Monday, June 9, 2008

Why do so many celebrities go broke?

Interesting feature in the "Freakonomics" blog - Why do so many celebrities go broke?

I agree with a couple of the commenters, that I'd like to see some stats on what percentage of stars actually blow through their money. As compared to people who make a quick load of money and *aren't* famous - say, entrepreneurs, lottery winners and unsuspecting heirs.

But I must say that, at least in LA culture, there is a sort of "meta" perception about perception: that you need to *look rich* in order to *be* rich. And this is grounded in a bit of truth - the perception *among the masses* that you are glamorous and successful will make a studio more likely to hire you, even if they know better.

This results in some celebrities *barely* maintaining extravagant means in order to maintain their status in the work market. Therefore: leasing not owning, spending not saving, borrowing not investing. If they're "between movies" - i.e. unemployed - for too long, they can try to pawn some of their sport cars, motorcycles, jewelry and other swag. I have read of discreet, exclusive LA pawn shops for just this purpose.

All of which means that if there's a long-term drop-off in work, there can be a grim financial reckoning. After all, not everyone can come up with a Thighmaster.

The solution? Financial education should be taught in all schools, public and private. Screw Home Ec. You can sew buttons and bake bread when you're relaxing in retirement.

No comments: