I want to play a (zero-sum) game

Slashing through the BS and putting common personal finance expressions in plain terms.

If you hear two economists squabbling, they’re likely fighting about one of two things: whether Mad Money is an aphrodisiac or if the economy is a “zero-sum game.” But what is a zero-sum game?

The term originated in game theory, so let’s start there. Think of a game that involves one winner and one loser—pickleball, for example. In pickleball, one player’s win = the other player’s defeat. The winner’s gain is equivalent to the loser’s loss, so there’s no net change in benefit. It’s like flipping over an hourglass; the sand flows from one bulb to the other, but the amount of sand never changes.

Need another example? Picture a tasty NYC-style hero evenly divided between four people. If I want more than my fair share, I’d have to snatch some juicy cold cuts from someone else’s portion. My gain = someone else’s loss. This, readers, is a zero-sum game.

This is where things get controversial. Some argue the economy is not a zero-sum game, and a growing market will eventually benefit everyone. Others argue that a free market economy is a zero-sum game because, like in the cold cuts example, players can only advance by impoverishing others.

I’ll leave you to draw your own conclusion. Meanwhile, I’ve got an Italian hero with my name on it. 😋—Lillian