth and not, like, I get it. If you have less maybe to work with currently and less to invest, but I feel like, and maybe, maybe I'm wrong here, but I feel like you should take just as much risk, if not more, especially if you're starting young. Even if you're, even if you do have that variable income and more insecurity.

• 26:17Speaker 04

  Well, also, when you're thinking about long-term investing, you really want to think about your portfolio very holistically. Because I think that's another mistake we make. And if you're a lower-income person, you get a very large chunk of your retirement income already from social security.

• 26:28Speaker 05

  Yes.

• 26:28Speaker 04

  It's already guaranteed.

• 26:29Speaker 05

  Right. So you can take a little bit more risk because you have that guaranteed paycheck, right?

• 26:34Speaker 04

  Yeah, so in a lot of ways, your retirement portfolio is already too low-risk if you count social security in it. And you're, I mean, you shouldn't be, I'm not saying don't take like leveraged bets here, but, you know, take, take thoughtful risks, like, you know, an index fund.

• 26:49Speaker 05

  Yes. You mentioned already the, the tightrope walker. There was another profile in your book, Judy Henderson, who built a mannequin business after years in corporate work. So shifting gears a little bit to professional risks. What's the lesson there in her story for someone who wants to like start a business that is very different maybe than what they're currently working on? You know, and maybe even a different income, too? Like, I think that's, that's a lot of people. And I get, I get people writing in about that. Like, I work at Google and I want to start a salon, a hair salon, which, you know, long-term could be more profitable for them, but in the beginning. And also, there's like an aspect of prestige that they were so comfortable in owning with their job title and their corporate title

• 27:33Speaker 05

  that, you know, shifting to self-employment in the beginning can feel like a loss of identity, which can feel risky, too. So what's your, what insights did you glean from Henderson?

• 27:44Speaker 04

  Well, I love this story because, one, she was older when she did this. I think she was in her 40s or 50s, which we tend to think you, you age out of risk-taking or age out of starting a business. But in fact, some of the growing entrepreneurial group classes, people in their 50s and 60s, partially to start hedging, you know, I guess semi-retirement, are people who are going to work less as they get retired. Or, you know, it's a good hedge if you're feeling like your job's insecure. But what I loved about her story is she grew up never thinking she could be an entrepreneur. She grew up in a very conservative economically family, at least economically family. But she ended up living in Silicon Valley and working at tech startups, not as like a tech bro person, I think really as an administrator. But she kept seeing all these young men, younger than her, who seemed to know less than her, starting businesses.

• 28:29Speaker 04

  And maybe they worked, maybe they didn't. And, but they moved on and they started something new and they got money again. And she's like, well, why can't I do that? So I think she saw an ad somewhere for mannequins and she just always said she had a fascination with mannequins. So she bought a bunch and then managed to sell them and then sort of built this big online business and, you know, ended up being financed by Goldman Sachs.

• 28:52Speaker 05

  Wow.

• 28:52Speaker 04

  Yeah, so it's amazing because it's also another story, which I think we, we tend to associate technology as threatening our jobs. But it also enables us to do these things. Like, she was early to eBay and that really grew her business. And she's like, now, you know, with more online shopping, there's less of a market for mannequins. So I have to like remake this business again. So she gave it to her, but I was taking it away and she asked her to reassess it. And I think we're going to see that a lot with AI even. I mean, we assume it's job loss, but I talked to a lot of people who are starting their own businesses now. And AI has really lowered a lot of the fixed costs involved with starting a business.

• 29:30Speaker 05

  Exactly. And I think especially- Especially with people who are in midlife and older, like Gen X, let's say. My argument is that Gen X is the best generation because we had to learn before technology existed, really. You know, I mean, my most used technology at home, growing up, was like our printer, you know, and our, like, very slow computer.

• 29:49Speaker 04

  Yeah.

• 29:50Speaker 05

  And so now, when we have that, I guess, grit and that, I call it MacGyver problem solving ability from the 80s and before, paired with like the speed that AI provides you in terms of research and, you know, editing and all of that, watch out, world, like, Gen X is going to, you know, really show what they can do. You know, towards the end of your book, you talk about, you know, the things that we can do to fix this, in some ways, like, broken relationship with risk.

