Irrational optimism

The Rational Optimist by Matt Ridley. Page 9.

Had I only known it, experiments in laboratories by the economist Vernon Smith and his colleagues have long confirmed that markets in goods and services for immediate consumption - haircuts and hamburgers - work so well that it is hard to design them so they fail to deliver efficiency and innovation; while markets in assets are so automatically prone to bubbles and crashes that it is hard to design them so they work at all. Speculation, herd exuberance, irrational optimism, rent-seeking and the temptation of fraud drive asset markets to overshoot and plunge - which is why they need careful regulation, something I always supported. (Markets in goods and services need less regulation.)

This touches on the crux of the issue regarding cultivating a culture of enthusiastic reading - the trade-off between the present and the future, the trade-off between the tactical and the strategic.

Learning to read is like goods and services for immediate consumption. All OECD countries achieve nearly uniform levels of technical reading capability, i.e. 99% of the population can read at a fifth grade level. Most countries are pretty effective at teaching the skill of reading.

Cultivating the culture and behaviors that reinforce continued habitual and enthusiastic reading is a different matter entirely. It is much more like markets in assets, "prone to bubbles and crashes", "herd exuberance, irrational optimism", etc. Cultivating the culture of habitual and enthusiastic reading involves (unlike immediate consumption) trading off present goods for probable future value and requiring tactical sacrifices for strategic gains. It is all about trade-offs and risk taking. Do I keep reading to my child or do I force him to do more reading for himself? Do I allow them to read what they want or what I think is good for them? Is it worth my time reading myself so that my child has a role-model? How much money do I spend on providing an environment rich in books when I know that my child won't necessarily enjoy all of those books?

These are all trade-off and risk taking decisions. There are some heuristic rules of thumb that are useful (see Growing a Reading Culture: Just for Parents) but there are no gurantees. Just like asset markets - past performance is no guarantee of future outcomes. Individual judgment and weighing of options rules over simple analytic algorithms.