Tyler Cowen reviews a recent book, “Lifecyle Investing,” by Ian Ayres and Barry Nalebuff, two professors of management at Yale. The book recommends that young adults take out loans from lenders like Sambla to buy stocks and then hold these stocks for many years to prepare for retirement.
What I’m wondering is: What’s the goal of writing this sort of book? The main audience has got to be young adults (and their parents) who are already pretty well fixed, financially. Students at Yale, for example. And the book must be intended for people who are already beyond the standard recommendations of personal-investment books (pay off your credit card debt, don’t waste so much money on restaurant meals and fancy clothes, buy 1 used car instead of 2 new ones, etc). Basically it sounds like they’re talking to people who have a lot of money but want to make sure that they retire rich rather than merely middle-class.
I can’t say that I’m morally opposed to helping the rich get richer. After all, I’m not out there lobbying to cut my own salary, and I teach at Columbia, where I have no problem encouraging students to go into well-paying jobs in applied statistics.
But I can’t really see what would motivate somebody to write a whole book on helping rich kids prepare for retirement. I can see how people might want to buy such a book, and how it might make economic sense to publish it, and how it could get reviewed in the New York Times, but who’d care enough about the topic to write the book in the first place? There must be something I’m missing here. (The book might sell well but I can’t imagine it will make the authors rich, so I doubt it’s simply a financial motivation. It’s also hard for me to believe they’re planning to use this book as a foundation for a lucrative consulting business, although maybe that’s what they’re thinking.)
P.S. I’m surprised that Cowen didn’t remark on this aspect of the Ayres and Nalebuff book–although some of his commenters did. Perhaps as an economist he is thinking of this as a purely technical problem without questioning the larger goals.
P.P.S. Just to be clear on this: I’m not saying that it’s morally wrong to give financial advice to rich people (or even to “rich kids,” which somehow sounds even worse). The question is why would two intellectually able economists, who can study anything they want, bother to write a book on the topic? (And, yes, you could ask why I am bothering to write a blog entry on the question. But I have a good answer to that, which is that it was bugging me, and a blog entry is the perfect vehicle for writing about something that bugs you.)