• 30:28Speaker 05

  Part systemic change and then part like what we can do in our day to day lives. And let's start with the systemic stuff. Like, what do you see as some of the structural issues in America today that make it easier to just be comfortable and stay put?

• 30:42Speaker 04

  Well, again, a lot of it is the way we structured the economy. I mean, we've more and more, you know, as you get richer, safety is like a luxury. You know, you don't.

• 30:51Speaker 05

  It is.

• 30:52Speaker 04

  Yeah. Or, so, I learned retirement finance from Robert Merton, and he would always say, you know, there's three things you can do to get more money in retirement. You can save more, no one wants to do that, you can work longer, most people don't want to do that, or you can take more risk. Like, but if you're well funded for retirement, you don't have to do any of those things. So they're all luxuries in their own way. So I think, you know, safety costs money. You give up upside, you give up training. And as we've become richer as a society, we've just built more safety into it. So, you know, there's a lot of policies we can do. I think we've sort of convinced everyone that they can get both safety and prosperity. And, you know, where I think we're running up against the limits of that.

• 31:33Speaker 04

  So a lot of it is, you know, building more, you know, structuring benefits so they don't penalize people taking risks and them working out. That certainly can help. But it also, as I said, individuals have to become more comfortable with risk taking, even if you weren't really exposed to it before. And I think a lot of that starts small, like, maybe taking small risks, you know, ones you're comfortable with, and seeing how it goes, and adapting a strategy to it.

• 31:58Speaker 05

  Yeah. Hedging, diversifying as well. You know, you talked about data earlier, and sometimes we don't do the work of just kind of like, the example of, you know, getting on a plane may terrify you, but you know, driving is just, is more dangerous than like getting on an airplane. But I think.

• 32:13Speaker 04

  I wonder if that's going to change. So it's not like people felt more comfortable driving because they felt in control, but if we move to autonomous vehicles.

• 32:20Speaker 05

  Right. Watch, well, yes and no, maybe, because like, the idea of my son getting behind a car, I'm just like, I don't know.

• 32:27Speaker 04

  How does he?

• 32:28Speaker 05

  Well, he's only 12, but I'm anticipating. I do think, too, there's, there's, there's something that we often forget to do in this calculation of risk, which is to go back and document your own life experience, right? So I hear often from people, like, I'm worried I'm going to run out of money. I'm like, have you ever run out of money? No. So where is that fear coming from? And again, this could trace back to how they were raised, and maybe a household where there was bankruptcy or scarcity, or a lot of arguments around money and just this, not like this confidence that they could actually endure in their financial lives. And I'm wondering what you, what you could add to that, this idea that when you're, when

• 33:10Speaker 05

  your instinct is to say no to a risk, because you think that you can't handle it, or because you don't have what it takes. What do you, what kind of inventory, self inventory, do you think is worthwhile?

• 33:21Speaker 04

  Well, you do want to be thoughtful. And I think the first thing is, is thinking of, does this risk actually bring me what I want? I think you don't just shake up your life. You're not like, oh, I'm going to move just because I hate.

• 33:32Speaker 05

  I heard.

• 33:32Speaker 04

  It could help.

• 33:33Speaker 05

  Yeah.

• 33:34Speaker 04

  Yeah, I'm unhappy, so I need change. I mean, sometimes that works, but you kind of do, it's like you're saying with your husband, like, the problem is you, after a while. You have to think, what am I looking for in my career? What am I looking for in a community? And then find the city or community or the jobs that offer you all of those things. You know, otherwise, this is, you move, and they say, they say, wherever you go, there you are. So I think you, you do, you, people in me who are comfortable, they are thoughtful in what they're doing, and they have purpose, and it actually fulfills something they're looking for.

• 34:05Speaker 05

  Yeah, because otherwise, you might just be, when does risk, taking risks, turn into just avoidance? Of like, you know, what's in front of you?

