Episode 459: Getting It Right : Planet Money On today's show: Three short stories about trying to figure out what things are really worth. Also, an update on our t-shirt project.

DAVID KESTENBAUM, HOST:

Hello, and welcome to PLANET MONEY. I'm David Kestenbaum.

ROBERT SMITH, HOST:

And I'm Robert Smith. Today on the program, Getting it Right - three stories about people trying to find out exactly what something is worth. We'll ask whether Lady Gaga's thoughts should be counted as part of the U.S. economy. How much is a dirty, torn $20 bill worth halfway around the world? And what's the value of passion for a new college graduate?

(SOUNDBITE OF SONG, "GO WITH IT")

TOKIMONSTA AND MNDR: (Singing) Ay, oh, let it go. See the big picture explode.

KESTENBAUM: But first we wanted to start off with a little update on our T-shirt project. Two weeks ago, you know, we set out to resolve this crucial question - how many of you want T-shirts? How many these T-shirts should we order? In economic terms, what is the demand for T-shirts with squirrels on them holding martini glasses that also tell the story of their own creation, priced at $25, where the proceeds go to help public radio? That particular question - it turns out there is not a lot of historical data on it.

SMITH: No. We decided to do it through the website Kickstarter. And the way this website works is, if you have a project - like making a T-shirt in our case but works for a short film or a new watch or something - you describe the project. You set a goal for contributions and a timeframe, a deadline. And if you meet that goal, you go ahead with your T-shirts or your movie. But if you don't, everyone gets their money back. You have failed. And it can actually be nerve-wracking to watch the numbers on these things.

KESTENBAUM: We set a goal of $50,000, which seemed like a safe number. But honestly, we did not know.

SMITH: And if you looked around the newsroom here at NPR in New York, everyone had this up on their screensavers. Everyone was watching the numbers go up. The demand for squirrel with martini T-shirts was not zero. We beat the goal on the very first day. We got $85,000 in orders that first 24 hours.

KESTENBAUM: It was pretty clear, though, that the orders were falling off after that initial burst. And you know, if we were actually running a T-shirt store or something, we would have some CFO who would be thinking about this. But you know, it's just us. So I sent out an email to everyone on the team saying, give me your predictions. You know, we had this initial burst. Word went out on the podcast and Twitter and Facebook and the blog. A lot of people have ordered, but it is falling off. What do you think the total will be?

So I sent this out at the end of Day 1, where we'd brought in, like, $85,000. We recently got everyone to sit down and recall their predictions. Here they are in order from lowest to highest.

Alex?

ALEX BLUMBERG, BYLINE: I went with $150,000 purely based on superstition. I didn't - I wanted to be low. And I was worried if I guessed too high, I would jinx us.

SMITH: All right. Zoe's up next. What did you guess?

ZOE CHANCE, BYLINE: Two hundred thousand dollars.

SMITH: And why?

CHANCE: I looked at the initial burst, and I figured that was going to be it. And then it was going to taper off sharply. But in fact, that's not what happened.

SMITH: David Kestenbaum?

KESTENBAUM: I went with $250,000. I did a falling exponential curve on an Excel spreadsheet.

SMITH: And got it wrong, and got it way wrong.

(LAUGHTER)

KESTENBAUM: Caitlin?

CAITLIN KENNEY, BYLINE: I went with $270,000. I did a rough calculation based on the number of downloads of our iPhone app, and then I added a little to it because I was feeling ambitious.

SMITH: Jacob Goldstein?

JACOB GOLDSTEIN, BYLINE: I picked $300,000. Basically, it seemed like the middle of what everybody else had picked.

KESTENBAUM: Marianne?

SMITH: Marianne McCune, our newest member.

MARIANNE MCCUNE, BYLINE: I went with $340,000 because sales were really strong that first day. I thought it was the diehard fans, and it would slowly drop off after that.

KESTENBAUM: All right. Chana, you?

