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February 22, 2017

A still from the visual effects-laden Rogue One: A Star Wars Story (Photo: Disney)

Our latest Freakonomics Radio episode is called “No Hollywood Ending for the Visual-Effects Industry” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

In their chase for a global audience, American movie studios spend billions to make their films look amazing. But almost none of those dollars stay in America. What would it take to bring those jobs back — and would it be worth it?

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

One of the big winners at the 2013 Academy Awards was Life of Pi.

Suraj SHARMA as Pi Patel (clip from Life of Pi): My name is Pi Patel. I have been in a shipwreck. I am on a lifeboat alone – with a tiger.

The film was based on a novel by Yann Martel. It won four Oscars that night – including Best Director, for Ang Lee. It had been nominated for eleven Oscars, including Best Visual Effects. How amazing were the visual effects?

WESTENHOFER: There was a scene near the end when the tiger and Pi have been at sea for a long time and they’re both starving and near death.

That’s Bill Westenhofer. He was the visual-effects supervisor on Life of Pi.

WESTENHOFER: And we show the tiger in a very emaciated form. And I think it was India that said they wouldn’t allow the filming of the movie because they thought we had starved the tiger. And we had to show them that all that Suraj Sharma, the actor playing Pi, was doing was holding a blue sock, and that it was a complete digital creation on top.

What does it take to make a film with digital tiger so real that you can’t tell it’s not a real tiger?

WESTENHOFER: We had 1,300 people working for about a year. I was on it for about three years. And there were some other artists as well, smaller team that was on it for that length of time.

All their work, and creativity, were acknowledged:

Samuel L. JACKSON (clip from the 2013 Academy Awards): And the Oscar goes to Life of Pi!

WESTENHOFER: It’s funny, they tell you when you get nominated for the award that you have 45 seconds to give your acceptance speech.

WESTENHOFER (clip from the 2013 Academy Awards): The irony is not lost on any of us up here that in a film whose central premise is to ask the audience what they believe is real or not real, most of what you see is, well, it’s fake. That’s the magic of visual effects. I want to thank…

WESTENHOFER: And I had a speech that – it’s a big thing to win awards, so you want to thank as many people as possible.

WESTENHOFER (clip from the 2013 Academy Awards): To my family to all the sacrifices they made. Gabrielle, I love you so much.

WESTENHOFER: And then I also wrote a few words that I wanted to say about the state of the industry. So I timed out some of the speeches that have gone before me, and I know there was at least one that went 60 seconds. So I said, “I can do the full version of the speech.”

What was in “the full version of the speech?” Westenhofer wanted to address the elephant in the room. The fact that the visual-effects company he worked for, Rhythm and Hues, was at that moment going through a bankruptcy. And that several hundred visual-effects artists had protested outside the Oscars, claiming their industry was being crushed by outside economic and political forces. That’s what Westenhofer planned to get into …

WESTENHOFER: But, sure enough – at 45 seconds, the lights started flashing, and then I believe the – all though I didn’t hear it on stage, I believe the Jaws theme came on and played over me.

WESTENHOFER (clip from the 2013 Academy Awards): Finally, I want to thank all of the artists who worked on this film for over a year – including Rhythm and Hues. Sadly, Rhythm and Hues is suffering severe financial difficulties right now. I urge you all to remember –

WESTENHOFER: And they took me off stage before I was able to say the final few things that I wanted to say.

DUBNER: And we should say, they actually cut your mic, right? And we could see Nicole Kidman in the audience kind of empathizing for you that your mic went to zero. I assume you realized that your words were no longer being heard before they grabbed you?

WESTENHOFER: No. No, you can’t hear that. You can’t tell on stage. I did finish saying everything on stage.

DUBNER: Oh you did?

WESTENHOFER: The people – within four feet of me heard it all.

DUBNER: But the other billion or so didn’t. All right, so what did you say then?

WESTENHOFER: Well, I was just going to point out that, you know, we had just received this Academy Award and I worked for a company that at that time was going through a bankruptcy. So I wanted to just give a shout-out that visual effects is a industry and it’s ironic that at a time when the box office was reaching new highs, that visual effects was struggling to keep its head above water. And that the state of the industry was potentially putting those artists at risk and we could start to lose the very art that we were being recognized for at the time.

[MUSIC: Fooling April, “Too Late (Instrumental)” (from Three)]

Today on Freakonomics Radio: the visual-effects components of movies have become larger and larger. So why is the industry – in the U.S. at least – so much smaller? Our episode features: the disgruntled former visual-effects guy:

Daniel LAY: I said, “Wow, that’s great we’re making a lot of money.” And she said “Actually, we’re not making any money at all.”

The studio executive:

Chris DeFARIA: The economics of the whole visual effects industry changed dramatically.

And the big-time director:

Bryan SINGER: It has everything to do with tax incentives! Come on, who’s fooling who?

*      *      *

WESTENHOFER: As a kid I was drawing and painting and making flipbooks. I think I wanted to be an animator.

But then he fell in love with movies.

WESTENHOFER: I was 9 years old and Star Wars came out. I even bought a bunch of action figures and would make little videos at home with a super cheap camcorder.

In high school, he got interested in computers; he stuck with it during college and grad school. Just as he was trying to figure out his career, another landmark movie came out.

WESTENHOFER: When Jurassic Park came out I said I have to get out to L.A. now. Because to be able to see dinosaurs for real was the most amazing thing. And I said that’s what I want to do.

Westenhofer moved to Los Angeles in 1994, got some work on TV commercials, and then on films. He was a digital artist on the 1995 film Waterworld and a CGI supervisor – that’s computer-generated imagery – on the 1996 film Kazaam.

WESTENHOFER: I started going on sets more and more and finally lucked out with Babe: Pig in the City came along and they needed some help supervising the movie. And I’ve been doing that ever since.

Westenhofer worked on movies like Men in Black IIElf, The Chronicles of Narnia. His career rise paralleled the rise in visual effects generally. A rise in both the supply side, as the technology got better and better; and the demand side, as movie audiences loved the effects. By 2013, the year Westenhofer won his second Oscar for Life of Pi, visual effects accounted for about a third of the production budget on the top box-office movies – roughly double what it had been a decade earlier. But this did not necessarily translate into more money for the people who actually made the visual effects.

WESTENHOFER: I started in 1994 and the margins just continued to get tighter and tighter and tighter.

So tight that on that Oscars night in 2013, when Westenhofer accepted his award, he felt compelled to warn the world that his employer was in bankruptcy and his industry was under assault.

[MUSIC: Justin Marcellus, “Aerital” (from Pulsatronic Oberheim)]

DUBNER: So that was a few years ago. Despite –  forget about the fact that your speech wasn’t heard other than by a few people within hearing distance, and by people listening to this now – were your warnings heeded? Were they ignored? And what is the state of the industry now compared to then a few years ago?

WESTENHOFER: Well, it’s pretty much left Los Angeles. A lot of the people who worked on Life of Pi are now either not working in visual effects or have moved to Canada.

How did this happen? To answer that question, we’ll talk to a number of people from different segments of the film industry food chain. It’s an industry with many different players, with different and often competing incentives. You’ve got the studios and production companies that finance and distribute the films; the directors and their allies, who try to make the film they want while not blowing out the producers’ budget too badly; and the visual-effects firms – and many other subcontractors, of course – who typically bid for jobs and are then locked into that amount no matter what actually happens during production. We’ll start with … this guy:

Bryan SINGER: Hello, my name is Bryan Singer. I’m a film director and producer and writer. I’ve done such films as The Usual Suspects, a majority of the X-Men films, a film called Valkyrie, with Tom Cruise .

Singer grew up making home movies for fun. But he remembers the exact moment he decided to become a director.

SINGER: It wasn’t until I had seen the film E.T...

Pat WELSH as E.T.: E.T. phone home.

Henry THOMAS as Elliot: My God, he’s talking now.

SINGER: I was about 16 years old and they were profiling Steven Spielberg’s life on the TV show 20/20 and I saw that there was this Jewish kid, like me, who was – didn’t get good grades in school and he had a drawer full of 8 millimeter films just like me. And I thought, “Wow, he made this amazing film. And I want to be just like that guy.”

It took a while. He made a short film, then a low-budget feature; The Usual Suspects came out when he was 29.

Kevin SPACEY: He tells him he would rather see his family dead than live another day after this.

This was 1995. The Usual Suspects opened doors for Singer.

SINGER: I always knew that I wanted to get into science fiction and fantasy. I didn’t realize I would do it through comic books but a friend of mine Tom introduced me to the idea of the X-Men. I had not been a fan of the comic. I didn’t know the comic very well. But the themes about tolerance in it I found very interesting and I was very drawn to the characters. So I started to study the X-Men quite heavily and I had a meeting with its creator Stan Lee and its producer Lauren Shuler Donner. And it was during that meeting I started thinking, “Wow this is Stan Lee. This is the man who created Spider-Man and The Fantastic Four and The Hulk and all these characters and he’s an icon.” And he loved The Usual Suspects and went off on it and treated me so nicely. Well, I owed it to him to at least give this some thought. So that night I gave it a lot of thought. How could I make this comic book universe seem real and seem like it could actually happen? Like what if mutants really did exist in our society? And I kind of cracked a few ideas and I basically signed a deal to start developing the material in 1996.

The Usual Suspects had cost about $6 million to make. The X-Men movie he signed on to had a budget of $75 million. And a lot of that money was for special effects –  an art that Singer would have to learn a lot about.

SINGER: Both George Lucas and James Cameron at that time opened up a lot of their doors to me.

Singer spent time at George Lucas’s famous visual-effects company ILM, or Industrial Light & Magic.

SINGER: And then I also visited the set of Titanic and watch a lot of how the visual effects were done on Titanic. And so that was a great education.

Titanic was at that point far and away the most expensive movie ever made. But, in retrospect, it was a harbinger of Hollywood’s future.

DeFARIA: For me it was around the time of the making of The Matrix movies.

That’s Chris DeFaria, president of the DreamWorks Feature Animation Group. Before that, he was at Warner Brothers, where he was heavily involved in making The Matrix franchise.

DeFARIA: Suddenly, quite suddenly, it really feels like overnight, visual-effects budgets went from let’s say five percent of the budget, maybe, which means $5 to $8 million on a typical movie. They suddenly jumped up into the 50s and 60s. And it happened because the audiences were rewarding these huge blockbusters.

[MUSIC: Justin Marcellus, “Distant (Guitarscapes Mix)” (from Transitional Motions)]

Bryan Singer agrees – visual effects, or VFX, exploded in filmmaking in part because customers, especially global customers – couldn’t get enough.

SINGER: VFX budgets have ballooned because of the audience’s palate. The audience has a great expectation for realism. They want shots, visual effects – whether it’s a planet exploding or it’s something as simple as a robot of some kind – they want it to feel completely real.

DeFARIA: And it happened because a number of really progressive, interesting filmmakers came into the into the market here and they had some understanding of new tools out there – what were CGI tools.

DUBNER: I would love you to just help us a little bit because what we civilians call “visual effects” and also you know a lot of people know the phrase CGI, which stands for “computer generated imagery,” yes?

DeFARIA: That’s that is. And then everybody also calls things special effects too, which is actually something different.

DUBNER: Yeah. Can you just give us a brief taxonomy on what’s what?

DeFARIA: Well, “special effects” typically is something that can happen kind of in the real world around you, everything from a door slam to an explosion to a fake bullet going through someone’s chest. “Visual effects” are those things that are not visible to the eye or can’t be seen by the camera. So those are the things that often we would use post-production tools for and often that points to a lot of those being created with CGI. So CGI is creating things , they could be anything from an explosion to a car to a person to pretty much anything that’s created in a computer. And then composited into photography.

SINGER: And to create that in the computer takes a lot of time and engineers and brilliant, brilliant men and women who sit at computers for hours and hours and days and months to create a simple single effect at some points. And that just takes rooms and rooms that are vast – and I’ve visited them on many occasions – filled with people creating these effects and that’s just very very expensive.

DeFARIA: And in that time the economics of the whole visual-effects industry changed dramatically.

To untangle the economics of the visual-effects industry, and the changes therein, let’s start with the demand side: audience dollars.

SEYMOUR: What are the 50 top films of all time? If we don’t allow for inflation and just look at the numbers, then all of them are visual-effects films.

Mike Seymour is a visual-effects artist, a lecturer at Sydney University, and co-founder of the website FXGuide.

SEYMOUR: It’s just no question. You go down the list. The only ones that you wouldn’t say aren’t visual effects are 100 percent animated films.

But, Seymour says, it’s a mistake to think of box-office dollars as the only measure of a film’s economic power.

SEYMOUR: That’s only a small proportion of the money that’s actually made from a film. You can have a moderate successful Pixar film like Cars that can make billions more in merchandising.

Merchandising that includes toys, clothing, video games, on and on. Given that huge downstream earnings potential, you’d think this would be great news for the visual-effects companies working upstream that create the templates for all that merch. But that’s not the case.

SEYMOUR: Not a year goes by that we don’t lose visual-effects companies.

This is especially true in Hollywood, which has seen a massive exodus of visual-effects jobs.

WESTENHOFER: There are a few companies still around but movie production, for the most part, does not happen in Los Angeles.

Bill Westenhofer again, who won the Oscar for Life of Pi while working for the visual-effects company Rhythm & Hues. Now, there may be any number of reasons why any one firm goes bankrupt. The director Bryan Singer:

SINGER: What I think happens very often is the companies get spread thin. There’s a lot of work load that comes in, it comes in very fast and it’s all tied to a release date. So you’re pushing now programmers, you’re pushing artists, and you’re pushing these incredibly talented folks into overtime and that costs money.

But Rhythm & Hues was hardly an anomaly. According to Mike Seymour’s tally in FXGuide, the year Life of Pi won that Oscar.

SEYMOUR: This gets repeated over and over again. Companies working really hard, doing good work, but just not being able to survive in terms of margin to be able to continue going on. That seems like a non sequitur, right?

Of the four industry leaders founded in the 1970s – Apogee, Dream Quest Images, Boss Films, and ILM – only ILM remains. But not as an independent: it was acquired in 2012 by Disney.

SEYMOUR: It’s no lack of visual effects. It’s really complicated. It’s not an easy job. Why aren’t these guys able to charge a fortune and drive Ferraris and stuff? The answer is they just don’t. They’re on wafer-thin margins. They really suffer by the structuring of the industry.

All right, let’s get into the structuring of the industry.

DeFARIA : The drying up of the L.A.-based or the U.S.-based visual effects business was driven by several forces.

That, again, is DreamWorks executive Chris DeFaria.

DeFARIA: One was an increasing standardization of tools and techniques.

As film-making became more and more digital, the nature of the visual-effects industry changed.

DeFARIA: What had been kind of a small in-your-basement kind or garage business with guys often with you know powder burns on their hands and grease marks on their shirts was replaced by CG artists.

And, importantly, standardization meant the barriers to entry fell. CGI was all about computers and software – which, of course, get cheaper over time, easier to use, and can be used anywhere. This meant more competition, which meant smaller profit margins for visual-effects companies. Another big factor is how visual-effects work is contracted by the producers and studios. The director Bryan Singer:

SINGER: It’s very arbitrary, I’ve got to tell you. We literally look at a visual effect and we assess what kind of effect it is. Whether it’s a sentinel robot from “X-Men: Days of Future Past” or it’s a Wolverine’s claws coming out of his hands. Something simple, and we just attach a figure to it. “That’s a $10,000 shot.” “That’s a $15,000 shot.” “Oh that, one – well that’s got five Sentinels and transforming in it. That’s an $80,000 shot.” “Oh that’s got a whole city exploding. Well, that’s a $140,000 shot.” And these effects literally just get labeled and placed into a budget and then that budget is summed up into a total and that total becomes the bid.

DeFARIA: It’s a little like saying to a contractor, “Build me a tall, good-looking building that works really well.” And then you go away and you come back and you pay them for it.

SINGER: And on a big movie, a big visual-effects movie that bid can be somewhere between $60 and $80 million.

DeFARIA: The script says, “A spaceship lands, aliens get out, and they mow down the entire countryside full of cows.” And you go, “Wow, okay that’s a shot we’re not going to get in camera. It’s a visual-effects shot. You have to build the asset of the spaceship. We’re going to do CG cows because we can’t be cruel to animals. I don’t really want to go to Indiana and shoot this, so we’re going to shoot it in a parking lot and we’re going to paint in all of the ground plane and all of that. And you start breaking down the shot into its elements. At that point then that becomes a document someone can bid on.

SINGER: And you bring that bid to various effects houses, because very often not one effects house can handle one movie by its release date. And it’s just a number. But at some point you have to pick a number because you have to pick a budget and you have to deliver it and someone has to sign off on it to get a green light on your movie. And so you get into this sort of situation where, “Wow, that $60,000 shot actually cost $85,000 worth of manpower. So how can we reduce somewhere else or can we?”

DeFARIA: And the hard thing where the rubber hits the road – or where the rubber fails often to hit the road – is that we go out and we make a change as a studio for creative reasons, very good legitimate creative reasons, or we don’t shoot it in the parking lot as described because we found ourselves in Indiana and therefore we want to change the definition of the shot after we’ve shot. At the same time we have to stay on the crippling schedule, which was already over budget. And it becomes really difficult to make those changes. And so a lot of the business ends up being that thing that you get into where we all agree to, “Okay, you guys are going to lose on this shot. Make it up on the other one. You might lose on this show. Make it up on the other show.”

SINGER: And that’s where visual-effects companies sometimes get in trouble.

DeFARIA: It becomes a, you know, kind of a barter system or a horse-trading game, which is a tough way to do business.

It’s one thing for a studio executive like Chris DeFaria, or a director like Bryan Singer, to recognize this as “a tough way to do business.” But it’s a lot tougher for the visual-effects firms. Because the studio and the producer and the director have a lot more leverage than the visual-effects firms. How does that lack of leverage play out for the visual-effects firm bidding on a film?

SEYMOUR: I’m going to keep coming back to the same people to bid on the same projects.

Mike Seymour again.

SEYMOUR: If I am going to take a hit on this one, I’m not going to make too much of a fuss about it, in one sense, because I’ll never work with you again, and I suddenly lost a seventh of the industry. And in the case as we have right now,  because they’re very good at what they do, Disney dominates. So I would really not want to annoy Disney, because Marvel films are the backbone of visual-effects right now. So now, of course, is Marvel a good company? Absolutely. And are their films terrific? No question. But you’re going to be continuing to make these films, whether they’re Star Wars films or Marvel comic films. And I want to keep working on them. So I’m in a really awkward position when it comes to negotiating.

WESTENHOFER: Movie-making is a business.

That’s Bill Westenhofer.

WESTENHOFER: And if, you know, if you can find a way to get the job done elsewhere for a cheaper rate, they’re going to pursue that.

Things might have worked out differently if visual-effects companies had pushed years ago to get a piece of the back-end of the films they help make. But that never became the norm. Or if they had colluded to keep up their margins. But that didn’t happen either. The studios, meanwhile – well, an antitrust law suit alleged that Hollywood’s biggest studios did collude to fix wages and not poach animation and visual-effects employees. DreamWorks, Fox, Sony, and Disney have all by now settled the case, paying hundreds of millions of dollars in damages. But still – that hardly explains why Hollywood has hemorrhaged visual-effects jobs during a time when visual-effects spending has been booming. So … why? You might think it’s because all those visual-effects jobs migrated to places where labor is much cheaper. That, of course, is what’s happened with a lot of American industries. But in this case, a lot of jobs migrated to places where labor isn’t cheap.

SEYMOUR: Why would Hollywood have lost a huge amount of business to London? It’s one of the most expensive cities in the world to live. Why would it have gone to Canada, which again isn’t some low-income area?

That’s coming up on Freakonomics Radio. Also: if you really want to blame someone for the hollowing-out of California’s visual-effects industry, who you gonna blame?

DeFARIA: Alright so, like I hear where this interview is going and I’m concerned that you’re digging me up as the villain in your scenario.

*      *      *

Daniel Lay grew up in Los Angeles reading comic books, playing video games, and loving movies that had loads of visual effects.

LAY: And at some point people said, “Well, you’ve got to kind of take what you love to do and turn it into a career.”

In college, at UC-San Diego, he studied visual arts and computer science.

LAY: As I came out of school, my dream was just to maybe work for a video-game company like Electronic Arts. And to my surprise, companies like Sony Pictures Imageworks were calling me and saying, “Hey, would you like to come work with us?”

And he did. His first project was the first animated film made by Sony Pictures Imageworks. It was called Open Season.

TRAILER ANNOUNCER (clip from Open Season trailer): Martin Lawrence.

Martin LAWRENCE as Boog: Oh, yeah! Don’t mess with the Boogster.

TRAILER ANNOUNCER: Ashton Kutcher.

Ashton KUTCHER as Elliot: I come in peace…

Now, to clarify: when you hear “Sony Pictures Imageworks,” you might imagine that Sony, and probably the other big Hollywood studios, have their own visual-effects outfits. That’s what I thought – and I’d asked DreamWorks executive Chris DeFaria about it.

DUBNER: Now I understand studios have VFX shops. Yes? Some do, some don’t?

DEFARIA: No, they don’t. The studio you might be thinking of is Sony, who maintains a visual-effects vendor. That vendor in theory is no different than we at the studio – we have a lighting department. That doesn’t mean that we get lights for free. Those lights are available to anybody to rent and the visual effects department at Sony is not really a department of the studio. It’s an adjunct, a separate business.

SINGER: There was always the theory that studios should have their own visual effects houses.

That’s the director Bryan Singer.

SINGER: They’ve always tried. And for some reason they’ve always failed because of this paradigm which is visual-effects hnouses seem to lose money.

Okay, so back to Sony Pictures Imageworks – “not really a department of the studio” – but, in any case, the place where young Daniel Lay got his first gig, on Open Season.

LAY: On that film I was brought in as what they call a render wrangler. So they really test you to see how much you love the industry, because I would work from 4pm to 2am every night just kind of watching the artists’ renders, which took hours and hours to do. So a kid like me out of school was just kind of watching those, making sure that everything was okay. And in the morning time, they had their shots ready to review.

Lay started moving up the ladder.

LAY: There was this little film called I Am Legend, which starred Will Smith, and they needed what they call hair and cloth artists, to help do cloth animation on all the zombies on that project.

Will SMITH as Robert Neville (clip from I Am Legend trailer): Sam, we got to go!

LAY: So that was kind of my first big swing at actually working on the shots there.

Lay went on to work on many films, for several visual-effects firms.

LAY: I would say Shrek Forever After, I Am Legend, and Tron: LegacyX-Men First Class, those were kind of the big films that I’ve worked on that were probably more famously known to a lot of my friends.

Famous yes – but lucrative? Lay recalls a conversation he had with his manager at Sony Pictures Imageworks in 2007.

LAY: She goes, “You know, we have done so much business this year.” And I said “Wow, that’s great we’re making a lot of money.” And she said, “Actually, we’re not making any money at all.” And I was like “What? Are you kidding me?”

It was around this time that Lay noticed a huge shift in his industry.

LAY: Sony started opening up facilities in New Mexico and there was a lot of people moving there and, from what I understood, they said, “Well, it’s because of the tax incentives.” And I came back to that same manager and I’m like, “What is it? Are taxes so much lower in New Mexico that California can’t compete?” And it was explained to me by this manager that, “Well, the reason why is that they’re not essentially taxes that we’re talking about here, we’re actually talking about government subsidies, where the government of New Mexico was essentially paying for 25 percent of the visual-effects production costs to the producers of the film.”

Twenty-five percent off the top! Think about that. If you’re the studio or the producer or even the director, that’s hard to resist. And it wasn’t just New Mexico offering deals like that.

THOM: Almost all states, about 44 or 45 states, created programs at some point over that time frame.

That’s Michael Thom, a political scientist at the University of Southern California. The time frame he’s talking about is 1998 to 2013.

THOM: The first big incentive program was in Hawaii.

Thom was curious about the overall economic effect of such programs.

THOM: Many of the research studies that were published were either funded by the industry or only looked at one particular state. And so there was the space open to kind of look at the whole 50 states and see, do they work? And so I decided to look.

He did look, and published a study called “Lights, Camera, but No Action?”

THOM: And so this study looked at all 50 states and how motion-picture employment and wages changed kind of with and without the incentives depending on how much they spent, how long they were in place and controlling for other factors, like you know the growth of the industry, the growth of the economy, and so on.

Thom concluded that most film incentive programs, quote, “had little to no sustained impact on employment or wage growth.” Nor did they help build a permanent filmmaking industry in those places. Thom’s findings are in line with a lot of economic research about the efficacy of tax and incentive programs.

THOM: As a rule, targeted incentives like this, given by state governments and sometimes by local governments, don’t work – and the motion picture industry incentives are no exception.

So the incentives may not work, financially at least, for the places that offer them. But if you run a movie studio – well, why wouldn’t you exploit them? If New Mexico or Florida or Iowa are essentially offering rebates for you to move your production there, why not? You don’t have to move to New Mexico or Florida or Iowa. You can stay in L.A., with the sun, and the restaurants. And when a new state offers an even better deal – well, time to move production again. How are all these deals happening?

[MUSIC: Chauncey Canfield, “Invisible Pattern” (from Music For Walking Around)]

THOM: So the motion-picture industry, through the Motion Picture Association, has no shortage of lobbyists.

But also, as Daniel Lay points out, the politicians who make these decisions have incentives that play right into the movie industry’s needs:

LAY: They need a very simple way for them as politicians to point to “Hey, look at me, I’m creating policies that create jobs.” And the film industry is a very footloose industry. So if you let’s say have an election coming up in two years and you want to create jobs very quickly, you could do that with the film industry. And it makes them look really good, right? To be around all these movie stars – “Look at this!”

THOM: Yeah, the celebrity factor probably cannot be ignored here. Manufacturing tax credits aren’t sexy. No movie star shows up to you know push manufacturing tax credits or research and development tax credits. But if a movie star shows up, even if it’s for a day, and local media picks it up, state media, regional media picks it up, suddenly it’s become this symbol. And it’s a symbol of success at least in the minds of the voters, maybe even legislators. There’s no counterweight to that except for these admittedly dry, often boring academic studies that would maybe give people a fuller idea of what’s happening here.

So what, exactly, was happening here?

LAY: There’s sort of this race to the bottom…

THOM: … and the bottom is that states end up spending more and more and more on these incentives but they get less and less and less back.

LAY: You know, the studios are very good at getting states and various jurisdictions and various countries to start competing against each other to offer them more free taxpayer money.

THOM: And that bidding war is exactly what happened late 90s, really more through the mid-late 2000s, was that not only were states that already had these incentives spending more , the ones that weren’t players in this space created new programs and then upped their investment. It’s hard to win that fight especially when the returns are diminishing.

All this can help explain the kind of chaos Daniel Lay went through some years ago. His employer, Sony Pictures Imageworks, had opened a visual-effects facility in New Mexico.

LAY: A producer could get 25 percent back on their visual effects project if they could do it in New Mexico. So Sony started sending a lot of workers there.

By 2010, Lay was working for a different firm, Digital Domain, which was building a facility in Florida.

LAY: The state of Florida was offering millions and millions of dollars to open an animation and visual effects facility there.

And by now, he says, Canada had gotten into it.

LAY: So they were offering essentially 60 percent of the labor cost. So if you could get a worker to move there, and they were making let’s say $100,000 a year, as a producer you could get 60 percent of their salary back if they’re a resident of that province there, British Columbia. So, what happens was, well, quickly in New Mexico they realized it’s a lot more lucrative to go to Canada, so all those people who moved there, who bought homes, they ended up sort of losing their jobs, and being told “you have to move to Canada or you’re going to lose your job.” So they realized, OK we’re out of the job, so they ended up trying to stay in the States, and I remember stories of people from New Mexico who were laid off who were driving towards Florida and during that time, Digital Domain goes into bankruptcy because they’re trying to build this huge facility in Florida to get those subsidies in Florida, but they’re borrowing massive amounts of money. So, at the same time they’re working on these underbid visual-effects projects, so they’re losing money like crazy. And as those people arrive in Florida they realize the company went bankrupt. Guess what? The company you were hired for doesn’t exist anymore, or they’re almost out of business, so you don’t have a job. So, here are these people, lost their jobs in New Mexico, on their way to Florida, and they just find out on the way they lose their job. It was just amazing to me.

By now, the race for movie-making jobs had gone fully global.

LAY: New Zealand, for example, when Peter Jackson started The Lord of the Rings, they took advantage of a huge subsidy loophole there.

Andy SERKIS as Gollum (clip from Lord of the Ring: Return of the King): My precious!

LAY: The U.K. is another good example – the Harry Potter films – those were heavily subsidized by the government there.

DeFARIA: Harry Potter is often pointed to as a movie that the movie series is that in some respects transformed the business.

That again is Chris DeFaria – who’s now with DreamWorks but for years worked at Warner Brothers – on a portfolio that included the Harry Potter films. The first one was released in 2001.

DeFARIA: At the time, the U.K. had a program in place called sale – leaseback, that offered you know to sell tax loss to somebody else. And therefore in some respects get a rebate for work you’re doing there. It then transformed into a real formal traditional rebate system and that’s what exists today in the U.K.

The sale-leaseback system, begun under the Blair Administration in the late 1990s, presented a tax loophole that investors could take advantage of. Just recently, for instance, it was revealed that the Royal Bank of Scotland avoided around £1 billion in taxes by investing in films, including Harry Potter films. One British newspaper named this scandal “Harry Potter and the Bank with the Magically Vanishing Tax Bill.” That old system was replaced in 2007 with a more formalized incentive program called Film Tax Relief, which has gotten only more generous since it began. Among other perks, producers can claim a cash rebate of up to 25 percent.

DeFARIA: So when we were doing the Harry Potter movies we were really for the most part bidding U.K. companies, because we’re going to get a rebate back on that. So we bid the you know five companies in the U.K. We would often bid one company in Australia, which had a good rebate system in place. A company in Canada and then often one in L.A. Though it’s kind of tough to make the LA and California ones work – but those companies worked tirelessly to try to bring their prices in line with what we’re rebated prices around the world.

DUBNER: And how did the rebated prices work? Was there a list price that the firm would offer and then the government is actually taking off the top to make the retail price to you?

DeFARIA: Well, the practical part of it is that the you bid the work and so you can go bid work let’s say in a California company and then a U.K. company and they both come in at $1,000 for a shot. Then you just when you calculate it you realize you’re going to get probably 22 percent of that back from the U.K. government after you tell them what you spent so now suddenly their bet is vastly more competitive.

DUBNER: Right, so I’ve read you talking about the opportunity for big savings in taking visual effects for Harry Potter, the Harry Potter series to London. You said in the beginning, “We literally couldn’t find a way to spend $1 million on visual effects in London. I don’t know if you like hearing that qu0te read back to you. That was from 2009, but talk to me about that for a moment. How much how easily could you have spent that $1 million in L.A.?

DeFARIA: Well, I guess what that quote refers to is that at a time when the U.K. government described this program, we needed to move suddenly a lot of work to London, it would be advantageous to us. But there just was not the companies that there were in Los Angeles there. So there just simply was not the way to get to do the work there.

DUBNER: So there is now, obviously? Yes?

DeFARIA: There is now a huge infrastructure there, massive companies. But I think what I think what you’re referring to though is it that without a doubt I guess the infuriating thing about the U.K. rebate is it really worked in that it is set up a visual- effects industry in the U.K. that would not have come about any other way.

So unlike the American states whose incentive deals didn’t lead to many permanent jobs, the U.K. built what is, for now at least, a large and lasting film-production industry. How important were the government subsidies? A 2012 study estimated that production spending in Britain would fall by about 70 percent were it not for the subsidies. A weakened pound may have drawn even more American business. Last year, Hollywood spent a record $1.7 billion on movie productions in the U.K., including the upcoming Star Wars: The Last Jedi, The Mummy, and Dunkirk. Which means even a two-time Oscar winner like Bill Westenhofer no longer does much work in L.A.

WESTENHOFER: I own a house in Los Angeles – but this past year as an example, I only was here for about three months out of it. The rest of my time was in London working on the current project Wonder Woman.

DUBNER: Do you have a family or anything like that in L.A.?

WESTENHOFER: I do. I have my wife lives here. Two sons, my daughters are now in college and one’s post-graduate, so they are – they’re living outside, but I still have family in Los Angeles. But it is – it is a challenge. It’s hard to do this kind of work and have to be away for so long. And just – in the past, filming itself is a worldwide thing, you know, you always go to locations to film, but I was always balanced by having post-production take place in Los Angeles. So I could – I could sell that to the family and say, “Yes, I may be gone for five to six months, but then I’ll be back for a year and a half.” And now it’s more and more becoming that the whole thing is being done elsewhere.

Again, it’s not just in Britain. The director Bryan Singer:

SINGER: My visual-effects supervisor had to sleep literally in the studio because he had conference calls all over the world in four separate time zones, so he couldn’t afford to go home to his wife and family because he had to be there for these calls that were coming in and for these viewing sessions that were coming in on single shots. They were being farmed out to companies on all corners of the earth.

One of the most popular corners is Canada. As we heard from Daniel Lay, Canada years ago started recruiting Hollywood business. By 2000, so much work had gone to Canada, especially British Columbia, that it came to be called Hollywood North. Vice President Al Gore, putting on his “America First” hat during his run for president, asked the Commerce Department to investigate why so many American jobs had moved north. One of the big conclusions: tax subsidies. American filmmakers can get a huge share of their visual-effects labor paid for by Canadian taxpayers.

[MUSIC: Lucy Bland, “Plumb (Instrumental)” (from Down to Sea Level)]

SINGER: We will literally move a team to Canada to do the work because we’ll get the rebate from their work even if they’re a team from here because Canada offers the incentive.

In recent years, most of the big California visual-effects companies have moved some or all of their operations to British Columbia, including Daniel Lay’s original employer, Sony Pictures Imageworks. There are now roughly 50 digital-effects and animation studios in the Vancouver area. Bill Westenhofer gets it; but he doesn’t like it.

WESTENHOFER: It’s unfortunate that in the – especially in this day we’re discussing trade agreements in many other industries that you know, one could argue that subsidies are a bit unfair.

Daniel Lay, who’d worked his way up the ladder in the visual-effects business, came to feel the same way. He felt he and his friends and colleagues were being exploited, living under the constant threat of their jobs moving to another state or country. He decided to try and do something about it. He started a blog called VFX Soldier.

LAY: A soldier within the trenches of the visual-effects industry who was giving his point of view of how things were really going on in the industry.

Lay got support from visual-effects artists around the world. Encouraged by the response, and increasingly alarmed by the exodus of jobs from his hometown of Los Angeles, Lay started pushing harder. He led protests at media events, including the Academy Awards. But protests and blogging weren’t really moving the needle. He began looking for real leverage. Unionizing, for instance.

LAY: However, there have been some reservations on that because the vendors that we work for are only making five percent margins, and so the concern is that, Well, if we unionize, it’s going to cost them more money and they may go out of business.

