Was the recession the fault of Texas hold 'em?

By Conor Clarke

I have been reading George Akerlof and Robert Shiller's Animal Spirits, which has a chapter on how "corruption and bad faith" can influence the business cycle. They describe the 1920s as "a period of remarkable financial predation, which led years later to public disgust with such dealings and, after 1929 and some further delay, to landmark changes in U.S. laws." They continue:

The post-1920s cultural change manifested itself in other ways, for instance in leisure activities. In the Depression years of the 1930s, the card game contract bridge, first played in the United States in the late 1920s, blossomed. By 1941, the end of the Great Depression, a survey by the Association of American Playing Card Manufacturers revealed that contract bridge had become the most popular card game in the country, and that 44% of U.S. households played it. Contract Bridge is a game played by partners, who must cooperate [...and] has only rarely been played for money.

Yet in the first decade of the twenty-first century contract bridge is in serious decline, viewed as a game for the elderly, with few younger enthusiasts. In contrast, in recent years poker -- and especially its twenty-first century variation, Texas hold 'em -- has surged forward. These games are played by individuals for themselves alone, emphasize a type of deception variously called bluffing and "keeping a poker face," and are generally played for money.

This is obviously not scientific. It is also a very small part of the chapter. Still, Akerlof and Shiller ask: "if card games played by millions of people shift the role of deception, wouldn't we be naive simply to assume that such shifts do not also occur in the world of commerce?"

On the other hand, James Cayne of Bear Stearns was apparently playing plenty of contract bridge while his company collapsed.

This article available online at:

http://www.theatlantic.com/politics/archive/2009/02/was-the-recession-the-fault-of-texas-hold-em/435/