CHANA JOFFE-WALT, BYLINE: I picked $373,000.

KESTENBAUM: And when you sent me that, you wrote, this is based on a proprietary model I cannot share with you all.

JOFFE-WALT: That's right. That's all I can say.

(LAUGHTER)

SMITH: And Jess Jiang?

JESS JIANG, BYLINE: I went with $500,000, and it was based on the first day's sales and assuming it would drop off, but not by too much.

SMITH: At the end of the two weeks, the numbers were in. And we were all wrong. We were all too low. The least wrong person, as usual here at PLANET MONEY, was Adam Davidson.

ADAM DAVIDSON, BYLINE: Five hundred and thirty thousand dollars.

SMITH: That was crazy when you said that.

DAVIDSON: It actually was crazy. I almost felt embarrassed when I sent it and was going to send back afterwards, like, $280,000 or something. I felt like I wanted to do something ridiculously high to kind of motivate the team. But that seemed to ridiculously high.

SMITH: So was there any logic behind this number that you picked?

DAVIDSON: (Laughter) I had a job - it was one of the worst jobs I've ever had - running public radio fundraisers for the station in Chicago. It's an awful job just because no one at the station wants to do the fundraisers. No one listening to the station wants the fundraisers. And you have to make it happen. Anyway, I learned it's all about the end of the fundraiser. You know, basically nobody pledges - or the vast majority - and back then, it was even more severe. The vast majority or the hugest spike is in the very last few hours. So I did think there was a chance of that, that people would know about it and just - oh, yeah, I want to do that. In fact, just the day before it ended, someone was like, oh, yeah, I've got to do that.

KESTENBAUM: Robert, I actually got this predictions guru, this guy, Adam Clark, who runs a website called Kicktraq, which tracks Kickstarter projects. And he looked at our numbers, and he said, you know, Adam turned out to be right to a point. There was this burst at the end. He says the thing that was most remarkable and actually unusual about our campaign was that the ordering of T-shirts was pretty steady every day. It was, like, new people discovered it and came to the website and ordered. In the end, you all out there ordered some 20,000 T-shirts. The grand total for the PLANET MONEY Kickstarter project - $590,807. Adam, your crazy projection - looks like you're the closest of any of us.

DAVIDSON: Yeah. It has been amazing for all of us, I think, to see this. I mean, it's just really exciting that the most ridiculous projection was the one that was right.

(SOUNDBITE OF SONG, "GO WITH IT")

TOKIMONSTA AND MNDR: (Singing) Ay, oh, let it go. See the big picture explode.

KESTENBAUM: Thank you. Thank you. Thank you. We are humbled, and we are very, very excited. Now we begin tracking down all the component parts of the T-shirts and reporting on the whole process from Texas and North Carolina to Columbia and Bangladesh. We will bring you all those stories and send out the T-shirts this fall.

(SOUNDBITE OF SONG, "GO WITH IT")

SMITH: OK. Today on the show, we have a special PLANET MONEY three-in-one - three of our stories that have aired on the radio, but never before in one place - not until now.

KESTENBAUM: Exciting.

SMITH: And we want to start with actually what we all got really excited about here at PLANET MONEY, which is - we heard that, officially, the size of the U.S. economy will be getting bigger this summer.

KESTENBAUM: And, like, how do you know that? It turns out it's not because we know our experts are going to grow or we know that there are going to be new jobs or something.

SMITH: No. It is all due to an accounting change. And David, you had the story for Morning Edition.

(SOUNDBITE OF ARCHIVED NPR BROADCAST)

KESTENBAUM: An economy is a tricky thing to measure. You've got millions of people buying hamburgers and coffee and cars and socks. Then there's all the stuff you can't touch, like haircuts. There's also all the things the government does - police officers, firefighters, thousands of numbers that we, as a country, try very hard to add up.

(SOUNDBITE OF MONTAGE)

UNIDENTIFIED REPORTER #1: Just in to CNN in the latest GDP report - the U.S. economy...