He thought about a political approach – trying to get the U.S. Trade Representative to argue on behalf of American workers at the World Trade Organization.

LAY: And there are trade agreements that we’ve all signed. WTO, many of these trade agreements banned the use of these subsidies. And so I went to these international trade law firms to discuss that, and it turned out that it seemed to gain some interest from some major law firms there.

One big problem:

LAY: This WTO route, going through the U.S. Trade Representative, that is going to be very, very tough to do, because the MPAA has a lot of lobbying power there, and it’s a political route.

The MPAA being the Motion Picture Association of America. Which represents the major Hollywood studios. Who, remember, have all the incentive in the world to lower production costs by seeking out international subsidies that inherently work against the interests of American employees. But Daniel Lay did not give up. He thought there might be an avenue through the courts. He used his blog to crowdfund some money from visual-effects artists.

LAY: I had some vacation time. I flew down to Washington, D.C., and I started meeting up with attorneys who specialize in international trade.

Under international trade law, he learned, goods that are subsidized by foreign governments can be seen as anti-competitive, and could therefore be eligible for what’s known as a countervailing duty – essentially a tariff that’s levied when the subsidized good is imported.

LAY: The reason why the countervailing duties route was interesting was because it is actually the least political route for success here. So all you have to do is go to court and if you prove to the court that you have the support of the domestic industry and that domestic industry you can prove is being harmed by international subsidies. If the court agrees with you, that’s it. The duty gets put into place.

But international trade law is tricky. The issue was whether movie visual effects are a service or a good.

LAY: The law firm there told us, they said “Daniel, one of the big problems that you have is, remember, visual effects, we don’t know if this is a good or a service.” And I asked why do you need to know that? They said “Well, these duties can only be applied to goods.” So sneakers, softwood lumber, things that you can drop on your foot. Visual effects, these are ones and zeros, this is digital, this is a novel approach to what you’re doing. We need to prove to the court that visual effects is an actual product, a good. And that’s the only way to apply that by law. To apply these duties by law defines that, it must be only applied to a good, not a service.

Lay says there were some legal precedents that might have helped his cause – if, that is, he could get his day in court. To do that, he’d have to prove that he had the support of the visual-effects industry.

LAY: And so in order to enlist the support of the industry, I needed to create a professional organization, a trade organization. And that was essentially what me and a number of professionals decided to do in the industry and as we did that, we needed to raise the money to help pay the law firm to prosecute this case. And as we did that, a number of artists were just simply either out of work or they had to move to Canada and they just simply didn’t have the funds to continue doing this. So within a year just unfortunately we just didn’t have funds. We had the vehicle, we had the car, we had the direction we wanted to go to, we had the destination, we just needed money for gas and unfortunately just couldn’t raise enough money to prosecute the case.

[MUSIC: Edgaz, “White Flag” (from Shining Hour)]

Daniel Lay no longer works in the visual-effects industry; he’s in the tech industry now. Which means he got to stay in his native California. A state where very few visual-effects companies remain.

WESTENHOFER: The saddest thing is more – it’s almost more emotional.

Bill Westenhofer again.

WESTENHOFER: You know, Los Angeles, if you ask – ask anyone in the United States or the world what is Los Angeles known for? And you’d say the movies. It’s kind of a core identity. And the truth is that less and less of that is actually taking place here because of the way the economics have worked out.

We asked Chris DeFaria at DreamWorks what he thinks of how things have shaken out.

DUBNER: So I’m sure you are friends with or at least friendly with a lot of these visual-effects artists and owners of these firms. Do you – we talked to Bill Westenhofer. I don’t know if you know Bill personally?

DeFARIA: I know Bill. I know Bill well. He did Cats and Dogs for me many years ago and many other movies since.

DUBNER: Gotcha. Okay, so Bill is famous for having while accepting the Oscar for his visual-effects work on Life of Pi, his firm was going bankrupt. So I’m just curious. How do you feel about – I’m not asking you to profess guilt about the industry moving away. It’s plainly not your fault. And you’ve described that it’s a very complex ecosystem with a lot of players, most of whom you have no control over whether it’s the government of California or the government of Britain. But how do you as a filmmaker, who is obviously still in L.A. and gets to and gets to enjoy still being there when this work for even someone like Bill gets offshored where he’s now spending most of his time working in London. How do you kind of reconcile that job flow out?

DeFARIA: That’s an interesting question. Well, let’s see. One is that my passport is equally worn from traveling around the world tracking this. “Reconcile” is a funny word. I mean I guess if you want me to say that I bear responsibility for it, I think that’s a pretty naive assessment of what’s going on here. I mean there’s not there isn’t a moral choice here. And with a publicly traded company, I don’t think you’re in the position to say we’re going to ignore the economics that our competitors are enjoying, right? In some effort is to remain here. I think the responsibility for this falls on everybody. I think that sure the you know movie studios desire to try and find a way to make movies less can be blamed though I don’t understand that is an unsound practice for a company whose job is to make a profit. The companies that were here, many, some that went out of business. They did not respond to this. They didn’t respond with better management or with changing some of their own internal economics. A lot of them and they didn’t think they would admit it were a bit of a head in the sand on this. I think the government, both federal government and the state government, failed for political reasons to respond to the changed environment here and failed to actually understand the value of the industry that was leaving. I think that foreign governments that have offered the incentives you know have, in some respects, I don’t know they’ve while it may have benefited companies like Warner Brothers or Paramount or Fox, right? Because they do their work over there. I’m not sure that in the long term it’s going to actually benefit their states, their nations. You know I think there’s mistakes made all around. I you know I feel – of course, I feel bad. Everybody feels bad that people that had a living here right now don’t anymore. But at the same time it did not come unannounced and it did not sneak up and that I think there are plenty of people that could have intervened at a different point to keep some of this business here. But then you really have to ask yourself in the end of the day would that have been the right thing to do?

DUBNER: Is it true that as a young man, you voiced Peppermint Patty?

DeFARIA as Peppermint Patty: What’s this?! A piece of toast, a pretzel stick, popcorn. What kind of a Thanksgiving dinner is this?

DeFARIA: Possibly.

DUBNER: Possibly? I’d think you’d be in a hurry to claim credit for that. That’s awesome.

DeFARIA: All right. So like so. So I hear where this interview is going. I’m concerned that you’re trying you’re digging me up as a villain in your scenario.

DUBNER: Oh really?

DeFARIA: Yeah.

DUBNER: Because I’ve got you being Peppermint Patty now? That’s where it took the turn to villain?

DeFARIA: Because every villain needs a quirky tic? Don’t they? Something they can –

DUBNER: Oh exactly. I was wondering if you could still do the Patty voice at all though? Or did you just totally outgrow that?

DeFARIA: I outgrew it quite some time ago. Yes.

DUBNER: How old were you when you did that?

DeFARIA: Eight, maybe –

DeFARIA as Peppermint Patty: Don’t you know anything about Thanksgiving dinners? Where’s the mashed potatoes? Where’s the cranberry sauce? Where’s the pumpkin pie?!

DeFARIA: – eight or nine? Yeah and it’s been a while.

DUBNER: And did you want to be a performer? Was that kind of your dream at that point?

DeFARIA: No. I wanted to be cool and just like that sounded cool. That was it. My ambitions were fairly low at that point and they remain so.

DUBNER: Alright, I’ll give you one more question since you think I’m heading you down the villain road. I promise we’re not trying to create a villain here. Let’s say that you could have persuaded the California government or even the federal government here to do some kind of either or you know countervailing tariff or countervailing subsidy or whatnot, that’s not necessarily the right thing to do either, is it?

DeFARIA: No, I don’t think it is. It’s a no-win game. I think that what you the lesson here and I would hope is that we as a community of filmmakers, as an industry that needs to make a profit, as a government that needs to take care of its citizens, that we can look down the line because there’s plenty of lines to look down right here. What we had was we had a real exodus of work that drove technology and development in areas of imagery and CGI that are both you know applicable to other markets and hugely important to you know underwriting or at least supporting you know the community here of really smart art and technically savvy artists. That loss is going to be a hard one to get back. And I think its implications are certainly outside the film business, but that’s where I think the government has to have a role and we approached the California legislature many times and said, “Look I know it’s hard to stem the flow here but we would love you to take a look at the high-tech jobs that are associated with visual effects because they’re just they’re so transferable to other areas of growth in our economy. We didn’t get back what we needed you know and so in some respects I lay a little bit on them. 

DUBNER: When you say “look down the line” it sounds like you’re talking about other elements of the industry that are in you know danger or susceptible to this kind of wage pressure. What are you talking about there?

DeFARIA: Well I’m talking about let’s – off the top of my head feature –  film animation. The Pixars, DreamWorks, Disneys – these companies, which employ thousands of people at really terrific artist-oriented high-paying jobs are going to be – I can feel them the push to get them out of California. Already Sony, that used to have a massive footprint in Culver City, has moved three-quarters of its animation capacity to Vancouver, who is offering a massive subsidy. And here’s the – and the hard part about animation is it the best, brightest, and most talented artists are here in Los Angeles. But as these you know when you get corporate consolidation in the media business and you get an increase you know pressure to make the numbers work, you know that’s the one I see coming down the line.

[MUSIC: Fooling April, “Too Late (Instrumental)” (from Three)]

We reached out to Los Angeles mayor Eric Garcetti about this job loss. “No industry has been hit harder by runaway production than visual and special effects,” he told us. “When we fought to pass the California Film and Television tax credit, we made sure that productions that opt to create visual effects in L.A. get an additional five percent credit. But that’s not enough — which is why we are exploring expanding the incentives for visual effects when we return to Sacramento to urge the state legislature to renew the credit.” In other words, if California had the money to buy back those jobs from London and Vancouver and elsewhere, maybe it could, or would. If you’re an American visual-effects artist, you might say: Yes, please, do that! But, if you’re just a taxpayer? Not so appealing.

Given what we’ve learned today about the labor intensity of creating visual-effects, we asked Bill Westenhofer for any closing thoughts for us laypeople to consider when we’re watching a movie.

WESTENHOFER: If people sit in the theater and watch the credits roll to the end, you will notice the number of people involved in visual effects can often be several times larger than the number of people involved in the rest of production. And these are people like myself that I’m still working in this industry – even though I have to go to London for several years. It’s something that we really love, we really love to create amazing things, and it’s – We aren’t begging for recognition, but if – a lot of times there’s a kind of an instant gratification these days and people expect that a film can be made with perfect visual effects every time, and – we try our best to get everything right. But if we don’t, it’s – there are still a lot of people who work really hard to get that done and just appreciate that fact.

Coming up next time on Freakonomics Radio: it takes a special entrepreneur to disrupt the kind of industries that haven’t been disrupted…

AGRAWAL: I’m in the business of taboo. My job is not to be afraid to talk about things. 

And we’ve got her – Miki Agrawal, empress of the 3 Ps: periods, pee, and poop. That’s next time on Freakonomics Radio.

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Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky. Our staff also includes Shelley Lewis, Christopher Werth, Stephanie Tam, Merritt Jacob, Eliza Lambert, Alison Hockenberry, Emma Morgenstern, Harry Huggins, and Brian Gutierrez. You can subscribe to Freakonomics Radio on iTunes, Stitcher, or wherever you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

ETC.

The post No Hollywood Ending for the Visual-Effects Industry appeared first on Freakonomics.

February 19, 2017
Panelists

Panelists Melanie Whelan, Mike Pesca and Lizz Winstead. (Photo: Lucy Sutton)

In 1921, Congress considered a bill that would add a 13th month called Vern. The goal was to create a year with 13 identical months of exactly four weeks (28 days). We would have a perfectly fixed calendar — every date of every month would fall on the exact same day of the week. Always.

Our first episode of Season 2 is close to perfection: our contestants bring you perfect cows, rats, tongues, water and calendars.

Melanie Whelan, CEO of SoulCycle, is just like President Barack Obama, in that she’s been to Richard Branson‘s private island.

Mike Pesca, host of Slate’s The Gist podcast, is an accomplished jello juggler.

Lizz Winstead, co-creator of The Daily Show, keeps her dog close to her at all times…her ex-dog, that is.

Our real-time fact-checker is A.J. Jacobs, who is definitely related to Albert Einstein.

The post Perfection: TMSIDK Episode 7 appeared first on Freakonomics.

February 15, 2017
Blasting in an open cut mine

Blasting in an open cut coal mine. (Photo: CSIRO/Wikimedia Commons)

Our latest Freakonomics Radio episode is called “Professor Hendryx vs. Big Coal” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

What happens when a public-health researcher deep in coal country argues that mountaintop mining endangers the entire community? Hint: it doesn’t go very well.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

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Many of you have already subscribed to our other podcast, Tell Me Something I Don’t Know – and if you haven’t, now’s a good time to do it, since our new season starts February 19th. We’ll be putting out 30 episodes this year – so if you subscribe – on iTunes, Stitcher, or wherever you get your podcasts — you won’t miss a one. And: come see us live! In March, we’ll be in Washington, D.C., Boston, and New York. In April we’ll be in Chicago. Even better, sign up to be a contestant when we’re in your town. Big thanks to our producing partners WAMU in D.C., WBUR in Boston, and WBEZ in Chicago. And remember: new episodes of Tell Me Something I Don’t Know will start coming your way on Sunday, February 19th.

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You wouldn’t think it’s a good time to make a bet on coal. As recently as the early 2000s, more than half of the electricity in the U.S. came from burning coal; now it’s only a third. One big reason is competition from cheap natural gas. But also coal, due to its environmental costs, has become heavily regulated over the past couple decades. And yet: coal is suddenly having a bit of a renaissance. A recovery in the price of coal has a number of mining firms looking to go public. The election of President Trump also helped; he called for a revival of the industry, and he criticized President Obama’s “War on Coal.” Indeed, just a couple weeks into his administration, Congress reversed a coal-mining regulation that Obama pushed through in his final days, and Trump is expected to sign it.

[MUSIC: Christopher Norman, “Lines” (from Process)]

Today on Freakonomics Radio: we go down a coal wormhole and we discover a surprising fact: one of the biggest hazards of the modern coal industry was a result of efforts to modernize the coal industry. Also: what it feels like for an academic who studies this issue to testify before a pro-coal congressional hearing:

John FLEMING: You should be embarrassed to be here with a study like this!

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I’d like you to meet Michael Hendryx.

Michael HENDRYX: I’m a professor in the Department of Applied Health Science in the School of Public Health at Indiana University.

Stephen J. DUBNER: And Applied Health Science means that you, your discipline and your PhD. and so on, are in what?

HENDRYX: My PhD is originally in psychology. I’ve had a long route to where I am now. I was trained originally in research methods and research design, but for much of my career I applied that to other kinds of health services problems. It was only fairly recently that I started to get interested in environmental issues and in the health problems that the people in the mining communities were experiencing.

Fairly recently being around 2006, when Hendryx landed a job at West Virginia University, in the heart of coal country. He’d come from Washington State University, in Pullman, Washington – wheat country. His research there was focused on mental-health services.

HENDRYX: When I first decided to take the job, I didn’t really have any plans to pursue research interests related to coal. It was something that came about after I moved there.

Hendryx immediately found that West Virginia was different from Washington state in many ways – culturally, politically, and of course geologically.

[MUSIC: Jonathan Headley, “In The Hills”]

Crystal GOOD: My name is Crystal Good and I am a poet, an advocate, and entrepreneur.

Tammy NICHOLS: My name is Tammy. I’m 50 and I am from Summersville, West Virginia.

GOOD: Coal is a part of the fabric of West Virginia.  It doesn’t matter if you’re directly in the mines, there’s an ancillary business that we all benefit from or are connected to.

NICHOLS: This is a rich state, okay? And there is things out there in the mountains and everything that could really make money and jobs for people.

GOOD: Whether that’s my mom unloading a coal truck at DuPont or whether that’s my basketball team being sponsored by Friends of Coal or, you know, however. Everybody’s in some way connected to the industry.

That connection extended to Hendryx’s new university.

HENDRYX: West Virginia University would have their annual Coal Bowl football game, the game between West Virginia and Marshall every year, just as one example. And they had a research center for coal and energy on the WVU campus. Politicians were always quick to support and defend the coal industry if they wanted to get reelected. Very pro-coal environment there.

DUBNER: And it sounds like you were at least a bit of an environmentalist when you came to West Virginia. 

HENDRYX: Well, I loved the outdoors. I learned how to fly-fish and hiking and backpacking and such, yeah. That’s true.

DUBNER: Which is not to align you with any political movement, because we know there are naturalists and environmentalists across all political spectrums. But I am curious what your views were on coal, per se, coming into WVU.

HENDRYX: You know, I really knew almost nothing about it. I was one of those people that didn’t know how the lights were turned on or what the energy sources were. I was educating myself at about that time. I happened to come across a book, it was written by a journalist, Jeff Goodell, called Big Coal. And he was doing stories about the important and kind of quiet role that coal played in American life, and he was describing some of the stories of people that lived in these mining communities. And that’s what got me, kind of the first knowledge I had about this as a potential issue.

DUBNER: And then that led you to think, “Hey, I should take a look at public health implications of coal mining”?  Was it as direct a line as that?

HENDRYX: Yeah. It’s as simple as that. It seemed like a logical next step.

Now, we should back up here and say that coal mining had changed a great deal in the past few decades. As we noted earlier, the industry has been in serious decline, with production falling substantially and, with it, employment. Especially in a place like West Virginia. The Bureau of Labor Statistics, which groups together mining and logging jobs, shows that sector has fallen roughly 40 percent in West Virginia in just the last five years. Again, there are several reasons for this decline – especially the natural-gas juggernaut – but it’s also related to something that happened decades earlier, in Washington, D.C.

President George H.W. BUSH: Thank you all very much. Thank you.

In 1989, at the White House, President George H.W. Bush made a major announcement.

PRESIDENT BUSH: First I’d like to lay on the table my proposals to curb acid rain and cut urban smog and clean up air toxics. And second, I want to call upon all of you to join me in an acting into law a new Clean Air Act this year.

The original Clean Air Act dated from 1963, and it had been amended several times. Bush’s new amendments, which took hold in 1990, directly affected the coal industry and coal-fired power plants. Sulfur dioxide, a byproduct of burning coal, lowered air quality generally and contributed to what was known as acid rain. The new amendments capped sulfur-dioxide emissions and established the first large-scale cap-and-trade program. Michael Hendryx again:

Michael HENDRYX: The Clean Air Act, it has been successful at reducing acid rain pretty significantly and at improving air quality from power plants. There’s no question about that.

But there was an unintended consequence of the new Clean Air Act.

HENDRYX: Economically, it became more attractive to try to mine coal that before maybe wasn’t attractive to mine.

This type of coal had lower levels of sulfur. And it was especially plentiful in the mountains of central Appalachia. To get it, miners turned to a process known as mountaintop coal removal. Rather than burrowing deep beneath the ground for seams of coal, mountaintop removal is a technique that involves literally blowing up mountains.

The health hazards of underground mining – both immediate and long-term – are substantial and well-established. But what about the health hazards of mountaintop removal?

HENDRYX: People that work in surface mining — even though there’s some evidence that they may suffer some respiratory issues over time as well — the evidence is that that’s less dangerous than underground mining.

Statistics from the West Virginia Office of Miners’ Health, Safety, and Training show that surface mining is indeed much less dangerous than underground mining. At least for the miners. But what about everyone else — the people living near the mountains that were being blown up? For Michael Hendryx, a public-health researcher, that seemed a natural question to ask when he arrived in West Virginia.

[MUSIC: Planes on Paper, “Iron Boat” (from The Ruins)]

DUBNER: So at the time mountaintop removal mining was viewed as how in terms of environmental impact, and let’s say, public health impact?

HENDRYX: I think there was always concern about its environmental impacts. I mean, you’re using explosives to literally blow hundreds of feet off the mountaintops around where people live. There’s large-scale deforestation of existing forests in these areas. There’s permanent valley fills that permanently buried several thousand miles of streams in this region.You would hear stories from residents about the health concerns that they had, but nobody seemed to be investigating the public-health impacts of this form of mining until we started this line about ten years ago.

Hendryx began by reading the literature on the effects of open-mining sites and he was surprised to find there wasn’t much.

HENDRYX: And so I thought, “Well, one way or the other, this is an area where I can make a contribution.”

Hendryx began with mortality data from the Centers for Disease Control. It was specific enough that he could identify causes of death at the county level, and for specific population groups.

HENDRYX: So we would merge those data with other data. So we used, as a key source, information from the Department of Energy on the amount of coal that was mined in different counties. And we could merge these together, along with other kinds of demographic and behavioral risks, to try to understand whether people who lived in areas with heavier mining had higher mortality rates.

To find an answer, there was a fair amount of statistical maneuvering to be done.

HENDRYX: The people in these communities, as a general statement, tend to have lower levels of income, they tend to sometimes engage in less-healthy behaviors, smoking rates are higher. So we had to try to account for those somehow. But there are very well-established statistical approaches to be able to do that. So as we looked at it more and more, the evidence became, in our view, stronger, that there really was an independent association of being in mining communities that was related to a variety of poorer health outcomes. And it was an effect that was most pronounced in areas where surface mining takes place, especially mountaintop removal mining. And the health effects were present for men and for women, and for some children’s outcomes, which made us think that it’s more of a community-wide issue and not just an occupational exposure issue.

DUBNER: And talk me through, for a moment, the mechanics by which you believe mountaintop removal, and perhaps other coal mining, actually increases mortality, and the specific ways, I guess, in which it has an ill effect on the health of, as you described it, men, women, children, and I guess in-utero children as well.

HENDRYX: Sure. When we first started doing these studies, we did not have direct measures of environmental conditions. We only had these correlational studies that showed poorer health outcomes in these communities in ways that were not explained by other measures. So that was a limitation of the earlier studies. And more recently, we have been going out and collecting environmental data from communities where mining occurs, as well as control communities where it does not. We found evidence for a variety of environmental problems in these communities.

For example?

HENDRYX: For example, levels of silica, crystalline silica, which we think are coming from removing the rock and soil to reach the coal, which is done through the use of heavy machinery and through explosives, raises dust levels in these communities, and silica levels in particular are known to be a toxicant to lung tissue. They’re known to be a contributing factor to lung cancer, and that’s one of the most consistent health problems that we’ve seen in these communities. We’ve also seen evidence for elevations in some organic compounds in air samples. Polycyclic aromatic hydrocarbons, which are coming in part from, again, from the coal itself and from the rock and soil around the coal, we think, as well as potentially from some of the diesel products that are used in the machinery and in the explosives. So we think the air is a transport route for the health problems that exist. We’ve also measured the particle size in these communities, and we found, somewhat to our own surprise, that the most pronounced difference, when you compare mining communities to similar rural communities in West Virginia that don’t have mining, the primary difference is in very small particles that are called ultrafines that can penetrate deeply into lung tissue, that are known to be a particular health hazard, and those were the particle sizes that were the most pronounced. We’ve done some limited water quality testing, and we find some evidence, as well, for some coal-related contaminants in some groundwater samples. Higher levels of conductivity in water—we don’t know exactly what’s causing that, but there’s evidence for some water impairments, too, that are related to the chemicals that are used in the coal extraction and processing activities.

[MUSIC: Jetty Rae, “Another Town” (from Can’t Curse the Free)]

In a nutshell: a whole heap of bad news. Michael Hendryx and his colleagues would go on to publish more than 30 peer-reviewed studies that, to Hendryx at least, reached a clear conclusion:

HENDRYX:We’re convinced that surface mining in central Appalachia, especially mountaintop removal mining, is an independent significant risk to public health.

The paradox, of course, was that the problem stemmed, in part, from the success of the Clean Air Act:

HENDRYX: The principal unintended consequence of the Clean Air Act was to encourage the development of mountaintop removal coal mining in Appalachia, and there is strong evidence that this form of mining is harmful. It’s harmful not only to public health, but it’s harmful environmentally, and the people who live in these communities have had to suffer so that others can enjoy cleaner air.

Coming up on Freakonomics Radio: Professor Hendryx goes to Washington — which doesn’t go quite as planned.

HENDRYX: Well, to tell you the truth, I was pretty naïve.

*      *      *

 [MUSIC: Planes on Paper, “Monolithia” (from The Ruins)]

The public-health researcher Michael Hendryx had discovered an unfortunate chain reaction: the Clean Air Act amendments of 1990 did clean up the air, substantially, but they also incentivized a boom in mountaintop coal mining — which, his research showed, led to widespread public-health hazards. Not just for the people involved in mining, but for anyone living nearby. The fact is, almost any regulation or piece of legislation will have some unintended consequences. Environmental regulations seems particularly susceptible.

[MUSIC: Lerin Herzer and Andrew Joslyn, “Mister Moon” (from The Dead of Winter)]

About a decade ago, the United Nations began offer a generous bounty to manufacturers for destroying their stockpiles of a pollutant – HFC-23 – that is a byproduct in the manufacture of a common refrigerant. The U.N. was hoping the manufacturers would be grateful enough to collect their money from the stockpiles and switch to making a different refrigerant. Instead, factories in China and India doubled down, making even more of that refrigerant in order to create even more of the byproduct and get more of the money the U.N. was handing out. Or consider the Endangered Species Act. It is meant, of course, to protect species under threat – but there’s a good possibility, as one environmental economist puts it, “that the Endangered Species Act is actually endangering, rather than protecting, species.” Why? Because a species is often declared endangered months or even years before its “critical habitats” are officially designated. This allows time for public hearings – and it also allows time for developers and foresters to rush in and pave over those critical habitats before it’s illegal to do so. So perhaps we shouldn’t be too surprised that a law meant to clean up the air from coal pollution … has led to a different kind of coal pollution. That said, what should be done about it? Based on his research, Michael Hendryx went on record saying the appropriate policy would be a ban on mountaintop coal removal. Some people we spoke with in West Virginia supported this idea.

Casey LITZ: My name is Casey Litz and I am the singer of The Company Stores.

[“Pocket Change” by Company Stores: “Benjamin Franklin, I’d really like to thank him, because he paid all my bills with a smile on his face, and…”]

LITZ: Living in West Virginia this is an issue that is brought up all the time. You know, it pollutes our waters, it’s killing our mountains. We have a lot of other ways that we can create electricity, It should absolutely be banned.

But that view is hardly universal.

Brennan ZERBE: Brennan Zerbe. I’m 26. On the one hand, as like an everyday citizen living here I can say I at least dislike mining because it has a negative impact on my own life. But on the other hand I can’t speak to the need that some people have to work. The need for miners to make a living. And I can’t, you know, in total equanimity say that it should be totally banned.

HENDRYX: Well, to tell you the truth, I was pretty naïve when I first started.

Michael Hendryx again.

HENDRYX: I was coming from this position of being a rational, objective person, and in my naiveté, just moving to West Virginia, not yet really understanding the nature of coal in the state or the political pressures that it could play, I thought people would listen to me and make appropriate responses to the information, and I was quickly relieved of that idea when the first results started coming out and the first efforts from the industry and the politicians were more or less to ignore it, pretend they had never read it, not want to talk about it.  I thought people would listen to these results, and maybe the politicians would even listen, and maybe something could be done, and that was obviously not the case.

In recent years, we’ve learned how different industries – tobacco and sugar, for instance – essentially co-opted academic researchers to produce results favorable to their industries. But here was Michael Hendryx, a newcomer to coal country, putting out academic research that made the coal industry look bad – and complicated his relationship with his university.

HENDRYX: And I know that even though West Virginia University, to their credit, never pressured me to stop directly, I think that some of the upper-level administrators probably received some pressure to try to make me stop, but that was never an issue for me. I was always allowed to do the work that I felt I wanted to do.

Which didn’t mean it wasn’t tricky.

HENDRYX: It would be much easier for me to simply not talk about it and do something else. Because I have felt under considerable pressure to be very careful about what I would say to journalists, and be very cautious about what we would right in the papers.   

DUBNER: When you say you feel the pressure, what do you mean by that? You felt it how and from whom?

HENDRYX:  It was self-imposed, maybe, more than anything, but I knew that my department chair and upper-level administrators at the university were nervous about this work. They wanted me to be really careful. Whenever I would have an interview with a journalist, I would  have someone from the media office, if it was an in-person interview, by my side, to listen to what was being said. My chair would caution me on a regular basis to be careful, be careful and I would always try to do that, because I knew that it was — after I had gotten over my naiveté — I knew that it was a really charged issue and that I was threatening a vested interest, and so I felt that. I felt the stress from it.

One tool that industry groups use to challenge academic work they find unflattering is a Freedom of Information Act, or FOIA, request. In the academic community, Hendryx came to be cited as a prime example of how FOIA can facilitate harrassment.

HENDRYX: We were subject to two very large FOIA requests. And the attorneys for the industry wanted essentially every scrap of paper that existed, every email that went back and forth, every draft of a manuscript, computer codes for the analyses, everything. And the attorneys for West Virginia University, to their credit, fought it as a way to protect academic freedom, and the case was ultimately heard at the West Virginia Supreme Court, and decided in favor of the university, that it was a request from the industry that was designed basically to intimidate, to freeze academic freedom, and to require me, essentially, just to waste a lot of time chasing down documents that they really didn’t need to see.

And then there was the time Hendryx was called to testify before Congress about his research. Under consideration was a proposal concerning mining permits and water-quality protection.

REP. DOUG LAMBORN: The Subcommittee on Energy and Mineral Resources will come to order.

DUBNER: Can you talk about that experience?

HENDRYX: Yes. I was one of—

DUBNER: Or would you rather not?

HENDRYX: It’s all right. It wasn’t the most rewarding experience, ultimately, but I was one of four witnesses who was asked to testify before a committee for Congress—a committee, of course, controlled by the Republican majority. The other three speakers were supportive of the coal industry.

Hal QUINN: I’m Hal Quinn, the president and CEO of the National Mining Association. The Coal Industry strongly supports HR 1644.

HENDRYX: So I was  the lone voice there, and  I felt like the quality of the discussion was pretty infantile.

Rep. John FLEMING: So I would have to say to you, sir, I’ve seen fifth-grade science projects that were more scientific than this.

HENDRYX: You know, I came here not to be insulted.

FLEMING: Yeah, I’m sorry, sir, but–

HENDRYX: This paper when through peer-review. There are 30 of them…

FLEMING: I’m sorry, sir, but I have the time. The time is mine. And I’m sorry, but you’re–I didn’t ask you that question.  

HENDRYX: It can be pretty stressful sometimes.

FLEMING: You should be embarrassed to be here with a study like this!

DUBNER: Did you know pretty much what you were being set up to do?

HENDRYX: No; again, I’m just naïve, I guess. I thought there would be a dignified discussion and I would have a chance to present my views, and others would present theirs, and I didn’t realize that it would turn into this little, insulting little exchange.

FLEMING: You want us to set policy and damage jobs, take away job opportunities from people based on nonsense science here! And–

HENDRYX: Is that a question?

FLEMING: –and, I’m not asking you a question, sir. I’m making a statement.

DUBNER: I know that Representative John Fleming of Louisiana basically treated you as if you were defending your dissertation on how to conduct statistical analysis of public health records.

FLEMING: You control for those? How do you control for that?

HENDRYX: It’s a common statistical analysis to control for other risk factors.

FLEMING: So you use statistical analysis to control for the difference?

HENDRYX: Of course.

FLEMING: Okay.

HENDRYX: Yeah, he clearly knows nothing about analysis himself. He just had some predetermined question or two that one of his aides wrote for him, probably, that he flung out at me. We’ve published, like, 30 papers on the health problems related to this form of mining, and he chose one of them. One of our health surveys that was a published paper, maybe not one of our strongest efforts, but a published paper that documented the health problems in mining communities, and chose to take a couple of potshots at that one paper, as though that was going to make some grander statement about the weight of the evidence as a whole. But he knows nothing about research. He doesn’t even seem to understand basic control issues of how you measure covariates. He knows nothing.

DUBNER: I understand he objected to your reliance on self-reported data, said your sample size was too small. Let’s pretend for a moment that he’s on the other line, and how would you just explain how your research actually stands on its own?

HENDRYX: Well, the sample size for that study was several hundred people. It wasn’t too small. If it had been too small, we maybe would not have been able to find the differences that we had seen. The fact is, we did find big differences in health status across a variety of dimensions, and the sample size was certainly adequate enough to detect those. Self-report is one valid, well-recognized form for collecting health data. There’s plenty of evidence that people are, in fact, able to report their own health status accurately. I’m certainly not the only one who does analyses or writes papers based on self-reported health data.

DUBNER: Let’s say, however, I put you in the prosecution chair for a moment and ask you to pick apart the overall thrust of your own argument here, having to do with the relationship between mountaintop removal mining and health of the community. Talk about what you feel are the potential flaws, weaknesses, or unanswerable, let’s say, questions in your thesis.

HENDRYX: So we haven’t been able to make that direct connection within a single study between the health conditions that people have and the environmental conditions that those same people are exposed to. And that’s a limitation, there’s no question about it. We’re trying to do some work now to overcome that. But if you look at the pattern as a whole, and you see 30 papers—more than that now—and they document that the health problems are present throughout these communities. They become stronger as the levels of mining go up, they become stronger as mountaintop removal specifically occurs, they become stronger as people live closer to the sites. They are not due to other conventional confounds like smoking, obesity, education, age, insurance, et cetera. And, independently, we’ve been able to assess that the water quality is in fact impaired, that the air quality is in fact impaired in ways that are consistent with the health problems that we’re seeing in these communities. Even though we don’t have the smoking gun, you know, we don’t have the magic bullet that explains this relationship: at this point in time, with the weight of the evidence, to try to make a statement that we really don’t know, we really can’t be sure, has come to the point in my view that it’s immoral. And we have something in environmental science called the precautionary principle, that if you know there are health problems in communities, and you know that the environmental conditions are impaired, even if you don’t understand all the causal mechanisms, you have to take appropriate steps to reduce harm, and that’s what we should be doing.

[MUSIC: Johnny Fiasco, “Neptune”]

The Congressman who grilled Hendryx in Washington – Louisiana Representative John Fleming – recently left Congress. We reached out for a response to Hendryx’s characterization of him as someone who “clearly knows nothing” about this type of research. Fleming objected. He told us that in addition to serving as a Congressman, quote, “I am also a board-certified family physician who has studied medical literature for many years. As a trained physician, I can easily identify a well-designed or a poorly-designed study when I see one.” Furthermore, Fleming argued that Hendryx was in league with what he called “tree-hugging” environmentalists. “In short,” he said, “Dr. Hendryx attempted to push a personal environmental agenda in the guise of a public health study. That was plain to see as a physician. The conclusions about his ‘study’ were drawn by me, not my staff.” In any case, Hendryx’s testimony, and his research, have not accomplished what he hoped for.

HENDRYX: Well, I wish I could say it had had more impacts. Mountaintop removal is still taking place.

