What's the Real Value of Money in Poker?

WSOP Bracelet and Money
Money makes the game go.

Money is funny stuff. Everybody wants it. Most of us don't have enough of it (or don't think we do).

And, oddly, when people suddenly manage to get a lot of it they typically do not grasp what they have, do not understand it and don't know what to do with it.

Money confounds economists, who are supposed to know all there is to know about it. It confuses social scientists, who try to analyze how people think and feel about it.

People, it turns out, are annoying critters; they often don't do what the theories say they should.

Money Is the Engine of Poker

Economic theory is based on people making decisions using logic and rationality. They don't. It is based on the idea that a dollar is worth a dollar. It isn't, as strange as that may sound.

Lacey Poses with the Cash

Money also happens to be the engine of poker. It makes the game go.

Poker just can't be played without money ... although a game played for clothing has a certain allure.

So, do social scientists have anything to tell us about this essential element in the game? Or, perhaps, do poker players have any insights into money that might be useful to economists or psychologists?

I'm not sure what the answer is but it's worth a bit of a ramble.

Money is Asymmetric

The first thing to appreciate is that money is ± asymmetric. There is a compelling asymmetry in the subjective worth of money.

A loss of a decent chunk of change, say $500, is a lot more negative than an equivalent win is positive.

This effect shows up even when the money is imaginary. People asked to imagine various gains or losses and judge how this will make them feel report that even the thought of a large loss makes them feel uncomfortable.

Imagining the loss of $10k is very negative; imagining a similar gain is good, but not as good as the loss is bad. In short:

  • A dollar isn't always worth a dollar

The implication is that people are, for the most part, "risk-averse." They tend to avoid risk because of the fear of being made miserable by a loss.

We are all risk-averse to some extent but those who find losses the most distressing avoid risk whenever they can.

I have a good friend who is smart and a very good game player. She is aggressive and ruthless in every game we've ever played. But she won't play poker. Not because she won't win. With time and experience she'd likely become a formidable player.

It's because she is extremely risk-averse. Just the thought of losing even a small amount of money makes her unhappy. So, wisely, she doesn't play.

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Money Is Different in Poker

It's also not hard to find folks at the other end of this spectrum. We all know poker players, sports bettors, high-rolling horse handicappers or, as we've all discovered recently to our collective pain, bankers, mortgage company CEOs and commodities traders who are at the other end of this continuum.

money in poker
Low-stakes players look different.

But we can discern patterns. For example, low-stakes players, for the most part, look different from those who play at higher stakes. Low-stakes games are very popular and filled with players who never move up.

These folks are almost certainly moderately risk-averse. They will have some measure of tolerance for loss; otherwise they wouldn't be playing poker at all. But their aversion to a large loss keeps them from moving up.

Interestingly, the negative emotions here often don't have a lot to do with money. I've known players who have successful businesses but find losing $200 at poker so painful that they won't play above the $2/$4 limit, even though $200 means nothing in the larger frame of their lives and they routinely risk far more in business dealings.

Note the lack of rationality here. Money in business feels different than money in poker.

Moreover, if we limit the discussion to poker their behavior still doesn't make sense. The better players should, according to classic theory, move up. But few do, likely because of the negative emotions that accompany just the contemplation of a large loss.

Note that this asymmetry is one reason why you should work to lower variance. High variance gives you big wins and big losses. The wins don't gain you as much, psychologically speaking, as the losses are costing you.

If you lower variance you diminish the emotional downside without having as much impact on the upside.

Money Isn't Really Worth Anything

Then there are those who live at the far end of the spectrum. Internet star Tom "durrrr" Dwan once issued a million-dollar challenge. The details aren't important (although they involve Dwan actually risking $1.5 million); you can find them here.

Chips BOM IMG 0044
Just a way to keep score.

Here's what interests me. Tom is young, 22 to be exact. One million dollars is a lot of money. The average annual income for a family of four in the United States is around $40k. Tom is putting on the line what the average family makes in 25 years, for a game of poker.

To understand poker played at these levels we need to realize that here money isn't worth anything.

I don't know Tom, but I've known more than a few with this style. What I suspect he is really putting up is the challenge, the desire for action, to take risks, to be considered the best. In short: ego.

As British essayist and poet Al Alvarez noted in his brilliant classic, The Biggest Game in Town, the chips aren't "really" money; they're just the way to keep score.