UNIDENTIFIED REPORTER #2: Let's start with the GDP data we're looking at.

UNIDENTIFIED REPORTER #3: The economy is picking up speed.

KESTENBAUM: The Gross Domestic Product - the sum total of all goods and services we produce. Well, almost all. It turns out we've been missing a few things, like music. To help explain, I called up Dan Sichel. He's an economist at Wellesley.

DAN SICHEL: I'm actually a Lady Gaga fan.

KESTENBAUM: Lady Gaga?

SICHEL: Yeah. So there you go.

KESTENBAUM: What's a Lady Gaga song you like? I ask just because we're going to have to play one now.

SICHEL: Big fan of "Telephone."

(SOUNDBITE OF SONG, "TELEPHONE")

LADY GAGA: (Singing) Stop calling, stop calling, I don't want to think anymore. I left my head and my heart on the dance floor.

KESTENBAUM: Now, certainly some parts of the Lady Gaga empire get counted as GDP.

SICHEL: If Lady Gaga did a concert and sold concert tickets, the concert tickets would count as GDP.

KESTENBAUM: Songs she sold online, CDs - all that gets counted. But something was missing. We weren't including the value of the time she spent working on new songs, working in the studio. That's an investment, he says, and it should be counted as GDP.

SICHEL: It's really quite analogous to a factory investing in a new machine.

KESTENBAUM: Imagine Lady Gaga sitting in front of her laptop, staring at the sky, thinking up new songs. That's economically valuable. It turns out it's not just music we've been doing wrong - movies, too, for a long time now.

(SOUNDBITE OF JOHN WILLIAMS SONG, "STAR WARS (MAIN TITLE)")

KESTENBAUM: "Star Wars" ticket sales from 1977 - yes, that was in GDP, but not the cost to make the actual movie. The scripts, the Wookie costume, the Death Star - none of that was counted. But that, arguably, was an investment that went on to pay off handsomely. We also haven't been counting money that companies invest in research and development. That's another thing that's being fixed.

Why did we get this wrong for so long? One reason is just that the accounting rules for GDP were written in a much simpler time. It used to be, when a company made something, that thing physically existed. You could drop it on your foot, and it would hurt. But increasingly, our economy produces intangible goods - things that are worth something, but you can't touch, like computer software. Steve Landefeld is the director of the Bureau of Economic Analysis, which produces the official GDP numbers.

STEVE LANDEFELD: I mean, a lot of this is about intangibles and intellectual property becoming a much more important component of GDP, our trade, our competitiveness. And it's essential we get a better handle on it.

KESTENBAUM: If you add up all the changes, Landefeld says he thinks they will boost annual GDP by hundreds of billions of dollars. Significant.

LANDEFELD: Roughly 3%.

KESTENBAUM: That's, like, a big adjustment.

LANDEFELD: Mmm hmm. Yeah.

KESTENBAUM: Our economy just magically grew 3%.

LANDEFELD: Well, I think it was always that big, but we hadn't been measuring all that.

KESTENBAUM: Historical GDP numbers will also be adjusted. So on the charts, it's not going to look like a big jump. Landefeld says for most people, the important thing to pay attention to is the change in GDP. Did it go up or down? The actual number - it's always going to just be this mind-bogglingly big thing. Right now, U.S. GDP is around $15 trillion.

(SOUNDBITE OF SONG, "BREAKDOWN")

ALICE RUSSELL: (Singing) Got to get my mind clear. Got nothing to lose. Got to get my pink stray, jazz away them blues. Still got my fake, but it's getting loud. Now all these voices...

SMITH: Next, Story No. 2 - we're going to go halfway around the world for this one.

KESTENBAUM: And Robert, you're just back from Burma, from Myanmar.