Hendryx says his research did gain some traction during the Obama presidency: the EPA tightened permitting guidelines for mountaintop removal; West Virginia politicians acknowledged the potential for public-health problems; and, Hendryx says, his message may have helped persuade some big-name investment banks to divest from mountaintop mining. But under a Trump Administration that has vowed to be pro-coal, momentum is already shifting. A late-Obama-era Interior Department ruling, intended to protect waterways from coal debris, appears headed for repeal. Hendryx called this “a very bad idea, in my view.” Still, he’s hoping that research like his will convince policymakers to take a more comprehensive view of environmental legislation generally.

HENDRYX: Try to pay attention — not just when it comes to mountaintop removal. But to any energy policy that we develop — pay attention to the full production cycle: to where it comes from, to how it’s produced, to how it’s extracted, to how it’s used, to how the wastes are disposed of. And not just to the consumption portion. We don’t do a very good job of that, and we should do that regardless of the energy source that we’re using.

DUBNER: But what do you do if your bread is buttered by, you know, the industry and maybe you see the potential downside of your activity and maybe you don’t, but people really dig their heels in and find a way to justify or confirm their position based on, you know, how they put food on their family’s table, or how they pay back their shareholders, and so on. That’s always going to be the case. There’s always going to be some industry or institution that, even if the evidence is not in their favor, they’ll make a strong argument and often win because they have a lot of leverage. So is there anything you’ve learned from your interactions on this issue that you could see would be a useful mechanism to kind of breaking that logjam to where we could perhaps align incentives more productively for the greater good?

HENDRYX: Well, you’re absolutely right that people’s self-interest trumps many other considerations, and finding ways to make that work in our favor rather than trying to struggle against it is probably a smart approach. Better incentives to promote clean energy development, for example, would be one thing that I would think would be a good idea, but how do you do that when you have to face the same entrenched political interests that tend to oppose those kinds of changes? We could talk about it in a rational way, but it’s still going to require — I hate to say this, but I think it may require a crisis before we’ll make real change.

DUBNER: But whenever there’s any change there are always winners and there are losers. So in this case, you know, what if the potential loser were somehow given a winning ticket? What if you could go to the coal industry, let’s say, and then say, “We are going to subsidize your clean-energy development to the tune of X, which is we’re giving everyone, plus 10%.” It’s going to be really hard for you to lose money for the next five years. Would something like that work?

HENDRYX: I don’t want to — this is going to sound like I’m trying to claim your idea, but that was something I’ve actually been thinking about, a while back, is that rather than having the West Virginia Coal Association, we should have the West Virginia Energy Association, and there should be incentives for them to develop a more sustainable long-term approach to the energy needs of West Virginia and of the country. So those sorts of incentives, I think, would be really smart to do, but I don’t know if we’ll be able to do them.

DUBNER: Was your idea for the West Virginia Energy Association met with open arms by the West Virginia coal industry?

HENDRYX: Well, it was one I discussed more with colleagues and friends privately; I never approached them about it.

DUBNER: Ah, so you too need to get out of your silo, though, perhaps, Professor Hendryx, right?

HENDRYX: I do, you’re right, you’re right. I’m sure they would have welcomed the idea with open arms.

[MUSIC: Grow and Twine, “Next To You” (from Wind Fool)]

DUBNER: Why are you no longer at West Virginia University?

HENDRYX: Oh, that’s a pretty boring story, too. My wife is a professor, she’s an epidemiologist, and she was at West Virginia University, too, and she got a great job offer here at Indiana that was an important career advancement for her. So we moved here support her career.

DUBNER: So your move from West Virginia wasn’t due to any kind of pressure — indirect or direct — against your research.

HENDRYX: No. I’m sure that’s a quick question that comes to people’s minds. I’ve been asked about it a number of times. But it’s just not the case. It’s just a personal decision.

DUBNER: Well, for those of us who appreciate academic research and freedom, whether from the individual level up to the provost/chancellor level, that’s very, very nice to hear, that you felt like the university really had your back, even though you were producing research that could have made things uncomfortable for them.

HENDRYX: I’m sure it did make things uncomfortable for them in some other ways, and I’m sure there were a few of the administrators who were happy to see me go. But they did allow me to pursue my work, so I appreciate that.

Coming up next time on Freakonomics Radio, another story about another industry. But unlike coal, this one has been booming:

Chris DeFARIA: Suddenly visual effects budgets went from let’s say five percent of the budget up into the fifties and sixties.

That’s great news if you run a visual-effects shop in Hollywood, right? Guess again:

Bill WESTENHOFER: We had just received this Academy Award and I worked for a company that at that time was going through a bankruptcy.

In a world where Hollywood movies are visually extravagant–why has the visual-effects industry in Hollywood vanished?

Bryan SINGER: It has everything to do with tax incentives! Come on, who’s fooling who?

That’s next time, on Freakonomics Radio.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky. Our staff also includes Shelley Lewis, Christopher Werth, Stephanie Tam, Merritt Jacob, Eliza Lambert, Alison Hockenberry, Emma Morgenstern, Harry Huggins, and Brian Gutierrez. Special thanks to the band The Company Stores, which we played in the episode. Check out their music at TheCompanyStores.com. You can subscribe to Freakonomics Radio on iTunes, Stitcher, or wherever you get your podcasts. You should also check out our archive, at Freakonomics.com, where you can stream or download every episode we’ve ever made – or read the transcripts, and look up the underlying research.  You can also find us on Twitter, Facebook, or via e-mail at radio@freakonomics.com. Thanks for listening.

SOURCES

  • Michael Shawn Hendryx, professor of applied health science at Indiana University Bloomington School of Public Health

RESOURCES

ETC.

The post Professor Hendryx vs. Big Coal appeared first on Freakonomics.

February 9, 2017

(Photo: non-defining)

Season 6, Episode 23

On this week’s episode of Freakonomics Radio: an economist’s guide to dating online. PJ Vogt bravely lets us evaluate his OkCupid account, and we teach him how to game the algorithms.

Plus: Stephen J. Dubner on the state of the marriage union.

To find out more, check out the podcasts from which this hour was drawn: “Why Marry? (Part 1)” and “What You Don’t Know About Online Dating.”

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post What You Don’t Know About Online Dating appeared first on Freakonomics.

February 8, 2017

Srinath Mahankali correctly spelling his word during the 88th Scripps National Spelling Bee
(photo: Chip Somodevilla/Getty Images)

Our latest Freakonomics Radio episode is called “How to Get More Grit in Your Life (Rebroadcast).” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

The psychologist Angela Duckworth argues that a person’s level of stick-to-itiveness is directly related to their level of success. No big surprise there. But grit, she says, isn’t something you’re born with — it can be learned. Here’s how.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

[MUSIC: Pat Andrews, “Get Faster”]

Srinath Mahankali is sitting on a sofa in his family’s living room in Queens, New York. He’s 12 years old. His father, Srinivas, is looking up dictionary words on a laptop, reading them aloud.

SRINIVAS MAHANKALI: Chamois (sham-ee) or chamois (sham-wa)?

SRINATH MAHANKALI: Chamois. May I have the language of origin please?

SRINIVAS MAHANKALI: It’s Middle French from Late Latin.

SRINATH MAHANKALI: Chamois. May I have the definition please?

SRINIVAS MAHANKALI: A small goat-like antelope.

You’ve probably figured out that Srinath was preparing for a spelling bee. It was the Scripps National Spelling Bee, the Super Bowl of spelling bees.

SRINATH MAHANKALI: Chamois. C-H-A-M-O-I-S. Chamois.

SRINIVAS MAHANKALI: That’s right.

Srinath is not the first great speller in his family. A few years ago, his older brother, Arvind, won the national spelling bee and the $30,000 prize. Arvind’s winning word: knaidel, from the Yiddish.

ANNOUNCER 1: Knaidel or knaidel is a small mass of leavened dough cooked by boiling or steaming as with soup, stew or fruit… It’s a dumpling.

ARVIND MAHANKALI: Knaidel. K-N-A-I-D-E-L. Knaidel.

ANNOUNCER 2: You are the champion.

Srinath didn’t win the nationals but still — just to qualify was quite an accomplishment. He got there by winning the New York Daily News competition.

SRINATH MAHANKALI: I won on the word osculatory. [EDIT] O-S-C-U-L-A-T-O-R-Y. Do you want to know what it means? Related to kissing.

MUSIC: Boat, “Do The Magic Centipede” (from Setting the Paces)

Srinath practices a lot. And practice, especially what’s known as deliberate practice, is vital if you want to get really good at anything. In fact, it may be more important than the talent you’re born with:

ERICSSON: With the right kind of training, any individual would be able to acquire abilities that were previously viewed as only attainable if you had the right kind of genetic talent.

That’s what we talked about on a recent episode of Freakonomics Radio – how deliberate practice can help anyone get really good at just about anything. So let’s assume you buy into that. You really believe that talent is vastly overrated, and that with the right amount and the right kind of practice, you can excel. Alright, then, here’s a question: how are you supposed to push yourself to practice like that? Where does that drive come from? How can you increase your determination, your stick-to-it-iveness, your… what’s the word I’m looking for?

VOICES: Grit. Grit. Grit.

Yeah, grit! Grit. May I have the definition, please?

ANGELA DUCKWORTH: I define grit as passion and perseverance for especially long-term goals.

And what kind of questions should we be asking about grit?

DUCKWORTH: What specifically are gritty people like? What do they do when they wake up in the morning? What beliefs do gritty people walk around with in their heads?

And: can someone who doesn’t have a lot of grit learn to get some?

DUCKWORTH: My answer to that would be yes, you can.

*      *      *

[MUSIC: Dink Farklebrink, “Cowgirl Hat”]

Annette Lee grew up in New Jersey. As in many first-generation immigrant Asian families, she says, there was a lot of pressure to succeed, including intra-familial pressure.

ANNETTE LEE: No matter what you did, you always heard about Auntie So-and-So’s son, or Uncle So-and-So’s daughter, who did it better, faster, first. So you would come home and say, “Guess what? I got 1520 on my SATs,” and then you would hear, “Oh, that’s too bad. Auntie Rose’s son got 1600, and he took them in 8th grade.” So pretty much, no matter what you did, you were kind of a disappointment.

Lee’s parents both emigrated from China and met in the U.S. in the 1960s. Her mother was studying for an MFA in painting. Her father got his Ph.D. in organic chemistry and took a job at DuPont. They had three kids; Annette was in the middle.

LEE: We had a very, I think, middle-class upbringing. You know, four-bedroom, two-and-a-half-bath house in the suburbs. If you’ve seen The Wonder Years, that kind of a neighborhood.

In other words, it was kind of average. Average house, average job, and average children. At least that’s how her dad saw it, Lee says. He just didn’t think his kids had much natural talent. One of his favorite sayings was: “You’re no genius.”

LEE: Yeah, “You’re no genius.” You know, I think that we grew up a lot thinking that we were just failures.

Annette Lee, we should say, became a doctor — a reproductive endocrinologist, in private practice in Pennsylvania. But back when she was applying for college and was accepted by Cornell, an Ivy League school, her parents were disappointed that she didn’t get into Harvard, Princeton, or Yale.

LEE: And my parents’ reaction was, “Oh, my God. Thank God we still have Angie.”

DUCKWORTH: Hi, this is Angela.

That is Annette’s younger sister, Angie Lee, a.k.a. Angela, now Angela Lee Duckworth. She did go to Harvard, and to Oxford, and she got a Ph.D., in psychology, from the University of Pennsylvania. But their dad’s whole genius shtick stayed with her.

DUCKWORTH: I think what my dad meant when he would say out of the blue, you know, “You’re no genius,” is that I wasn’t the smartest person that he had met. That I wasn’t leagues smarter than other people my age or people that he knew.

Duckworth’s career has worked out pretty well.

DUCKWORTH: I’m scientific director and founder of the Character Lab and a professor of psychology at the University of Pennsylvania.

And now she’s written a book:

DUCKWORTH: Oh yeah, here comes the self-promotion part. I’m also an author of a book called Grit: The Power of Passion and Perseverance.

Duckworth’s focus is on education, and her research tries to understand how kids learn best. She used to teach 7th-grade math in New York City. In the classroom, watching the successful kids — and the unsuccessful ones – she came to the conclusion that a given student’s natural abilities seemed to matter a lot less than effort, and grit.

DUCKWORTH: That’s right. I want to redefine genius, if you will. I think most people use the word “genius” the way my dad means the word “genius,” — you know, somebody who has an intellectual gift which is far greater than what most people have in a given area, in music or in mathematics, in running or in dancing. And by that natural ability, they’re going to far excel the rest of us, almost by destiny. I think that is what most people use the word genius for. And then they all have their handy list of geniuses that they think of, like Mozart or Einstein. I want to define genius as greatness that isn’t necessarily effortless, but, in fact, greatness that is earned however you do earn it. And so I want to define genius as something that you accomplish yourself as opposed to something that’s given to you.

STEPHEN J. DUBNER: And that brings us, I assume, therefore, to grit. So, talk about grit. First of all, let’s start with how you define it.

DUCKWORTH: I define grit as passion and perseverance for especially long-term goals.

DUBNER: OK, so that sounds kind of like a no-brainer — that everybody in their right mind would want to have more grit rather than less of that. So surely your argument isn’t simply that grit is a good thing to have; it’s that grit is … what?

DUCKWORTH: So, the message of the book is not that grit is a good thing in particular. The message of the book is that like so many other things about us that are good, we can do something to intentionally cultivate grit in ourselves and in others that we care about.

DUBNER: Well, can you start teaching me, right now, or anyone listening to this, how to be grittier? I mean, I want specifics. I want to know what to do; I want to know what not to do; I want to know how long I should expect these changes to take; I want to know if there are going to be relapses that I should be prepared for, and so on. How do we start?

DUCKWORTH: Yeah, when you talk about changing character, or changing grit, it feels like, well, “You can’t change that. People are who they are.” But when you actually get to the specifics, you know, what specifically are gritty people like? What do they do when they wake up in the morning? What beliefs do gritty people walk around with in their heads? When you get to that level of specifics, you realize, “Gosh, there’s no reason why these things couldn’t be taught, practiced, or learned.”

[MUSIC: Andrea Wittgens and Sugartown, “Alibi Was Just an Afterthought” (from Blue Eyed Fool)]

Duckworth has learned what she’s learned about grit in two main ways. One: by conducting in-depth interviews with high achievers — businesspeople, athletes, musicians, and so on — “paragons of grit,” she calls them. And two, by following groups of people, like new cadets at West Point or students in the Chicago Public Schools, and seeing whether a person’s long-term success corresponds to their grit score. (We’ll learn later how she calculates that score.)

Through her research, Duckworth has identified four traits that gritty people have in abundance: interest, practice, purpose, and hope.

DUCKWORTH: Let’s start with the first thing I think that gritty people develop in the order in which they develop it, which is interest. So one thing that I found about paragons of grit, you know, real outliers in passion and perseverance, is that they have extremely well-developed interests. They cultivate something which grabs their attention initially, but that they become familiar with enough, knowledgeable enough that they wake up the next day and the next day and the next year, and they’re still interested in this thing. And I think that is something that we can actually intentionally decide: “I want to be the kind of person who stays interested in something.” And so that passion really does have to come first.

DUBNER: What about, however, if I, or my kid, or someone that I really care about — if I’m a teacher, my students — what if they can’t find a passion?

DUCKWORTH: Yeah, I don’t know if there are many commencement speeches given these days that don’t actually exhort people to follow their passion. And I think that just strikes the fear of God into people because they then think, “Oh, my God I don’t have one. Now I’m really screwed.” And I think the idea of “following a passion” is just the wrong way to phrase it. “Following a passion” sounds like it’s there in the world fully formed, you just have to dig it up under the right bush. Really, you have to foster a passion. You have to actively put some work in and try things, and try them for a little while, and get into them, and then you have to switch, right? Part of grit is actually doing enough exploration early on, quitting enough things early on, that you can find something that you’re willing to stick with. So I don’t know that there’s an easy prescription then for telling people how exactly to do that. But I think one misunderstanding, which is very dangerous, is to suggest to people that passion just falls into your lap, and it’s love at first sight. It’s not like that. It’s not like that for the people that I’ve been studying.

DUBNER: And what happens if I’m interested in something to the degree of passionate, but then my passion shifts over time? Do I feel like I’m therefore a loser? That I’m an anti-grittist? You know, “I used to think I was passionate, but now I think I’m a dilettante.” So how do you handle that?

DUCKWORTH: One of the psychologists that I interviewed said shame is usually not helpful as an emotion, and I would second that. So no, I don’t believe people should berate themselves for deciding that they don’t want to go to medical school after all. But I will say this: it is human nature to get bored of things and to seek the novel. And I think that one of the skills that one must develop in life, if one cares not to be a dilettante, if it’s a goal of yours to become expert in something, one of the skills is to learn to substitute nuance for novelty.

[MUSIC: Saturn Missiles, “Clear to Me” (from Clear to Me)]

I love that idea — “to substitute nuance for novelty.” So rather than constantly moving on to a new thrill, you try to find another level, another dimension, of the thing you’re already doing, to make it more thrilling. Whether it’s a research project or an arpeggio, a breaststroke or a soufflé — wherever your interests lie.

DUCKWORTH: I think there’s something of a skill there that needs to be acquired. Otherwise, we will default to that natural human tendency to click on another hyperlink and go somewhere entirely new.

DUBNER: OK, so if interest is the first trait that gritty people tend to possess, and you say that is kind of the bedrock foundation, yes? That these are attained in order, yeah?

DUCKWORTH: Yes, that’s right. I think developmentally, most people just get interested in something and then some people cultivate those interests. Those interests get developed and then deepened. And that second stage is practice.

Particularly deliberate practice.

DUCKWORTH: The kind of deliberate practice that kind of went viral when Malcolm Gladwell wrote Outliers.

Malcolm Gladwell’s book Outliers is premised on something called the 10,000-hour rule.

DUCKWORTH: Sometimes it’s called the ten-year rule, so-called because the average number of hours of effortful practice was 10,000 hours over 10 years.

But the real guru of deliberate practice is Anders Ericsson, author of the book Peak.

ANDERS ERICSSSON: And I’m a professor of psychology at Florida State University in Tallahassee, Florida.

There are several components to deliberate practice, but generally, it’s about using good feedback to focus on specific techniques that will lead to real improvement.

ERICSSON: So anytime you can focus your performance on improving one aspect, that is the most effective way of improving performance.

Angela Duckworth, in pursuit of a better understanding of grit, has collaborated with Anders Ericsson on research about deliberate practice.

DUCKWORTH: The second stage really does have this quality of laboring in a very methodical way and in a very unfun way for most people to get better and better at this thing that you’ve become interested in.

DUBNER: I think that is a conflict that at least I personally, and I know a lot of people that I know, come up against, which is that if you try to force yourself or will yourself into becoming awesome at something that you don’t have that true passion for, then the practice does become a sort of slow form of torture as opposed to a kind of work that you’re willing to go through because you love the underlying thing even if you don’t love playing that e-minor scale for the 1,800th time today.

DUCKWORTH: I completely agree, and I think that is why interest must come first. I think there are a lot of overeager, probably very well-intentioned parents out there who are kind of like chaining their kids to the piano bench in hopes that seventh hour of practice today is going to put them on course for Juilliard or Harvard. And I think they’re seriously getting things out of order. I interviewed Rowdy Gaines, the 1984 gold medalist in the 100-meter-freestyle representing the United States, and he estimates that in the years up to the Olympics where he won that gold medal, he swam equivalently around the world, right? Roughly 20,000 miles. And so I asked him, “Do you love practice?” And he said, “are you asking me if I love getting up at 4 in the morning, jumping into a cold pool, and swimming laps looking at a black line on the bottom, at the very edge of my physical ability where my lungs are screaming for oxygen and my arms feel like they’re about to fall off? No, I don’t, but I love the whole thing. You know, I have a passion for the whole sport.” And so that passion really does have to come first.

[MUSIC: Salim Nourallah, “Travolta”]

Such passion plainly comes in many flavors. Olympic competition, sure, but also spelling.

SRINIVAS MAHANKALI: OK, the first word is allemande.

SRINATH MAHANKALI: Can I have the definition?

SRINIVAS MAHANKALI: A 17th century and 18th century court dance developed in France.

SRINATH MAHANKALI: A-L-L-E-M-A-N-D-E, allemande.

SRINIVAS MAHANKALI: That’s right.

It isn’t just the competition that excites Srinath. It’s the words themselves.

SRINATH MAHANKALI: I have a passion for words because I just don’t really understand why they put it together in this sort of way. Like, when they got words from different languages, why did they make it spelled this way, that way?

His mother, Bhavani, remembers when her older son, Arvind, caught the spelling bug.

BHAVANI MAHANKALI: Actually when my first one was in like third grade or second grade, he was watching Scripps National Spelling Bee on TV. And then he came out with a notebook, and he was writing all the words because he wanted to be on TV.

SRINIVAS MAHANKALI: Arvind started writing them down, those words, and said, “I want to do this, and I want to be like that,” because they’re small kids. They’re so impressed with small children standing there and asking all the root questions and all that. It was fascinating.

BHAVANI MAHANKALI: I always thought this is only for some other kids. I’m not going to make my kids do that. I always thought that. This is nice to watch but I’m not expecting …

SRINIVAS MAHANKALI: Beyond our realm.

Srinath, at age six, was memorizing the winning words at the National Spelling Bee. He learned the diacritical marks in a dictionary that denote pronunciation. His parents wound up coaching him.

SRINATH MAHANKALI: I got to give a lot of thanks to my parents. They look through the dictionary. They look for interesting words. Some of them are too long. Some of them have very different spellings. Some of them are too short.

Instead, Srinath and his parents focus on interesting spellings and patterns — on French and German and Spanish words so he can master foreign prefixes and suffixes, in case similar words come up.

SRINATH MAHANKALI: Hanap. May I have the language of origin please?

SRINIVAS MAHANKALI: It’s from Middle English, from Middle French.

And then he practices and practices and practices, depending, of course, on how much homework he has.

SRINATH MAHANKALI: Hanap, H-A-N-A-P. Hanap.

SRINIVAS MAHANKALI: That’s correct.

Among the many high achievers that Angela Duckworth has studied are National Spelling Bee contestants. You may not be surprised to learn that high grit scores translate into high spelling scores, and that the style and intensity of practice are extremely important.

DUCKWORTH: Kerry Close, who won the National Spelling Bee one year that we studied it, said the one thing that very grittily studying for the National Spelling Bee for five years in a row — because she won her fifth year of competition — was just the, the ability to take a large something, and break it up into little tasks, and to fractionate things so that they’re not so overwhelming and that you can do them. So that is the second stage, and it’s about doing things that you can’t yet do. And that, too, I think if you ask the question: “Do you think kids could learn how to practice in that way? Could adults who really want to pick up something new, could they learn that?” I think they can.

[MUSIC: Rookie, “Man on a Mission” (from Into the Outer Space)]

DUBNER: If interest comes first, practice follows, what’s next?

DUCKWORTH: The third stage is purpose. Connecting your work, or even your hobby if that’s where your real passion is, to people who are not you. So it’s a beyond-the-self purpose that I’m particularly observing in grit paragons. And I used to think, well, of course that will apply to people who are working on the cure to cancer or people who are working in community organization. But, in fact, even athletes, who you might say, “Well, they’re doing something kind of selfish, right? They’re trying to win the gold medal for themselves.” But even these people who have ostensibly very personal, or you could argue, selfish interests, they really see how their work is connected to other people. Athletes will say they feel connected to their teammates, to the sport as a whole. So I think that this third stage doesn’t happen at the front for most people.

DUBNER: OK. And the final component of grit is?

DUCKWORTH: The final component is hope. And I won’t say that you only need that only after you’ve been doing something for 12 or 15 years. You really do need hope from beginning to end. Because, of course, no matter where you are in your journey, there are going to be potholes and detours and things that might make you think that it’s not worth staying on this path. So hope, essentially, is the belief that there’s something you can do to come back from these problems or from these challenges. And I say that it’s the fourth component, but it’s really something that you need at varying degrees in varying ways all along.

DUBNER: So when you’re writing about hope, and you link it to optimism and you talk about the difference between optimists and pessimists, and you write that optimistic people tend to perform better in school, in their work, that their health is better, than pessimistic people. But whenever I see a piece of research like this I wonder: “Well, how do we know that the people that are identified as optimists aren’t optimistic because they’re better off in life? And how do we know that the pessimists aren’t pessimistic because they’re having a hard time, and that the arrow isn’t going in the other direction?”

DUCKWORTH: It’s a really good question. And I think you’re partly right, by the way. Why would somebody be optimistic? I think in part it’s because they enjoy a virtuous cycle of believing that they can change things, looking for ways that they can improve their situation, putting forth effort, in fact, making some change in their situation for the better, reaping those rewards, and the whole cycle starts over again, right? And you could imagine the vicious cycle for pessimists. And, in fact, this is what actually happens, in particular, for example, with clinical depression. When you have at the extreme a pessimistic outlook that says, “I’m hopeless, there’s nothing that I can do because I’m a loser. I’m not going to go to that party. I’m not going to take that job interview.” OK, then what happens? Social isolation, unemployment that confirms your intuition that everything’s awful. You sort of produce the evidence for yourself that you were right all along, which then gets you to be more entrenched in that pessimistic state. So you’re very likely correct that there’s this reverse causality. I would just call it part of this reciprocal causality that reinforces things.

*      *      *

DUBNER: So Levitt, let me ask you this question. However you think of grit, how would you rate yourself on a scale of 1 to 5 on grittiness?

LEVITT: I am not very gritty when it comes to things I don’t like.

[MUSIC: Arian Saleh, “Better in Blue” (from The Cobblestone)]

That’s my Freakonomics friend and coauthor, Steve Levitt. He’s an economist at the University of Chicago.

LEVITT: Almost every day, as I watch my kids go to school, I think about how glad I’m not in school anymore. Because school forces you to do all sorts of things that you hate, like to swim in a really cold pool, or to learn French, or to write humanities papers about Lord of the Flies. Things I really wouldn’t want to have to do. And at this point in my life, I have no grit for things like that. But for things that I have an intrinsic interest in, I am incredibly gritty. I would say I am about the grittiest golfer who’s ever walked the planet. So, you and I, we played 72 holes in two days, and at the end of those 72 holes, all I wanted to do was go back out to the driving range and the putting green, because I felt like there so much work to be done.

In the professional realm, meanwhile, Levitt very much subscribes to the “passion” argument.

LEVITT: One of the things I’ve always used as an indicator of who will be an excellent economist is the people who love it the most. So, even if they don’t have a lot of talent, even if they haven’t had a lot of good publications, when I talk to people who love economics more than anything else in the world, I know that in 10 years, they’re still going to be working as hard as they can to try to get the answers. When I find people who treat it like a job, who don’t seem to like it, but have a natural talent, I think that’s often an indicator of someone who when the going gets tough, they will not have grit.

But let’s back up a minute. How can you tell how gritty somebody actually is? If we’re going to try to figure out how important grit is in success, you need to be able to measure their grit, right? These are the kind of questions that are central to Angela Duckworth’s research. Questions that don’t always have complete answers.

DUCKWORTH: Yeah, I’ll first say that I wish I knew more. As a scientist — and I, in some ways I resisted writing a book because a scientist is, by training, I think very cautious about overreaching the data. But in my research lab, we do longitudinal studies of individuals at places like West Point or the National Spelling Bee or Chicago Public Schools — places where we can follow people over time in situations that we believe are challenging, and we can measure in some objective way their performance. And we can measure grit at the beginning and their performance at the end and in many cases other things like I.Q., where we want to make sure that we’re controlling for that. So a lot of my research is based on these longitudinal studies: measure their grit, look for differences — high-grit people, low-grit people, people in the middle — and then see what happens.

To measure grit, Duckworth designed a twelve-question survey called the Grit Scale.

DUCKWORTH: I abbreviated it to 10 items in the book because I have discovered, through personal experience, that people are not very good at dividing by 12 to calculate their score.

DUBNER: OK.

DUCKWORTH: But the origin of this scale were interviews that I had done in my very first years of graduate school, when I was trying to understand what the psychological characteristics were of super-high achievers. First I asked them what they were like. And I learned very quickly that people who are, you know, Nobel laureates or the equivalent in their field, aren’t very good at describing themselves, in part, because I think we’ve all be trained to be humble and self-deprecating. So I started asking people about the people that they in turn admired most. And the questions on the scale are almost verbatim the way that these other super-achievers were described to me.

DUBNER: OK, so, Angela would you read a couple of these grit questions from the questionnaire, and I’ll go ahead and answer them.

DUCKWORTH: Yeah, so let’s start with perseverance. So on a scale from 1 to 5, where 5 would be very much like me and 1 would be not at all like me: “setbacks don’t discourage me. I don’t give up easily.”

DUBNER: I would say, 4 out of 5. That is mostly like me.

DUCKWORTH: OK. “I finish whatever I begin.”

DUBNER: Oh, well, I’m interpreting that in my brain. I’m going to say, not like me at all. I mean, I finish the things that are really important, but there are a lot of things that I don’t finish. I’m going to say not.

DUCKWORTH: So not at all? So 1 out of 5?

DUBNER: Yeah, I’m going to say 1 out of 5.

DUCKWORTH: OK. “I am a hard worker.”

DUBNER: I would say 4 out of 5. That’s mostly like me.

DUCKWORTH: “New ideas and projects sometimes distract me from previous ones.”

DUBNER: Oh, daily. Yeah, very much like me. 

DUCKWORTH: And then, “my interests change from year to year.”

DUBNER: I’d have to say I’m in the middle on that. Only because some interests are very, very constant, but then a lot of new ones, and I kill off a lot of old ones. So I guess 3 out of 5.

DUCKWORTH: 3 out of 5. OK, right in the middle—

DUBNER: I have a feeling I’m like, I’m heading toward real middle-grit territory. I’m like not very gritty. OK, give me one more.

DUCKWORTH: “I have been obsessed with a certain idea or project for a short time, but later lost interest.”

DUBNER: It’s interesting because I want to argue with every one of your questions, because I want to argue that the fact that I’ve been obsessed with a certain idea or project means that I have some passion, so doesn’t that get me up on the grit scale? But I do lose interest. I would say that that’s mostly like me. I get obsessions. I follow them for a while, then I kick them out of bed.

DUCKWORTH: So not so gritty, right? Two point something. Between a two and a three. Let’s see. I’ll turn it over, and I’ll give you your percentile. Yeah, 10 percent. Yeah, I think you’re roughly comparable to 10 percent of a sample of American adults. There’s lots I could say about the danger of making comparisons and error, but I absolutely agree that sometimes you take these scales and you just want to shout back to them because you don’t want to circle the answer; you want to explain why the question itself is flawed. I’d love to hear what your reactions are.

DUBNER: Well, not necessarily flawed, but that, as with any survey in life, it’s hard to reduce it to a number or a letter because there are different components of it. In other words, I want to give an essay answer rather than a multiple choice answer, which I know is not the ways surveys can work if, from your end, you want to use them. But I guess that does get me to the gist of the question, which is: it’s a self-reported pile of data. So how good is it?

DUCKWORTH: Yeah, I think I’m quoted in The New York Times saying all measures suck, and they all suck in their own way.

[MUSIC: Paul Freitas, “You Gotta Be Kidding”]

This is true. The Times article was about how some California schools are using socio-emotional measures to assess students’ performance. Now, you might think that Angela Duckworth, the standard-bearer for grit, would be leading this parade too. But you’d be wrong. “I do not think we should be doing this,” she told the Times. “It’s a bad idea.” Just in case anyone missed her point, she wrote an opinion piece for the Times a few weeks later called, “Don’t Grade Schools on Grit.” She argued that the measurement of grit and other character traits may never be good enough for such an important assessment. And she resigned from the board of a non-profit that was working with the California schools. All this led me to ask her what seems an obvious question:

DUBNER: So how can you claim that grit is so important while also claiming that we’re not very good yet at measuring grit?

DUCKWORTH: Well, first of all, anything that a social scientist wants to measure from poverty to self control to I.Q. to how well somebody can read, there are no perfect measures. So let’s take a questionnaire. They’re all fakeable. There are no un-fakeable questionnaires. There simply aren’t any. And they’re also subject to something called reference bias. So, for example, you gave yourself 1 out of 5, the lowest possible score on finishing whatever you begin. Now, I think you made a good point about [how] you don’t finish everything; you finish it if you care about it. But if you really think about that, I wonder whether if you just compared yourself to humanity, and asked, “Compared to humanity, are you really in the bottom of the group in terms of finishing things?” I doubt that. My guess is that, in part, you’re comparing yourself to a different standard than other people might be comparing themselves — a very high standard. That’s probably, in part, why you do finish things. So that reference bias is another problem of self-report questionnaires. I don’t think that any of the measures that are currently available are appropriate for high-stakes accountability policy like whether a school is doing a good job educating their kids. That’s not to say that we can’t measure anything at all and we should just throw up our hands and go home. It just means that when we measure things, we should know in what ways our measurements are imperfect. And we should know that any data that we get from these measures is going to carry signal, but also noise.

DUBNER: OK, let me play devil’s advocate for just a minute. What if you’re just wrong about grit? That it’s not important as you argue? So, for instance, I understand there’s a new study by researchers at King’s College London suggesting that grit “adds little to the prediction of school achievement,” which runs contrary to some of your conclusions. They argue that the samples that you’ve used — spelling-bee finalists, and teachers — are too selective, and therefore, “lead to stronger associations between grit and achievement later in life than might be the case in a wider sample.” So tell me you’re not wrong. Or maybe you are wrong and extraordinarily gritty in your ability to admit to…

DUCKWORTH: Well, I think it’s always important to remind yourself that you could be wrong, right? I know the study that you’re talking about. In particular, in that study, it’s looking at self-reported grit scores as they correlate with your standardized achievement test scores when you’re 16 years old. And yes, grit is predictive, but not as predictive as something like a broad scale of conscientiousness.

A “broad scale of conscientiousness” meaning the “big five” personality traits that psychologists talk about: extraversion, agreeableness, conscientiousness, openness to experience, and neuroticism. The King’s College London study looked at a sample of 4,500 16-year old twins in Britain.

DUCKWORTH: So a couple reactions. One is that I don’t expect grit to predict all success outcomes equally. I don’t think that for many 16-year olds, their standardized reading and math scores are a goal of personal significance to them. And so, that’s why I study at places like West Point. Like, if you’re a salesperson, do you stay in your sales job? If you know you’ve committed to college, do you finish college? Goals that are at least at some level important to you, and I know that they are. You could say that that’s a kind of success outcome. That’s not all success outcomes, because achievement test scores are another kind of success outcome. But am I wrong? I mean, I guess it would be hard for me to believe — I’ll just confess my bias here — it’s going to be hard for me to believe that in 20 years, research comes out to say that effort doesn’t matter. That the quality and the quantity of your effort doesn’t matter. That really, the great accomplishments of humankind have been made by people who labored for only minutes or weeks and not for decades. That actually it’s possible to get somewhere in life without being hopeful, without learning to practice, without having a sense of meaning, and without being interested in it. So, you know, I could be wrong; it’s just, it’s really hard for me to imagine at that fundamental level that I am.

