Big Hat, No Cattle


These people cannot be millionaires!  They don’t look like millionaires, they don’t dress like millionaires, they don’t eat like millionaires, they don’t act like millionaires – they don’t even have millionaire names.

Where are the millionaires who look like millionaires?

The Millionaire Next Door

So starts the book The Millionaire Next Door, the classic study of how most rich people got rich.  The quote is from a salaried, middle manager in a large bank, talking about people that were financially independent.

His view of millionaires is shared by most people who are not wealthy. He thinks that millionaires drive expensive cars, wear expensive clothes, watches and other status symbols. Wrong!

The reason he is Wrong is perhaps best expressed by those wise and wealthy Texans who have a phrase for consumer suckers and others showing off in the Prison Camp:

Big Hat, No Cattle

There is a world of difference between looking rich and actually being rich. Many people buy stuff they can’t really afford in an attempt to persuade you that they are more successful than they really are, often using debt to do this. I’ve never been a big fan of showing off in this way but I’ve noticed that it’s a widely used tactic.

One hazard of writing a blog about financial independence is that people often don’t believe you at first. But there comes a point where people realise its true. For example, I sometimes give financial coaching at my house. There are several advantages to this. One is that its a quiet environment where clients are away from work stress and distractions.  But another advantage is that seeing is believing. So by the time they’ve seen the house, my bike and maybe met my wife or my children, clients are often thinking something like:

Blimey, so all that stuff on the blog was actually true!

noise and signal
Signal vs noise

In life generally, some scepticism is healthy. There is lots of bullshit out there and we have to learn to separate the wheat from the chaff, the signal from the noise.

Imagine you are a 19 year old girl going on a first date with Wayne (20) who you met down at the local Wetherspoons pub.

Wayne arrives to pick you up in a shiny red Ferrari. Now there are 2 possibilities.  Its possible that Wayne really is the wealthy businessman / tech entrepreneur that he said he was.  The alternative is that he’s rented the car for the weekend.   There really are companies that make money from renting out trophy cars for short periods to the financially challenged.

Let’s look closer at what is going on here.  Wayne is using a tactic called “signalling” by biologists and economists.  He is signalling that he owns a Ferrari, has high status and is capable of delivering resources. This is also known as “fronting and maxxing” by rappers.

All humans, all mammals and most creatures on the planet use this tactic to some extent.  They use signals to convey information about themselves. These signals can be deployed in different ways but here we’re talking about signals of resources and status. In the natural world, signals provide information as to the fitness of the animal displaying the signal.


The most famous example of this is the peacock’s tail. The peacock’s tail is a display provided by (male) peacocks to the surrounding (female) peahens.

For many years, this was a puzzle to biologists. Why would peahens favour a tail that was visible to predators and costly to maintain in terms of biological resources? (food, calories, nutrients, blood supply, muscle requirements etc etc).  This makes no sense from a “survival of the fittest” perspective.

There are 2 forms of selection going on in evolution.  Survival of the fittest is the one that people usually know about.  We’ve seen the Planet Earth type nature documentaries and we know that, when there are lions around, its the slow and the lame wilderbeest that don’t enjoy the end of the movie. That’s survival of the fittest.

But the other way that evolution selects genes is by sexual selection.  Sexual selection operates by the choices that animals make about who they mate with.  You could think of it as survival of the sexiest.

Back to peacocks.  The peahens prefer large beautiful tails when choosing a mate.  Why? Peacock’s tails are not efficient in everyday life.  But they are an important signal for mating precisely because they are inefficient and costly for the peacocks.  A large tail takes more effort, more food, more strength to maintain.  It’s highly visible so tends to attracts predators as well as the opposite sex.  So to carry this burden, the peacock must be particularly fit and healthy.

In humans, the equivalent of the peacock’s tail is the trophy house (complete with high maintenance garden, swimming pool etc), the ridiculously expensive to maintain supercar and so on.  Its not an accident that these trophy houses and cars are wasteful; that’s kind of the point from a signalling perspective.

In nature, each time a species carves out an ecological niche using a signalling strategy, this is gives rise to the potential for a strategy of mimicry, to “free ride” on the back of the original honest signal. In other words, for every creature that is genuinely strong or poisonous or otherwise well adapted to their environment, there is another that is just mimicking the signs of strength, toxins or wealth.


What does that look like? Well, imagine the poisonous snake that advertises to foxes and eagles that they are poisonous via bright red colours or stripes: nature’s version of a warning signal.  For each poisonous snake, there is usually another species that replicates these markings yet is not actually poisonous.

If you are thinking that this is just stuff you see on nature documentaries and doesn’t apply to humans, then you’re mistaken.  We humans are part of nature and mimicry is a widely used strategy.

People fake the signals of wealth by buying knock off designer handbags or sunglasses from Hong Kong. Or they buy real cars, houses, boats etc that they can’t really afford, using credit card debt or mortgages.