My last example here is John Myung. John's an old adversary who once hit a one-outer to knock me out of a tournament three spots from the money.

A couple of years ago he took down the Showdown at the Sands for $1 million. He took the cash, bought a house and invested the rest to guarantee an education for his kids.

That's John's notion of what money is worth. I'll be very interested to see where Messrs Myung and Dwan are in 10 or 15 years.

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The Color (and Feel) of Money

Like most of you, I really like money. Oh, not just the stuff in a bank or an investment fund or tied up in a mortgage. The real stuff, the paper.

I love the feel of it with its slightly raised surfaces rich with ink, embossed with faces, slogans, monuments to greatness past and imagined. I love its smell; I love the texture of the stacked edges laid side by side.

I love the sound of counting out stacks of hundreds each slipping off the other with a gentle swish. I’m a guy. I’m a gambler. I’m a poker player and a horse junkie.

Real Men Don't Use Wallets

When I was young, a mere slip of a kid, a pretender in these games, I kept my money in my wallet tucked into the back pocket of my jeans where its bulk made the obligatory ring on the leather surface (hey, you never know….).

Phil Ivey cash
How the real players do it.

Then I learned. Real men don’t use wallets; they fold their bills.

No ostentatious money clips, no bejeweled snap-shut baubles; just an elastic band to hold my stash, wrapped twice about the wad thick with importance and shoved into my left front pocket where I could run my finger tips along its edges as I walked.

My elastic-wrapped talisman. It is always with me. My wife says, as we head into the supermarket, “Do you have money for the groceries?”

“I do,” I smile, for I do. I always do. It is my amulet, my wad, my bullet proof shield and it has, almost always, a couple of thou’ (hey, you never know….).

Why the Folding Stuff?

It is the first thing that gets shifted into the new left hand pocket of my clean jeans for I am naked without it, insecure without it. If I get broke in a big game I go get more for I am fragile and weak and feel less a man without it.

I’ve been this way with money for so long that it has begun to bother me. It felt like a drug. Like I was hooked. On slow, cold evenings I would take out my roll and count it, slowly and lovingly. And I would feel better about life.

Why should this be? The money in my pocket is actually a pittance. It’s nowhere near what’s in my bank, my pension funds, my portfolio, my house, my car.

I don’t get out my bank book and rub it or flip through its pages. I’ve never had any desire to pull out my stock holding summary sheets and rub them against my cheeks.

Why the folding stuff? It’s really weird and forty-plus years of studying the human condition has taught me that when these kinds of anomalies pop up, something’s going on. But what?

Money Is Addictive

Then I ran across an article in the journal Psychological Science and I smiled. It turns out that not only is my fascination with wads of hundred dollar bills fairly common, it has a straightforward, though somewhat surprising basis to it.

poker cash money
Touch it. Go on.

Money, indeed, acts like and has many of the properties of an addictive drug.

Xinyue Zhou at Sun Yat Sen University in China and Kathleen Vohs at the University of Minnesota and her colleagues (if you’re curious, check out Vohs extensive and fascinating research) have discovered some rather amazing facts about money, especially paper money.

We know that rejection and physical pain are unpleasant. Zhou and company found that the simple act of handling money reduces both physical pain and the psychological distress of rejection.

And it isn’t just the act of handling paper with similar shape and feel. The effects are dependent on it being real bills.

Professional poker player Roy Brindley, in his book Life’s a Gamble, goes on lovingly about the “cash in the pocket” life style. I thought it a bit odd at the time but now it makes sense.

Zhou and colleagues also found that having money in your pocket increases confidence and improves mood. Even more remarkable, these effects have symbolic features. Simply being reminded of money spent or money lost increases psychological distress and imaging oneself having money reduces social anxieties.

The Money
Go get more of it.

Poker Players Carry Cash

The message for poker players? Simple. Carry cash. Carry it in rolls that are easily touched and can serve as reminders of its presence.

If you go bust, go get more cash. Fat rolls are best. If you’re short on hundreds, get a bunch of tens or fives.

Fold them over in a wad, wrap an elastic band around them and, when you get the chance, sit down and count them, smell them, let the loose symbolic taste of money penetrate your brain.

It is a drug. It is stimulating the release of endorphins, of dopamine. Your nucleus accumbens is dazzling with activity. And you will feel more confident.

Your game will improve and you will win more money and need a bigger elastic band.

More poker strategy articles from Arthur S. Reber:

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