SMITH: Yeah, I was there with our producer, Lam Thuy Vo. And we were fascinated by Myanmar because it's just opening up to the world after decades of economic sanctions, and so there's just a ton of interesting stories there about a country learning how to interact with the world economy again. You know, complicated things, like banking, but also really simple things, like what is a piece of currency worth?

KESTENBAUM: And what currency did they use? They have their own currency?

SMITH: Yeah, it's the Myanmar kyat. But in Myanmar, what people really want is U.S. dollars. They want $100 bills, $20 bills - anything that they can get from us.

KESTENBAUM: And they're very picky about those bills. Here's the story.

(SOUNDBITE OF AIRPORT AMBIENCE)

SMITH: When you arrive in Myanmar at the airport in Yangon, you can see how eager everyone is to do business. There are new signs in English welcoming tourists, and a guy in a booth offers to rent me a local cellphone - only $10 a day. But when I pull out my U.S. currency, he shakes his head, oh, no, no, no, no, no.

I'm sorry. I'm sorry. What do you - what's going on?

KARTIK: Do you have another note from this?

SMITH: Kartik (ph) - that's his name, Kartik - points to the fold mark in the middle of a nice-looking $20 bill. He won't accept bills with creases. So I pull out another.

Wait, what's wrong with this one?

KARTIK: There's a little bit fading.

SMITH: Wait, where's the fading?

KARTIK: In here.

SMITH: The next one has a tiny, tiny tear - rejected. I try one more.

KARTIK: This one is not very acceptable because there is ink.

SMITH: OK. It looks like somebody put a Sharpie pen right on the corner. Just a little - I think it's a little tiny bit of ink. You know in the United States this is perfectly good?

KARTIK: Yes, yes, I'm sure. Even in other country other than Myanmar, this is still acceptable.

SMITH: But not here. When I start to ask people why the bills have to be so perfect, they laugh and they say, yeah, they know it's crazy. But you have to understand the history of Myanmar. You've probably heard about the human rights abuses under the former military regime in Burma. But the old government also used to screw with the money all the time. It would all of a sudden announced that certain denominations of the currency were worthless. It would be like waking up to find that the $100 bill was suddenly outlawed. If you had cash hidden in your mattress...

ZEYA THU: Those money are gone just with the wind.

SMITH: Zeya Thu is an editor with The Voice of Myanmar. He says the old socialist government was worried that some people were getting rich, so it would take the largest denominations out of circulation, no warning. Zeya remembers the time in 1987. It devastated businesses in the middle class.

THU: Yeah, yeah, yeah, my family, too. Because at the time, my father and mother are common servants.

SMITH: They were civil servants getting ready for retirement. And Zeya tells a story about how they had cashed out their life savings to buy a plot of land, put the money in a suitcase. And literally as they were about to buy the property - they were in the room with the seller - the Burmese government came on the radio. All those bills - worthless.

THU: The largest amount of money in our life. And then it was just gone with that announcement.

SMITH: The government created new bills overnight - strange ones in denominations that corresponded to the dictator's lucky number - nine. So all of a sudden, people had to do business with bills worth 45 and 90 kyat, the local currency. And many people vowed to keep their life savings in a currency no dictator could touch - the U.S. dollar.

So that explains why the Myanmar love the dollar. But why does it have to be bills so perfect that they look like they just rolled off the presses? That has to do with the banks. For decades, Myanmar banks were cut off from the rest of the world. They didn't have an easy way to recycle old U.S. currency, and American banks, by law, weren't allowed to deal with them. And so American $100 bills started functioning less like a currency and more like a collector's item. People treat their hundreds there like they're rare baseball cards. No one wants to smudge or bend them. My translator, Swe Win, showed me his.

SWE WIN: For example...

SMITH: You've opened up a book here, and you have crisp $100 in here. They're perfect. They're beautiful. Look at this. It's just - how many - you've got...

WIN: I always bring my money with me.

SMITH: This may seem like an economic quirk. But for a developing country, this does real damage. There are people who want to spend U.S. dollars in Myanmar and people who want to take them. But the whole system can be held up by a random crinkle down the face of Ben Franklin. It functions almost like a tax on the use of U.S. currency. And who gets that tax?

