Listen to Episode 90 - EU referendum - How to decide if the UK should Leave or Remain in the EU
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EU referendum
This whole podcast is going to be about the EU referendum and helping people decide which way to vote. Now I've sat there and looked at lots of bits and pieces that have been produced, the information that you see printed, reports etc., I've listened to politicians, and at the end of the day, the way I see it is a lot of it is just pure speculation.
I don't know how you view the EU referendum scenario, but to me, I think a lot of people are confused. What I'm going to try and do is help them decide which way to vote. I don't want to skew people's votes.
I've decided to take a completely different angle. I'm not going to quote a single stat to anybody today. I'm not going to quote anything that says what will happen if we stay or leave. What I'm going to do is effectively talk about how to make rational decisions, as that is what we're going to have to do for this EU referendum.
So this is a piece about how you make decisions and to be happy with the decisions you make.
Simple method for making important decisions in life
I think the best piece of advice I ever received was, when you make a decision, you're never going to get 10 out of 10. So when you look at all these things, whether it's me choosing my food at a restaurant or the house I'm going to buy or the job that I'm going to take, you can sit there and look at all the different criteria, all the different parts, the moving parts, all the sort of nuances of these things, and you will never get to a hundred percent. You'll find a house that may be a lovely house but it's in slightly wrong location, or it may be vice versa.
I was told that as long as you get towards 7 out of 10 in life, then that's enough to be able to make a decision. I tend to use that, and I find that it works, you are never going to get to 10 out of 10. So you get a house and everything might not be perfect, but if you can give it 8 or 9 out of 10 then make a decision otherwise you will be continually procrastinating trying to get to 10 out of 10.
Do you know what? Using that very loose idea, it stops me trying to be a perfectionist and chase perfection, but it also helps me be more decisive. Then equally when I've made a decision, it stops me regretting it because I can sit there and rationally say to myself ‘Do you know what, I had 7 or 8 or 9 out of 10 on that, and I made a decision.’ In the same circumstances I would make the exact same decision again. Even if the decision wasn't perhaps, the best decision I've ever made, it doesn't really matter because it's all about, would you make the same decision in the same scenario with the same set of circumstances and information? If the answer is always going to be a yes, then I think that's a good thing.
So if you're going to vote on the referendum, you need to decide if you're going vote with your heart or your head. Now, if you're going to vote with your heart, then that's going to be a very emotional draw, and you're going to probably be one of these people who is focused on things like immigration. The facts and figures you see banded around about immigration, I think you can pretty much take for granted are stabs in the dark at best or complete lies at the worst end of the scale. On the other hand, if you're going to vote with your heart, then there's nothing I can say to change the way you're going to vote or help you decide. You're going to do it anyway.
There are some people, however, who don't really know what it is they want. They don't want to think about it logically, they are just going to go with what their gut feel is on the day.
This referendum is really interesting because it's the first time in recent memory where we have a vote where there are only binary options. Normally when we go for a vote, we vote in a general election, there's a whole host of candidates and parties with basically a broad scale from left to right from which you could choose. Whereas now, there's basically remain or you exit. So it is binary, you can only have one or the other, that's what makes this vote particularly interesting.
If you don't know what your gut feel is, there's another way I make a decision. I've done this before, and it has served me fairly well to this point in life.
The problem is we have emotions and we're never very honest about what they are. So we might sit there and decide that we want to stay, we think of all the reasons why we want to stay in the European Union. But there's a part of you that actually likes the idea of an exit as well, but you're not going to really admit that because maybe the people around you are people who want to remain or vice versa.
The strategy in this situation is to get a coin. I know this sounds terrible to decide the nation's fate on a toss of a coin, but David Cameron did start this game off because he was the one who enabled us to have this referendum. I mean, just for the record, I do not think we should have a referendum, because if you vote for people in power you are saying those people have all the information and can make decisions based on having all that information. I don't have the necessary information to make an appropriate decision on this. So I don't think I should personally be allowed to vote. But there you go.
So, if you're not being true to what your emotions are, if you get a coin and toss it and say, " Heads, we're going to stay in the EU, tails, we're going to leave, and I will go with the result.". If you do that and when it comes down to it you go, "Do you know what? Let's do best of three." you’ve just determined what your gut feel really is. If you don't do the best of three, then you truly don't care, then you could vote for either side or probably shouldn't actually vote at all.
I've always found that often you never actually get to the coin toss, because once you start to think about it and actually put it down, you realise that you do actually have a view either way.
The EU referendum and Game Theory
Now I want to focus on being rational. I'm a mathematician at heart, and people may know that I did a mathematics degree many moons ago. Rational decision-making lends itself to logic, and in mathematics, there's something called game theory. Now, game theory is a fascinating area of mathematics. The idea being that if you have a game with a set of certain outcomes and possibilities then you can start to try and predict what will occur. There's a famous game theory example where there's two prisoners, prisoner A and B. If A and B betray each other, then they both serve two years in prison. But if A betrays prisoner B, and prisoner B remains silent, A will be set free and B will serve three years. If they both remain silent and don't basically stitch each other up, then they will get only one year in prison.