[MUSIC: Debbie Miller, “You Make Me Happy” (from You Make Me Happy)]

DUBNER: So, for parents or would-be-parents out there, what are some ideas for instilling grit? Or maybe the better question would be: what are some ideas for not killing the appetite to accomplish grit on their own? Because you do write about how overbearing parents and teachers erode intrinsic motivation. And if motivation is the first step, obviously you don’t want to kill that before it can flourish.

DUCKWORTH: Yeah, I mean, I’m a parent to a 12-year-old and a 14-year-old, so after I leave the lab, I sort of come home and there’s this study of grit all over again, but just with my own kids and what to do with them. So yeah, first I do try to remember that though the perseverance piece, the hard work, the kind of get up again after you’ve fallen down, that’s very important. But if I’ve sort of skipped that chapter on them feeling like it’s interesting to them and eventually that it is also purposeful to them — that it’s important to them, and important because it means something to other people — if I skip that, then really I’ve maybe done more harm than good by trying to get them to now work really hard at it. So I do try to keep that in mind. I also think it’s naive to — I used to believe that I’m such a hard-working person that my kids will just watch me and that they will sit down at the piano bench and like start practicing scales—

DUBNER: Osmotic grit, yeah.

DUCKWORTH: Osmosis, yeah, that’s a great idea. I wish that it were so. But I think that even kids who have the potential to be very gritty, they really do need parents to say to them, “No, you actually do have to go to track practice today even though it’s raining.” Or, “You know what? That practice was — you know and I know that that practice was not serious practice, right? Let’s give it another shot.”

DUBNER: I’m curious if the partners and/or spouses and/or co-workers of people who have a lot of grit are also better off. Is grit a tide that lifts all boats? Or does it kind of swamp everybody around it?

DUCKWORTH: I do not have data on that. We have not yet asked about the happiness of the people who are living with these very gritty people. What we do have data on is the happiness of those gritty people themselves. And we find just a straight line — the more grit you have, the happier you say you are, the less anxiety you have, the less depression, the less sadness. So, from a personal perspective, grit seems to be terrific because you’re better off in terms of your achievements, but you’re also happier. But we don’t know — we really don’t — if that comes at the cost of your loved ones. I mean I’ve asked my own family — I mean, those are the only people that I can ask this question — you know, does it bother you?

DUBNER: What do you say, “Is my grit driving you crazy?”

DUCKWORTH: Yeah. Exactly. “Do I work too hard? Is your life worse off?” And I do think there is a cost, right?

DUBNER: I mean talk about unreliable self-reported data, though. What do you expect them to say to you? “Yes mom! We hate how hard you work.”

DUCKWORTH: Totally biased. Yeah, right. “We hate you.” But I will say this too. To be a really gritty person at the very extreme, take somebody like an Isaac Newton, who was singularly obsessed and there was nothing in his life, really, other than his work. You could spend a lot of time thinking about the consequences to the other people in his life. But I think for a lot of people who are listening, they’re nowhere close to that level of grit. They might be closer to the dilettante you jokingly described yourself as. And I think for those people to wonder, “Well, what if I did something with some more passion? What if I found something to be of deeper interest to me? Something that I’d be willing to be interested in, not just for the next year, but really actually for a few years. And I’m going to actually start working hard at this and trying to get better. And when bad things happen, I’m going to try and get back up again.” If you ask your question like, “Is that going to be bad for the people around me?” I’ll tell you one thing: the people who you love, love you back, and they probably want you to be a fulfilled individual. And by that metric, that should be a tide that raises the boats.

That is Angela Duckworth. Impressive; interesting; gritty. By the way, remember how her dad always used to say, “You’re no genius!”? Well, in 2013, Duckworth won a MacArthur Foundation fellowship, also known as the Genius Grant. Just sayin’.

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Next time on Freakonomics Radio: the Clean Air Act did a lot of good things for a lot of Americans. But not all of them:

Michael HENDRYX: The people who live in these communities have had to suffer so that others can enjoy cleaner air.

The unintended consequences of environmental regulations — that’s next time, on Freakonomics Radio.

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Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Christopher Werth. The rest of our staff includes Shelley Lewis, Merritt Jacob, Greg Rosalsky, Stephanie Tam, Eliza Lambert, Alison Hockenberry, Emma Morgenstern, Harry Huggins, and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

ETC.

The post How to Get More Grit in Your Life (Rebroadcast) appeared first on Freakonomics.

February 1, 2017

John Urschel, Penn State graduate, NFL offensive lineman and Ph.D. candidate in mathematics at MIT, has some advice on how to enjoy the Super Bowl. (Photo: Penn State/flickr)

Our latest Freakonomics Radio episode is called “An Egghead’s Guide to the Super Bowl.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

We assembled a panel of smart dudes—a two-time Super Bowl champ; a couple of NFL linemen, including one who’s getting a math Ph.D at MIT, and our resident economist—to tell you what to watch for, whether you’re a football fanatic or a total newbie.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

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[MUSIC: Tony Flynn, “Orchestral Dawn”]

[MUSIC: Richard Freitas, “Gridiron Glory”]

Super Bowl Sunday has become a sort of secular holiday in the United States, with more than 110 million people watching the game on TV. As with any audience that large, there’s bound to be a lot of variance among the viewers. You’ve got hardcore fans, especially of the teams involved – this year, the New England Patriots and the Atlanta Falcons. You’ve got the people who like football well enough but aren’t fanatics. And then there’s a large swath of people who probably don’t watch much football at all. They’re primarily there for the party, and the chicken wings. Or maybe they’re new to this country, or at least new to the sport, and have no clue as to how American football even works. So we thought: what can we here at Freakonomics Radio do to make this secular holiday a little more enjoyable for everyone? That’s why we assembled a few bright people, including two current NFL players; a former player who’s a two-time Super Bowl champion; and because this is Freakonomics Radio, a Ph.D. economist, to create this  episode: “An Egghead’s Guide to the Super Bowl.”

*  *  *

For our Egghead’s Guide to the Super Bowl, we’ll start with our resident egghead, Steve Levitt.

[MUSIC: Dorian Charnis, “Endurance”]

STEVEN LEVITT: Hey, Dubner.

Levitt is my Freakonomics friend and co-author, an economist at the University of Chicago.

DUBNER: So Levitt, I’ve known you a long time and I know you’ve written a lot of papers on different sports and elements of sports — sumo wrestling and soccer and sports gambling, for instance. But honestly, if someone were to ask me, “Hey, is Steve Levitt a sports fan?” I don’t really know. I don’t think you actually enjoy watching just to watch your — you don’t really enjoy rooting for a team or anything plebeian like that, do you?

LEVITT: Well the sad part is I used to. I grew up as a huge sports fan and then before I wrote papers on sports gambling I did a lot of sports gambling myself and although sports gambling was really, really fun, the problem with it was that once you start betting on sports it became, at least for me, I think for most people, hard to maintain any kind of loyalty to the home teams like the Minnesota Vikings or the Twins that I grew up loving so much. And even though I no longer gamble on sports, I’ve never been able to get back my mojo when it comes to really caring about a team just for the sake of caring about a team.

DUBNER:  So considering that you don’t love watching the game just for the sake of the game or the competition or your team, whatever. Um, are there ways that you enjoy it anyway? Are there things that you look for whether they’re kind of brain puzzles or kind of bets against yourself to see, you know, if X happens will Y happen and so on?

LEVITT:  Well I don’t do anything as intellectual as all that. But  I do watch the Super Bowl, and there are at least two things about the Super Bowl which  at least for me give me a source of entertainment when I watch the game. Now the  first of these of course is the ads, and there’s really nothing else in the world like Super Bowl ads. And I don’t know why I love them so much. It’s partly because I know so much effort has gone into them, partly because there’s so much creativity and partly because I am … I always do focus on the intellectual side of wondering whether the ads will actually work. And it’s an interesting problem. So in general it’s very hard to figure out whether advertising works. In particular it’s extremely difficult to know whether something like a Super Bowl ad actually works and in a time where now this year I think the 30-second Super Bowl spot will be selling for $5.5 million, it’s a good question to ask whether or not indeed the investment that the firms are making in these ads pay off, and so as I watch the ads I’m always intrigued to think about whether or not there’s any conceivable way that the ad that you’re seeing might lead to a positive ROI for the advertisers.

So that’s one thing to think about during the Super Bowl, especially if you’re not that interested in the football. But what about the football? Let’s introduce the rest of our egghead panel, all of whom are quite qualified on that front.

[MUSIC: Ed Hartman, “Football Funk”]

My name is John Urschel. I’m a Ph.D. student at MIT in applied mathematics and I also play football for the Ravens in the NFL.

WINSTON: Eric Winston. I am a right tackle for the Cincinnati Bengals. Just finished my 11th year and I am the president of the NFLPA.

TUCK:  Justin Tuck, former NFL defensive end now Wharton MBA student.

So we’ve got in John Urschel a guy getting his math Ph.D. at MIT while playing in the NFL; in Eric Winston, the president of the NFL players’ union; and in Justin Tuck, a recent retiree, with two Super Bowl rings, who’s now getting his MBA at Wharton. Surely their recommendation for what to watch for isn’t the same as Steve Levitt’s? And yet … it is:

URSCHEL:  It does not matter how much or how little football you know. You will enjoy the commercials. When they go to commercial break, this is not your time to get up and go to the bathroom and like go get some like chips and dip.

WINSTON: Watch the halftime show — it’s great. The halftime show is phenomenal. The commercials are great too. The commercials are really funny.

TUCK:  I’ll tell them to pay attention to the commercials. The commercials are really good.  

Okay, so watch the commercials. As for the game itself? We’ll start with what to watch for if you know absolutely nothing about the sport of American football.

URSCHEL: I’d say it’s very much similar to rugby

John Urschel, the mathematician.

URSCHEL: Except some main differences are when you have the ball and you get tackled, they actually stop play, so rugby you know it’s continuous play. They actually stop play and it’s a lot of set pieces which a lot of people who don’t watch football and a lot of international people, they think it’s kind of strange, they think it’s kind of slow. But I think the thing to watch for and appreciate is the fact that because football is broken up into these bits of like seven, eight second plays with these breaks in between, in those seven and eight seconds you get to see so much athleticism and just so much physical talent that it makes it a much higher quality seven or eight seconds broken up than if you watch an entire rugby game throughout or an entire soccer game throughout. I can tell you that on every single play if you watch it closely and you really pay attention to the players you will see amazing feats of athleticism every single play which I can’t say for every single minute of say West Ham versus Arsenal.

TUCK:  I would say if you don’t know anything about the game, right, you probably will watch the person with the ball.

Justin Tuck, who played nine seasons with the New York Giants and two with the Oakland Raiders.

TUCK: Like obviously the center has the ball first. He’s going to snap it to the quarterback in some capacity while he’s in the shotgun or under center. And then from there if it’s a run play, you know the quarterback is going to hand the ball to the running back. If there’s a pass play the quarterback is going to drop back and figure out what is the best option for him to disperse the ball to another player.

WINSTON: If you actually want to watch the game, step one — don’t bother a guy that’s really watching the game to explain it to you.

Eric Winston.

WINSTON: Like, that is the worst. Like we can do that at halftime we can… just right in the middle of the series don’t start pulling, “Hey, what’s that mean?” or whatever. So that’s step one if you’re a novice or you’re you don’t really care about the game.

DUBNER: I’ve often been told and read that all offensive linemen are on average the smartest guys on any football team. Is that true and if so, why is it?

WINSTON: Of course. Without a doubt we’re the smartest guys in the field.

URSCHEL:  I like to think we’re pretty bright.

Urschel is also an offensive lineman.

URSCHEL: I mean, I hate to judge people just based off their position group but I like to think we’ve got some pretty smart guys. Certainly I would I would agree with that in that you know being an offensive lineman requires more kind of mental function in a given game than say playing as a defensive lineman or linebacker or defensive back and that’s certainly true. You have to know your assignments know all these plays. Be able to see what the defense is doing make adjustments and then to be all on the same page all five of you, because all it takes is one of you to mess up and the whole play is just ruined. As opposed to on defense, all it takes is one of you to make an amazing play and the whole play is just brilliant.

I asked Justin Tuck the same question – if offensive lineman are, on average, the smartest group on the field. He, remember, was a defensive lineman.

TUCK: I would say as a group they probably are.

DUBNER: Really? I can’t believe you’re giving it to them just like that.

TUCK: Wait, wait,  you didn’t let me finish. Let me finish. As individuals go, you know I would probably say all the O-linemen had to be you know, C caliber of smarts, where you get guys at the center position probably has to be B , you know a B-plus type, quarterback has to be probably A.  But you know you know obviously they’re going to say — and I heard you talked to two pretty good ones — so I could give that to them. For the whole, I give that to them.

So if you’re a football novice and you’re watching the Super Bowl, you’ve got a few things in your pocket: watch the ads, of course; during the game, watch the ball but also take advantage of the stop-and-start nature of the game, that seven or eight seconds of amazing athleticism; and finally, if you’re looking to impress someone, tell them how the offensive lineman – the huge gentlemen up front who protect the quarterback and clear the path for runners – how they’re probably the brightest guys on the field. All right, then, what if you already know a fair amount about the game? We asked our eggheads what you should watch for. John Urschel first:

URSCHEL: I think one thing that’s always interesting to think about, that I think the regular fan who watches a lot of football doesn’t kind of put in their head, is, think about the kind of chess match going on here. Think about the actual strategies that the team have and try to think about what wins and loses a football game. Because you know you’re a football fan, you watch all these games, you root for your team. You know you’re a diehard fan. But really what are the fundamental things that win and lose football games and what are the critical moments and how do you know them when they get there. The sort of awareness of, “Well, how do these wins and losses really really come about?”

[MUSIC: Joshua R. Mosley, “Government Suspense”]

To that end, Justin Tuck suggests you look for patterns in how a given team handles different situations as the game goes on.

TUCK: You can figure out you know, depending on what the team had done earlier in the game why they would come back to do something you know later in the game that way. I would say look at personnel like whether — you know, normally in third and ten, you know you’re going to be more a passing attack type of offense. And obviously on defense they’re going to be more in the nickel packages and trying to stop the pass.

 Eric Winston has some simple but useful advice for a fairly knowledgeable football fan:

WINSTON:  Look who affects the middle of the pocket.

Meaning?

WINSTON: Meaning, see what team can move make the quarterback move horizontally.

The quarterbacks to watch this year are Matt Ryan – a great player for most of his eight seasons with the Falcons, but playing in his first Super Bowl; and Tom Brady of the Patriots, playing in his record seventh Super Bowl.

WINSTON: Tom does a phenomenal job of what they call stepping up in the pocket, meaning that once the ball has been snapped and the quarterback’s looking downfield he moves upward in the pocket, usually right to the direction of where the ball was snapped by the center. He steps up and is looking to make a good throw because it’s easier to make a throw when your shoulders are perpendicular to the line of scrimmage and you can follow through. So if you’re affecting that ability, especially for Tom, in making him move sideways, he doesn’t throw the ball as well. So Matt’s a little bit… as similar to Tom Brady in that sense. He likes to play from the pocket. He likes to be able to step up and make throws. He’s used to making throws with some guys on him. He’s a big guy. … If they’re pressuring the middle of the pocket and making Matt Ryan move around and move laterally, they’ll be better for it.

If this actual football stuff doesn’t move you, Eric Winston has something else to think about. Something that comes from playing the NFL for 11 years and not making it to the Super Bowl.

WINSTON: So this is a little factoid that I’m sure a lot of your audience might be interested in. Most players, even though they have the option of buying two tickets and going to the game, won’t go — the active players won’t go there. There’s very few players that will go. The old adage is you don’t go to the Super Bowl until you play in it. And so that’s always been most guys’ thing, that they’re not going to… They’ll come to the park they’ll come to Houston to go to some of the parties and do some media engagements and talk to people and meet people but they leave either Sunday  morning to get home so they can watch the Super Bowl or they’ll leave Saturday.

DUBNER: Just because it’s too hard to sit there and watch it in person?

WINSTON: Well, It’s just that’s just one of those things. It’s just it’s like superstition almost. You just don’t you know go to the Super Bowl until you played in it.

Coming up on Freakonomics Radio: our eggheads tell you what to watch for if you’re really into football, or want to seem as if you are. And: if you’re the kind of person who hears the word “football” and thinks of soccer – well, we’ve got that in our Freakonomics Radio archive too – at Freakonomics.comon iTunes,  and elsewhere. I’d suggest you start with the episode called “Why America Doesn’t Love Soccer (Yet).” There’s also one called “The Longest Long Shot” – that’s about Leicester City Football Club’s amazing Premier League title. Both episodes include my footy-loving teenager Solomon – and, if you’re really into it, he and I do a whole separate footy podcast called Footy for Two. Check it out.

*  *  *

[MUSIC: Brian Curtin, “Will to Win”]

How do you watch the Super Bowl? Depends – depends on how much you care about the teams; depends on whom you’re watching with; and your level of interest and knowledge. In this “Egghead’s Guide to the Super Bowl,” we’ve been asking NFL players past and present – Justin Tuck, John Urschel, and Eric Winston – things that anyone can look for. We’ve already covered the average football fan and the total newbie; but what should someone who really knows the game watch for?

WINSTON:  I look at formation — are they doing a lot of two tight-end sets, are they completely open sets? And what are they. Are they under center quite a bit? I still believe and they’ve gone away from this. But I still believe the more you’re under center, the more deception you have in your offense. You’re more you’re able to play- action pass more you’ll able to do different running plays, I think out of shotgun you are limited to me and some of the things that you can do. And so I look at that. I’m looking at the defense obviously –- are they moving around, or are they stagnant or are they blitzing a lot. And then once the ball is snapped I’m watching the front seven, meaning the offensive lineman. Plus the down linemen and linebackers and how are they, who’s winning there,  who’s not winning.

That was Eric Winston, long-time offensive lineman, and current president of the NFL Players Association. And here’s advice from John Urschel, the Ravens offensive lineman who’s also getting his Ph.D. in applied math.

URSCHEL:  I would tell them pick any position that they find interesting, whether it’s you know, like a corner back or whether it’s a certain wide receiver and you’ll really notice more about the game if you just pick a position or even pick a player and just watch that player the entire game,  just to see what that person’s game is like the whole game, because very much very often you know football fans even hardcore football fans who know a lot, they’re always watching the action and they kind of miss out on the idea of well what’s this player’s day actually like. So if you look at a wide receiver– what is that wide receiver doing on pass plays where the main route combination is not to his side. What is he doing when it’s a run play. Is he running them off, is he just jogging, is he talking to the corner back? What you know what is going on there.

DUBNER: Offensive linemen are in the unfortunate position of when on the rare occasion that they make a mistake, and are called for holding, that is often one of the only times that their name is mentioned on the broadcast and the camera goes to them and so on. It is just an unfortunate situation.

URSCHEL: Well, no offensive linemen will ever admit this but since we’re talking you know mathematically holding happens a lot during a game but only gets called … and when it gets called it’s always kind of a little questionable. Should have been called, shouldn’t have been called. So there’s always this risk-reward as an offensive lineman for how long you hold for, how hard you hold, in terms of how often you get holding calls during the season, as opposed to how much this helps you maintain your block.

DUBNER: Do you find that an offensive lineman or defensive lineman is more prone to fatigue?

URSCHEL: Defensive linemen certainly, because they have to run to the football. So an offensive lineman’s job is I’m blocking this man and I’m stopping him from either getting to the quarterback or getting to the running back. And while his job is to get to the quarterback or the running back so you know I’m blocking him. And suppose the running back runs all the way to the other side eventually he’s going to get off my block. He’s never going to get to the guy but he still has to start running in that direction. If the quarterback throws the ball and a receiver catches it. Well I’m not much good downfield I’m running downfield but the defensive lineman has to sprint downfield to try to help to make the tackle. So they get tired much more quickly than we do. Also I think there’s some fatigue involved in not knowing what’s happening. So we have to always be going always be you know aggressive whereas I know the play I know what’s going to happen,  they have to figure this out.

DUBNER: That’s such an interesting point because there’s a lot of social science research psychology particularly that shows that uncertainty is exhausting. And people make really poor decisions under uncertainty. So you’re saying that even for the defensive. For anyone on the defense I guess you’ve got that doubt all game long.

URSCHEL: Yes. You’ve got this constant uncertainty.  

TUCK:  If you ever want to watch smart football players, especially on the defensive side, just pick a defensive end.

And that again is Justin Tuck, an All-Pro defensive end who spent nine seasons with the New York Football Giants, including their two Super Bowl wins over the New England Patriots.

TUCK: And most of the time the defensive ends that are really late getting in their stance. They’ve exed out plays they know are not coming. I used to do it. I learned it from Strahan and Osi when I was playing with those guys —

That’s Michael Strahan and Osi Umenyiora.

TUCK: — but I would always get in my stance last second because I wanted to see what the offense was doing. I wanted to see did they have trips into the boundary. Is the running back eight yards deep versus six or seven yards deep. Quarterback in the shotgun. What is what is the hand of the offensive linemen that I’m going against. What does that tell me? How’s his foot position; is he blocking down, is he blocking towards me. Is his weight back because he wants to kick out because of the pass? Things like that is what experts look at, you know and you know are they are they going in motion to see if we’re playing man. All right. You know is this a situation where we might get hard-counted. Is it third and short. Should I watch the ball more and more intently than I would if it was third and long. All those things kind of go in my … But the better you get at it, the quicker it goes. So you know you normally have, once they come to the line of scrimmage you probably have five seconds at the max depending on the type offense you’re playing against and you have to you know decipher all this information like that and be able to go and play. And I think the teams that do it the best are the teams that you know play really really well.

DUBNER: When you say you want to go into your stance late is it because you want to be upright to see better longer or you want to adjust your stance?

TUCK: Both, both.

DUBNER:  OK so you’re going to. OK.  So the more information you have the more you know what stance you want.

TUCK: Exactly and you know I always told people like for example like we used to have defenses kind of like, check with me defense, where we would change defenses as the offense changed or so on and so forth. So as a D-lineman I had to listen to the guys behind me. Once I got my…  And I would tell my linebackers don’t tell me anything once my hand’s in the ground because once my hand’s in the ground my mind went completely black. And it’s more figuring out or focusing on how to beat this guy right in front of me. You know when I put my hand in ground it could be 80,000 people in the stands. I don’t hear any of them. So that’s one of the reasons why I stood up longer because you know we will be checking defenses and going from blitzes to cover twos or whatever it may be and you have to you have to hear that stuff and then adjust to it. And so me standing up, or me not putting my hand in the dirt as long as possible gave me a better chance of being able to adjust.

DUBNER: How valuable would you say — and I would ask you to kind of put on your MBA hat here, because now you’re thinking about risk-reward and all that – how valuable in let’s say in one given football game is the element of surprise? You know, it’s like a game-theory question: theoretically, if the offense can surprise you every time or at least randomize, then I’m ahead of the game. On the other hand by insisting on wanting to surprise you, I might do things that are not playing to my strengths. So I’m curious as a defensive player what you thought of not necessarily trick plays but you know how much the offense tried to fool you.

TUCK: You know, I think it’s a fine line between trying to fool players because you’ve got as a defensive player, most of my time isn’t spent on the actual field running around trying to stop offenses. Most of my time is spent watching film trying to figure out you know what their tendencies are. So coming to a football game I have a pretty good sense of what they like to do in certain situations which allows me to play really really fast.

DUBNER: But on the other hand  they know that you know, now the game theory happens, right — so that you Justin Tuck have watched 12 hours of what you know X team is going to do on third and long and so they know that you know that then they might want to you know,  outsmart you.

TUCK: Yeah, they might but they also are doing something now that they’re probably not as good at as well. So I think it is pretty much you know a similar outcome. You might get me once on that trick play and then play  but the next time you might lose or you know 15 yards and set your offense back.  But I’ll also say this: I’m  more from the old school, where I believe that regardless if they know what I’m doing and if I execute what I’m doing yeah they’re better than him, then I’m going to win. So I’m always I’ve always been in the mindset. I don’t care if they know what I’m doing as long as I’m doing it 100 percent of my capacity, then I’m fine with that.

[MUSIC: Pat Andrews, “The Big Game Inspiration”]

In terms of outfoxing the other team, or at least trying to optimize your play-calling, Steve Levitt and a colleague wrote a paper on this very topic. It’s called “Professionals Do Not Play Minimax,” and it analyzed about 125,000 NFL play choices.

LEVITT: We found at the time — which was about five or six, seven years ago — we found that teams systematically ran the ball too much, that given the outcomes of plays, it looked like if teams were to pass a lot more than they did, things would actually get better. And I can’t say that it is actually causal. I doubt that the NFL football teams read our paper and dramatically changed the way they did things. But I am happy to report that in the years since we wrote that paper there was a dramatic increase in the share of plays from scrimmage that became passes versus runs when that trend hadn’t been there at all prior to our writing so. So maybe I should take credit for it even though it’s almost certainly impossible that I have made NFL football more efficient.

Steve Levitt has one more piece of advice for anyone watching the Super Bowl, regardless of interest level.

LEVITT: The beauty of the Super Bowl is that you can virtually gamble on any aspect of it. So not just the final score, who will win, but even who will win the opening coin toss. And I remember one year you could actually bet on whether Jay-Z would also appear along with Beyonce in the halftime show. So if you if you want to have some fun you can go to a sports book,  you can look at you know literally hundreds of different betting options that are there, and without even the trouble of going and making account at the sports book I would suggest you find a friend and you divvy up the bets, you bet on you know 50 or 75 things in the and you keep track of who wins what. And it can keep you busy for the entire game. And if it’s the sort of thing where you don’t get any pleasure out of taking money from your friends then I would suggest that you find one of your enemies and you actually divvy up all the bets with one of your enemies so that you if you actually happen to win a lot you can take great joy in that in that outcome.

[MUSIC: Christopher norman, “Maps”]

Coming up next time on Freakonomics Radio: nobody gets to the NFL – or succeeds at any level – without a certain amount of stick-to-it-iveness, otherwise known as grit.

Angela DUCKWORTH: What specifically are gritty people like? What do they do when they wake up in the morning? What beliefs do gritty people walk around with in their head?

How to get more grit in your life. That’s next time, on Freakonomics Radio. And one more thing: we’re working on a special series of episodes and we want to include your voice. Here’s the question we’k like you to answer: if you could reboot or totally overhaul one system or institution that you engage with regularly — something from your work life, or personal life, or maybe something about government or the economy — what would it be? No idea is too small, or too large; no idea is too serious, or silly. Record your comment using the voice memo app on your phone and email the file to radio@freakonomics.com. Please keep it relatively short, try to record it in a relatively quiet place, and make sure you tell us your name, where you live, and what you do. Thanks!

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Shelley Lewis. Our staff also includes Greg Rosalsky, Christopher Werth, Stephanie Tam, Merritt Jacob, Eliza Lambert, Alison Hockenberry, Emma Morgenstern, Harry Huggins, and Brian Gutierrez. You can subscribe to Freakonomics Radio on iTunes or wherever you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:SOURCES

  • Steve Levitt, William B. Ogden Distinguished Service Professor of Economics at the University of Chicago, where he directs the Becker Center on Chicago Price Theory.
  • John Urschel, Ph.D. student at the Massachusetts Institute of Technology in applied mathematics, guard and center for the Baltimore Ravens in the NFL.
  • Eric Winston, right tackle for the Cincinnati Bengals, president of the NFLPA.
  • Justin Tuck, former NFL defensive end, MBA student at the Wharton School of the University of Pennsylvania.

RESOURCES

ETC.

The post An Egghead’s Guide to the Super Bowl appeared first on Freakonomics.

January 25, 2017

New drives for notebooks roll off of factory lines in China. (Photo: Robert Scoble)

Our latest Freakonomics Radio episode is called “Did China Eat America’s Jobs?” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

For years, economists promised that global free trade would be mostly win-win. Now they admit the pace of change has been “traumatic.” This has already lead to a political insurrection — so what’s next?

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

[MUSIC: Pearl Django, “Boheme Auberge (from New Metropolitan Swing)]

David AUTOR: I entered the profession late actually. I had several failed careers prior to economics.

That’s David Autor.

AUTOR: I’m a labor economist at M.I.T.

And what does a labor economist do?

AUTOR: I work a lot on skill demands and changes in labor markets having to do with technology and with trade as well.

As Autor said, he came late to academia.

AUTOR: I did software development for a while and I also spent several years directing a nonprofit in San Francisco that did computer education for the poor. I also did a lot of work in fast food. I spent a month working at McDonald’s and half a year working at Papa Gino’s, which is a kind of pizza franchise in the Boston area. I did a lot of blue collar work. I also worked as a temp, I did you know light construction and cleaning. I did clerical temping. I also fix cars and motorcycles and electronics.

So Autor hasn’t spent his entire adulthood in the ivory tower. And that’s reflected in his choice of economic specialty.

AUTOR: I think we labor economists like to think of ourselves as being closer to the people. I think I’m pretty cognizant of how tough the labor market has been for them for the last 35 years.

For the past several years, Autor and several colleagues – including Gordon Hanson, David Dorn, Daron Acemoglu, Brendan Price, and Kaveh Majlesi – have been analyzing huge data sets to try to answer an important economic question.

AUTOR: The objective was to understand how China’s very rapidly rising exports to the United States were affecting U.S. labor markets.

Today on Freakonomics Radio: the answer to that question; how it relates to American political rhetoric; and … what economists got wrong:

AUTOR: I think if we had realized how traumatic the pace of change would have been we would have at a minimum had much better policies in place.

*      *      *

[MUSIC: Apalog, “Transfiguration” (from This Is How We Know What Love Is)]

Our previous episode looked at the degree to which the American Dream has been damaged.

Raj CHETTY: You’re twice as likely to realize the American Dream if you’re growing up in Canada rather than the U.S.

This topic was a main feature of the 2016 presidential campaign:

Donald TRUMP: Sadly, the American Dream is dead!

As for who killed the American Dream – Donald Trump had a long list of suspects. But very near the top was China:

TRUMP: We can’t continue to allow China to rape our country — and that’s what they’re doing. It’s the greatest theft in the history of the world!

It was a theme that President Trump returned to during his inaugural speech.

TRUMP: We’ve made other countries rich while the wealth, strength and confidence of our country has dissipated over the horizon. One by one, the factories shuttered and left our shores with not even a thought about the millions and millions of American workers that were left behind.

During the campaign, many people had been so focused on Trump’s outrageous persona that perhaps they saw his claims about China and trade as similarly outrageous – hyperbolic at best, outright wrong at worst. Wasn’t the U.S. a willing partner and an architect of the huge push toward globalization? We endorsed sending low-wage manufacturing jobs overseas, believing we’d get cheaper imports and newer, better jobs to replace the off-shored ones.  So how well has that dreamy scenario worked out?

AUTOR: I’m much less sanguine about it than I used to be.

Let’s start with a bit of history between the U.S. and China. The adversarial relationship kicked off by the Communist Revolution in 1949 blossomed into a full-blown Cold War – which began to fizzle out, quick shockingly, in 1971. That’s when President Richard Nixon, a devout anti-Communist to that point, reached out to Chairman Mao as a partner:

President NIXON: The meeting between the leaders of China and the United States is to seek the normalization of relations between the two countries.

AUTOR: China was sort of in a perpetual state of economic crisis from the Mao Zedong era forward and really didn’t have its act together as a trading country or producer, and it was largely closed.

David Autor again:

AUTOR: And it wasn’t till Deng Xiaoping took power and began changing things in the late 1970s and began what he called “Reform and Opening,” which meant setting up export zones in the southern parts of China, across from Hong Kong, allowing foreign direct investment, allowing use of market prices, allowing for mobility of labor. So over the course 20 years about a quarter of a billion people migrated out of a relatively unproductive rural agriculture into cities to do production. Just incredible.

Between 1991 and 2013, Chinese exports grew from roughly 2 percent of the world’s total to nearly 20 percent.

AUTOR: And China marched from being, you know, 30 or 40 years behind the frontier of production to being really a world-class producer with at that time lots of available labor and lots available land. And you know, lots of resources.

Other countries had taken the same route as China. But China was different. In several ways; but most significantly, in size.

AUTOR: So, you know, if a country like Vietnam or Cambodia or something went through the exact same developmental process as China, it would quickly run out of capacity and after a very little while it would have made all the, you know, the iPhones and the apparel and the toys and so on it could. And then wages would rise, prices would rise, and it they would just be a blip on the world scale. But because China is so enormous and had so much slack, it took decades for that string to play out. And in that time it was just producing goods, high-quality goods, at low prices that were extraordinarily competitive by world standards. And this had the effect of displacing a lot of competitor countries’ production — including the United States.

Stephen J. DUBNER: So David, you and some colleagues have taken a hard look at how globalization has had some profound effects. So tell us broadly what you know and how you know it.

AUTOR: Sure. So economists have known forever, or you know since the 1950s, that globalization, or the integration between trading partners, raises GDP, raises national incomes in both countries – if they’re consenting partners – but can have adverse distributional consequences.

[MUSIC: Justin Marcellus, “I’m That Sad Place” (from Deep Signals]

“Adverse distributional consequences” being economist-speak for a rising tide that does not lift all boats.

AUTOR: So even as it makes a country wealthier it can make some people in that country poorer in absolute terms. So it can grow the size of the pie but make some slices sufficiently smaller that in net they contract. However, literature had failed to find any strong evidence that those adverse distributional consequences were coming to pass. 

“The literature” being the economics literature. Meaning that as economists watched globalization accelerate, it seemed to be working out pretty well.

AUTOR: Labor economics sort of 15 years ago, a lot of people saw it as, “Oh well, now we’re sort of studying well-functioning markets. It’s about characterizing equilibria and explaining why it’s all efficient and we should turn our attention to the developing world where all the problems are.

That view turned out to be illusory, or at least short-lived.

AUTOR: But now we have lots of problems. People recognize that and they see labor as being part of the big challenges facing lots of countries, including the developed world, in terms of income distribution, opportunity, the sort of a changing share of national income going to capital versus labor, the role of globalization in shaping opportunities, and even the way that labor markets feed into political outcomes and people’s sense of party identity and the type of candidates that they vote for.

That said, David Autor is not willing to throw his profession under the bus.

AUTOR: I don’t think the old evidence was incorrect. There are two big differences of the last two decades relative to earlier periods. One is that a lot of our trade prior to China’s rise, a lot of it was North-North trade. You know, trading between wealthy nations. So you know, we sell aircraft engines to France and we buy cheese and wine and Renaults or maybe we buy Mercedes from Germany. And so it’s a lot of high-skill people trading high-skill goods and we’re trading on the basis of taste. Like, “I like your vehicles. You like my aircraft.” It’s not trying to see who can make the cheapest version of X, Y, or Z. We’re often focusing on a set of expensive goods in which we all are differently good at different subsets. 

But when China opened up, that changed.