• 34:14Speaker 04

  Well, I think that's what we're seeing with a lot of young men turning to sports betting. It's like, they don't have a lot of other outlets, so this gives them some thrill or potential for upside. I mean, to some of it, it's just technology, some of it is just, you know, young men are drawn to not really productive risks, that's how they're wired. But the fact that they're taking so much to it, and even to the extent it's crowding out other more productive forms of investing, or, you know.

• 34:38Speaker 05

  Right.

• 34:39Speaker 04

  Productive risks, like asking a girl out in a bar, is, you know, I think it's like, this is, sort of, we've developed this sort of unhealthy relationship with risk, where it is not well thoughtful, not as well managed.

• 34:51Speaker 05

  What is the biggest fear that people have when it comes to this idea of taking on a risk? Obviously, there's a cost, and we know there's, with certain risks, it's a financial loss, and I get that. But emotionally, what is it? Is it like the fear of rejection? Is it the fear of loneliness, failure? What do you think?

• 35:11Speaker 04

  I think it's all of those. It depends on the, on the risk you take. I mean, obviously, it's also, like, if you bet on the wrong thing, you know, you feel like, oh, I should have done this other thing. So you have this regret, which you don't want to experience. I think, you know, in terms of why people are less likely to ask someone out in person, I think there is, to some degree, a fear of rejection, a fear of coming across as inappropriate or creepy. Social norms are changing in a way that's unpredictable and hard to manage. Also, it's technology. I mean, you can meet someone and get on a date on an app and not feel like you had to go through any rejection. Of course, it's sort of like a false economy there, because, you know, if you meet someone and ask them out in person, you already know you have chemistry with them.

• 35:52Speaker 05

  Right, right.

• 35:53Speaker 04

  And you, this person might also be impressed, you've put yourself out there. As opposed to you meet someone on an app, you, you, you know, they could show up and you could be like, ew, no, never, and you're stuck.

• 36:02Speaker 05

  To lose, lose, lose. So glad to not be on the dating landscape right now.

• 36:06Speaker 04

  Yeah.

• 36:07Speaker 05

  Lastly, Alison, I think it was this idea that you have to be ready.

• 36:12Speaker 04

  Because I think back, and the best risks I ever took was when I wasn't ready, but I was forced to take it. And I think there were periods where I didn't take enough risks, because I felt like, oh, I'm comfortable, but I should wait until the following things happen. And my life just didn't move forward.

• 36:24Speaker 05

  Yeah, yeah. It all works out, though, sometimes, you know? I feel like, you know, during COVID, I like, didn't put myself out there more online like everyone was. And because I was running a family and two kids, and I just moved, and I was just trying to like, one day after the next. And it felt like being on TikTok was just like a risk, not even that it was a risk, but it was like a time suck.

• 36:53Speaker 04

  Yeah.

• 36:53Speaker 05

  And sometimes, you, you choose to not take certain, you choose not to do certain things because it just doesn't fit with your life right now, because of priorities. To trust your instincts, too, whether they're telling you to not take the risk or to take the risk. Sometimes there is, sit with that, you know?

• 37:11Speaker 04

  Yeah. Or maybe there's a way to take the risk in a smaller way, that you feel comfortable with.

• 37:15Speaker 05

  In a smaller way, I like that. Alison Schreger, thank you so much.

• 37:19Speaker 04

  Thanks for having me.

• 37:19Speaker 05

  Yeah, this was a great conversation, and so many applications of this in our lives, money, career, relationships. Well done, thank you.

• 37:29Speaker 04

  Thank you.

• 37:42Speaker 03

  Hey, we're Nick and Jack, hosts of The Best One Yet. Behind every episode, there's research, emails, spreadsheets, and our shared Google Doc, the headline hammer. With Google Workspace with Gemini, Google's AI is built right into the premium versions of tools we already use, like Gmail, Docs, and Sheets. No new tools or extra logins, just personalized AI for the way we work. That means less time on the work, around the work, and more time finding the stories worth talking about. Get AI tools for work. Upgrade to Google Workspace with Gemini at goo.gle/workspacewithGemini. That's goo.gle/workspacewithGemini.

• 38:15Speaker 06

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