UNIDENTIFIED PERSON #1: Changing money?

SMITH: Do you speak English?

UNIDENTIFIED PERSON #1: Yes, yes. I - you money change?

SMITH: The black market.

This guy popped out of the shadows of a shopping arcade. He says he'll take my cash, just not for full price. He points out every flaw.

UNIDENTIFIED PERSON #1: Here, look - damage. Here, look - Damage.

SMITH: Eventually, after a few of these interactions, I find out what my $20 bill with a tiny little mark on it is worth in Myanmar - $17.75. They'll, of course, smuggle it out to a place where it's worth full price.

(SOUNDBITE OF SONG, "MONEY (THAT'S WHAT I WANT)")

THE FLYING LIZARDS: (Singing) The best things in life are free. But you can give them to the birds and bees. I want money. That's what I want.

SMITH: We're going to end the show today with - I guess it's sort of a commencement speech of sort because everyone's graduating from college now, and they're asking, what am I going to do with myself? What am I going to do with my life? And Chana Joffe-Walt had this great story about one young man who asked himself this question and tried a very novel way to get an answer.

JOFFE-WALT: There is a classic response to the classic question. Follow your passion - a response commencement speakers will be repeating again and again this month, just as they did last year and the year before.

(SOUNDBITE OF ARCHIVED RECORDING)

ELLEN DEGENERES: Follow your passion. Stay true to yourself. Never follow someone else's path...

(SOUNDBITE OF ARCHIVED RECORDING)

MICHAEL BLOOMBERG: You are free to pursue your dreams.

(SOUNDBITE OF ARCHIVED RECORDING)

OPRAH WINFREY: If you really want to fly, just harness your power to your passion. Honor your calling. Everybody has one.

JOFFE-WALT: Ellen DeGeneres, Mayor Michael Bloomberg and Oprah Winfrey. Max Kornbluth (ph), like every other young American, has heard this message again and again. And every time he hears it, a voice in his head screams, what if you don't have a passion? Other kids, his friends, peers at college never seem to have this problem.

MAX KORNBLUTH: I knew kids who had their one thing and had already found it, right?

JOFFE-WALT: Were you one of those kids?

KORNBLUTH: I was not one of those kids. I did not have my - I still don't have my one thing.

JOFFE-WALT: Max is a smart guy, interested in lots of different things. He's well-educated. So how to decide what career to pursue? Without passion to organize this choice, Max felt like he needed some other metrics. And he turned to economics, specifically one economist who writes a blog Max likes - Tyler Cowen of George Mason University.

KORNBLUTH: I wrote him, basically, a question that said, hey, Tyler. Here's the situation I'm in. I don't have a passion. Should I be trying to find a passion? Or if not, what should I be trying to optimize? Need I try to develop a passion before selecting a life path or career? And if so, how do I do that? All the best, Max.

TYLER COWEN: And I thought this is really, truly, literally a central question of our time.

JOFFE-WALT: Tyler Cowen found this question exciting because he says it's a very new conundrum. The fact that Max and so many other young college graduates can even entertain the question, what is my passion? - could choose their careers at all - that's the result of years of industrialization and a country becoming more and more productive. So now that we live in that reality, what's the best, most rational way to make this very common choice? Economics seems like it could help. It's all about costs and benefits, modeling complicated decisions. But Tyler sat down to think about it.

COWEN: And I found it was very hard to give him a good answer. It was a truly difficult, tough question to make any progress on. And months passed. And I felt guilty.

JOFFE-WALT: Because he had no answer. Tyler invited Max to lunch to meet him in person. He thought that might help.

COWEN: Hello. You must be Max.

KORNBLUTH: Hey.

COWEN: Hi.

KORNBLUTH: I'm Max.