AUTOR: A lot of what we’re trading there is labor-intensive goods. Nothing that China was selling the United States, especially up until recently, couldn’t be made in the U.S. It just couldn’t be made as cheaply. So this was actually about price competition rather than simply having a better or different variety.

On the surface, that might seem fine – again, it would mean Americans, and many others, getting to buy cheaper goods because they’re made in China. But of course the calculus is trickier than that.

AUTOR: So when the United States trades with the developing world, we’re going to typically export skill-intensive products: aircraft engines, electronics, movies, and TV programs and things that use a lot of highly educated labor. And we’re going to tend to import low-skilled or what we call labor-intensive products like you know footwear and textiles, leather goods, things that require a lot of hand assembly. And so what does that do? Well, when we export those high skill-intensive goods we’re basically raising demand for skilled or educated workers in the United States . When we import those labor-intensive goods, we’re going to reduce demand for blue-collar workers, who are not doing skill-intensive production.  Now we benefit because we get lower prices on the goods we consume and we sell the things that we’re good at making at a higher price to the world. So that raises GDP but simultaneously it tends to make high-skilled and highly educated labor better off, raise their wages, and it tends to make low-skilled manually intensive laborers worse off because there is less demand for their services – so there’s going to be fewer of them employed or they’re going to be employed at lower wages. So the net effect you can show analytically is going to be positive. But the redistributional consequences are, many of us would view that as adverse because we would rather redistribute from rich to poor than poor to rich. And trade is kind of working in the redistributing from poor to rich direction in the United States. The scale of benefits and harms are rather incommensurate. So  for individuals, you know, I have less expensive consumer items because of imports from China. But it hasn’t affected my employment or my wages. For many others – on the order of at least a million U.S. manufacturing workers – it meant the end of their jobs and in many cases the end of their industries.

[MUSIC: Bastian, “Leviathan” (from Bastian)]

But that wasn’t even the worst of it. Coming up on Freakonomics Radio: the true breadth of the problem – and we talk about solutions.

AUTOR: I don’t think there are any easy solutions. I don’t think if I were, you know, labor secretary I would just be able to get in and you know turn this ship around.

That’s coming up, right after the break.

*      *      *

[MUSIC: Leon Ayers Jr., “Moving Shadow”]

David Autor, a labor economist at MIT, has spent the past few years working with fellow economists to measure the effects of global trade, especially between the U.S. and China. A lot of political rhetoric argues that China has damaged the U.S. economy via currency manipulation, making Chinese goods even more attractive to American consumers.

TRUMP: It’s the single greatest tool they have, currency manipulation, and they’re grandmasters. They do a great job. I congratulate them. I’m not angry at China. I’m angry at our country for allowing them to do it.

Autor’s research reveals a story that is in some ways more complicated than Donald Trump’s explanation,  and in some ways simpler.

AUTOR: What occurred is not primarily the result of currency manipulation or cheating or unfair trade deals. It was a function of China’s extremely rapid development – which, by the way, is a very good thing. You know, it brought 400 million Chinese out of poverty, raised incomes in Central and South America, caused investment throughout Africa, right? This is sort of the best thing to happen to the global middle class in at least a millennium, right? But it was it was tough on U.S. manufacturing.

Very tough – especially after 2001, when China was accepted into the World Trade Organization.

TRUMP: China’s entrance into the World Trade Organization has enabled the greatest job theft in the history of our country.

AUTOR: We would conservatively estimate that more than a million manufacturing jobs in the U.S. were directly eliminated between 2000 and 2007 as a result of China’s accelerating trade penetration in the United States. Now that doesn’t mean a million jobs total. Maybe some of those workers moved into other sectors. But we’ve looked at that and as best we can find in that period, you do not see that kind of reallocation. So we estimate that as much as 40 percent of the drop in U.S. manufacturing between 2000 and 2007 is attributable to the trade shock that occurred in that period, which is really following China’s ascension to the WTO in 2001.

DUBNER: And are you controlling for the effects of technology here?

AUTOR: Well, yes to the best we can. To the best we can. We do have measures of sort of exposure to automation and so on. And as far as we can tell that that’s not really the main driver. Now I think it’s reasonable to argue, well, you know given 15 or 20 more years it would have been.

DUBNER: Right.

AUTOR: So then the question then is, “Well, what happens? Where do those workers go?” In a canonical economic model they just costlessly reallocate to their next best opportunity.

[MUSIC: Justin Marcellus, “Finally Broke”]

Ah, the lovely language of economics once again. “Costlessly reallocate to their next best opportunity”: meaning that some American who loses his manufacturing job just hops over to the next good job, which just happens to be available, near where he’s already living, and for which he just happens to be perfectly qualified for …

AUTOR: … which is, you know some other sector elsewhere in manufacturing, elsewhere in services. And kind of that plays out across the entire United States. So even though it’s very concentrated locally, it defuses over space so it’s small relative to the entire labor market. And so it shouldn’t really have a big local effect, it shouldn’t be very long-lasting.

So that’s the economic theory. Is that what David Autor and his economist colleagues saw in reality?

AUTOR: That’s not what we see. We see those falls in manufacturing employment correspond to about equally large falls in overall employment rates over the first 10 years in those trade-impacted locations. So every half a point that manufacturing falls, we see a total decline of about a half a point. So some people are leaving the labor market, some people are going into unemployment. Some people are going on to disability. And so the reallocation process seems to be slow, frictional, and scarring.

DUBNER: Okay, so until “scarring” those words sounded fairly clinical and academic. But what you’re describing here it is really bad. A) Correct?

AUTOR: Yeah. Yeah.

DUBNER: And B) I’m just curious before we move on – you looked at a whole lot of different manufacturing ecosystems. I’m sure there’s great variance, or I’m assuming there’s great variance from one to the next. Can you talk about some ecosystems, some manufacturing industries or jobs where people did do a better job adapting?

AUTOR: You know actually the real differentiator is the kind of skill level of the worker, so higher-paid and more highly educated workers, they seemed to reallocate successfully out of manufacturing into other jobs. So the shock to manufacturing affected everyone in the immediately targeted industry. But the differentiator is not what industry you were in specifically, but how skilled you were initially.

DUBNER: So the H.R. person at a big textile firm gets an H.R. job elsewhere and the manufacturers on the line are probably not.

AUTOR: The line workers are much less likely to do so, exactly.

DUBNER:  Right.

AUTOR: And what’s important to emphasize if I say a shock to furniture, that’s not just one plant, right? There are multiple plants in you know Tennessee that have 10,000-plus workers and they all kind of shut down within a few years of each other. And so you can think of this as it’s like you know there’s a certain element of blight that sets in, right? Look, there are 3,000 counties in the United States. If 10,000 workers were eliminated, you know, three from each county, you wouldn’t even notice it, right? But if 10,000 workers are eliminated simultaneously from your you know local labor market, that’s very noticeable, and it has kind of add-on effects. Because gee, well those manufacturers also stop you know buying the delivery services and the catering services, people have less income so they go out to dinner less. So all kinds of kind of adverse multipliers, not huge, but noticeable and measurable, set in.

DUBNER: Maybe this is not a multiplier, maybe i’m defining it wrong, but, what about with all those relatively low-skilled workers out there floating around looking for jobs, presumably that could lower the wage of other existing jobs or no?

AUTOR: Yes. Yeah, that’s what we find actually that you see a kind of decline in the wage level not just in manufacturing. You also see people using public transfer benefits like unemployment and trade adjustment but actually much more numerically, quantitatively large, are disability, Medicare, Medicaid, food stamps, TANF, early retirement. So those programs actually are or numerically, you know fiscally, much much larger.

 

Look at all those downstream effects from China’s manufacturing growth that David Autor identifies in the U.S.: job loss; wage depression; higher welfare spending. In another research paper, he and his colleagues found yet another downside. Many economists had suspected that greater competition with China would create incentives for American companies to invest more in research and development and become more innovative. But it hasn’t worked out that way. Instead, Autor and his colleagues found, Chinese competition has lowered profit margins for American manufacturers, leaving less money for R&D and resulting in less innovation.

DUBNER: People like you – meaning economists, not like you David Autor necessarily – you know have been telling us for several decades now that globalization would be largely a win-win. I’m not so naive as to think that there are no losers. I get that. But that overall, we Americans should kind of sit back and relax, that it would be good for the median U.S. resident. So I don’t feel that way anymore and tell me if I’m wrong to not feel that way. And additionally if I’m wrong maybe to blame you and your cohort a little bit.

AUTOR: I think if we had realized how traumatic the pace of change would have been, we would have at a minimum had much better policies in place to assist workers in communities that suffered these very severe and immediate consequences. And we might have tried to moderate the pace at which it occurred. And let me add another factor that really augments this is we also had a huge trade deficit and that meant we simply did a lot less manufacturing. So that meant that workers had to make a tougher transition out of manufacturing, into something altogether new. And I think that upped the challenge. It made it harder for people to reallocate. It was one thing if they are going you know they’re getting out of textiles and moving into automobiles or tools. But that’s not what happened, they’re getting out of textiles and moving into Wal-Mart, you know, moving into fast food. I think the other thing that we have to recognize, and that economists have tended not to emphasize is that jobs aren’t purely income. They are part of identity. They structure people’s lives. They give them a purpose and a social community and a sense of relevance in the world. And I think that is a lot of the frustration that we see in manufacturing-intensive areas. We saw a lot of that actually in the recent election. People feel like their place in the universe, or at least in the economy, has really been kind of reduced, made less valuable. And I think that that’s costly even beyond the direct financial costs.

DUBNER: So President Trump did not choose you, David Autor, as labor secretary.

AUTOR: No.

DUBNER: But he did choose someone else with a fast-food background: Andrew Puzder, who’s chief executive of the company behind Hardee’s and Carl’s Jr.

AUTOR: Yeah.

DUBNER: So if it had been you and maybe someday it will be: What to do about it? You acknowledge that you’re not as sanguine as you were or thought you might have been. You acknowledge that the degree of pain and the pace of the change has been really severe. Tell us some things that are potential remedies or at least better thinking frameworks to approach the future of labor in this country.

AUTOR: So it’s a challenging question. I don’t think there are any easy solutions. I don’t think if I were you know labor secretary I would just be able to get in and you know turn this ship around. But a couple of things I’d do: one thing is I would expand the Earned Income Tax Credit, which is a federal wage subsidy for people with low incomes. It’s a really generous and effective program but it is targeted at adults with dependent children, primarily women. So if you’re a mother with two dependent children you can get up to $6,000 a year in EITC support, up to a household income of about $40,000. So it raises incomes and it also causes people to participate more in the labor market. It makes low-paid work better paying, effectively. But if you’re a man without dependent children you can get about $400 a year total from the EITC, not $6,000 – $400 a year. And many of the men that are you know struggling for employment, in fact many of them do have children. They just can’t claim them as dependents. They’re frequently not married to the mothers. So this is a group that is experiencing falling wages. Labor-force participation rates are declining among less-educated men, even less-educated young men. So one policy I would use is to provide the Earned Income Tax Credit. Basically makes it more rewarding, financially rewarding, more worthwhile to work. That’s one thing.

I do think there are tax changes that we ought to make that could be beneficial. One of them is actually being talked about in the Trump Administration is the so-called “Border Adjustment,” which is a way – it’s a complicated story – but it’s like a value-added tax. And if it were used to offset other taxes like our payroll tax, for example – right now our payroll tax raises the cost of producing in the United States. But foreign countries when they import here they don’t pay our payroll tax. If we had a value added tax that would be levied both on things produced domestically and on things that are imported. If it were used to offset the payroll tax why that would have the effect of basically making imports a little bit more expensive relative to domestically produced goods. I don’t think that’s a terrible idea. Many countries do something that looks a bit like that. I think the other things are importantly are skills investments and then I think also things that make the quality of life better for people with low incomes including I’m afraid to say it, the Affordable Care Act, which is a very good policy that we will be saying goodbye to soon.

DUBNER: So those all sound interesting and perhaps viable and perhaps useful – but most of them are coming primarily from one direction, which is basically there are costly ways to support the people who have lost out because of this economic change. What about reversing that dynamic? So obviously this president, that’s his gospel on the labor front, to date, which is reshoring, or I don’t know what you call it in the case of Carrier where you don’t let them get away in the first place. What’s your view on that?

AUTOR: Well, so the border adjustment that I talked about actually would have the effect of encouraging domestic production. I think you know a number of things for many of those labor-intensive jobs are not going to come back. Even if the production returns the United States – it would be done with a lot more machinery and robotics. I think manufacturing will continue to occur in the United States. I just don’t think it’s going to use that much labor. I think it’s perfectly reasonable to aggressively enforce our trade deals. There are certainly countries that dump products, that steal intellectual property, that create anti-competitive barriers in their own country so the U.S. can’t export to them even though it’s importing from them. But I don’t think we can turn back the clock. And moreover, remember that many of those imports – for one they do make consumer prices lower and two they’re often inputs into things that we’re making and then exporting or consuming domestically, right? So you know as soon as you start taxing you know Chinese goods you’re taxing car parts that end up in you know GM and Ford and you know Fiat-Chrysler automobiles. You’ll quickly find that there’s a lot of opposition from U.S. manufacturers to restrictions on trade or tariffs. You might think, “Oh no we’re doing a favor, we’re you know making your products more competitive.” Well not if you’re importing a lot of your components.

[MUSIC: David M. Young, “Iridentalism”]

DUBNER: President Trump has been accused of ignoring evidence on a lot of fronts. In this case, when it comes to the costs of globalization, it strikes me that his views are kind of align quite closely with the views of economists like you who do see evidence that supports some of at least his proclamations about the costs of globalization. Where do you find yourself on that spectrum whether politically per se or just philosophically?

AUTOR: Well I want to be clear: President Trump makes a lot of unfounded claims about trade that I do not agree with. For example that NAFTA was a disaster for the United States. Very very little evidence to suggest that was true – was actually mostly a win for the United States and but pretty modest. I also you know strongly disagree with the idea that we ought to be slapping extremely high tariffs on importers. I think that would be quite damaging to the U.S. Similarly I don’t favor strong-arming companies to keep employment here if it’s going to deter others from creating jobs here out of fear that they’ll then be forced to retain them. So I don’t even think trade has been a net bad for the United States. I just think it’s created real concentrated adverse impacts, which I you know Trump was right to recognize. And but that’s where I’m more in sympathy with the administration than on other points. I’ll finally say that a good example of where bad thinking and bad trade policy has come in immediately is in this whole debate around the Trans-Pacific Partnership, which was basically a forward-looking trade agreement that was set up as a bulwark against Chinese domination of Asia. You know, Trump said on the campaign trail you know “China will take advantage of us through the TPP like they always do.”

TRUMP: The TPP is a horrible deal. It is a deal that is going to lead to nothing but trouble. It’s a deal that was designed for China to come in — as they always do, through the back door — and totally take advantage of everyone.

AUTOR: I don’t think he even realized at the point that China was not a signatory to the TPP and China was the country cheering loudest to see it crash and burn it because it was basically establishing rules of the game among with Asia and North America and the United States that would uphold intellectual property agreements, freedom and transparency of contracting, market access, and so on. So if we don’t set the rules of the game in Asia, China will, and I don’t think we’ll like those rules nearly as much. So that’s just this kind of bluster against trade that is ignorant and harmful to the U.S. interests and really harmful to our allies, including most especially Japan.

DUBNER: So David I know you’ve said that economics wasn’t entirely wrong on this prediction that global trade would kind of work out okay. But I do think a lot of people would disagree. Obviously it’s a matter of degrees. So if that’s my view and I think that you know many or most economists were wrong on something as basic and important as this, why should we ever listen to what you wonderfully educated egghead economists have to say when it comes to something as important and broad as macroeconomic issues that will affect my actual life? You can predict all you want about currency stories abroad, etc. But if it’s my life, my livelihood, my job, my family, and my ability to provide for them, you guys are supposed to be the nonpartisan, smart, apolitical cohort out there. And I trusted you and now I’m sorry I did. Because if I hadn’t, I might have changed course 15 or 20 years ago. And while I might well I might not be in great shape I’d certainly be in better shape than I am now.

AUTOR: Well, I don’t know that you’ll be in better shape. You’d be in different shape and a different group of people would be benefiting. I don’t think we’d be wealthier but you know I think it it’s a really good question. I mean I think economists have learned a lot from the data and it’s actually a credit to the profession that we’re you know we’re not just asserting, we’re testing. And when the facts change we change our opinions and the evidence that economists were relying on up through the 2000s wasn’t incorrect for its time. It just turned out not to be fully predictive of what happened next. And that’s you know that’s sort of cold comfort I realize. But you know we’re in the position where we now understand better what the consequences were. And we can make better policy going forward. And also if we didn’t have economists sort of trying to assess and answer these questions, we’d be relying on a lot of wrong and bad ideas about the gold standard, about “trade is only good if you export and bad if you import.” That you know the most important thing to do in a recession is stop spending so the country you know saves. You know there’s tons and tons of bad economic reasoning out there. Contemporary economics is quite imperfect but I think it’s at least guided by evidence and economists are fully capable of changing their views based on evidence. I do not think the profession actually is nearly as ideological as it was 25 years ago when it was guided so much by theory. Now it’s really guided by data and you know case in point the work that we’ve done here it’s been somewhat controversial but by and large economists have really embraced and said, “Oh yeah, wow, we’re surprised and this changes how we think about it,” and again I don’t want to claim that we were you know some upstarts. We just happened to look at the right data and come away with conclusions that none of us were expecting. But I think that’s you know that’s about as good as social science does. We’re not working with natural laws that are can be as neatly summarized as Newtonian physics.

[MUSIC: Justin Marcellus, “Light Aperture” (from Deep Signals)]

I have no idea if you’ll agree, but David Autor strikes me as a particularly keen and fair-minded analyst, and observer, of the U.S. labor markets. It doesn’t seem as if he’s got a horse in the race; it doesn’t seem as if he’s got his thumb on the scale. And his insights seem useful – at least as useful as a diagnosis can be once you’re already sick. There’s just one caveat I’d add to his message. It has to do with the predictions economists made about how Chinese manufacturing would affect the American labor market.

AUTOR: The evidence that economists were relying on, you know, up through the 2000s wasn’t incorrect for its time. It just turned out not to be fully predictive of what happened next.

This program has gone on and on about the folly of prediction. In fact, there’s a Freakonomics Radio episode from years ago called “The Folly of Prediction.” We talked about how one of the most common explanations of smart people, when their predictions turn out to be inaccurate was that “Well, we did the best we could considering the information we had at the time. If we’d had better information, we could have made a better prediction.”

But you know what? If you had better information at the time, you wouldn’t have to make a prediction; the future would be obvious. But that’s the thing about the future – it’s rarely obvious. Which leaves a lot of room for all kinds of people to make all kinds of predictions that may or may not come true.

[MUSIC: Clay Ross, “Sixth City Waltz” (from Entre Nous)]

I’m not calling out David Autor here – again, I really appreciate his transparency and his doggedness. But the story of Chinese manufacturing and American labor is yet another reminder of how humble we should all be when we make a prediction, and how cautious we should all be when we hear one.

Think about this: if the vast, vast majority of political pundits and TV journalists and even the most revered analytics geeks got the 2016 presidential election so wrong – and that’s a simple, binary choice, the Blue Team versus the Red Team – then how much harder is it to predict the downstream consequences as something as vast and broad as a global labor upheaval? I don’t mean to get all preachy on you; that’s not the Freakonomics way. But I will say this: beware the punditry, no matter how well-degreed they are, or well-spoken, or well-coiffed. Don’t assume they can know the future any better than you do; and don’t assume you’re such a genius either.

Coming up next time on Freakonomics Radio: “An Egghead’s Guide to Watching the Super Bowl.” How can you optimize the experience, whether you’re a football addict or a total newbie? We talk to some of the smartest NFL players, past and present: two-time Super Bowl champion Justin Tuck; Eric Winston; and Baltimore Ravens lineman John Urschel, who’s getting his Ph.D. in math at MIT.

John URSCHEL: So if you look at a wide receiver — what is that wide receiver doing on pass plays where the main route combination is not to his side? What is he doing when it’s a run play? Is he running them off, is he just jogging, is he talking to the cornerback?

We also talk to our resident Freakonomics egghead, Steve Levitt:

Steve LEVITT: The other thing that’s really special about the Super Bowl and if you are not a fan but are forced to attend the Super Bowl party – I would highly recommend gambling.

And there’s one thing all our eggheads agree is the best part of Super Sunday.

URSCHEL: You will enjoy the commercials, I can assure you.

JUSTIN TUCK: I will tell them to pay attention to the commercials.

ERIC WINSTON: The commercials are really funny

LEVITT: I give special attention to the ads.

That’s next time, on Freakonomics Radio.

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky.  Our staff also includes Shelley Lewis, Christopher Werth, Stephanie Tam, Merritt Jacob, Eliza Lambert, Alison Hockenberry, Emma Morgenstern, Harry Huggins, and Brian Gutierrez. You can subscribe to Freakonomics Radio on iTunes or wherever you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:

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The post Did China Eat America’s Jobs? appeared first on Freakonomics.

January 18, 2017

If the new generation can’t do better than their parents, is the American Dream dead? (Photo: Beth Rankin)

Our latest Freakonomics Radio episode is called “Is the American Dream Really Dead?” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

Just a few decades ago, more than 90 percent of 30-year-olds earned more than their parents had earned at the same age. Now it’s only about 50 percent. What happened — and what can be done about it?

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

[MUSIC: Joe Smith and the Spicy Pickles, “Dark Elixir” (from High-Fidelity)]

Let’s start today with a pop quiz. Here we go: in 1970, what percentage of 30-year-olds in America earned more money than their parents had earned at that age? Adjusted for inflation, of course. That’s question No. 1. And question No. 2: what percentage of American 30-year-olds today earn more than their parents earned at age 30? I’ll give you a second to think it over.

All right, you ready for the answer? The percentage of American 30-year-olds in 1970 who were earning more than their parents had earned at 30? Ninety-two percent. Isn’t that amazing? That, in a nutshell, is what we call the American Dream. And what’s the percentage now? It’s somewhere around 50 percent. Which has led some people to say this:

Donald TRUMP: Sadly, the American Dream is dead!

Donald Trump’s view of the American Dream – and his promise to revive it – had a lot to do with his getting elected president. According to Gallup polls, before the election more than 50 percent of Americans saw our economic conditions worsening.  And, in case you’re wondering, it’s not just cranky old people. A poll from the Harvard Institute of Politics found that nearly fifty percent of millennials think the American Dream is “dead.” We went out on the streets of New York ourselves to ask people if they thought the American dream was real, and achievable.

[MUSIC: Texas Gypsies, “Guitar Twins” (from Café Du Swing)]

VOICES ON THE STREET:

MALE 1: Absolutely it’s real. Especially standing here in Battery Park you look at different people from all across nations that come to America to realize the American dream.

FEMALE 1: I think that if you really work hard then you can do whatever you want in America. It might be a little difficult at first but you can still do it.

MALE 2: I don’t think the American dream is achievable. I think it’s a motivator, to try to achieve it.

FEMALE 2: The American Dream is something of a mythology for a way in which to advance and have a good life under what is essentially not just a capitalist system but a country founded on exploitation.

FEMALE 3 : You put in some work, you put in some sweat, and you can definitely make the American Dream happen.

MALE 3: Well, there’s a lot of cynicism now over the American dream. I am a product of it. My family, our families are refugees, came to this country 30 years ago. Had nothing. Was able to send all their kids to college, was able to have a house, was able to give a better future for myself and their children than they ever would have had back in Vietnam.

A lot of the conversations we have these days about the American Dream are in political terms, or theoretical terms. Today on Freakonomics Radio: the actual, unvarnished economics of the American Dream. Which we will define, for the sake of today’s conversation, as this:

[MUSIC: Tony Flynn, “Star Spangled Banner”]

Raj CHETTY: If you’re born into a low-income family, do you really have a shot at rising up no matter what your background is?

And we’ll discuss whether the American Dream is really dead – or maybe if it’s just moved a bit … north.

CHETTY: You’re twice as likely to realize the American Dream if you’re growing up in Canada rather than the U.S.

*      *      *

[MUSIC: Luke Brindley, “American Dream”]

James Truslow Adamsborn in 1878 to a wealthy New York family, became a financier and, later, an author. He won a Pulitzer Prize for a history of New England; and later he wrote a book called The Epic of America. Even though it was written during the Great Depression, Adams took a fundamentally bullish view of the United States.

His book was hugely popular, and as best as we can tell, it introduced the phrase “The American Dream.” Adams defined this as “that dream of a land in which life should be better and richer and fuller for everyone, with opportunity for each according to ability or achievement.”  The phrase caught on, and not just a little bit. Especially among our presidents:

Barack OBAMA: The bedrock of our economic success is the American Dream.

Richard NIXON: The American Dream does not come to those who fall asleep.  

George W. BUSH: So every citizen has access to the American Dream

Ronald REAGAN:They have lived the American Dream

Bill CLINTON: The American Dream will succeed or fail in the 21st Century.

Donald TRUMP: Sadly, the American Dream is dead!

Raj CHETTY: The reason my parents came to this country was in search of the American Dream.

That’s Raj Chetty.

CHETTY: I was born in New Delhi, India, and came to the United States when I was 9 years old, and grew up mostly in the Midwest.

Chetty is now an economist at Stanford:

CHETTY: I study issues of inequality and opportunity and how we can use economic policy to improve people’s outcomes.

Chetty was one of the scholars behind the research I cited earlier, about the massive drop in the share of 30-year-old Americans earning more than their  parents did. In fact, he is behind a lot of the most important research on income inequality, mobility, and the fragile state of the American Dream. His work is highly regarded by the people who give awards – he has won a MacArthur “Genius” Award and the John Bates Clark Medal. Politicians admire him as well.

Senator Jeff SESSIONS: Dr. Chetty, thank you for your participation.

Senator Bernie SANDERS: Dr. Chetty, what do you think?

That was Senator Bernie Sanders and, before him, then-Senator Jeff Sessions, when Chetty testified at a Senate hearing on income mobility and inequality. Chetty is a favorite of Democrat Hillary Clinton.

Hillary CLINTON: Some really interesting work being done by Professor Raj Chetty and his colleagues.

As well as Republican Paul Ryan.

Paul RYAN: Economists — you know, if you talk to Raj Chetty or others — they’ll tell you this is social capital.

Chetty is the policymakers’ policymaker. The economists’ economist. Which means he tries to be, above all, empirical. Not ideological or political.

CHETTY: One of my missions is to try and inject more evidence into these important policy debates because I think we’re making huge investment decisions with very little knowledge about exactly what is going to work.

Stephen J. DUBNER: Do you vote? Are you a political participant?

CHETTY: I’m independent. And so I’ve thought hard about this. I think it’s very difficult to keep yourself objective, which is very important to me. I mean it’s important to me that I have some findings that I think are more supportive of policies that Democrats are pushing, and there are some findings that are more supportive of policies that Republicans are pushing.

DUBNER: Some academics I know whose work gets cited for political purposes have told me that the work is inevitably cherry-picked or cream-skimmed to suit the politician’s position. 

CHETTY: I think while the big-picture focus might be chosen based on political views, there are lots of details that matter greatly, and I think science can be very useful there, in addition to perhaps guiding which areas we focus on — affordable housing versus tax cuts versus other things.

For all his influence, Chetty is only 37 years old.

CHETTY: I was actually the last person in my family to publish a paper. My parents are both in academics, and I have two older sisters who are in bioscience.

Chetty went to Harvard as an undergrad but he didn’t spend spent much time undergradding: he got his Ph.D. at 23.

CHETTY: Basically I did a six-year Ph.D. and didn’t go to college, in the sense that starting my sophomore year, I actually didn’t take any undergraduate classes.

He taught at Berkeley, then Harvard, and in 2015, moved to Stanford.

DUBNER: You are hardly the first economist from Harvard to go to Stanford in the last few years. There’s been quite a little exodus.

CHETTY: Recently, as the field of economics is shifting towards big data and increasing use of modern statistical techniques, like machine learning, to think about economic questions, Stanford has tremendous strength in those areas and other fields. And of course we all know that the birthplace of much of modern computing is here in Silicon Valley at Stanford.

DUBNER: Now, economists in particular, but social scientists more broadly, have in the past few years especially, just been being gobbled up by tech firms. Because they, too, have discovered that big data is potentially exciting and a number of academic economists, many of whom I’m sure you know well, are moonlighting or sidelining with tech firms, Uber and Facebook and on and on. What about you? Was that an appeal for you to be out there and are you doing any consulting, advising work on the side with these private firms? Or are you strictly an academic economist?

CHETTY: Yeah, that is a very important trend. I myself am not doing any work with those firms directly, but what I am interested in is working with the data from firms like Facebook and Twitter, for instance, to think about social and economic policy questions. So, to give you a concrete example, I’m starting a project with my colleague Matt Jackson here at Stanford, and others at Facebook, where we’re exploring the role of social networks in inequality, and trying to understand essentially whether you can network yourself out of poverty. Social scientists have been interested in that sort of question for a very long time, but we just haven’t had the data to really investigate that question precisely from an empirical point of view. And the Facebook data, of course, are game-changing in that respect.

[MUSIC: Mokhov, “Mysterious Dream” (from Revel Revival)]

A lot of Chetty’s research falls under the banner of something called the Equality of Opportunity Project. That is a group of economists – and other social scientists – who are trying to find the most effective, and efficient, ways to address chronic poverty. Which, Chetty argues, is really important. Because the economy that for so many years facilitated the American Dream for so many millions is no longer reliably doing so.

CHETTY: While modern technology and economic growth is changing the world in tremendous ways — I mean, we can now do things with our cell phones that we never would have imagined 10 years ago — I think unless we think carefully about social policy, doesn’t necessarily end up benefiting everyone. There are many people for whom progress over the last 30 years hasn’t really had a tremendous impact on their lives in terms of better opportunities for their kids or better health outcomes and so forth.

Chetty admits the American Dream worked out great for his immigrant family.

CHETTY: And so partly with that personal motivation, partly out of scientific interest, I wanted to think about whether the American Dream truly is alive and well, and what the determinants of the American Dream are.

Okay, so how do you do that? How do you measure the state of the American Dream? And, more important, how do you identify the determinants that enable one family, or one kid, to shoot up out of poverty while others are left behind? Well, if you’re an economist, you do that with … data. Lots and lots of data.

CHETTY: And this specific angle we took is by using the large data that we have now from administrative tax and Social Security records where we’re able to see for the full population what income distributions look like for kids and for parents. And so you can basically ask, taking say, all of the kids born in America in the 1980s, “What fraction of the kids born to low-income families actually make it to the top of the income distribution? How much intergenerational mobility is there in America?” In the U.S., if you take, say, the set of children who are born to families in the bottom quintile of the income distribution, in the bottom fifth, about seven-and-a-half percent of those kids make it to the top fifth of the income distribution. 

DUBNER: And that number in isolation doesn’t sound off the bat so bad.

CHETTY: Yeah, that’s right. Exactly. Seven-and-a-half percent, is that a big number, is that a small number? It’s hard to judge in isolation. So to give some context for that, I think Stephen, it’s useful to start first by thinking about comparisons across countries. So if you look at that number in other countries where we have comparable data, like the United Kingdom, for instance. In the U.K., that number is nine percent. A little bit higher, but not all that much higher. If you go to a place like Canada or Denmark, the number is 13 percent, or 13 and a half percent. That’s quite a bit higher. And it’s useful, in thinking about these numbers, is 13 percent a big number? Well, you have to remember, of course, that no matter what you do, you can’t have more than 20 percent of people in the top 20 percent, right? So the maximum value this statistic can take, I think, is plausibly 20 percent. To put it more precisely, if you lived in a society where your parents played no role at all in determining your outcomes, we’d expect one-fifth of kids to rise from the bottom 20 percent to the top 20 percent. And so relative to that benchmark, that upper bound, if you will, the 13 and a half percent rate in Canada and the seven-and-a-half percent rate in the U.S., that’s a really big difference. It’s almost like you’re twice as likely to realize the American dream of moving up if you’re growing up in Canada rather than the U.S, right?

DUBNER: Or perhaps more precisely, we should just call it the Canadian Dream instead of the American Dream, if they’re twice as good. Well, but what we want to know then is why, right? What makes that more possible in Canada? So that’s what your research is really about, yes, is about identifying the factors that move that needle?

CHETTY: Exactly. Exactly. So that I think is kind of useful as background, but there are lots of differences between Canada and the U.S. The first of which is that Canada has less inequality than the U.S. There’s less distance between the 20th percentile and the 80th percentile in Canada, relative to America.

DUBNER: Which means — so are you making a social point or is this a statistical point? In other words, it’s easier to move because it’s a smaller jump.

CHETTY: That’s exactly right. From a statistical point of view, one view you could have is maybe the reason you see higher upward mobility in Canada is not really so much that it is actually easier to move up in Canada, but it’s easier to make that move because it’s a shorter distance in a sense. So that’s one example of why I think these cross-country comparisons, while they can be motivating, in and of themselves it’s inevitably going to be very difficult to say for sure what you can learn from comparing Canada to the U.S. But I think before we even get to the issue of why is the U.S. is different from Canada, it turns out the story even in America itself is much more nuanced. Within America, there are actually a number of places that truly are lands of opportunity, places where kids achieve the American Dream at high rates. In some places, like in Salt Lake City, Utah, or in the Bay Area, something like 13 percent of kids are making it from the bottom fifth to the top fifth. Turns out in the center of the country, like in Iowa, for example, in many areas of Iowa you see more than 15 or 16 percent of kids making it from the bottom fifth to the top fifth. So higher than the numbers we see in the data for Canada and for Scandinavian countries. But at the other end of the spectrum, you take places like Atlanta, Georgia; or Charlotte, North Carolina; or much of the southeast of the U.S., and you have rates of upward mobility below four-and-a-half percent. Lower than any country for which we currently have data.

DUBNER: So that shouldn’t really, I guess, surprise us if you know a little bit about the makeup and history of the United States and the fact that we are states that have different policies, different populations and then obviously counties and cities that really differ a lot. 

CHETTY: Yeah, I think that’s right. But I think that line of thinking would lead you to think that most of this variation is regional. But what’s perhaps more surprising is that as we zoom in more finely we continue to find almost as much variation. So kids growing up in San Francisco, for example, have about twice the chance of climbing from the bottom to top as kids just across the Bay Bridge in Oakland.

[MUSIC: Pearl Django; “Eleventh Hour” (from Eleven)]

Coming up on Freakonomics Radio: the preliminary results of an incredibly ambitious government program to address poverty.

CHETTY: What you ended up finding was frankly I think somewhat disappointing.

All right then: how do you engineer the possibility of the American Dream?

CHETTY: We’ve identified five factors that seem to be particularly strongly correlated with these differences.

*      *      *

[MUSIC: Lucy Bland, “Plumb” (from Down to Sea Level)]

The Stanford economist Raj Chetty has been working with large data sets to try to understand why so many Americans are no longer living the American Dream. When it comes to economic opportunity, Chetty and his colleagues found huge regional and even local differences throughout the U.S.

As he told us, kids growing up in San Francisco have about twice the chance of living the American Dream as kids from just across the bridge, in Oakland. Why? One easy explanation would be that the people in those different areas are just different – they have different abilities, different cultures, different job opportunities. And that certainly has some explanatory power. But Chetty and his colleagues found the story isn’t that simple.

CHETTY: A lot of this variation is driven by differences in childhood environment, as opposed to differences in conditions in the labor market or the types of jobs that are available or unemployment rates —things that affect you in adulthood.

How do the data explain that it’s the childhood environment making the difference?

CHETTY: So we’re going to start by thinking about families who move when their child is exactly 9 years old, alright? And why age nine? That happens to be the earliest age we can examine in currently available data. 

DUBNER: And that’s not just because you were nine years old when you moved from India to Milwaukee, is it?

CHETTY: Not, not quite.

DUBNER: Just a coincidence? Okay.

CHETTY: Interesting coincidence. And so when we look at these nine-year-olds who move, we find that they end up roughly halfway between the kids who grew up in Oakland from birth and the kids who grew up in San Francisco from birth. So they’re earning roughly $35,000 when we track them forward 21 years and measure their own incomes when they’re age 30. So that’s for the kids who move when they’re exactly nine, right? So now let’s replicate that for kids who move when they’re ten, eleven, twelve, and so forth and so on. And what you end up seeing in the data is a very clear declining pattern where the later you make that move, from Oakland to San Francisco, the less of the gain you get. And in fact, if you move after you’re 21 or 22 or so, you get absolutely no gain at all, and if you move in your early 20s or when you’re 30, the relationship is completely flat. There’s no further gain from moving. So this sort of analysis leads us to the conclusion that first of all, where you grow up matters. It’s not just that kids who live in Oakland are somehow different from the kids who live in San Francisco. Second, you see that neighborhood environment matters because of childhood factors and not factors in adulthood, right? 

[MUSIC: Planes on Paper, “Iron Boat” (from The Ruins)]

This is hardly a new idea – that growing up in a poor neighborhood isn’t the best launching ground for economic success. This idea, in fact, led the Clinton Administration to experiment in the mid-1990s with a program called Moving to Opportunity.

CHETTY: They took about 5,000 families, across five large cities in the U.S. including New York, Chicago, and Los Angeles.

In New York for instance …

CHETTY: So, for instance, in New York, many of the families were living in the Martin Luther King Towers, which is a very high-poverty, large public-housing project in New York. They took these families and they randomly assigned them to one of three groups.

The first was a control group. They stayed put in the Martin Luther King Towers.

CHETTY:  And then there were two treatment groups, one of which was called the Standard Section 8 Housing Voucher Group.

This group could use the vouchers to move wherever they wanted.

CHETTY: So many families, for example, moved to a place in the mid-Bronx called Soundview, which is about six miles away from the MLK Towers. So not in the super-high-concentrated-poverty public-housing project, but not in a dramatically different neighborhood either.

Families in the third group were also given a housing voucher.

CHETTY: However, with an additional restriction — which was that you could only use this voucher to rent a house or apartment in a place with a poverty rate below ten percent. So basically trying to encourage families to move into more mixed-income areas.

Hence the program’s name: Moving to Opportunity, or MTO. The people behind the program suspected, or at least hoped, that families who removed themselves from concentrated poverty would end up having better outcomes themselves. For both the adults already in the labor market and their kids, who’d be coming into the labor market. So what happened?

CHETTY: What you ended up finding was frankly I think somewhat disappointing. So you didn’t see any differences in employment rates or average levels of earnings.

There were some positive health effects – lower obesity and better mental health, for instance. But the MTO experiment was largely considered a failure.

CHETTY: I think it left the field in kind of a difficult spot, because people still instinctively felt and anecdotally felt like, “Of course it’s got to matter where you grow up.” But this gold-standard scientific experiment is telling us that it doesn’t matter for economic outcomes.

That indeed was the consensus among researchers who analyzed the MTO data. But several years later, Chetty and his colleague Nathaniel Hendren wound up taking another look at the data. And they saw a different picture. They saw a rather large benefit among some people who had participated in MTO. Why?

CHETTY: Our hypothesis was that earlier studies of MTO had looked at impacts on adults and children who were older at the point of the move.

Remember, the Moving to Opportunity experiment was conducted in the mid-1990s. The studies that found disappointing results were published roughly ten years later.

CHETTY: And, of course, the children who were very young at the point the experiment was implemented — say, kids who were 2 or 3 years old — 10 years after the experiment was implemented, they were still only 12 and so obviously, you couldn’t measure their earnings at that point because they weren’t working yet. So these earlier studies for that reason mainly focused on adults and older youth, and they didn’t find much of an impact. But to us, in light of our findings on the importance of childhood exposure, that actually made sense. We thought, “Well, in our data, it looks like in order to really see an effect of moving to a better neighborhood, you need many years of exposure to that better neighborhood.”

And that’s what led Chetty and his colleagues to re-examine the MTO data. They added a layer of IRS data, in order to measure the longer-term earnings for the kids who were young when they moved.

CHETTY: And, quite remarkably, and I still vividly remember seeing this when we were studying this at the IRS, looking at the data — when you look at children who moved when they were young, you see extremely clearly that they are doing dramatically better today as adults. They are earning 30 percent more, they are 27 percent more likely to go to college, they’re 30 percent less likely to become single parents. And that, in our view, just kind of completely changed everything and I think has changed people’s perceptions of MTO.

Okay, so young kids who move out of a high-poverty neighborhood do much better later on. What, exactly, does this signify? What’s going on in the poor neighborhoods to depress income mobility and what’s going on in the better neighborhoods to increase it? Answering those questions has become a big part of Raj Chetty’s work. He and his colleagues  have come up with five significant explanations.

CHETTY: The first is residential segregation. Cities that are more segregated by income and by race tend to have much lower levels of upward mobility. So if you look at a city like Atlanta it’s an incredibly segregated city. Now cities that look like that, in terms of residential structure, we find systematically tend to have very low rates of upward mobility. In contrast, if you look at a place like the Bay Area, at least in the 1980s and 1990s, and this, Stephen, I think is changing quite a bit over time, especially here in Silicon Valley as prices are rising, but in the 1980s and 1990s, the Bay Area was relatively integrated, at least compared to Atlanta. Where you had neighborhoods of San Francisco with both middle- and high-income people, you had people of different ethnicities living near each other, and those kinds of cities tend to have much higher rates of upward mobility.

The second factor:

CHETTY: Income inequality. You have more people in the middle class, you also tend to have higher levels of upward mobility. This relationship is what Alan Krueger, based on cross-country data, termed the Great Gatsby Curve. The idea that there’s a link between inequality in any one generation and rates of intergenerational mobility. Why is this link interesting if one can interpret it causally? It suggests that as we have growing inequality over time, as we do in the U.S., we might be concerned about that not just because we’re worried about equitable distribution, but also because we’re worried that it might erode children’s chances of achieving the American Dream. And so, again, we don’t know exactly what the mechanism is and whether this is really a causal effect — inequality causing changes in upward mobility—but there does seem to be some link between these two factors.

The third factor they identified relates to family.

CHETTY: It turns out that the single strongest correlation we find in the data is with measures of family structure, such as the fraction of single parents living in an area. We find that places with more single parents have significantly lower levels of upward mobility. Now in interpreting this correlation, it’s very important to note that it’s not purely driven by the fact that growing up in a one-parent family leads to worse outcomes for children. And the way you can see that is if we look at the subset of kids who grow up in a two-parent household, we see that for that subset of children, even for them, growing up in neighborhood with a lot of single parents is associated with lower levels of upward mobility. So it’s not literally about whether your own parents are married or not — again, it’s picking up some community-level factor where growing up in a place that has a lot of single parents — maybe there’s more family instability or it’s correlated with some third factor that is leading to higher rates of single parenthood. For whatever reason, that seems to be strongly associated with lower levels of upward mobility.

The fourth factor:

CHETTY: Social capital. And so the idea of social capital — I think of it in relation to the old adage that it takes a village to raise a child. Will someone else in your community help you out when you need help? So as an example, Salt Lake City with the Mormon Church is thought to be the quintessential example of a city with a lot of social capital. And correspondingly in our data, seems to exhibit a lot of social mobility. Now this concept of social capital, as you might know, was popularized in a very well-known book by Bob Putnam called Bowling Alone.

Indeed, we put out an episode not long ago, called “Trust Me,” with Bob Putnam, who teaches public policy at Harvard. Years ago, he was looking at the decline of civic life in America.

Bob PUTNAM: We were becoming more and more isolated. Or as a friend suggested to me once, “You mean we’re bowling alone?”

CHETTY: And the reason for the title of that book is social capital is notoriously difficult to measure. And Bob had the creative idea of using the number of bowling alleys in an area, and in particular whether people are bowling alone, as a proxy for social capital.

PUTNAM:The core idea of social capital is so simple that I’m almost embarrassed to say it. It is that social networks have value. There’s a huge amount of work on how social networks help us find jobs.

CHETTY: So I was amazed to find, I remember actually discussing this with Bob in his office at Harvard, that the number of bowling alleys is actually very highly correlated with the rates of upward mobility in our own data.

DUBNER: Were you skeptical when you first looked at that?

CHETTY: Yeah, I was surprised, certainly. I also thought, Wow, Bob really had some foresight in thinking about bowling alleys. But I mention that here because it illustrates a caveat to all of these relationships because these are all correlations rather than causal effects, right? And so it would be surprising if the policy implication to draw from this is that we should build more bowling alleys to increase upward mobility in the United States. And so I think that’s a very important caveat to keep in mind. I mention that because the fifth factor is a bit of an exception to that. The fifth factor is school quality.

CHETTY: We find that places with better public schools, as you might expect intuitively, have much higher rates of upward mobility. And on that dimension, there’s a lot of very good evidence showing that improving the quality of schools  can really, meaningfully, affect rates of intergenerational mobility. So I would treat school quality a little bit differently from the other four factors, where we see strong correlations, but are not yet sure exactly what the causal mechanisms are.

DUBNER: Now each of the factors that you’ve discussed, even I could think of some potential policy ideas to improve them. Do you think much about that, or are you content at this point to do the research that allows policymakers to have those ideas and make those moves?

CHETTY: Absolutely, we want to take the next step to think about what this means for policy, what the causal mechanisms are, what the levers are, that we can push to change some of these factors. So that I think is a good segue now to come back to the Moving to Opportunity experiment, which I see as a way to potentially tackle segregation. One concrete way in which you might try to integrate a city is by giving low-income families housing assistance, to be able to rent houses in more mixed-income neighborhoods. Thereby mechanically reducing segregation. 

DUBNER: Now, I could hear you talking about this, extolling the virtues, the latent virtues, that you ultimately unearthed of a program like Moving to Opportunity, where the government spends a bunch of money to relocate families, and I could think, “Oh, you’re just another big-government-spending advocate.” On the other hand, I know that you have thought quite a bit about the money that is spent in the U.S. on a variety of affordable housing programs, I believe a total of roughly $45 billion. So I’m curious as an economist how you would assess the efficiency of typical or historical housing spending in the U.S., and compare that to the ROI on something like Moving to Opportunity.

CHETTY: I certainly recognize that in a time when we have a government that’s already spending quite a bit on initiatives like this, the answer can’t simply be to just spend more on these problems. I think the power of these data and what we need to be doing is spending money in smarter ways. And so this is a good example of a program, where we’re spending $45 billion on various forms of affordable housing, but we’re not spending that money in the most efficient possible way in order to achieve outcomes like reduced poverty in the long-run. So let me give you a couple of examples on dimensions in which we can, I think, make improvements. First , the optimal age at which to help families move is when their kids are born or when their kids are very young. In practice, we do almost exactly the opposite. We put families on waiting lists when they have kids, and those waiting lists sometimes take many, many years, particularly in the most depressed cities where we really would like to be moving families out of concentrated poverty. And so what ends up happening is that families only get the opportunity to move exactly when their kids are older, which is exactly backwards, right, in terms of what you’d like to be accomplishing here. So that’s a tweak that would not increase program costs but I think would dramatically increase impact. Another example is that the vast majority of housing vouchers are currently being used in very high-poverty, low-opportunity areas. And that is problematic, because we find that it’s really critical to move to these higher-opportunity, low-poverty areas in order to see beneficial outcomes. And so we’re working with HUD and a large group of public-housing authorities to figure out how, again, without spending more money, how we might be able to reform the program so we can get more families that get these vouchers to move to neighborhoods that are going to better serve their kids in the long-run. A further important aspect to think about in the context of cost is that my sense is that the government will actually recover much of the money we invest in programs like this because we see that these children who are earning 30 percent more as adults — they of course are paying more in income taxes themselves as they have higher earnings. And so we calculate that the extra income taxes that they pay actually more than offsets the incremental cost of a program like Moving to Opportunity. So it’s actually a, we think, a budget-saving program in many ways. 

DUBNER: Your work has been cited by politicians certainly across the aisle — by Paul Ryan, you’ve personally tutored Hillary Clinton in mobility issues and perhaps others, you’ve advised the Obama Administration and advised Jeb Bush — I’m really curious to know how, well, I was going to ask you how it feels to have that policy pull, I don’t know if you actually have pull, but at least you’re in the room and you are looked to as an authority who really understands or can explain cause and effect in addressing these issues that policymakers deal with all the time, often not in an evidence-based manner. So could you just talk about that — what those conversations are like, if you feel they’re fruitful, if you feel your research is considered seriously and perhaps even acted upon?

CHETTY: Yes. I am quite encouraged by how interested policymakers are in this type of evidence, and I think there is a genuine interest, often on both sides of the aisle, in trying to do better things with the money that we’re spending. I think when you can come into a room and say, “I’m not saying we should spend an extra $30 billion on affordable housing, I’m saying we should take the money we’re already spending and maybe tweak it in certain ways and enact certain reforms, that based on the evidence will actually deliver better outcomes that we all want to achieve.” I think that can really be impactful. My sense is by the way, a lot of the political influence that matters here is not just at the national level, but at the local level, given the nature of the problem. Mayors can do a lot. We noticed mayors are talking about things differently. Our hope is ultimately the evidence that we’re accumulating and a number of other researchers will ultimately influence policy.

[MUSIC: Joe Hedges “I Can Try” (from: Alchemy)]

Since our interview with Raj Chetty, he has met for an hour-and-a-half with Ben Carson, the presumptive Secretary of Housing and Urban Development. As Chetty described it in an e-mail:  “He and his staff were eager to hear about how the data could help us make better use of the dollars HUD is spending to achieve better outcomes for low-income children.”

We asked Chetty if he’d consider serving in this Administration himself. “I would not have considered serving in either a Trump or Clinton administration, largely because I’d like to continue focusing on research to identify the best policy solutions at this point. Perhaps down the road I’d reconsider.” Chetty also wrote this: “I hope that the new administration will take an evidence-based approach to making policy decisions, for instance by making smart investments in childhood education, affordable housing, and other programs that can create opportunity in effective ways.”

If you want to look at some of the research by Raj Chetty and his colleagues on the Equality of Opportunity Project, I suggest you spend some time on their website. You can look it up: Equality of Opportunity Project. And next time on Freakonomics Radio, we’ll expand this conversation about the state of the American Dream.

One argument we’ve all heard is that the U.S. was too willing to let its manufacturing jobs go to China and elsewhere. Economists were for the most part sanguine; they told us not to worry, that the upsides of global trade would cancel out the downsides of that job loss. What do they say now?

David AUTOR: I’m much less sanguine about it than I used to be. I think if we had realized how traumatic the pace of change would have been, we would have at a minimum had much better policies in place to assist workers in communities that suffered these very severe and immediate consequences and we might have tried to moderate the pace at which it occurred.

The true story of Chinese trade and American job loss – that’s next time, on Freakonomics Radio.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Greg Rosalsky.  Our staff also includes Shelley Lewis, Christopher Werth, Stephanie Tam, Merritt Jacob, Eliza Lambert, Alison Hockenberry, Emma Morgenstern, Harry Huggins, and Brian Gutierrez, and we had help on this episode from Andrew Dunn and Noam Osband. You can subscribe to Freakonomics Radio on iTunes or wherever else you get your podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

ETC.

  • Trust Me,” Freakonomics Radio, 11/10/16

The post Is the American Dream Really Dead? appeared first on Freakonomics.

January 11, 2017
Trevor Noah on The Daily Show

Trevor Noah of The Daily Show, is the author of a new book, Born a Crime.
Photo Credit: Brad Barket

Our latest Freakonomics Radio episode is called “Trevor Noah Has a Lot to Say” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

The Daily Show host grew up as a poor, mixed-race South African kid going to three churches every Sunday. So he has a sui generis view of America — especially on race, politics, and religion — and he’s not afraid to speak his mind.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

[MUSIC: Baba Brinkman, “Spread It” (from The Rap Guide to Religion)]

Stephen DUBNER:  I am curious, in this, the era of podcasting, how does it feel to just be doing a TV show? Does it depress you knowing that you’re the wave of the past?

Trevor NOAH: It doesn’t depress me at all. If it wasn’t for the visual element of the telly that we are doing, then I would never get to dress up. Right now, your listeners don’t realize that we’re both sitting here pants-less having this conversation.

[MUSIC: Jack Miele, “Take it Downtown”]

Trevor Noah, host of The Daily Show, is a seriously funny and a seriously smart man. He also brings to his job a sui generis view of America – our politics, our customs, our obsessions.

NOAH (clip from African American):  It’s all about statistics. Have you seen sports in America? Non-stop. You know everything. You know everything.  And then you switch over to your business channels and your economy and you’re like, ‘What’s happening in the economy this year, Bob?’ ‘Well, nobody knows.’

Noah grew up as a mixed-race kid in South Africa during the final years of apartheid. When he holds a mirror up to America for us to see, it’s almost as if it’s a two-way mirror: yes, he’s an outsider, dwelling on the differences, but he often zeroes in on the similarities.  

NOAH (Clip from The Daily Show): The people with the longest history of getting (bleeped) over in America are the ones who are getting (bleeped) over. Like this is the conversation. The conversation seems to go: “The pipeline is completely safe.” “And it’s like, well then, why didn’t you build it under the white people’s houses?” “Well, because it might leak.” “So it’s not safe, it’s just safe enough for the native Americans.” “No it’s not a race thing, it’s that if the pipe leaks there’s  fewer of them than of us.” “And why are there fewer of them?”

Noah has been in the States for five years now. A major highlight: interviewing President Obama:

NOAH (Clip from The Daily Show): Yeah, I’d like to apologize first of all. I know you waited a long time for this and you wanted to make it happen. I’m sorry..

President OBAMA: You guys wouldn’t book us. I kept on calling.

And Noah was one of the few people who talk for a living who didn’t discount the possibility of Donald Trump becoming president. Nor did he explain Trump’s election in the usual fashion.

NOAH (Clip from The Daily Show): When you look at the election results, the color red doesn’t necessarily mean white power. It can also mean there are people who wanted the world to pay attention to them. 

Today on Freakonomics Radio: Trevor Noah on politics, race, religion, and his excellent new memoir, Born a Crime.

NOAH: I was the first person in my family who was allowed to go to a white school or a school that was considered white.

*  *  *

DUBNER I would think that comedians around the world are going to be very pissed off at you because rather than just writing up a book of all your comedy stuff, which is what they usually do, you went and actually wrote a real book, which raises the bar.

NOAH:  Oh, wow. Thank you. Most people would see it as a book about me growing up in apartheid, it’s not really that. Apartheid was merely the container that my life existed within. If anything, it’s a story of myself and my mom. It’s a crazy journey that we lived through together.

[MUSIC: Josh Hill, “Deep Breath” (from Jawdrop)]

Trevor Noah was born in South Africa in 1984. His mother was black and African; his father, white and European. This meant Noah was, technically, Born a Crime, the title of his book. The rules of apartheid dictated that neither his mother nor father could publicly acknowledge this mixed-race boy as their son. His mother, if asked, would pretend she was his babysitter; his father literally ran away from him on the street if he started shouting “Daddy, Daddy!” Noah grew up primarily with his mother and her family in the black township of Soweto. He was very poor but also much loved, much encouraged, and he was good at many things – language, sports, making people laugh, and taking the temperature of a room.

DUBNER: You write as a kid that you really became a chameleon linguistically but in other ways too, and that you used that to your advantage. You wrote that the way to bridge the gap between different people was their language and so on. So is chameleon essentially always a good thing?

NOAH: Yeah. I think so. Fundamentally, a chameleon may change its color, but it’s still a chameleon. That’s really what a chameleon is doing. A chameleon is, for me, doing two things. It is blending into its environment to protect itself, but also so as to not disturb the environment and to create a panic.

DUBNER: Now what if someone said, “Well, that means you’re not being your authentic self.” Is that a concern?

NOAH: It doesn’t concern me at all. What you’re saying is my authentic self is one thing. Why does that need to be? So could you not see the same person as being — think of a parent. A parent is a provider but at the same time they are a protector. A parent is someone who provides love but also discipline. You get what I’m saying? You can be many things at the same time whilst authentically being yourself.

DUBNER: So, your mom is remarkable. She obviously taught you a lot, and you learned a lot from her, and you learned a lot on your own as well.  She talked about one of her greatest hopes was that you wouldn’t have to pay what she called the black tax. That you’d have to work harder than a white person just to get back to zero, and that generationally that can even compound on itself. Talk to me for a minute about that concept of the black tax there in South Africa versus here now.

NOAH: If you think of it like this — you know  a lot of the time when you hear people having conversations about white privilege, male privilege and so on, I think sometimes what gets lost is with the word “privilege” comes the connotation of having a good time. You know, people go, “What privilege? I may be a white man but I’m poor. I may be a white man but I’m suffering.” And that is completely true. And sometimes I go, “Maybe in the labeling, it’s almost like it could have gone the other way and it’s like, is it a black disadvantage? Or is it a female disadvantage?” Because we cannot deny that there are certain handicaps that come with these certain labels you know that exist. If you look at the effects of what you’ve lived through in your life, you cannot deny that they compound. You cannot deny that they grow over time. So people who say things like, “Get over it, slavery’s done” or “Get over it, apartheid is over,” then I go, “You cannot get over it because it ending is merely the beginning of your journey.” And so, you think of it like this—in my family, I was the first person in my family who was allowed to go to a white school or a school that was considered white. My grandparents were not taught the things that other people’s grandparents were taught if they were white in the country. And so now, even if we’re not talking about financial inheritance, we’re talking about now educational inheritance. My grandfather and grandmother couldn’t bequeath to me an education that they would have learned because they didn’t get it. My mother, self-taught for many things. She was lucky in that she encountered a missionary and that’s where she learned things that the government wasn’t teaching to many black people. So there you see someone equalizing or get her back to zero, which is where everyone should be able to start from.

DUBNER: Right. But she was also—look, to be frank, your mother was singularly, maybe not singularly—extraordinarily driven—

NOAH: Oh yeah, definitely.

DUBNER: For her own life, she wanted to have a child—

NOAH: Yes. Definitely.

DUBNER: —even if there wasn’t a marriage and that child was you. And then the extent to which she made sure to literally invest in you, take you to places that cost nothing, expose you to things that cost nothing, expose you to languages and help teach you languages. So you know—

NOAH: But that’s, that’s an example of my mother working extra hard to make sure that I was at least the zero level that a child who was not black would be at.  That’s what I’m saying. She was trying to make sure that I wasn’t in a place where I would now have to pay back in essence for things I didn’t have access to beforehand.

DUBNER: So that’s fantastic for you, fantastic for her, and she’s obviously to be applauded for that. But on the other hand, because she is such an outlier, you have to think about, well, when the system itself doesn’t provide for that opportunity —

NOAH: Definitely.

DUBNER: —for everybody, what do you do? I’m just curious. I do think that you think about our society, including race, very differently.

NOAH: I think it’s because I’ve been lucky enough to live all over the world. So South Africa birthed me, South Africa raised me, but then I spent a lot of time living elsewhere. I’ve gotten to spend cumulatively a year living in the U.K. I’ve got to spend six months in Australia, I got to spend now five years living in the U.S. I’ve gotten to spend so much time living in different places, even experiencing what it means to be black in different places.  And so, with that comes a different way of processing information. With that comes a different way of trying to understand what we’re dealing with in the world. Whether it comes through like you say these systems that oppress people and these ideas that are designed to hold people back.

 

NOAH (Clip from Lost In Translation):  This is the strangest thing. They ask all these weird questions, questions that have nothing to do with the man being shot who is unarmed. They come on and they go, “Also noted, is Walter Scott owed $16,000 in child support.” To the cop?

 

DUBNER: So you were very, very religious as a child.

NOAH: Yes.

DUBNER:  Then as a Christian, as a Roman Catholic, but then your mom converted to Judaism.  What’s your religious situation now?

NOAH: I’m spiritual. I think what constantly throws me with religion is the taint of man, I find.

DUBNER: Humankind, you mean? Or maleness?

NOAH: That as well, because a lot of religion is framed around patriarchy.  You know, it’s men using this mythical thing to oppress other people and women. You know, most religions aren’t very progressive in terms of women’s rights.

DUBNER: Although they are reflective of the eras in which they were formed, of course.

NOAH: Oh yeah, yeah definitely, but what I’m saying is there’s just not even one religion where it’s just, no no, men need to cover up more, and men are the ones who are dirty, and men are the ones — do you get what I’m saying?

DUBNER: Maybe you should start one. Maybe this Daily Show thing is just a way station on the route to starting — what would you call your religion?

NOAH: What would I call my religion? The Church of the Truth. That’s what I would call it.

DUBNER: Shooting small.

NOAH: Catchy name, right? Where do you go? I go to the Church of the Truth.

DUBNER: Do you still pray?

NOAH: I do.

DUBNER: What do you pray for? I realize that’s an intimate question. You don’t have to answer.

NOAH: I see prayer as a way of meditation. When I look across religions, I find the common thread. And I go, so, if you look at a person who’s meditating, that’s no different to what a lot of people who worship under Islam are doing five times a day. They’re taking time out of their day and getting into a zone. That’s really what prayer is for me. It’s taking a moment to be mindful, thinking about your world, thinking about your day, visualizing, thinking about a future, thinking about the past. 

DUBNER: Is there a deity involved? 

NOAH: Not necessarily Not necessarily.. I think, again, that’s where man has attached himself to the god, you know? I think if there is a god, it’s something we cannot understand. It is far beyond our comprehension of what we would think. We make it like it’s just basically a big version of Santa Claus, who decides who gets gifts and who doesn’t.

DUBNER: I was going to ask you who God prays for. So there’s a tradition in Judaism — do you know anything about Midrash? Midrashim?

NOAH: No.

DUBNER: So Midrashim are these informal but revered Jewish teachings by the sages, right? There’s one Midrash about what God prays for, which I thought was a fascinating idea, just because it flips it. And the question is asked, “What does God pray for?” and the answer is, “He prays that His mercy be greater than His anger.”

NOAH: Huh.

DUBNER: Which I found to be very compelling because the Bible is full of an angry god that people struggle with, and the Midrashic argument is that well, if you want to anthropomorphize God, which maybe is not a good idea—but if you do, and you see him being so pissed off all the time—that the way to think about it is that He is like a parent to these kids who are being a pain in the ass …

NOAH: That makes sense.

DUBNER: Kinda like you, like your mom felt about you.

NOAH: That’s exactly how I was, yeah.

DUBNER: And that when people who are meant to watch other people strike out at them, it’s not about being angry at them, it’s about being scared for them. And so he wanted his mercy to be always greater than his anger.

NOAH: That’s fascinating. That’s a fascinating thought. I don’t think I ever think about it that deeply. I try, and then I always get caught up in personifying a god too much.

DUBNER: And that feels counterproductive?

NOAH: Well I go this is what I think I would be if I were a god, which is I think what everyone does. That’s what everyone’s doing.

DUBNER:  Really? You do? You think that’s what everyone does? Really?

NOAH: Everyone’s basically going, “I think God would do this, and I think God would do…” It’s like no, no, no, what you’re seeing is, “I think I would do this if I were a god.” That is what you’re really saying.

DUBNER: So what would you do if you were a god? Whether you have your own religion—Church of the Truth or—

NOAH: I don’t know if I’d give people free will.

DUBNER:  Oh, really?

NOAH:  That’s why I don’t think I’d be a good god.

DUBNER:  That’s a big one to take right off the table.

NOAH: Yeah. Why would you give people the will to hurt you? That makes no sense to me. And that’s why I say God must be beyond everything we conceive, if there is a god. Because I wouldn’t let you choose to do the thing that would hurt me. Why would I want that?

DUBNER: You sound like someone who grew up under a very repressive dictator, a very repressive government, I have to say.

NOAH: It sounds like you’re talking about apartheid, but I’m talking about my mom. Yes I did. Very, very oppressive regime. That is my mother.

[MUSIC: Baba Brinkman, “Stand Up” (from The Rap Guide to Climate Chaos)]

Coming up after the break: Trevor Noah does Donald Trump …

NOAH: These people, they wanted change. That’s what we’re going to do. We’re going to make America great again.

And he explains why he’s not interested in being as angry as his predecessor, Jon Stewart.

NOAH: You’re trying to win. Your anger doesn’t help you win. Half of the time, it sends you into a blind rage.

That’s coming up, on Freakonomics Radio.

 *  *  *

MUSIC: J-Hype, “Isley”]

Trevor Noah, “born a crime” in South Africa, has achieved personal success beyond what he could have conceived. It was standup comedy that made it happen:

NOAH (from stand up clip): Why do you guys censor your hip hop on hip hop radio stations?    I understand when I  listen to KISS and they play a hip-hop song and they censor it, I’m like ok, maybe some people don’t like it. But then on the hip hop station, they censor hip hop. Why would you do that?  It’s a hip hop station. Surely everyone listening to the hip hop station knows what hip hop is all about. Is there somebody listening to hip hop who doesn’t like the cussing particularly?  Who are the people who made these laws?  Who is that person who says, you know what, you know what,  I can’t handle the cussing. I just can’t handle it. Please cut it out. But keep the misogyny. Keep that in. Keep that in. Because these hos ain’t loyal.

DUBNER:  America has a lot of conversations lately about diversity and what that means. There are some people who argue, and I tend to agree with them,  that often people talk about diversity in terms of the most observable characteristics.

NOAH: Yes.

DUBNER: Skin color is very observable, gender, etc. etc.. And that those characteristics may actually be emblematic of something that’s not all that substantial, whereas the less observable characteristics, inside of a person, which may be much more significant — how people think religiously, politically, how they think about the military, on and on—those are, because they’re not observable, we kind of don’t count them in terms of diversity. So what you may end up with in the kind of modern American form of diversity is a bunch of people who may look fairly different, but think exactly alike. As opposed to a bunch of people who have different thoughts and may or may not look alike. I’m curious whether you think what I just stated is true in your experience and if so, what you think is a better way to think about it.

NOAH: Well I think it’s complicated and none of us have figured it out. What I will say is this — within that world, the one thing you’re negating is the fact that what you feel or think about the world is not mutually exclusive from what the world thinks or feels about you. So if you have a room…let’s say you have a room of only purple people. They may all have different religions, they may all have different beliefs about the economy and the military and so on—but the one thing they all have in common is they’re all purple. And so it stands to reason that they’ve all shared similar experiences in and around being purple. So the way the world reacts to them is as purple people. And so, although it may not be perfect, when you have a room of different colors, what happens is each of those colors has interacted with the world in a different way because unfortunately that’s what the world is like now. So there’s an element of that. What you’re saying is completely true. There is no fix-all, I think. But you cannot deny that that is something that also informs you and changes who you are.

DUBNER: I very much see your point and I agree with your point. I guess the bigger challenge is when you say it’s hard to fix that or it’s hard to change it, again, the scholars that I’m thinking of would say well that is true, but the first thing you have to do is realize that the human brain makes decisions all the time based on shortcuts that are kind of bad ways of thinking, you know?

NOAH: That makes sense.

DUBNER: And that wouldn’t it be great if rather than saying “I’m going to group these people alike because they’re all purple or white or black” or whatever, I’m going to actually try to figure out some kind of litmus test of my own to think are these good people or are these honest people or are these trustworthy people?

NOAH: You are right in saying that there are many different measures. But when there are issues that are aimed at people — when you’ve got voter ID laws, let’s say, that are aimed specifically, as the 4th Circuit of Appeals said, at specific people who are marked by the color of their skin, why not get a person of that color to give you the feeling or the opinion behind it? And I think that’s where diversity plays in because, I think of it as a competitive advantage. I don’t think of it as a moral thing, in fact. I go, diversity is great for your competition. It makes you better. It makes you think. That’s what makes America great. I don’t think it’s any mistake that America has so much innovation. Because you’re living in a society that’s not homogeneous. You’re living in a society that has so many different influences. So you have a Russian coming in to create Google but from America. Because his mind comes from a Russian place but then he is basically infected with the goodness that is in America in terms of just different ideas. You know and that’s what it is. In terms of diversities, you bring your experiences, I bring mine, we may combine those two things to come up with something that you alone, I alone, could not have come up with.

DUBNER: So let me ask you this. It’s been said by eggheads whom I admire that one of the best ingredients in a healthy civilization is social trust and social capital. And that in America it’s been quite on decline since the 1960s or so, as it has been in Britain.  I’m just curious, you look at this country, if I tell you the fact that our social trust is relatively much lower than it used to be and you’ve come in as an outsider, Tocquevillian, in some ways, how would you think about repairing, uplifting social trust? Keeping in mind – sorry, I left out one thing, keeping in mind that one of the biggest barriers to social trust is diversity. So diversity, which is great for economies and great for the spirit, many would argue and so on, it turns out that people tend to get less trusting when there are more people around them who don’t look like them or go to the same church or whatnot.

NOAH: That is fascinating.

DUBNER: What would you, I hate to put such a burden on you, but if you could change things—

NOAH: That’s a tough one. The first thing I would have to look at then is, is there social trust in areas of America where there’s less diversity? That’s the first thing I would have to look at.

DUBNER: The short answer is yes.

NOAH: So there is?

DUBNER: But social trust in and of itself isn’t so great. It can exist in a place, but that group could be hostile to everyone else. Ideally, you want social trust and diversity.  What the scholars say is you look at the institutions that do a good job of creating that between people who are different. Universities, sports team. You boxed. Did you play team sports, though? Yeah.

NOAH: I did, I did. Is it maybe because in those institutions you feel like you have a common goal and a common purpose? And maybe essentially the people in this country don’t feel like they have a common goal and a common purpose.

DUBNER: So if that were the case, and let’s just say it is, and you could help define the common goal or purpose of America for the next five or 10 years, what would it be?

