Friday, February 20, 2009

Money and the Limits of Happiness

In reading MyTurn2Raise's “Shortstacker Illuminati” thread on 2+2, he lays down some certain strategy points for short-stacking. He also has to field the typical complaints of short-stacker etiquette (some of which I have already addressed) and also the common sense approach as to why he was engaging in it. When someone had piped in the quip that anyone knowledgeable and skillful enough to show a large profit short-stacking should be buying full anyway, his response was even more illuminating than the advice he gave. In a nutshell, he said that playing poker for a living was never really about the money, but rather about not having to get a traditional job out in the “real world.” And besides, he added, relieving himself of the stress of full-stacking is more likely to add years on his life than making a few extra bones in his time on this planet.

Think about this for a minute. A long minute....

So now as a mental exercise, I pose two possibilities before you. Would you rather make

A) $400,000 a year for the rest of your life or
B) $600,000 a year for the rest of your life?

Even those non-materialistic charitable types would certainly choose option B, if nothing more than for the reason that they would have an extra $200,000 a year to do good works with. But wait! There's a catch, of course....

To earn $400,000 a year you would have to work (or play) the normal 40 hour work week. To get the $600,000 you would have to work 59.5 hours a week. The payback ratio here is slightly skewed in favor of option B, but is getting a good ROE (return-on-effort) really worth sacrificing all of that extra time?

Now I know that they say that money isn't happiness, but that doesn't entirely support the facts. The first thing that needs to be addressed is “what is money really good for?” Here is the short list, in the order in which they are satisfied:

1)Fulfilling basic needs
3)Recreation and materialistic wealth

I would say that money that covers your basic needs “buys” the most possible happiness. While the extra money to cover security issues might not buy you more happiness directly, it frees you of certain burdens that will allow you to enjoy happiness that comes from other endeavors more intensely. Recreation is obviously important, but the manner in which it is enjoyed and consumed may or may not be directly tied in with your income. After these first three facets are filled, the value of any extra money you make rapidly begins to decline according to The Law of Diminishing Marginal Utility. Even though the creation of extra wealth may gain you status, that status is relative to the wealth and prestige of those around you and many other factors. After all, making $600,000 a year may make you a big timer in the world of poker but your wife or girlfriend that you have been habitually ignoring is probably not all that impressed.

So back to short-stacking...

I do this for the same reason that MyTurn2Raise does. It prevents stress and gives me a solid income. By relieving myself of normal poker-related stress, I have more energy, sleep less, eat healthier, and generally am more pleasant to be around. These things are no small matter and could not possibly be bought for an extra $10 an hour.


havin_a_laff said...

Nice post. Agree about diminishing returns. Even though I don't make my living from poker - I have made very good money as a consultant but my quality of life /stress levels were not sustainable. So I downsized my income and responsibilities. Now I am mentally healthier but I have the stress of worrying about future financial security...

Re. shortstacking - there's no doubt that my heart rate will not go up as much when I am shoving 25BB - as opposed to 100BB or more - which send bursts of unhealthy adrenaline into the system!

Lorin Yelle said...

This is true. I read in Nicholas Nassim Taleb's book "Fooled by Randomness" that prolonged exposure to negative swings of the type experienced by poker cause not only higher stress but neural deficiency and memory loss. Yet another high price to pay for the potential gain of a few extra bones...

ThePHC said...

I realize that short stacking and hitting and running are allowed by the poker sites. However it seems like it isn't quite ethical (specifically hitting and running). I don't play for a living but I really can't get behind the low stress rationale. For example I could go panhandle (low stress) for $5 per hour or I could take on a job (medium stress) for $8 an hour. Would you tell someone to go out and panhandle rather than get a job? I wouldn't.

Lorin Yelle said...

Interesting idea, but the point you are missing is that there are different levels of short-stacking. The bottom feeders (aka, rakeback pros) are doing nothing other than playing the two cards in front of them, something akin to putting out a pot and letting people drop money into it. A skilled short-stacker is a top notch con looking to grab every spare nickel that is left out on the table by actively exploiting obvious weakness and playing off opponent misconceptions about the true nature of the game.

I consider what I do to be art. I have since revised my previous opinion about short-stack play not being rewarding. I have since peeled back several more layers and metagame factors and found that within the short-stack parameters the rabbit hole goes just as deep as it does with full stack play.

However, there is another thing to consider: basic winning play is said to be tight and aggressive. I simply take that concept to its logical extreme. I am extremely tight and extremely aggressive. It is just a convenient coincidence that the minimum buy in of 20BB just happens to be perfect for it! On the opposite end of the spectrum lies the laggy player who benefits from the deepest stack possible. I am a sprinter, whereas they are distance runners. Where the profit from short-stacking comes from is when the laggy players believe that they can beat the sprinter in a short race. A hand likes 98s needs time to catch up to AA. To the river it wins about 20%, but to the flop it is disastrously behind.

I will discuss these thoughts more later but I am entertaining friends for my 30th birthday party. I do not feel the need to defend my strategy, but I do enjoy the intellectual debate. In the meantime however, I ask that anyone who reads this follow this link:

Gtr789 is a full ring short-stacker who plays about 12 tables of NL400 exclusively and has been doing so for quite some time. I am currently modeling my game after his bag of tricks and will post my results after I have accumulated data on 100,000 hands. I will show my graphs and holdem manager data so the numbers will be precise.

God bless!

Anonymous said...

I've tried short-stacking but I just can't do it! I think I have played 100BB+ deep for too long.

However, I may have to check out the thread you mentioned and have a practice on some of the smaller tables to get my head around it.

I'm guessing that a solid short-stacking strategy would only be good for rakeback types on "dealt" tables rather than "contributed" ones?

Lorin Yelle said...

Well, I am not sure what kind of strategy you were employing but there are many different styles of SSing. SSing is generally misunderstood and those on the outside seem to take the attitude that either you are SSing or you are not. Luckily, we tend to be mislabeled as shove monkeys and lumped all together, but hey, that's great for my bottom line.

Though I have already stated that I would not be giving away my strategy, I will let you know that mastering pre-flop requirements is only half the game. Bet-sizing, blind stealing and defense, and post-flop play is the other half. Starting requirements also vary drastically by position, number of limpers/and or raisers (as well as the amount of the initial raise) and who is to act behind you and/or in the blinds, etc.

I do, however, like your inquiry about the rake back. That shows that you are at least thinking like a hustler which is the first step in raising your results and "passive" poker income. I admit that until you brought up this point I had not really given that much consideration but after looking at the rake back structures I am in agreement with your assessment. I have shown my best results at Cake Poker and Full Tilt which both use the dealt method.

As an aside, I will be posting a JPEG of HM short stack results for February at the end of this month. I will not be doing it as a brag but rather for academic interest as I am sure that it at least will raise a few eyebrows!