How To Use The Concept of ‘Skin In The Game’ To Make Better Choices

Tom Stevenson
Photo by Ali Abdul Rahman on Unsplash

The flight you’ve booked from London to Dubai is about to take off. You’ve flown many times but the sensation of hurtling into the sky in a metal fuselage is still unnerving.

After a few minutes of ascending towards the heavens, the plane stabilizes and goes into cruise mode. The seat belt sign is switched off and you begin to relax.

You have seven hours ahead of you. The thought of how to keep yourself occupied enters your mind. The multimedia system in front of you has the latest films and TV series, a great way to pass the time. That book you’ve been meaning to read sits on your lap.

Then, you have your in-flight meal to look forward to. Even if you’re not the biggest fan of in-flight food, the thought of eating in a few hours is appetizing. For the first six hours, you think of nothing else than the words in front of you and the scene playing out on the TV screen in front of you.

You look up from your book and realize it’s less than an hour until the flight lands. You begin to look forward to checking into your hotel room and exploring a new city.

As soon as that thought leaves your mind, the plane starts to drop. Maybe the captain has decided to make the descent into Dubai already? Usually, the descent is gradual, but this time it feels more violent as if he’s intent on landing the plane as fast as he can.

The captain backs off after a minute or two and normality ensues once again. Then, the process repeats itself. You feel like you’re on a theme park ride rather than a commercial flight. The sensation of falling overwhelms you. Everyone around you has the same concerned look on their faces.

The pilot reassures everyone over the intercom that everything is fine, but it sure doesn’t feel like it. You can’t remember a descent like this before. Twenty minutes later, Dubai is in sight and the Earth below that seemed so far away just a while ago, is now coming into view at an alarming rate.

You brace yourself, gripping the armrest so tightly your fingers turn white. You wonder what’s going through the pilot’s mind. How could he sound so composed when he’s flying so recklessly? Minutes later, the runway comes into view and the plane bounces onto the tarmac with a force you haven’t felt before.

It’s as if the plane has jumped up and slapped back down to earth again. The plane swerves violently to the right, you think for all the world you’re going to crash. This is it. An ignominious death. And then, control is restored, the plane straightens and the brake is applied.

Slowly but surely, the plane comes to a stop and although you’re not religious you say a prayer, thanking the deity you don’t believe in for the simple fact you’re still alive. Fear dissipates and all that remains is disbelief at what you’ve just experienced. What was the pilot thinking?

What Affects Me Affects You

If this scenario sounds outlandish, that’s because it is. Most of us have been on a plane and an experience such as this probably accounts for less than 0.01% of all flights in a year, if that.

We may not think about it, but when we step onto a plane, we are placing our life in the hands of the pilot and his first mate. The actions they take have a direct impact on our lives. But it’s not just our lives they impact, for the pilot and his first mate are putting their lives at risk too.

This is what’s known as skin in the game. The Cambridge Dictionary defines skin in the game as, being directly involved in or affected by something. The phrase often refers to those in finance and was made popular by the investor Warren Buffet. But it applies to wider aspects of life too.

In this case, everyone on board the plane is affected by the actions of the pilot, but he bears more responsibility than anyone. If the flight goes well, everyone, including himself, can depart the plane in the same state they found themselves in.

Should something go wrong, such as coming into land too fast for example, then not only is his life affected but the passengers and crew on board too. This is why the above scenario rarely happens. Pilots have too much skin in the game to act recklessly. Their decisions are tempered in the knowledge they affect multiple people.

Were a pilot to act in the manner described above, he would either crash the plane leading to a large loss of life, including his own. Or, the plane would land, as above, but he would be hauled in before his bosses, who would give him his marching orders for endangering the lives of hundreds of people.

Thus, accidents such as this are rare because the consequences of them are existential for the pilot. Crash and he’s no longer alive, along with his passengers. Survive and he’ll almost certainly lose his job becoming a pariah in the airline industry.

Skin in the game moderates his actions resulting in a better experience for the passengers and the crew, if at the expense of the innate recklessness the pilot may possess.

My Choices, Our Consequences

The choices for the airline pilot are clear. His skin in the game is clear. What’s less clear to most of us is how skin in the game affects us in our everyday lives. Surprisingly, the answer is a lot.

Our actions have consequences, good and bad. If I walk past a discarded plastic bottle on the street, and neglect to pick it up, it’s likely to remain there for the foreseeable future. With time, more and more pieces of plastic will be scattered down the same street until someone, or the local authority, decides to clean it up.

All of us have skin in the game in relation to one another. Our actions determine the quality of the society we live in. If everyone ignores the plastic bottle, then it never gets picked up. But if we recognize that our actions affect one another, then we’d either recycle the bottle in the first place or pick it up as we walk by.

On a societal level, skin in the game is recognizing the part we play in ensuring we live in a fair, tolerant, and functioning society. If we were all to act in our self-interest, as the airline pilot did earlier, society would begin to fray. Selfish interest would take the place of the common good.

When you go about your daily life, you should consider how much skin in the game you have. Do the decisions you make benefit yourself, but at the expense of others? By recognizing the effect your choices have on yourself, and others, you can assess whether you should make them or not.

It’s this notion of interdependence that stops a crime from becoming widespread. One person’s plunder is another person’s loss. Skin in the game means you pay a price if you commit the crime and those you are wronged pay one too.

It’s a moral framework that underpins society and helps us to function with one another. The majority of us wouldn’t want to be put through the experience of the flight described above. By treating others the way we would want to be treated if they were in our shoes, we act in our interest and that of others too.

When we operate with skin in the game in mind, we’re more conscious of the choices we make. Our reputation depends on the quality of our actions. In this regard, we all have skin in the game. No one wants to do business with someone they can’t trust. Nor would you wish to be friends with someone who might stab you in the back.

Like our friend the airline pilot realized a little too late, and what Marcus Aurelius knew two thousand years ago; ‘what’s bad for the hive is bad for the bee.’ By taking this outlook, the choices we make become more ethical and don’t harm others even if they would benefit us.

Skin in the game keeps our hubris in check and places morality at the front and center of our decision-making. When we have the possibility of paying a price for our decisions, we moderate them. The pilot who crashes a plane because he’s a thrillseeker is no good to anyone, the pilot who lands his plane with the grace of a ballerina is.

Recognizing that our choices affect more than just ourselves is the key to making better ones.

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