NOAH: This is the thing, I think it’s more a question. Over the next four years, America’s going to have to answer the question, and that is, “Who is America?”  Is America the land of the free and the home of the brave? Is America that shining tower on a hill? Or is America the capitalistic, take-as-much-as-possible, burn-as-much-fuel-as-possible, plunder where necessary in the world and oppress the weaker? Is that America? Or is America a little bit of both? And I think that is closer to where — once you get that answer….Because oftentimes you see in the conversations that are had between people, that is still something that people don’t agree on, is what America actually is.

DUBNER: But you said something earlier about America that I think most people would agree with, is the diversity is what makes us different, is what makes us innovative, right?

NOAH: Yes. And what makes it more difficult.

DUBNER: Well, true. Absolutely. But part of diversity means what they call heterogeneous preferences, right? People prefer different things. So, what if America remains divided, the way we call it that, a lot of different people having a lot of different preferences, but finding a way to unite under a common goal. In other words, the long-term goal, the definition of what America is.

NOAH: Yeah, I will put it like this, on a smaller level. Think of a music festival. Everyone can go to a music festival and have a really great time. All the people are there together because they share a common goal and that is to enjoy and appreciate music. Now some people will go to the hip-hop stage, some people will go to the rock stage, others will go to the indie/alternative stage. Some will go to all three.

DUBNER: What about the podcast stage?

NOAH: It’s a music festival. You’re killing me here. But the point is, everybody at least has agreed that they are in this for music. They want to appreciate music. That’s why I say the larger thing still becomes within that world. Yeah, you all want everything that is different, but what is that one common goal that you are striving for? You know and so, I feel like, to a certain extent, maybe countries where they’re good at doing that—you know, like Japan has a culture in and around that. Germany has a culture—I mean they had it a bit too much. A little bit of uber alles.

DUBNER: That’s a bit of an understatement, yeah.

NOAH: The point is everyone was aimed in the same direction, and I think that’s where you start to realize how that can move you forward.

[MUSIC: Teddy Presberg, “Free Love” (from Blueprint of Soul)]

In 2015, Noah was chosen by Comedy Central to replace Jon Stewart when he stepped down as host of The Daily Show.

DUBNER: Do you like your job now?

NOAH: Yeah, I love my job. It’s challenging. It’s extremely difficult.

DUBNER: I’m told that you were a little surprised by just how exhaustive and exhausting it is running the show editorially.

NOAH: Yeah. I will tell you this. Jon Stewart does not — he gets amazing credit, but one piece of credit and I tell him all the time, is I go, “You are a genius. You are a genius and you are one of the hardest-working people I’ve ever come across, because this thing is a monster to move.” It is a mountain because it’s one thing to make jokes every day, it’s another thing to be in a world where you’re making jokes, you’re also trying to do research, you’re trying to forge a point of view, you’re trying to be truthful whilst at the same time getting across a feeling and connecting with an audience. There are many things happening at the same time, often times I go, “Man i wish we could just makes jokes about nothing today, and it’s like ‘no.’”

DUBNER: Your appointment as host was surprising to just about everyone, including you. We know that Jon Stewart’s first choice was John Oliver, to get him back, and that didn’t work out. Did you feel in any way slightly less grateful that you weren’t the first choice?

NOAH: Why? Most of us are not the first choice in our lives. Most of the people who are married are married to someone because it’s not their first choice.

DUBNER: Is that true?

NOAH: That is life.

DUBNER: You know that for a fact?

NOAH: I know that for a fact.

DUBNER: Give me the data on that.

NOAH:  I’m willing to put money down. Think about it like this. If Will Smith didn’t turn down The Matrix, Keanu Reeves would have never made it. I always think that that’s what life is. It is somebody who turns something down and then you get to pick it up and go, “Let me try this.” I would have gone with John Oliver. I love John Oliver. To this day, John Oliver is one of the reasons that I was like, “I would like to do this show”. John Oliver was one of the people I looked up to. Because before him, I had never seen a non-American doing anything like that. And it took him a good 10 years to get good at doing that. So I aspire to be as good as John Oliver. No, no, that’s something I’m never slighted by because if that was the case, you’d never be grateful for anything in life.

DUBNER: And circumstances being what they are, you’ve done well on the show and the ratings have improved. That said, it’s easy for people to compare you at the beginning of your hitch, here, with Jon Stewart at the end, which is not a fair comparison, but the way time works, it’s a natural thing to do. So talk for a minute about that. What pressures you’re feeling, if any, from the network to improve ratings.

NOAH: I’ve been very lucky in that the network has always been supportive of us. And most importantly, because you must remember, we never lost ratings. We just never had the ratings of 16-year Jon Stewart. Which, in essence, would be an insult to Jon Stewart, I always think. I go, “Can you imagine if you come in from nowhere, nobody knows you, and the ratings are exactly the same?”

DUBNER: “Oh, it must have just been the time slot. It wasn’t you at all, Jon.”

NOAH: Then you go, “oh, Jon didn’t mean anything?” I would hope that Jon leaving would change the ratings. I would hope that would then give me an opportunity to build up to something myself. To see some growth. To see what a base is and to go, “OK, I can work up from here.”

DUBNER: So let me just go back a little bit to you taking over for Jon and you being a very different person, a very different thinker, and so on. You presented and, I think, talked a little bit about the fact that you’re not as angry a person, or don’t play that person so much. I’m just curious whether the election of Trump has changed your kind of internal mandate for how to manage or dial up, perhaps, the anger.

NOAH: Not necessarily. And I’ll tell you why. This is the thing people make a mistake with. They try to make it an either/or. They go, “Oh, you’re not as angry as Jon and you say you’re not as angry.” But if you listen to what Jon said was, he said, “I have become too angry, I have become tired of being angry, I can no longer do this. I understand that you want a comedy show, but I do not possess that.” And he said to me, “The show needs a host that still has that energy and still has the ability to find the comedy and use it as a tool to cut through everything that is presented to them.” My anger happens in bursts, but I do not exist only as an angry person. And maybe it’s because of the world I grew up in, where anger and strategy had to be balanced. In South Africa, we had many struggle leaders who were angry, but you had to learn when to let that anger come out. These are the things that I’ve learned from some of the greatest leaders, just reading their autobiographies and their stories. I also learned this when I used to box. I didn’t box professionally, but as a boxer you have to learn to calm down. You’re trying to win. Your anger doesn’t help you win. There are moments when you can use it to fuel what you’re trying to do, but half of the time, it sends you into a blind rage.

DUBNER: Do you think President Obama could have used a little more anger, or do you think he played things generally well? Obviously he was frustrated and he expressed his frustrations very eloquently for eight years, but he didn’t pound on tables and so on.

NOAH: I think hindsight is 20/20. I think everyone will know how Obama should have done it because it was  never  done before, and we won’t have an example until maybe another black president does it again.

DUBNER: You interviewed President Obama in the White House shortly before he left office. So for a guy who grew up very poor in South Africa that was obviously a very unlikely outcome that you’d end up in the White House. How do you process that?

NOAH: Wow. I can only be grateful. I sat with my friends afterwards, and we just talked about it. One of my friends, Trayvon, who used to be a writer on The Daily Show, him and I were just chatting and he was like, “Do you understand how insane this is? You are the host of The Daily Show, he is the President, but you are both mixed-race people who are both half-African, you grew up under apartheid, he is now the president. The fact that you guys met—do you know how unlikely … .just in terms of odds and numbers—”

DUBNER: Even meeting anywhere, much less at the White House.

NOAH: At the White House, you interviewing him. I mean, it was …

DUBNER: And him telling you that you’re the good-looking one, by the way.

 

President OBAMA (from The Daily Show): You know, I will say that I resent how young and good-looking you are, because, I used to think of myself in those terms, and it’s been downhill for quite some time.

 

NOAH: Look, you know,  I think it’s moments like that that I try to cherish as much as possible.

DUBNER: Let’s say I’m Donald Trump. You land me on your show. First question for me?

NOAH: First question for you. Let me think. Landed you on the show. You’ve come in as president. Are you president now, probably?

DUBNER: Let’s say I’m president. Say it’s January 23, on my very third day, I come to you, Trevor Noah, because I’ve heard that you are a really interesting thinker, a straight shooter, and that you look at things differently as do I.

NOAH: I would probably say, “You really knew how to tap into almost everybody’s anger and feelings of being left behind, and sometimes even of hatred, how did you do that without getting swept up in it? Because you don’t believe most of those things.”

DUBNER: Now, what makes you think, though, that I wouldn’t hear the beginning of that and say, “You did well at tapping into the anger,” wouldn’t my response naturally be then, “Well, that’s an accusation. It wasn’t anger—”

NOAH: Donald Trump doesn’t think like that.

DUBNER: No, he doesn’t?

NOAH: You’re going too deep now. No.

DUBNER: What would my reply be then? Now you have to be Trump and I have to be you for a moment.

NOAH: What would Trump say to that? He would probably say, “I traveled around the country, met a lot of people, fantastic people, tremendous people, tremendous people, a lot of angry people, I heard what they said. These people, they wanted change. That’s what we’re going to do. We’re going to make America great again. We’re going to make America great again.”

DUBNER: What do you think of Trump?

NOAH: I think Donald Trump is playing a character in a reality show, and he doesn’t take it as seriously as everyone else does. That’s what I genuinely think.

DUBNER:  Therefore, the outcome will be poor? Or therefore the outcome will be, it’s hard to say because we haven’t seen it before?

NOAH: It’s hard to say because we’ve never seen it. I’ve never seen this before. Normally the show ends when the person wins the prize. Now, you know, it’s the beginning of the journey.

[MUSIC: Beckah Shae, “It’s Well” (from Mighty)]

In case you’re still undecided on Trevor Noah, and want to know more about where he stands on the pressing issues of the day – well, consider his views on … this podcast.

NOAH: I’ve studied this for a very long time and I’ve come to the conclusion that people who refuse to listen to Freakonomics Radio are unfortunately doomed to be labeled as idiots. Now this is something we can all change, but it’s all up to you.

So congratulations, dear listener. You’ve proven you’re not an idiot. Why don’t you help your friends and family escape idiocy too, by telling them to listen, and do the other nice things to support our show. You can subscribe on iTunes or wherever you get your podcasts. You can write a review or leave a rating. And, of course, check out our next episode. If Trevor Noah is an example of the American Dream writ small, what about the big picture? We speak with the award-winning economist Raj Chetty about the state of the American Dream.

CHETTY: You’re twice as likely to realize the American Dream if you’re growing up in Canada rather than the U.S.

That’s next time, on Freakonomics Radio.

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CREDITS: Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Shelley Lewis. Our staff also includes Shelley Lewis, Christopher Werth, Merritt Jacob,Greg RosalskyStephanie Tam, Eliza Lambert, Alison Hockenberry, Emma MorgensternHarry Hugginsand Brian Gutierrez. You can subscribe to this podcast on iTunes or wherever else you get your podcasts. You can also find us on Twitter and Facebook. Thanks for listening.

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Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

ETC.

The post Trevor Noah Has a Lot to Say appeared first on Freakonomics.

January 5, 2017

The next generation of Yuengling’s beer, poised to take the lead: (from left) Wendy Yuengling Baker, Debbie Yuengling-Ferhat, Jennifer Yuengling, Sheryl Yuengling (rear) (Photo courtesy of Yuengling Brewery)

Season 6, Episode 18

On this week’s episode of Freakonomics Radio: if you’ve built a successful business — be it a bakery, a carmaker or a newspaper — who continues the legacy when you retire?

For many Fortune 500 companies, the answer is obvious: one (or more) of your children take the helm. But let’s get beyond the nepotism and silver spoons, real and imagined. Do the numbers support mixing business and blood ties?

To find out, Stephen J. Dubner learns about Japanese adoption practices and visits America’s oldest brewery. Plus, Warren Buffett’s youngest son, Peter Buffett, talks about why he didn’t follow in his father’s footsteps.

To find out more, check out the podcasts from which this hour was drawn: “The Church of ‘Scionology” and “Growing Up Buffett.”

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post The Church of ‘Scionology’ appeared first on Freakonomics.

January 4, 2017

Michael Lewis wrote The Undoing Project about two psychologists that changed the way we look at economics. (Photo: MichaelLewisWrites.com)

Our latest Freakonomics Radio episode is called “The Men Who Started a Thinking Revolution” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

Starting in the late 1960s, the Israeli psychologists Amos Tversky and Danny Kahneman began to redefine how the human mind actually works. Michael Lewis’s new book The Undoing Project explains how the movement they started — now known as behavioral economics — has had such a profound effect on academia, governments, and society at large.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

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A quick update on my new podcast, a game show called Tell Me Something I Don’t Know: We tape in front of a live audience and we’ve just announced a batch of new taping dates, in New York City, Boston, and Washington, D.C. On January 25, 26, and 27, we’ll be at Symphony Space, in New York City; on March 6 and 7, we’ll be at 6th and I, in Washington, D.C.;  and on March 14, 15, and 16, we’ll be at the Wilbur Theater in Boston. So please come to the show! To get tickets — or if you want to be a contestant — just go to TMSIDK.com. If you haven’t heard the show yet, check it out on iTunes or wherever you get your podcasts. It’s already got more than 3 million listens — so what are you waiting for? Our first six episodes are already up, and lots more will be coming soon. Now, on to Freakonomics Radio.

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[MUSIC: Torches, “Fancy Meats” (from Heads Full of Rust)]

There aren’t many people in the world who write excellent books that also get turned into excellent films. Among them is this guy: 

Michael LEWIS: My name is Michael Lewis, and I just think of myself as a writer.

What makes Michael Lewis’s rare feat even rarer is that his books wouldn’t seem at all conducive to the Hollywood treatment. Books like Moneyball

LEWIS: … which was about the way the Oakland A’s managed to function on a shoestring budget in Major League Baseball. And the book was in my mind really about the way the market for baseball players misvalued those players. That the then-experts in baseball, scouts, would make big mistakes in deciding who was a good player and who wasn’t a good player. And the A’s were exploiting this by using statistical analysis.

Brad PITT (Clip from Moneyball): The problem that we’re trying to solve is that there are rich teams and there are poor teams, then there’s 50 feet of crap — and then there’s us.

Or, an even more unlikely book to be turned into a film, The Big Short, Lewis’s book about how a housing bubble turned into a financial disaster.

Ryan GOSLING (Clip from The Big Short): With something called a Credit Default Swap. It’s like insurance on the bond and if it goes bust you can make ten-to-one—even twenty-to-one return.

LEWIS: I was astonished that anybody bothered to make Moneyball, much less The Big Short. And so my experience with the movie business is peculiar because what seems to happen is I write the books that are ever harder to turn into movies and they work ever harder to make them into movies. 

His latest book may pose the biggest challenge yet. It’s called The Undoing Project. And it’s about a pair of academics, in a room alone, for a few decades, writing papers. They are a pair of Israeli psychologists named Amos Tversky and Danny Kahneman.

LEWIS: And one of their great discoveries is that people don’t make clean, clear choices between things. They make choices between descriptions of things.

No car chases. No doomsday scenarios. But it may still be movie material – for what Kahneman and Tversky did was nothing less than redefined how we humans think. Is that dramatic enough for you?

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Stephen J. DUBNER: So as a fellow writer, I want to ask you this: Reading your work is so pleasurable and easy, and I don’t mean that at all as a pejorative. I love the way you use language and words to talk about ideas. It’s an incredibly rare ability. But because it’s so pleasurable and easy to read, one might assume that the writing of these books is easy and perhaps pleasurable. Is it? Are you, Michael, any less tortured than the average writer?

LEWIS: Yes. It is pleasurable and easy. I hate to ruin your punchline, but actually what is hard for me is figuring out in the beginning what I want to say. I spend a lot of time gathering material and organizing the material before I sit down to write. I’d say three-quarters of the time is that. When the actual writing starts, it’s, for me, fun. It’s just fun. I mean, it’s fun and hard, but if it’s hard, it’s hard in a fun way. And people like my wife, who has walked in on me while I’m writing — I write with headphones on that just plays on a loop the same playlist that I’ve built for whatever book I’m writing. And I cease to hear anything in the world outside of what I’m doing. And apparently I’m sitting there laughing the whole time. And so I think basically what I’m doing is laughing at my own jokes, and I wasn’t even aware of that. But people like my kids and my wife say that, “You’re sitting at your desk laughing all the time.”

DUBNER: What’s on your playlist? What kind of stuff? Is it pop songs with lyrics or does it have to be more background stuff?

LEWIS: It’s pop songs with lyrics, but I cease to hear it. So the playlist for The Undoing Project included two versions of “Jesse’s Girl,” the Rick Springfield song. It’s Meghan Trainor, some of Adele’s new album, a Cat Stevens song, a Jim Croce song. And then they just… It’s kind of a random assortment stuff. What it all has in common is it kind of gets me up, and after I’ve listened to it a few times while writing, I have this Pavlovian response to it. So if you played like a Meghan Trainor song right now —

DUBNER: You’d just start typing.

LEWIS: Yeah, I’d look for a keyboard. That’s exactly right. So it’s a very odd kind of conditioning mechanism for me.

[MUSIC: Johnny Fiasco, “Downward Spiral” (from Metropolis)]

The Undoing Project began to germinate more than a decade ago. Lewis had just published Moneyball. 

LEWIS: The heart of the story was that markets can really dramatically misvalue and misjudge people. And “If a baseball player could be misjudged, who couldn’t be?” kind of a thing. I thought it had kind of a universal message to it. What I didn’t do is ask why baseball scouts were misvaluing baseball players. And I didn’t really even notice that I hadn’t done that.

[MUSIC: Dot Dot Dot, “Can’t Let Go” (from Revel Revival)]

Lewis didn’t notice that until he read a review of Moneyball, published in The New Republic, by the economist Richard Thaler and the legal scholar Cass Sunstein.

LEWIS: And they said, and very sweetly, “This is a good story Michael Lewis has written, but he doesn’t seem to realize that these two guys named Danny Kahneman and Amos Tversky, psychologists, who’ve explored the biases in the human mind that lead people to make these sorts of misjudgments.” And that was the first time I’d ever heard of Danny Kahneman and Amos Tversky.

The fact that someone like Michael Lewis hadn’t even heard of Danny Kahneman and Amos Tversky tells you something about how obscure most academic research is. It also tells you something about Lewis.

LEWIS: I tend to have tunnel vision when I’m working on something and when Danny Kahneman got the Nobel Prize in economics in 2002, I was in an Oakland A’s dugout. And so I just wasn’t paying attention.  

And it’s not like Kahneman and Tversky are exactly famous today, outside of some rather specific circles. But those circles have been expanding. And even if you don’t know Kahneman and Tversky by name, you are living through a revolution that their research made possible. A revolution as basic – and important – as understanding how people make decisions. Small decisions, like what to eat for lunch; and big ones, like whether to start a war. This revolution has many components and several names, the most prominent being “behavioral economics.” Which is an interesting name for a couple of reasons. No. 1, shouldn’t all economics be behavioral? And, no. 2, a lot of what people talk about when they talk about “behavioral economics” isn’t really economics at all. Which makes sense, since Kahneman and Tversky were psychologists and not economists. But economists, as Freakonomics Radio listeners know, can be a grabby breed. So they put their name on it: “behavioral economics.” Anyway: what is it? Loosely defined, it’s a way of blending empiricism and common sense to understand how people behave; it marries the economist’s belief that people respond to incentives with the psychologist’s understanding that people often don’t respond to incentives as rationally as economic theory might predict. It all starts with recognizing the gap between how we think we make decisions and how we actually make them. The foundation of this field, along with much of its nomenclature, came from the minds of just two men: Amos Tversky and Danny Kahneman. They had a particularly intense and intimate intellectual partnership:

LEWIS: Danny is a fertile source of ideas. So he’s really generative. And it’s not that Amos isn’t capable of being generative, but Danny is off-the-charts generative.  He’s almost the poetic or novelistic mind in the room. And Amos is the diamond cutter. Amos is a pure analytical mind, who sees levels of abstraction in Danny’s ideas and generalizes them and formalizes them, so that they can be tested and expressed in a way that is academically respectable. But I think what they actually are doing is they’re laughing at stupid things people do. And Amos was asked once by somebody who said, “Does the work you and Danny do have any bearing on artificial intelligence?” And Amos said: “I’m much more interested in natural stupidity than I am in artificial intelligence.” And I think that they felt that it wasn’t a mocking spirit in which they operated, they were laughing also at themselves. At the sort of thing that they did that struck them as irrational, and they were mining that for gold. They have really a rattle bag of ideas that they end up trying to classify.

[MUSIC: Mark Ullrich, “Melting”]

Ideas that all revolved around a central realization: that when most of us make decisions, we essentially ignore the laws of probability and even logic. That we rely instead on primitive rules of thumb and shortcuts – or “heuristics,” in the language of academia – that are prone to error. One such heuristic that Kahneman and Tversky explored is known as “anchoring.”

LEWIS: Anchoring is the idea that your mind can be swayed by totally irrelevant information when you’re making a judgment. And they tested it by creating a wheel of fortune that had numbers 1 to 100 on it. You the subject, the lab rat, would spin the wheel of fortune and some number would come up – 20 or 47. And then they asked you to estimate what percentage of the countries in the United Nations came from Africa and what they showed is people who spun a higher number on the wheel of fortune placed a higher estimate there, and the people who spun a lower number on the wheel of fortune guessed lower. And they were anchored by just this number that had been mentioned before. The idea that you could have that kind of effect on an totally irrelevant judgment by just putting a number in front of it, I think it’s totally original. Although, every used car salesman sort of understands, right?

DUBNER: Exactly.

LEWIS: Right? Or Donald Trump understands. You name some huge number and that becomes what you’re centering your judgment around. But what they showed is that the number you’re shown has nothing whatsoever to do with the judgment you’re making and can still affect the judgment.

Another mental shortcut Kahneman and Tversky examined is called the availability heuristic.

LEWIS: It’s a fancy name for just memory — like what comes to mind easily and how that warps your judgment. For example, you’re driving down a highway and you’re going 75 mph like everybody else you’re kind of assuming it’s safe because nothing is alerting you to the probability of an accident. And then you see a horrible accident and everybody slows down to 50 because all of a sudden probability of accident is more available. It’s in your mind. So what comes easily to mind leads to all kinds of biases that people have named- the vividness bias. People think that a baseball player is a better baseball player than he is if his talents are very vivid – if he’s really, really fast or has a lot of power he is more likely to be overvalued than if he had subtle abilities, like plate discipline, because those aren’t vivid. Recency bias is a consequence of the availability heuristic. Whatever happened most recently is judged to be more probable and more likely. A hurricane hits New Orleans, wipes it out — everybody thinks hurricanes are more likely to hit New Orleans than they really are and so forth.

[MUSIC: Blindfold, “Rotation”]

A lot of Kahneman and Tversky’s research looked at how people think about risk – and how we typically give adverse events a lot more weight than positive events. That was the thrust of their most influential paper, published in 1979, called “Prospect Theory: An Analysis of Decision Under Risk.” It argued that the standard economic model for decision-making didn’t fully account for how real people make real decisions, especially if there’s the possibility of a bad outcome. It made sense that Kahneman and Tversky thought about this differently than economists – they were, after all, psychologists; also, they’d both seen some bad outcomes themselves. As a child, Kahneman survived the Holocaust, just barely, in France. Tversky was a paratrooper and an infantry commander in the Israeli army, and saw his share of death and disaster. Their own experience with risk, and adverse events, informed what they thought about as scholars. They were both obsessed with how people process information; with how cognitive shortcuts get in the way of long-term logic; and especially with how we try, in our minds, to explain or even undo our worst experiences. The Undoing Project – the title of Lewis’s book – was also the name of the last project Tversky and Kahneman worked on together.

LEWIS: And the nature of the project was they were going to explore the rules of the human imagination. They had come to the conclusion that imagination wasn’t just this free-flowing thing — that actually it obeyed certain rules.  And the way they thought they were going to study it was by studying the way people undid tragedies and tried to create alternative scenarios. When I saw the phrase I thought, “That’s a good description of their enterprise.” Because what these guys are engaged in doing, is undoing a false view of the human nature and the way that mind works, and that had infiltrated the social sciences and were just kind of in the air we breathed.

DUBNER: As useful as it is obviously to identify all these heuristics we use and all the errors they lead to, and honestly all the loss it leads to, how prescriptive were Kahneman and Tversky?

LEWIS: You know, they were very diffident about how their work was going to be used. So I think they thought — I know they thought — that people were never going to be as good at correcting for their own illusions, but I think they also thought that they might be good at correcting for other people’s illusions, that it was easier to spot the mistakes and inefficiencies and irrationalities in other people’s thinking and decision-making and judgment than it was your own and so that’s where you get checks from. That and also the whole Moneyball thing, that you use data as an antidote to the warping that naturally goes on when you’re making intuitive judgments.

Coming up on Freakonomics Radio: how to undo that warping. Also, how the odd couple of Kahneman and Tversky came to be:

LEWIS: No one who knew them both could imagine them spending five minutes together.

And: how their work has exploded in recent years.

LEWIS: It is incredible to me how many different spheres of human existence these guys’ work has touched and influenced.

*      *      *

[MUSIC: Neil Andersson, “The Blue Boat” (from As The Crow Flies)]

Michael Lewis’s book The Undoing Project is a portrait of two men who came together to rewrite many of the assumptions about how people think, and make decisions. Amos Tversky and Danny Kahneman met in the late 1960s; they were both teaching psychology at Hebrew University, in Jerusalem. Aside from that fact, they didn’t have much in common. Tversky was outgoing and headstrong and popular; Kahneman was brooding and, despite his brilliance, riddled with insecurities. They also looked at psychology very differently.

LEWIS: Amos had a kind of sterility to his academic interests. He was a mathematical psychologist. And if you want to put yourself to sleep at night grab a mathematical psychology textbook. It doesn’t really seem to have much to do with psychology. And Amos was happily assuming the assumptions of economics and mathematical psychology, which were that people were basically rational. People when they’re making rational decisions are basically good intuitive statisticians and making judgments as if they were good at them.

Kahneman wasn’t mathy at all. Intuitive, yes; and thoughtful – maybe to a fault. All he could think about was thinking. And he thought that the standard assumptions of mainstream economics and psychology were ridiculous. And he said so, to Amos Tversky’s face, when Kahneman invited Tversky to speak to a graduate seminar that Kahneman was teaching. Tversky, with his usual brio, began to extol the notion that most people are pretty good at making decisions based on a rational assessment of the available information.

LEWIS: And Danny is the first one to really challenge him on this, saying, “I’m not! I make mistake after mistake after mistake and I’m smarter than most of the people I know. This is nonsense, that I can show to you that people make systematic mistakes when they’re faced with decisions and judgments.” And this intrigued Amos. And very quickly they’re in a room together with the door shut and don’t want to see anybody else. And a collaboration begins. And the collaboration is all about the exploration of how the human mind actually works.

This collaboration was surprising to just about everyone at Hebrew University.

LEWIS: They were regarded as two big dogs on campus—yet they were also regarded as polar opposites. No one who knew them both could imagine them spending five minutes together. Kahneman was difficult, neurotic, seemingly perpetually unhappy, full of doubt, tortured. He was very fertile, had lots of ideas, but the minute he had the ideas he thought they were crap, and he would walk away from his own ideas very quickly. What he says now is he had a peculiar talent for changing his mind. He liked changing his mind. That’s a nice spin on a—

DUBNER: Do you believe it?

LEWIS: I think it’s much more complicated than that. I think that he doesn’t know what stability feels like. He was a child of the Holocaust. He spent ages 7, 8, 9, 10, 11 being chased through southern France by Nazis and hiding in chicken coops and barns. He watched his father die because he couldn’t seek medical treatment for fear of being caught by the Germans. And he himself has as one of his central qualities a kind of evasiveness. People found him hard to know. But incredibly talented. And when he got up in front of a class and talked he was mesmerizing. So mesmerizing as one of his students said after he has Danny’s class, he was finding other professors not that interesting and he complained to one of the administrators at Hebrew University said “You can’t do this.” He said, “You can’t compare other teachers to Kahneman. There is Kahneman and then there is everybody else.” Amos was untroubled, happy, simple, very clear in his head. You know, you describe his childhood; it’s not the childhood of an intellectual. It was a childhood of a happy kid, who’s pressed into a military service and through status needs becomes a Spartan warrior, like a lot of these first-generation Israelis were at that time. And he almost certainly killed people. He almost certainly had people trying to kill him. He was a decorated war hero, among other things. He saved other soldiers’ lives and risked his own. And at the end of his life, he still had shrapnel in his body. And was widely admired by everybody who knew him. And he was from a very early age identified by other people, more than by himself, as intellectually spectacular. The psychologist Richard Nisbett, after he got to know Amos, designed a one-line intelligent test, which gets repeated over and over. And it’s this: “The longer it takes you to figure it out that Amos Tversky is smarter than you, the stupider you are.”

Amos Tversky was smart enough to realize that Danny Kahneman, for all his insecurities, would be a priceless intellectual partner.

LEWIS: Central to the dynamic was Amos giving Danny the confidence to be himself, that Danny did not have confidence to be himself. And he didn’t realize how precious and valuable he was.

[MUSIC: Leo Islo, “Mind of Martha Jane” (from Modern Fiction)]

And thus began one of the most productive intellectual partnerships in modern history. Before long, both men moved to the States; they wrote paper after paper after paper, many of them fiercely original and, at first glance, a bit weird – for academia is a realm in which originality is praised but rarely pursued. Tversky and Kahneman tore apart and reconstructed the models that social scientists use to make sense of human behavior. It took some time but their work crossed over into economics, the most hard-headed of the social sciences. It helped, surely, that Tversky was mathy enough that their papers wound up in journals like Econometrica, which published their landmark paper “Prospect Theory: An Analysis of Decision Under Risk.” A more typical Econometrica article of that era? Something like Robert F. Engle’s paper called “Autoregressive Conditional Heteroscedasticity with Estimates of the Variance of United Kingdom Inflation.” Which I’m sure you all remember well. Kahneman and, especially Tversky, were originals in their personal lives as well.

DUBNER: You write at length about Amos’s singular approach to life and work, that he only really did what he wanted to do always, which made other people kind of astonished, when he wanted to go for a run he would just take off his pants and go out in the street and run. I’m curious about you, Michael Lewis, whether as a writer, as a human, as a father, whatever. Did it make you a bit envious to be learning and writing about someone who expressed his own preferences so aggressively whenever he wanted? And did it make you change anything in your life?

LEWIS: Well, that’s an interesting question because when I described Amos to my wife, I told her a couple of things. I said you know he was so ruthless in doing only what he wanted to do that when his mail came in in the morning, he flipped through it, glance at it and say a “what can they do to me?” rule. If by not opening the letter he wasn’t getting into any trouble, he would just chuck it into the garbage can. And this included invitations to parties, or thank you notes, or whatever it was. He had a gift to just not be in any situation he didn’t want to be in. And he told people. He gave people advice. He said, “If you find yourself at a party or a board meeting or a faculty meeting and you find it’s a waste of your time, you don’t have to think up an excuse to leave. You’ll never think of the words. Get up and leave and as you’re walking towards the door the words will come.” Now I’ve actually taken that advice, but when I told my wife about this she said to me: “He’s just like you!” And there is an element of Amos in me where I am extremely good at avoiding anything I don’t want to do.

DUBNER: You talk about Amos’s argument that, as you write it: “[T]he mere act of classification reinforces stereotypes.” It’s a way that we look at two or more groups of things and then kind of pick the most obvious difference between them and build that difference up to the point where we treat those two groups as very, very different when in fact mostly what’s underlying is similarities. And I’m curious any thoughts you might have to how that issue affects how we for instance talk about race in America now, or the political discourse.

LEWIS: One of the big things the human mind is doing all the time is making similarity judgments: Is this a friend or a foe? Is this a potential mate or not? Is this edible food or not? It’s always classifying. We take it for granted, but we’re doing it all the time. And Amos was interested even before he meets Danny, in how people make these judgments. What makes two things similar to each other. And he did really interesting work on the subject. And out of this work grows this other heuristic that they discover. They call it the “representative heuristic.” And if you want to put it in plain English, roughly what they’re saying is that people think in stereotypes. And the stereotypes are incredibly powerful. And when we’re looking for someone to fill any kind of job the fact that someone looks kind of like the way that we imagined the person who holds that job typically to look has huge effects on our judgment about whether that person will be good at that job, much to our detriment. And in fact I think they would probably agree that if a person looks too much like they belong at a job, it’s probably exactly when you want to question whether they belong at the job. Because maybe they got to the job because of the power of the stereotype. 

DUBNER: But you know it seems to me at least that there is a little bit of Catch-22 in that in the modern era we talk a lot about equity and fairness and reparations of different sorts and therefore dwell even more on the defining characteristics that are different. And my concern is that by focusing on the differences, you essentially just continue to rebuild and re-create and magnify the stereotypes. Am I wrong?

LEWIS: I think you’re right. If you want to reduce the power of a stereotype, you eliminate the classifications. The more you reinforce the classifications, the more powerful the stereotype will be. That’s their work, I mean that’s not me speaking. That’s their work. And so it is, you’re absolutely right, the more we focus on race as a differentiator between people, the more stereotypes are going to be driving people’s judgments.

[MUSIC: Jetty Rae, “Another Town” (from Can’t Curse the Free)]

DUBNER: Well I guess this leads to what their work has become, which is a couple of economists adopted or hijacked or whatever you want to call it, this work and turn it into a field that is now in academia, in particular, but elsewhere, in government and firms, even individuals, behavioral economics has caught on a lot, but it is prescriptive in that acknowledges the shortcomings of our thought processes and then designs kind of essentially workarounds. So talk to me for just a minute about a degree to which the rest of the world is using moves from, nudges from, whatever we want to call them, that are derived from the work of Kahneman and Tversky and how successful do you think they’re being?

LEWIS: It’s a messy story, but it is incredible to me how many different spheres of human existence these guys’ work has touched and influenced. So it’s not just economics. You know, medicine. It’s now a standard part of medical training for doctors to be introduced to Kahneman and Tversky’s work or at least their ideas, because they’re going to be rendering intuitive judgments about patients and they need to be aware of how they might be fallible. In government, I think the big influence that Amos and Danny have had is in the awareness of the importance of choice architecture – that the environment in which people make the decision has a huge effect on the decision, and if you want government workers to save more money, you design the pension plans so that they have to opt out of them rather than opt into them. And all of a sudden you double or triple the savings rates. If you want  people to school lunches to be healthy, you create the default option as a healthy option and force to kids to trade in for a less healthy option if they want it. There are units in the U.S. government, in the British government, in the Australian government, the German government is interested in it, the Scandinavian governments. They’re calling them Nudge units, after Dick Thaler and Cass Sunstein’s work, but this job is really to create environments that will lead people to make choices that are good for them. And that really comes out of Danny and Amos’s work.  One of their great discoveries is that people don’t make clean, clear decisions between things, or choices between things. They make choices between descriptions of things. And so how things are described have a huge effect on the way people choose and governments are often charged with creating these decision-making environments.