So the idea being if they work together, then they would obviously serve the least amount of time in prison as they'd only serve one year. Now these two prisoners, because they are in different cells, they don't know what each other is going to do. What will tend to happen is they will betray each other, and as a result, they'll both end up with two years in prison. This tends to happen because rationally the game is rigged to try and make people betray each other.
So that's the idea of game theory. So you see these applications in life, which is why it's quite fascinating.
Now if you think about it, if you want to try and apply some of the logics of mathematics to this EU referendum, then you can influence your vote.
So let's just run through it.
Now, if you think about the leave camp the only thing that we all know with 100% certainty, is that we will leave the EU if we vote to leave. That's an absolute certainty. The other thing we're pretty much certain of is that we'll never be allowed back in the EU. So we can pretty much guarantee this is going to be a one-way ticket.
At this point in time the impact of a leave vote is pure speculation so let's just say that if we leave the EU, then we've got a 50% chance that life will be as good or better than it is now. And we've got a 50% chance that if we leave, our lives are going be worse. This is how you start to build models of games in mathematics.
Now, if you look at the other side of the coin, the remain camp, the one thing that you know for certain, is that if you vote to remain, then you know for certain that life will probably remain as it is now, or at least as good as it is now. There's a small chance it could get worse.
So, if you sit there and look at that game, you'll be sitting there thinking, we have 50-50 chance, that things will be better or worse. So we're basically voting for a 50% chance that life will be at least as good as it is now if we leave.
Now, if we remain, we know that it's going to be a hundred percent certain that it's going to be the same. So just based on that alone, you might look at it and think "I'm pretty okay with the way things are, I don't want them to change that much," then you will probably look at that game with those odds and think "Well, do you know what, I probably will vote remain." Whereas if you are unhappy with your lot in life and you're generally thinking, "I want things to improve and I'm willing to take a chance," then you would vote leave probably because you'd have that 50% chance that things will get better for you. Now, you've got to decide those statistics.
Now, I want to chuck something else in there. One of the other things that we know is that with a leave vote, we won't be in the EU ever again. That's pretty much certain. But equally on the other side of the coin, if we remain in the EU, then the vote is not a once-in-a-lifetime vote, as it were, because already we've had people like Farage say they want to have another referendum. We're talking about the second one before we've had the first one. So, if you look at it just purely based on what's likely to happen with this vote and future votes, it’s very likely we will probably get a chance to vote again. If you look at the referendum in Scotland, they already are calling for a second referendum.
So if we're playing this game, and we're saying, "Look, if we decide now not only to remain, and so our life will probably be as it is now, I've also got the chance to have another go at this game in the future." Whereas if you were to vote to leave, then you've only got one shot at this game So if you vote to remain it’s probably unlikely to impact on whether there is a future referendum.
So if you stack the odds up like that and you look at it as a pure game of rational decision-making and almost game theory (of course it can only occur because there's only a binary option with this vote, either to remain or leave) then what will happen? You can actually create this where you start applying your own statistics.
I'm saying 50-50 on whether things are better or worse if we leave, because I just don't know who to believe, the politicians and the statistics. But based on that alone, it would be logical that you would vote to remain because you get a second bite at the cherry probably in the future. Also, if you're happy with your lot in life, then things are going be as good as they are now.
So it really therefore comes down to a decision of, if you're going to be emotional about it then you would vote with your heart. If you're going to be rational, then you need to look at whether you are happy with the way your life is, and if that's impacted obviously by the EU, and then for your willingness to toss a coin on the idea that it could get better or worse. So that's my view on the whole referendum and the game theory behind it.
Now, if we go back to that example I did about the two people in prison, what's quite interesting about that example is it's almost like this referendum. Basically there were two people, if they worked together, they were better off, if they betrayed each other, then the chances are they're going to be worse off, and the worst case scenario is one of them is set free and betrays and the other one keeps silent.
Now, if you think about this in terms of the referendum, what will happen if we vote in this referendum? If we decide to leave, then other countries in the EU will also do the same. If you think of it in the version of the game with the two prisoners, then what will happen is that the impact of subsequent votes in the EU may mean that the EU is unlikely to exist as it does now, which will also have a future impact on the UK. If we start to betray each other, i.e. we have a referendum, then it's perhaps worse for the EU, we might be okay to start with. But the difference is with this as others may start having referendums. It's almost like the game has an extra level where they can call us back into prison, if that makes sense, because the impact of other countries and the EU collapsing is likely to have a future impact on the UK if we leave.
I've also not seen any evidence that being the first to jump would be better. I think I'll have to wrap it up there because I think that kind of sums up my view on how you make rational decisions.
One thing I just wanted to add is, I spoke before about how you have to assess your lot in life and if you're happy with the way things are. You also need to think about if you're happy or what your plans are about the future. There seems to be a lot of people who plan to retire in Spain or something like that. Now, the EU referendum could impact those things. So you do have to think about the future and not just the present.
So the EU referendum, do you vote with your heart or your head?
If you use your head, then it can be very simple if you apply statistics because you can't trust the politicians. Question whether there's any benefit in being the first country to leave and bear in mind how it'll impact your future.
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