Words are cheap. So the best signals are honest and hard to fake. A peacock can not fake a large, beautiful tail.  The peacock can not bullshit the peahens with what economists call “cheap talk”.   The beautiful tail provides evidence of an underlying trait that is valued by the females.  The beauty lies not just in the aesthetics but also in the reliability of the signal.

Back to people. If you live in Texas and want to show off, what do you do? Well, its easy to buy a fancy Stetson, cowboy boots and a big pickup truck on debt finance.  That’s Big Hat, No Cattle.

But it’s much harder to have a million dollars in Vanguard ETFs or a house with no mortgage.  Those are real assets but invisible. You can see the house but you can’t see the mortgage (or lack of mortgage) or the fund values.

To understand consumer society, understand that males are competing via their ability to buy pointless shit for the females (as well as for themselves). And the females are competing via their ability to buy stuff like handbags, shoes, make-up etc.  

It seems pretty obvious to me that if your goal is to attract or impress other people, there are more effective ways to do that without wasting lots of money on conspicuous consumption. We humans are often tempted to bullshit ourselves and others. Its tempting, easy to do and there may be short term benefits.  But, in the long run, its a losing strategy.

The Escape Artist has written before about the benefits of honesty.  When you are 100% honest with yourself, you can accept that lasting happiness is not built on fake signalling or showing off.

So the next time one of your co-workers or neighbours starts boasting to you about their new car, gadget or other future landfill bought with a mortgage or credit card debt, you can just smile to yourself and think:

Big Hat, No Cattle

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  1. Coincidentally, I’m partway through ‘The Millionaire Next Door’ right now.

    It’s amazing to think that so many of us humans with all our superior intelligence and technology will still succumb to basic animal behaviour and can be likened to snakes and peacocks!

  2. I remember reading that book and it pointing out that Scottish people carried cultural traits that made them successful Millionaires Next Door. It’s an interesting side to money, how our culture shapes us. As a Scot, I always found people in south east England much more obsessed with status and money than those from the North. Wealth was much more evident too, primarily in terms of cars, London even more so. Yes, that’s because there’s more money around in the South, but I always suspected there was more to it than that.

    1. Yes, I agree…I was also struck by the analysis of which immigrant groups in the US were most likely to become millionaires…the Scots were right up there….something about Scottish frugality (saving) combined with American “can do” culture (earning) perhaps?

  3. The Rhino · · Reply

    AFAIK millionaire next door got a mauling by Taleb for epic survivorship bias. Prob still worth a read though if you take with a pinch of salt..

    Ridley’s ‘Red Queen’ is awesome if you want to get deeper into the biological side of things..

    1. I’m a big fan of Matt Ridley’s books…Red Queen, Rational Optimist, The Evolution of Everything etc

    2. Has any useful concept *not* got a mauling by Taleb, other than ones he has popularised? More to the point, how exactly does survivorship bias affect people with frugal living / high savings rates?

      I haven’t read T$MND but I am a big fan of Rich Dad, Poor Dad which I think makes similar arguments – these arguments are timeless wisdom, not risky investment/spending strategies susceptible to survivorship bias.

      p.s. @TEA – Great post – thanks.]

  4. Snake saying: Red next to yellow; you’re a dead fellow. Red next to black; you’re all right Jack.

    Of course buying your future freedom doesn’t impress anybody and on Saturday night you are commenting on a finance blog.

  5. Thanks for posting.

  6. Very true. Thinking long term is key and planning independence. Thanks!

  7. Nice writing. Big Hat, No Cattle – indeed. Up in the Northeast, we say its equivalent “All Sizzle, No Steak”, which is kinda odd considering I am a vegetarian! The point of your post is absolutely valid. Those who practice principles of ‘stealth wealth’ are the ones who reach FI faster. I guess it is possible to have the status symbols and still be FI, but that’s a very small minority of rich folks.

    1. Thanks….”all sizzle, no steak” is a great one..,.hadn’t heard that before!

  8. TheRetirementManifesto · · Reply

    Congrats on getting “Rockstar Status” for this one! Love the “when they brag about their new car, just think Big Hat, No Cattle”. Catchy, and true. I’ve always loved The Millionaire Next Door, great classic! A fellow millionaire next door here. I may not have a new car, but I think I have cattle to go with my hat…..

  9. I work for a Texas based company so we hear Big Hat No Cattle quite often but it always makes me laugh. I’m so happy you brought up the peacocks. I used to tell my girlfriends when they would go out with new guys to make sure they weren’t “peacocking”…to look beyond the feathers. Men do it, women do it. It seems our insecurities are the greatest link to lifestyle and stature inflation. I have no interest in either. I’ll take my simple life and simple feathers any day over the threat of a predator attacking just so I can look pretty for another. It’s what’s on the inside (your heart AND your wallet) that counts. 😉

    1. Thanks!…well done you for steering your posse in the right direction!

    2. ‘Simple life. Simple feathers.’ Words of gold! I always think girls without makeup look pretty! For guys as well. Simple is beauty. I think it’s partly a confidence thing..