JOFFE-WALT: Tyler brought two other economists with him, Bryan Caplan and Garett Jones, as sort of backup. So there was Max Kornbluth, enjoying crispy duck and Thai eggplant while a panel of economists attacked his question, what do I do with my life? And they all seemed sure they could come up with a rational, smart approach to the question if they could just get the right data set out of Max.

COWEN: How much are you willing to suffer in the short run to get a better future?

UNIDENTIFIED PERSON #2: Have you ever considered working and living in Asia? Say, Singapore, Tokyo? Yes or no.

UNIDENTIFIED PERSON #3: How important is it to be able to spend X number of hours a week with your kid, and what is that X?

UNIDENTIFIED PERSON #2: How well do you understand your own defects?

UNIDENTIFIED PERSON #3: What does 50-year-old Max want?

COWEN: Can your community be a cyber community, or do you need to have the face-to-face community?

JOFFE-WALT: Without a passion, economists needed some way to measure Max's preferences. If what Max wanted was to maximize his earning potential, they told him, he should go into corporate finance. If he wanted to maximize the benefit to the world, maybe he should do the same thing, make a lot of money and then give it all away. In the end, the three economists did not advise Max to pursue some particular career path. They didn't even give him very specific advice. But they did all agree that Max's lack of passion could actually work to his advantage. Pursuing a passion, especially if it's a popular passion, often doesn't pay well. Max, at the very least, they told him, will not have that problem.

(SOUNDBITE OF SONG, "GO WITH IT")

MNDR: Follow my lead 'cause I've been here before. We're close as family, and I won't steer you wrong.

KESTENBAUM: That's our show. Thank you. Thank you so much to all of you who ordered shirts, even those of you who ordered at the very last minute.

(SOUNDBITE OF PHONE RINGING)

TYLER MARTIN: Hello.

KESTENBAUM: Is this Tyler?

MARTIN: It is. Hi.

KESTENBAUM: Tyler Martin (ph)?

MARTIN: Yes, it is.

KESTENBAUM: It's David Kestenbaum and Robert Smith with PLANET MONEY.

MARTIN: Hi, David. Hey, Robert. How are you?

KESTENBAUM: So we were out at lunch yesterday. And Zoe here said, I wonder who the very last person was to order a PLANET MONEY T-shirt? So we looked. And it looks like it was you.

MARTIN: (Laughter) Funny - yeah. I was listening to your podcast when I was biking. I was actually biking from Minneapolis to St. Paul to go to the signing ceremony for the gay marriage bill. And I don't know. I must have heard at, like, 3:45 central. And I looked at my phone. And you guys said that you had till 4:55 Eastern or something like that. So I quickly pulled off and...

(SOUNDBITE OF MUSIC)

SMITH: So you were on the street at this point?

MARTIN: Yeah, I was.

KESTENBAUM: You ordered it from your phone on the side of the road?

MARTIN: I did, yeah. You know, I think it was one of those things, like, I had heard it on the podcast. A few previous episodes, you had advertised it. And it was in the back of my head. And I didn't have that last-minute deadline. I procrastinate with everything.

SMITH: So the deadline worked for you. This is exactly why deadlines exist.

MARTIN: It did. It was a animal spirit motivator, I guess.

KESTENBAUM: Well, thank you very much for ordering.

MARTIN: My pleasure. Thanks for the call.

KESTENBAUM: As always, we'd love to hear what you think. Send us e-mail - planetmoney@npr.org.

SMITH: Or you can check out our blog, where we have links to all of the previous stories on our T-shirt to get you sort of excited about what we're going to bring you in the fall. That's npr.org/money.

KESTENBAUM: I'm David Kestenbaum.

SMITH: And I'm Robert Smith.

KESTENBAUM: Thanks for listening.

(SOUNDBITE OF SONG, "GO WITH IT")

MNDR: (Singing) Ay, oh, let it go. See the big, big show explode like a lightbulb. Let it unfold. Just go, go with it. Just go with it.

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