SYLVIE DOUGLIS, BYLINE: NPR.
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STACEY VANEK SMITH, HOST:
So, Darian Woods...
DARIAN WOODS, HOST:
Stacey Vanek Smith.
VANEK SMITH: Now, from what I understand, last we talked, you had not seen the Netflix sort of international global phenomenon "Squid Game." Is that still true?
WOODS: Yes, I've not participated in the international phenomenon.
VANEK SMITH: OK. Well, just to sum up what it's about, it is a Korean show on Netflix. And basically, the premise of the show is that there are a lot of...
WOODS: Actually, hold on. Are you about to say some spoilers?
VANEK SMITH: No, no, no, no. Good question but no spoilers.
VANEK SMITH: Premise of the show, essentially, is that there is a super rich, evil person who gathers together hundreds of people who are in some kind of desperate situation involving money. Like, a lot of them are in a bunch of debt. And the super rich, evil person offers them a deal. You will compete against the other players in these games, these, like, kids games, like tug of war and marbles and things like that. And you may have seen the images. Like, in the very beginning, they play this game of red light, green light with this giant sort of terrifying doll who sings this little song. And if you keep moving after she stops singing, death ensues.
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WOODS: Oh, dear. I'm feeling a little nervous already, just hearing this.
VANEK SMITH: It is very chilling. So then the idea is the games will go on and on and on until there's a winner. And the winner will get a ton of money. Like, it's around $40 million.
VANEK SMITH: And of course, as I am watching this, I am thinking, as I way too often do, this is totally an INDICATOR episode.
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WOODS: You can't turn that part of your brain off.
VANEK SMITH: I can't turn it off. This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.
WOODS: And I'm Darian Woods. Today on the show, "Squid Game."
VANEK SMITH: "Squid Game," yes. We take a look at what it reveals about debt and humans and - Darian, get ready for this - the terrible real-life twist that lies at the heart of the modern economy.
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VANEK SMITH: OK, so Darian, "Squid Game" economics.
VANEK SMITH: Like I said, in the show, you've got hundreds and hundreds of people competing in these really weird children's games, death matches for money. They are all doing this voluntarily. Like, they showed up here knowing what the deal was. And that was my first question about the show. I thought, is this realistic? I mean, would hundreds of people really show up and, like, really risk death and have to kill each other and things like that for money? And so I called up John Beshears. He's an economist at Harvard Business School who specializes in financial choices and decision-making. By the way, Darian, he has also not watched "Squid Game."
JOHN BESHEARS: I have a 5-year-old and a 2-year-old. We watch, like, "Moana" and "Frozen" instead, so I have no immediate plans to see it.
WOODS: We asked John about this idea - if it's really realistic that hundreds of people would make a choice like this because of debt. But John says large amounts of debt can really mess with people and affect the way they make decisions.
BESHEARS: Being heavily indebted does change your cognitive capacity, and not in sort of, like, you know, your IQ or anything like that. What I mean is there's just something weighing on your mind. The fears that come with not being able to repay, that feeling of constantly carrying around a burden - that is taxing on people's brains in a pretty literal way.
VANEK SMITH: So John points to a study that was released last month from researchers at MIT, the University of Chicago, UC Berkeley and the Paris School of Economics, and it looked at hundreds of low-income workers in India. The workers were employed by a factory that made disposable plates, and most of the workers were living in a pretty hand-to-mouth situation, so they didn't even have enough to cover just day-to-day expenses between paychecks. And often, they'd have to take out loans to just get them through the two-week periods between paychecks for just little everyday things.
WOODS: And as part of the experiment, researchers arranged for a little subset of these factory workers to get paid more frequently. So it was the same amount of money, but they had got two paychecks in two weeks instead of just one. The results were striking. The group that got the money sooner was able to cover a lot of expenses more quickly and started to get ahead paying off their loans.
VANEK SMITH: And here is one of the really interesting parts of the study. So the people who were paid more frequently were not only less stressed and less anxious overall, but they became better workers. Their productivity increased. They also made fewer mistakes and their work quality was higher.
WOODS: John says that this illustrates how much debt affects our brains and our actions and our abilities to focus and function in the moment.
BESHEARS: Having this part of your brain occupied by this debt looming over your head is like taking away a little bit of your human capacity to reason and make wise decisions and sort of feel good about yourself as you're going about your day. I think there's good reason to say that overindebtedness is dehumanizing, too, to the borrower.
VANEK SMITH: And you can see this in "Squid Game." So the whole time people are, you know, killing each other and playing these horrible games, there is this big, kind of clear plastic disco ball shaped like a piggybank hanging from the ceiling over everybody's head. And it's like this teaser, this promise of escape from all of these troubles and issues and stresses around money. And so John says, you know, that it's really alarming and it's troubling. But he also pointed out that our economy is kind of designed this way.
BESHEARS: This is - I mean, this is an idea that goes back a long time. It's sometimes known as the paradox of thrift.
WOODS: The paradox of thrift.
VANEK SMITH: Yes.
WOODS: And the paradox is this - if individuals are thrifty, if they save more, spend less, squirrel away money for a rainy day, it might be good for that person, but it can be terrible for the economy.
BESHEARS: My spending that I just cut back on is your income because you run a business down the street. And therefore, when I'm cutting back in order to get my personal financial house in order, that's going to force you to cut back, to get your financial house in order yourself. Then potentially your business closes, and so we have this dynamic where the deleveraging of an economy leads to a contraction. That's, you know, the tension that is always playing out.
VANEK SMITH: The deleveraging of an economy leads to contraction. Because our economy is designed to encourage people not to save, but to spend and even to borrow so they can spend more.
WOODS: I mean, it is quite a paradox. I mean, we're taught from a young age to be prudent and save. And so this kind of goes against kind of almost some fundamental values that I've grown up with.
VANEK SMITH: I do have a silver lining, Darian...
WOODS: OK. OK.
VANEK SMITH: ...Because I did not want to leave you with a very bleak picture, which is - and we've talked about this on THE INDICATOR - that actually debt is less of a problem in our economy right now than it was before the pandemic.
WOODS: You know, and I've seen this a bit in the data, too. Like, when we got the stimulus payments and enhanced unemployment benefits, some of that money went down to paying back credit card debt and other loans. And so that's been really good for those people to have that opportunity to pay back debt. Yeah, we have seen savings go up, which is a really interesting feature of our kind of pandemic-era economy.
VANEK SMITH: And it has not had the effect on the U.S. economy that spending is down. In fact, spending on consumer goods is way up. Maybe this weird economic moment has solved the paradox of thrift.
WOODS: (Laughter) Well, before you write that obituary, Stacey, while there's been less debt and also more spending at the same time, some of that debt has just transferred to government, and the government has taken on a lot of debt over the last 18 months. And so...
VANEK SMITH: Oh. So maybe it's just changed form.
WOODS: So the paradox of thrift has kind of just shifted from one party to another.
VANEK SMITH: Maybe the next "Squid Game" is just going to be governments.
WOODS: I'd like to see Boris Johnson and Biden play a little game of hopscotch together to see if they can work it out.
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VANEK SMITH: This episode of THE INDICATOR was produced by our senior producer Viet Le, with help from Isaac Rodrigues. It was fact-checked by Taylor Washington. Kate Concannon edits the show, and THE INDICATOR is a production of NPR.
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