  10. I see it all the times with clients, they have the big house, the new cars, the fancy shoes… and credit card debt!

    They pay 20%+ interest rates to keep up with this life style they can’t afford just to impress people they don’t like.

  11. “One hazard that comes with writing a blog about financial independence is that people often don’t believe you at first. But there comes a point where people realise its true.”

    I hear you on that one. I often have the opposite issue too. Many folks in my day-to-day life only use the visual cues, which means they think we’re “just getting by” because we don’t do flashy things, walk a lot and spend a lot of time at home. Talk about a contradiction! Welcome to the paradox created by the great marketing engine: if you don’t have the big hat, you must not have the cattle!

  12. I have been calling on wealthy entrepreneurs for over 3 decades as a wealth management professional. You can tell the really rich ones by how spartan–I mean dingy– their offices are. They have no need for show and their investment accounts reflect it!

    Great piece!

  13. Love The Millionaire Next Door! So many good financial lessons in an easy to read book. Video was great-it doesn’t matter if you have a big hat. If you don’t have the cattle to back it up, you really have nothing.

  14. So good to read a kindred spirit swimming against the tide. It’s so hard in this consumer debt-laden society to stand apart consistently for the long term. And I constantly wobble and get annoyed that nobody else is living within their means and saving for the future. Sometimes I just want to really have a go at these people but then I realise they just can’t and will never understand. They want it all and they want it now because they think it will impress all their friends and family who are too busy buying more and buying bigger to notice!! You only have to look at all the photos of xmas present piles that appear on Facebook at this time of year to know that there’s nowt as queer as folk!! In my wobbly moments, reading sentiments like these really help. Thank you and keep up the good work. Big hat, no cattle, love it!!

  15. Just found your site. Fantastic article. Love the writing. Can’t wait to chew through your postings.

  16. Great article!

    A really good book on this exact concept is ‘Spent: Sex, Evolution and the Secrets of Consumerism’ by Geoffrey Miller. He poses better ways of signalling elements of your character to potential partners and friends, through less costly avenues.

    1. Thanks! That book is on my “To Read” list….you just moved it a couple of places up the order!

  17. As usual a good and thought provoking read. I completely agree with you when you wrote if “you are 100% honest with yourself, you can accept that lasting happiness is not built on fake signalling but rather on buying your future freedom”. But I think you overlook the reality of life especially that perceptions matter.

    As a mid 20 something year old who’s finding his feet in the sharp end of the legal services sector in London, like the non-poisonous snake I’ve found that fake signalling is essential for your future freedom. It is a useful survival mechanism.

    I’ve had to bite the bullet and buy a swiss watch which set back my deposit for a house and financial independence by a few years. And it could possibly be the best thing I’ve ever done. I get more respect from clients which has translated into better feedback from my bosses, better service and seating in restaurants, and even got an upgrade on a recent flight.

    As far as I’m aware, there is no correlation between the watch you wear and your intelligence or ability. Yet, unless you are a 60 something white around the ears, wise legal mind with the aura of Gandalf, you cannot get away with wearing a £5 casio to a client meeting as I’ve found to my dismay. Professional advancement depends not on your ability but the way you present yourself in the workplace – I don’t mean the basics of cleanliness or looking presentable but the flashy things like a swiss watch, leather briefcase, custom made shoes for over £1000 etc.

    Having done some research, it is a thing and not just me. There is even a company in New York which rents out luxury time pieces for a monthly membership fee. Like a Netflix for watches. I’ve read about casinos in Las Vegas who offer free suites to customers on the basis of what watch they wear.

    Unfortunately the reality is the richer you are the cheaper things get. Fake signalling if used properly can make life that much more better.

    1. Grasshopper has much to learn 😉

      Trust me, you can get a lot smarter about this stuff.

      Wearing a £5 plastic digital watch to a fancypants legal job would be a losers strategy, no doubt. But you can get a classic looking watch (with a leather strap…and real hands and everything!) for the same money!

      The junior Escape Artist worked for professional advisory firms and always dressed a level above his paygrade…but this does not require a watch that costs > £1,000, custom made shoes or a briefcase made of Unicorn hide.

      All the best with your future career success!

      1. Playing with Fire · · Reply

        I’d love to see a post on this if you have more tips.

        I have no sense of style and no old money people to help me out. I only learned about the issues that City people have with brown shoes a couple of years ago. As a back of house expert (engineer) people would put up with my rough, quaint, M&S suited ways, but I’m moving towards sales and need to show evidence (lie) that I care about this stuff.

        1. See my comments on appropriate work clothing contained in my review of “Thrift Shop” in Now 5!

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