DUBNER: So these two guys, Danny Kahneman and Amos Tversky, had an incredibly fruitful, original intellectual partnership that was also a very rocky relationship at times. Danny felt that Amos was getting a lot of credit for their work. Danny could be resentful and insecure and as you write the story, three days before Amos Tversky was diagnosed with melanoma they had effectively ended their friendship. Kahneman called it a “divorce.” Amos died. Danny later won a Nobel Prize in economics and Amos, being dead, was not eligible to receive that. So Danny wins the Nobel for work that had been done largely with Amos. So talk for a minute about Danny’s feelings about the award and all the recognition and opportunity it brought to him with his partner gone.

LEWIS: One of the most lovable things about Danny Kahneman is as much as he tortures other people with his doubt, he tortures himself even more. And when Amos had died he was left with a sense, Danny, that the world found their work extremely important, but maybe thought maybe he didn’t have much to do with it. And he had an invitation from the Nobel Prize committee to come and give a talk in 2001 in Stockholm, which he thought of as an audition for the Nobel Prize. And he thought the question wasn’t “Is the work worthy?” The question is “Am I worthy?” And he, you know, some part of him, I think, thought maybe he wasn’t. Some part of him always wondered how important he was, where Amos had never had any doubts about Danny’s importance. I think Amos actually thought Danny was more important than Amos to the whole thing. And so the prize—prizes usually have kind of a temporary effect. I think Danny and Amos’s own work would predict that people’s expectation of happiness from a Nobel Prize would exceed the happiness in the moment, which would probably exceed the happiness of the memory of it.

DUBNER: Well, unless the prize leads to opportunity and continuing recognition, which it really did in this case, right?

LEWIS: In this case it did. And people who know Danny told me going in that one of the problems you’re going to have writing this book is the person who we know post-Nobel Prize is entirely different from the person who got the Nobel Prize. And that he is much less gloomy, much less consumed with doubts, that this kind of like a sense in Danny that everything might kind of work out, which he never had before. And it puts him in a position, in relation to the rest of the world, that he’s most comfortable with. He’s the descendant of famous rabbis and he once said when someone asked if he could imagine an alternative career for himself, he said, “I could only be one of two things – a professor or a rabbi.” He likes to be in the position of being the wise man and he naturally is the wise man. And when you have a Nobel Prize in not even your field – I mean he doesn’t even know that much economics and they gave him the Nobel Prize in economics because of the influence he had on economics–you are treated wherever you go as the wise man and he plays the role beautifully.

DUBNER: And he deserves it, frankly, right?

LEWIS: My God. I’ve written about a lot of people. And I’ve had a lot of characters in my life over the course of my career. I’ve never had one of such depth of interest as Danny Kahneman. Everything that comes out of his mouth is interesting. Everything he thinks is interesting. He just doesn’t believe it.

[MUSIC: Beckah Shae, “See Ya Soon” (from Mighty)]

For the record, it was the work of Kahneman and Tversky that first got me interested in economics, and which led to Freakonomics. Before them, economics seemed too methodical; too bloodless. So I’m grateful to Danny Kahneman and Amos Tversky for shining their light into the human brain – and thankful to Michael Lewis for shining his light on them. Coming up next week on Freakonomics Radio: a very different kind of conversation …

Trevor NOAH: What would I call my religion? The Church of the Truth. That’s what I would call it.

Which, in the end, gets into a lot of the ideas we talked about today:

NOAH: The one thing you’re negating is the fact that what you feel or think about the world is not mutually exclusive from what the world thinks or feels about you.

A conversation with Trevor Noah, host of The Daily Show, and now, author of a best selling memoir, about religion, race – and podcasts:

NOAH: I’ve come to the conclusion that people who refuse to listen to Freakonomics Radio are unfortunately doomed to be labeled as idiots.

That’s next time, on Freakonomics Radio.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Greg Rosalsky. Our staff also includes Shelley Lewis, Christopher Werth, Merritt Jacob, Stephanie Tam, Eliza Lambert, Alison Hockenberry, Emma MorgensternHarry Hugginsand Brian Gutierrez. You can subscribe to this podcast on iTunes, or wherever you get your podcasts; and come visit Freakonomics.com, where you’ll find our entire podcast archive, as well as a complete transcript of every episode ever made, along with music credits and lots of extras. Thanks for listening.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

ETC.

The post The Men Who Started a Thinking Revolution appeared first on Freakonomics.

December 30, 2016

Season 6, Episode 17

On this week’s episode of Freakonomics Radio: we continue last week’s conversation about the economics of sleep. We look at some research suggesting, for instance, that early birds really do get the worm.

And then we look into the tactics — physical, mental, and strategic — of  six-time hot dog-eating champion Takeru Kobayashi, who revolutionized the sport of competitive eating. What can the rest of us can learn from his breakthroughs?

To find out more, check out the podcasts from which this hour was drawn: “The Economics of Sleep, Part 2” and “A Better Way to Eat.”

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post The Economics of Sleep, Part 2 (Rebroadcast) appeared first on Freakonomics.

December 28, 2016

Sure, practice makes perfect — but how you practice matters even more than how much. (Photo: Harry Engels/Getty Images)

Our latest Freakonomics Radio episode is called “How to Become Great at Just About Anything (Rebroadcast).” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

What if the thing we call “talent” is grotesquely overrated? And what if deliberate practice is the secret to excellence? Those are the claims of the research psychologist Anders Ericsson, who has been studying the science of expertise for decades. He tells us everything he’s learned.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

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[MUSIC: Tobias Gebb and Trio West, “Auld Lang Syne” (from Plays Holiday Songs)]

Before we get on with today’s show – an encore presentation of one of our most popular episodes ever, “How to Become Great at Just About Anything” — I’ve got a quick favor to ask. As you may know, Freakonomics Radio is produced by the public-radio station WNYC. And a big part of public-radio funding comes from listener donations. From people like … you! So please go to Freakonomics.com, click the donate button, and do your thing. You can also donate by texting – just send the word “freak” to the number 698-66 and you’ll get sent a link to the donation page. This is, of course, the best time of year to donate. Not only because it’s the season for generosity. Not only because it’s your last chance to qualify for a 2016 charitable-gift tax break. But also because your donation, right now, will be tripled. How’s that? The Tow Foundation, a generous supporter of WNYC, has offered to triple donations to Freakonomics Radio; they’ll contribute up to $50,000. So if you give $100, that’s a $300 donation to our program. And if you want to use up the Tow Foundation’s generosity in one shot, just send us $16,666.67, and that’ll land their $50,000. All you have to do is go to Freakonomics.com, click on donate, or text “freak” to 698-66. We have some great Freakonomics Radio swag to choose from, including Titleist golf balls marked with the Freakonomics Radio logo. Which are good for golfing but also, I’ve discovered, small dogs love to play with them. Probably cats too, but I don’t have any cats. In any case – happy holidays, thanks for your support, and thanks especially for listening to Freakonomics Radio.

[MUSIC: Pat Andrews, “Quirky Get Faster”]

Last week, we offered some advice on how to become more productive.

CHARLES DUHIGG: There’s actually a big difference between being busy and being productive.

Now that you’ve all mastered productivity, we’re moving on to something a bit more ambitious. How to become great at just about anything. Because that’s what you told us you wanted.

[MUSIC: The Sometime Boys, “The Butterfly” (from Ice and Blood)]

SARAH CATE PFISTER: I would really love the ability to become an expert performer.

CHAD HYDRO: I compete in the sport of powerlifting and so if I could better perform in that sport, that would certainly be what I would most like to accomplish.

ELENI GALATA: I would like to improve and excel at presenting my work in front of an audience.

KEN RYAN: I would most like to shoot below 90 for the first time and then build upon that success.

J.R. PATRON: Hi, Stephen and the rest of the Freakonomics team. This is J.R. Patron from Metro Manila, Philippines. I am most definitely want to up my guitar-playing skills. So how do I do it?

How do you do it? How do you attain excellence in anything? Is it all about the genes, the natural-born talent? Or: is there an actual science of expertise?

SUSANNE BARGMANN: So, my name is Susanne Bargmann, and I am a psychologist. And I work as a teacher and a supervisor here in Denmark.

Bargmann lives …

BARGMANN: … a bit north of Copenhagen, which is the capital of Denmark.

Bargmann is 42, married, with two kids. About eight years ago, she and an American colleague were studying what they saw as a lack of progress in their profession.

BARGMANN: And what we can see when we look at the research is that the outcome of psychotherapy hasn’t really improved over the last 40 years. And that had us puzzled. So we started looking in other directions to try and figure out why, or what would make us improve. And then we came across K. Anders Ericsson’s work on deliberate practice.

STEPHEN DUBNER: Hello, Anders?

ANDERS ERICSSON: Hi, Stephen!

DUBNER: How are you?

ERICSSON: I’m doing very well.

And that is K. Anders Ericsson.

ERICSSSON: … and I’m a professor of psychology at Florida State University in Tallahassee, Florida.
Ericsson is the man of the hour on today’s show; we’ll get back to him soon. It was his research on something called deliberate practice that got the Danish psychologist Susanne Bargmann excited.

BARGMANN: I’d been plowing through all the literature on deliberate practice, but it still seems a bit abstract when you read it. It was hard for me to really understand what it felt like so we started talking about how could try this out on ourselves. And after discussing this for a while, we decided if we are going to study the process it needs to be not our work, because we’re too close to our work to be able to see it. So we decided to pick up something else outside of our work and then apply the principles of deliberate practice.

So Bargmann wanted to use deliberate practice to try to improve at something, but something personal, not her profession. What should she do?

BARGMANN: When I was a kid, I had this dream of becoming a famous singer.

Her favorite singer?

BARGMANN: It was Whitney Houston. Oh, she was amazing.

But the dream got deferred, and then …

BARGMANN: Life took over, so instead, I became a psychologist and had a family and had a job.

Now, however, many years later, as part of her job, Bargmann thought that maybe …

BARGMANN: … I should give it a go and see if it was actually possible to improve my singing, improve my voice.

So she got back to it. The first thing to do was record herself to see what she sounded like.

BARGMANN: I started using this karaoke program, and I started singing. And then I started listening, and it was really horrible.  

So did that mean that Susanne Bargmann just didn’t have the tools, or maybe the natural talent, to be good at what she wanted to be good at? Or was there a way to become less horrible? Maybe to become … even … great?

*      *      *

[MUSIC: The Society of Rockets, “Olivia Odyssey” (from Olivia Odyssey)]

The research psychologist Anders Ericsson recently published, along with co-author Robert Pool, a book called Peak: Secrets from the New Science of Expertise.

DUBNER: So, let’s pretend for a moment that I’m skeptical off the bat and I say, “Well, Professor Ericsson, is there a science of expertise? That sounds like a bit of an overreach, perhaps.” How do you respond to that?

ANDERS ERICSSON: Well, I think this is what is exciting here about our work is that, for the first time, we really have been studying in more objective ways, pinpointing what it is that some people are able to do much better than other individuals.

Among the many and diverse expert performers that Ericsson and his colleagues have studied:

ERICSSON: Ballet dancers, gymnasts, and all sorts of athletes, a lot of coaches; we’ve looked at chess experts, surgeons, doctors, teachers, musicians, taxi drivers, recreational activities like golf, and even, there’s some research on scientists.

Let me admit that I’ve been fascinated for years by Ericsson’s research. I was introduced to it by this guy:

STEVE LEVITT: Dubner, how are you doing?

Steve Levitt is my Freakonomics friend and co-author; he is an economist at the University of Chicago.

DUBNER: So, Levitt, I still remember very well the day — it was maybe 10 years ago — when you called me up, and you said you had a great idea for a column that we were writing. You said it was this big, Swedish psychologist that you had met while you were on sabbatical at Stanford, I think. A fellow named Anders Ericsson. What was it about Anders and those conversations you had with him, and his research, that got you so excited?

LEVITT: He was infectious. His ideas and his enthusiasm just set me on fire. It was interesting because he studied topics I hadn’t really thought could be studied, like expertise and learning. The beauty of Anders — he’s really an amazing academic in the sense that he just was so interested in what he did and also so interested in the truth and willing to be challenged. I do remember. I remember I had lunch with him, and I immediately came back and called you on the phone and said, “We’ve got to write about this guy. He’s amazing.”

We did write about him, in a Freakonomics column for The New York Times Magazine. It was called “A Star Is Made.” It became one of the most popular things we ever wrote, I think, because it asked a very basic question: is the thing that we all call talent perhaps grotesquely overrated?

LEVITT: The part that really resonated with me is the idea that absent hard work, no one is really great at anything — because it’s an interesting insight. We’d like to think that Wayne Gretzky or Michael Jordan or Taylor Swift just emerge as savants, but they don’t. If you start with someone with talent, and another person who has no talent, if the person with talent works just as hard as the person without talent, almost for certain they’re going to have a better outcome. So, if our measure is true virtuosity, true expertise, it seems unlikely to me that this populist version of “oh, you don’t have to be good; you just have to try hard,” I think that’s probably a fallacy. But I firmly believe the other direction, which is that: if you don’t try hard, no matter how much talent you have, there’s always going to be someone else who has a similar amount of talent who outworks you, and therefore outperforms you.

ERICSSON: Exactly. 

[MUSIC: Rudy Pusateri, “Hot Springy Bass”]

Here’s Anders Ericsson again.

ERICSSON: We actually find that with the right kind of training, any individual will be able to acquire abilities that were previously viewed as only attainable if you had the right kind of genetic talent.

DUBNER: Would it be fair to say that the kind of overarching thesis of your work is that this thing that we tend to call talent, is in fact more of an accumulation of ability that is caused by what you’ve labeled “deliberate practice”?

ERICSSON: I think that, that is a nice summary here of what we’re finding.

[MUSIC: Wolfgang Amadeus Mozart, “Alla Turca”]

For more than 30 years, Ericsson and his colleagues around the world have studied people who stand out in their field. They’ve conducted lab experiments and interviews; they’ve collected data of every sort, all in service of answering a simple question: when someone is very good at something, how did they get so good? If you can figure that out, the thinking goes, then any of us can use those strategies to also get much better at whatever we’re trying to do. You don’t necessarily need to have been born with a special talent, a special ability. Something like perfect pitch, or absolute pitch — that’s the ability to identify or produce a particular musical note, with no reference point. It’s an incredibly rare ability; roughly one in 10,000 people are thought to have it. And while having perfect pitch doesn’t guarantee that you’ll become a great musician or composer, it can be a big help. Consider one of the most acclaimed composers in history: Wolfgang Amadeus Mozart.

ERICSSON: Mozart is famous for his ability to actually listen to any kind of sound and actually tell you what kind of note that sound corresponded to. That seemed like a magical ability that was linked to his ability to be outstanding in composing and playing music.

But Ericsson has three points to make about Mozart. The first is that perfect pitch does not necessarily seem to be innate; it’s teachable, although it helps to start early. As evidence, Ericsson points to research showing that perfect pitch is much more common in countries like China.

ERICSSON: In those countries where you’re actually speaking tonal languages, where the tone influences the meaning of words, it’s going to be much more frequent.

DUBNER: Meaning people are trained from a very early age to identify pitch, yeah?

ERICSSON: Well, that’s the only way you can identify the meaning of the words, because in Mandarin, the difference between different words is just the difference in their tone. So you actually need to be able to acquire that general ability, and what people have found is that you have a very high degree of individuals who exhibit perfect pitch in those countries. It’s becoming increasingly clear that, that is actually something that any individual, seemingly, with the right kind of training situation, can actually acquire, as long as they get the training early on, basically between four and six.

DUBNER: So, rather than perfect pitch being this incredibly rare innate ability, it is a teachable ability, if you know how to teach it.

ERICSSON: Exactly.

[MUSIC: Wolfgang Amadeus Mozart, “Symphony No 14 K 114”]

A second point about Mozart. Ericsson argues that as great as he was — having nothing to do with perfect pitch — that he wasn’t necessarily born that way; Mozart became Mozart by starting very young and training long and hard. We may think of him today as a freak of nature. But, Ericsson says:

ERICSSON: If you compare the kind of music pieces that Mozart can play at various ages to today’s Suzuki-trained children, he is not exceptional. If anything, he’s relatively average.

Did you catch that? Mozart as a young musician, compared to today’s good young musicians, would be relatively average. How can this be? This relates to the third point about Mozart. For his time, he was excellent. But over time, we humans generally become more excellent. Standards of excellence have risen, often a lot. In the book Peak, Ericsson writes of a more recent musical example: “In the early 1930s Alfred Cortot was one of the best-known classical musicians in the world, and his recordings of Chopin’s ‘24 Études’ were considered the definitive interpretation. Today teachers offer those same performances — sloppy and marred by missed notes — as an example of how not to play Chopin, with critics complaining about Cortot’s careless technique, and any professional pianist is expected to be able to perform the études with far greater technical skill and élan than Cortot. Indeed, Anthony Tommasini, the music critic at the New York Times, once commented that musical ability has increased so much since Cortot’s time that Cortot would probably not be admitted to Juilliard now.”

ERICSSON: We have similar developments in any of the sports. In order to qualify to the Boston Marathon, if you could produce that kind of time, you would be competitive at the early Olympics.

[MUSIC: Judson Lee Music, “Cheesy Race”]

That’s right. In order to just qualify to run the Boston Marathon today, a male in the 18- to 34-year-old group has to have run a 3-hour, 5-minute marathon. That’s only about six minutes slower than the winner of the marathon in the first modern Olympics, in 1896. The current marathon world record? Two hours, two minutes, and fifty-seven seconds. That’s nearly 56 minutes faster than the Olympic gold medalist in 1896. Or consider the improvements in golf, which this year is returning to the Olympics after more than a century. In the 1900 Summer Olympics, the men played two 18-hole rounds; the American golfer Charles Sands won the gold medal with scores of 82 and 85, which, these days, wouldn’t get you on a good high school team in some parts of the country. Yeah, the equipment and ball have changed, a lot. But still: the undeniable fact — whether it’s golf or running the marathon or playing the piano — is that as a species we have improved a lot at just about everything. How? Have we been selectively breeding for talent? Perhaps.

But, that is not what Anders Ericsson thinks is largely responsible. He thinks we’ve gotten so much better primarily because we’ve learned how to learn. And that if you study the people who have learned the best, and if you codify the techniques and strategies that they use, then we can all radically improve. But let me warn you: there’s no magic bullet. Improvement comes only with practice — lots and lots and lots of practice. You may have heard of the “10,000-hour rule”? The idea that you need to practice for 10,000 hours to become great at something? That idea originates from the research of Anders Ericsson and his colleagues. They were studying the most accomplished young musicians at a German academy.

ERICSSON: We found that the average of that elite group was over 10,000 hours by the time they reach 20.

[MUSIC: KP Devlin, “Shampoo Party Zone” (from Occidental Taurus)]

The secrets really boil down to one word: practice. Not just volume of practice — although we’ll get into that later. But the quality and the nature of the practice. There’s “purposeful practice,” for instance.

ERICSSON: Purposeful practice is when you actually pick a target — something that you want to improve — and you find a training activity that would allow you to actually improve that particular aspect. Purposeful practice is very different from playing a tennis game or if you’re playing basketball scrimmages. Because when you’re playing, there’s really no target where you’re actually trying to change something specifically and where you have the opportunity of repeating it and actually refine it so you can assure that you will improve that particular aspect.

And then there’s deliberate practice.

ERICSSON: We think of deliberate practice requiring a teacher that actually has had experience of how to help individuals reach very high levels of performance.

DUBNER: I want to go through one by one the components of deliberate practice and have you explain a little bit more if necessary, or acknowledge why they are important. So you write that “deliberate practice develops skills that other people have already figured out how to do and for which effective training techniques have been established.”

ERICSSON: And I think that’s key.

DUBNER: Which I guess helps us explain why a pianist from 80 or 100 years ago who was considered the gold standard is now considered not very good, because the instruction is built on top of itself to get people better faster, yeah?

ERICSSON: Exactly, and I think the same thing in sports, where new techniques will allow individuals to reach kind of a higher level and practice more effectively than previous generations.

DUBNER: You write that “deliberate practice involves well-defined, specific goals, and often involves improving some aspect of the target performance. It is not aimed at some vague, overall improvement.” Do you think that is a mistake that many people make when they’re trying to, “get better at something?” A “vague, overall improvement”?

ERICSSON: I think that is one of the most important pieces that we’re advocating, because you need feedback in order to be able to tell what kind of adjustments you should be making. If you don’t have a clear criterion here for what it is that you were doing, then it’s unclear how you actually  are going to improve if you get subsequent opportunities to do the same thing. So anytime you can focus your performance on improving one aspect, that is the most effective way of improving performance.

DUBNER: Here’s another component. You write: “Deliberate practice takes place outside one’s comfort zone and requires a student to constantly try things that are just beyond his or her current abilities.” That sounds horrible, first of all. You write, “Further thus it demands near-maximal effort, which is generally not enjoyable.” So you just discouraged everyone from ever wanting to do deliberate practice. But why is that important? Do you want to get out of what’s comfortable because that enables you to try harder in a way that you otherwise can’t?

ERICSSON: Well, I think this has to do with the body. If you’re just doing things that feel comfortable and go out and jog, the body basically won’t change. In order to actually change your aerobic ability, people now know that the only way you can do that is if you practice now at a heart rate that is above 70 percent of your maximal heart rate. So it would be maybe around 140 for a young adult. And you have to do that for about 30 minutes at least two or three times a week. If you practice at a lower intensity, the body will actually not develop this difficult, challenging biochemical situation, which will elicit now genes to create physiological adaptations. 

DUBNER: Let’s say I’m a crummy piano player, and I want to become a good piano player. For something like that, or for something like writing, or for something like selling insurance, what does it mean to get outside of one’s comfort zone and why does that improve my ability to get good?

ERICSSON: Deliberate practice relies on this fact that if you make errors, you’re going to find ways to eliminate those errors. So if you’re not actually stretching yourself outside of what you already can do, you’re probably not engaging in deliberate practice.

*     *     *

BOB FISHER: The thing which really enabled me to do all this was Ericsson’s deliberate-practice model.  

Bob Fisher is a soil-conservation technician for the Natural Resource Conservation Service in Seneca, Kansas. Fisher has a number of world records.

[MUSIC: Pat Andrews, “Basketball Boys”]

FISHER: I currently hold 14.

All the records are in free-throw shooting.

FISHER: The first one is the one-minute record, I hold it with 52 currently; most basketball free throws in one minute by a pair using a limited number of balls; most free throws in two minutes while alternating hands; most free throws in a minute by a pair using two basketballs, most free throws in one minute while alternating hands; most free throws while standing on one leg; most blindfolded free throws in 1 minute; most underhanded free throws in one minute; most basketball free throws in 1 minute by a mixed pair; this one I am proud of: most basketball free throws in one hour, 2371.

Fisher is 58 years old, six feet tall. He’s been playing basketball a long time.

FISHER: In high school, I started as a senior for a very small school and, no accolades, didn’t make any area teams or all-star teams or anything like that, at all. And I never considered going on and playing college ball because, quite frankly, I wasn’t good enough.

So how did he become one of the most accomplished free-throw shooters on the planet? By devising a physics-based approach to shooting, augmented by Anders Ericsson’s gospel of deliberate practice.

FISHER: And what he said was that people who continue to get better never allow themselves to go on automatic pilot; they’re continually breaking down the element they are trying to do and working on pieces and then putting it back together — which is nothing new. But I made a concerted effort to do that, and I think that was a large part, a reason of my success.

And when Anders Ericsson talks about getting out of your comfort zone as a component of deliberate practice, Bob Fisher very much knows what he means.

FISHER: Instead of just practicing, you are focused; you’re engaged; it’s like a rubber band. You are constantly stretching the rubber band, and you don’t want to stretch it to the point that it breaks, but you want it to have continual pressure. In other words, you want to try and do things that you are not able to do at the present time.

This leads to one of the most compelling angles of deliberate practice – the neuroscientific angle. The idea that the brain not only steers our practice, but is also shaped by it.

ERICSSON: I think this is one of the areas where we know the most .

That’s Ericsson again. In Peak, he writes about a fascinating study by Eleanor Maguire, a neuroscientist at University College London. Maguire used MRIs to compare the brain growth of London taxi drivers and London bus drivers.

ERICSSON: In London, taxi drivers have to memorize all the routes in the London area, and this is a process that takes a lot of training, and it basically takes years to master that body of knowledge.

Bus drivers, meanwhile, with a set route, spend a lot less time pushing their brains to master new material.

ERICSSON: And when you compare now these taxi drivers with bus drivers, you find this big difference in their brains. So, the process of encoding and mastering all these maps is associated with a change in the brains.

So, you might have the most experienced bus driver in the world. But experience of that sort – driving the same route over and over and over again – doesn’t seem to lead to growth. Which, if you move the conversation out of transportation and into something like medicine … well, I asked Ericsson about that.

DUBNER: There’s a scary part of your book that is about how many people in many professions, as they do it longer, they get more experienced, and there’s an assumption that they’re getting better and better. But you write that, “Once a person reaches that level of “acceptable performance and automaticity” you write, the additional years of “practice” don’t lead to improvement.” Can you talk for a moment about the value of experience for doctors, let’s say?

ERICSSON: I think this points out that difference between deliberate practice and experience. If you’re just doing the same thing over and over, you’re not going to prepare yourself for dealing with a complicated situation. When we analyze the outcomes of medical procedures, just the mere number of procedures that you completed is not related now to the outcome. It turns out that surgery is a little bit different, because there, you often get very immediate feedback, especially about failures.

DUBNER: But, you’re saying that it could be that a doctor who’s freshly out of medical school might be on some dimensions, at least, maybe some important dimensions, better than a doctor with 20 years experience?

ERICSSON: Well, it’s interesting. When it comes to actually diagnosing heart sounds, when you test people with recordings of heart sounds, it turns out that general practitioners — basically their ability to diagnose decreases as a function of the number of years in their practice. And it sort of makes sense. How would you be able to know basically that you’re making mistakes? Even if you realize that a patient was incorrectly diagnosed, you won’t remember exactly what the heart sound sounded like. And what’s kind of nice is that now they’ve developed courses, so within a weekend of training, where you are trying to diagnose particular heart sounds, you can now get up to a level to when you had graduated from medical school.

DUBNER: Many people listening to this are, I’m sure, familiar with the 10,000-hour rule, which you had a hand in defining. First of all, what is the 10,000-hour rule, if there is such a thing, as you understand it?

ERICSSON: Our research showed, to the surprise of a lot of people, that even the most talented musicians at a music academy in Germany, that they actually had spent more time practicing by themselves than less-accomplished musicians. And we basically found that the average of that elite group was over 10,000 hours by the time they reach 20.

[MUSIC: Judson Lee Music, “Wanna Be Spy”]

Most people who have heard of the 10,000-hour rule, heard of it via the book Outliers, by Malcolm Gladwell. Outliers looked at how extraordinarily accomplished people accomplished what they did.

ERICSSON: Now, right. Gladwell basically thought that was kind of an interesting magical number and suggested that the key here is to reach that 10,000 hours. I think he’s really done something very important, helping people see the necessity of this extended training period before you reach high levels of performance. But I think there’s really nothing magical about 10,000 hours. Just the amount of experience performing may in fact have very limited chances to improve your performance. The key seems to be that deliberate practice, where you’re actually working on improving your own performance — that is the key process, and that’s what you need to try to maximize.

DUBNER: You write that this rule, or the number, really — 10,000, nice, big round number — is “irresistibly appealing.” “Unfortunately,” you write, “this rule, which is the only thing many people today know about the effects of practice, is wrong in several ways.” One example that you give, that Malcolm Gladwell writes about in Outliers that you say looks good on first glance, maybe to a layperson, but falls apart upon inspection, is the Beatles playing all those nights at clubs in Hamburg. Can you talk about why that example doesn’t serve as an example of what you’re talking about deliberate practice representing?

ERICSSON: So to us, the Beatles — and I think a lot of other people agree — what really made them outstanding was their composing of a new type of music. So it wasn’t like they excelled as being exceptional instrumentalists. So if we want to explain here their ability to compose this really important music, deliberate practice should now be linked to activities that allowed them to basically improve their compositional skills and basically get feedback on their compositions. So counting up the number of hours that they performed together wouldn’t really enhance the ability here to write really innovative music.

DUBNER: So the very popularized version of one big piece of your research gets a lot of things wrong, according to you. How much does that bother you?

ERICSSON: Well, the one thing that I’m mostly concerned about is, and I’ve met a lot people who are counting hours that they’re doing something and then assuming here that accumulating enough hours will eventually make them experts. Because I think that is a fundamental, incorrect view that is so different from what we’re proposing — namely, that you intentionally have to increase your performance, and you have to be guided, ideally by a teacher, that would allow you now to incrementally improve. So that idea that people actually think that they’re going to get better when they’re not — that, I find, to be the most troubling.

DUBNER:Have you talked with Malcolm about what you feel he got wrong?

ERICSSON: Have not ever spoken to Malcolm Gladwell. And I think that could have avoided some of his summaries of that work in Outliers, but I never interacted with him.

DUBNER: All right, so if I run into him anytime soon, would you like me to pass along a message of some kind?

ERICSSON: I’m really impressed with his books, and I think that they’ve caught a large audience. And if we were able now to channel that interest in improving yourself by now suggesting how you really need to invest the time to improve your performance — I think that would be terrific. If he doesn’t agree with our analysis here, I think it would be important that he explains why he views that basically it’s not so important exactly what you do, but it’s more important with the hours.

[MUSIC: House of Trees, “I am a Clown”]

MALCOLM GLADWELL: The 10,000-hour stuff that I put in Outliers was really only intended to perform a very specific narrative function — or not narrative function, but argumentative function. 

And that is Malcolm Gladwell.

GLADWELL: To me the point of 10,000 hours is: if it takes that long to be good, you can’t do it by yourself. If you have to play chess for 10 years in order to be a great chess player, then that means that you can’t have a job, or maybe if you have a job it can’t be a job that takes most of your time. It means you can’t come home, do the dishes, mow the lawn, take care of your kids. Someone has to do that stuff for you. That was my argument, that if there’s a kind of incredibly prolonged period that is necessary for the incubation of genius, high-performance, elite status of one sort of another, then that means there always has to be a group of people behind the elite performer making that kind of practice possible. And that’s what I wanted to say.

DUBNER: So there’s a sentence in, I believe, it’s in the chapter called “The 10,000-Hour Rule” in Outliers where you write that “10,000 hours is the magic number of greatness.” I understand that was one sentence within many paragraphs within many chapters that’s trying to prove your larger point, and yet, I’ve heard from a lot of people— and I’m guessing for every one I’ve heard from, you’ve heard 50 — who’ve embarked on these trajectories, where “I want to be a ballerina, a golfer, a whatever, whatever, whatever, and if I can get to 10,000 hours, that will make me great.” So that seems to be a causal relationship. How do you feel about people drawing that conclusion and taking action on it?

GLADWELL: Well, elsewhere in that same chapter, there is a very explicit moment where I say that you also have to have talent. That, what we’re talking about with 10,000 hours is: how long does it take to bring talent to fruition? To take some baseline level of ability and allow it to properly express itself and flourish. Ten thousand hours is meaningless in the absence of that baseline level of ability. I could play music for 20,000 hours. I am not becoming Mozart — never, ever, ever. I can play chess for 50,000 hours, and I am not becoming a grandmaster —ever, ever, ever.

DUBNER: You wrote about the Beatles and how one of the key reasons why they became the Beatles was because of the huge amount of time they spent in Hamburg and playing in clubs. This is distilled best by one sentence in Outliers on page 50: “The Hamburg crucible is one of the things that set the Beatles apart.” So Anders, in his book, Peak, and in the interview, took exception with the Beatles example and I’d be curious to run this scenario past you. So he said, I’ll just quote Anders a bit: “So to us” — he and his fellow researchers – “the Beatles, and I think a lot of people would agree, what made them outstanding was their composing of a new type of music. It wasn’t like they excelled at being exceptional instrumentalists. So if we want to explain here their ability to compose this really important music, deliberate practice should now be linked to activities that allow them to basically improve their compositional skills and basically get new feedback on their composition. So counting up the number of hours they perform together wouldn’t really enhance the ability here to write really innovative music.”

GLADWELL: Oh, I disagree — again, respectfully. I’m understanding I’m disagreeing with someone who knows more about this than me. My sense is that, as someone who is in — here I am about to commit a kind of casual obscenity, but — as someone who is also in the creative business, I think that playing in loud, crowded strip bars for hours on end, starting out with other people’s music covers, and moving slowing to your own music, is an extraordinary way to learn about composition. I know of my own writing, I began as a writer trying to write like William F. Buckley, my childhood hero. And if you read my early writing, it was insanely derivative. All I was doing was looking for models and copying them. Out of years of doing that, emerges my own style. So I would say, to the contrary. When you absorb on a deep level the lessons of your musical elders and betters, in many cases, that’s what makes the next step, the next creative step, possible. I would have a very different interpretation of where creativity comes from than he does. And the other thing I would point out is the Beatles literature predates Ericsson. So, he’s not the first to make arguments about practice. This literature goes back to the ‘60s and ‘70s. So a lot of what I was reading when I was writing that chapter was not Ericsson; it was rather a generation of people in this field that came before him. And they had point out, I think, very, very accurately, that the Beatles experience is really unusual. So people always say, “Well, lots of bands in Liverpool played a lot together.” Actually, they had played together 1,200 times — played live 1,200 times by the time they came to America in 1964. Twelve hundred live performances is a, I’m sorry, absolutely staggering number.

DUBNER: But the idea may be, presumably, that there could have been another group of four guys, even from Liverpool, who went to Hamburg and played for many, many hours — and played as many hours, but never got good. That’s the kind of hair that I think I’m trying to help you and Anders split.  Because I don’t hear as much disagreement as either of you hear, frankly. What I hear is that you’re more focused on the holistic creation of expertise, and he’s focused more on, I guess, what I would call the more technical version, which has to do with deliberate practice and what it is. And it sounds like he’s saying that 10,000 hours of something isn’t necessarily deliberate practice. And you’re saying 10,000 hours of practice isn’t necessarily deliberate practice, but there are things that happen in that process that you can’t get to without the 10,000 hours anyway.

GLADWELL: Yeah, and particularly when the four guys who are playing together 1,200 times under very, very trying circumstances are themselves insanely talented, right? So it’s not four schmoes — it’s, for goodness sake, it’s Lennon, McCartney, and Harrison. (I’m not going to mention Ringo Starr.) Each one of whom individually could have had an extraordinary career as a rock-and-roll musician. We had three of them in the same room for years playing together. So there you have this kind of recipe for something extraordinary.

So this, in the end, is the central puzzle. The talent puzzle – just as puzzling as “which came first, the chicken or the egg?” When we encounter someone who does something extraordinarily well, is it because they are “insanely talented,” as Malcolm Gladwell puts it? Or is it because they had, yes, an adequate measure of baseline ability and then found a way to convert that ability into something extraordinary? And if it’s the latter, can that conversion process be reliably emulated? By people like you and me? By people like the Danish psychologist Susanne Bargmann?

BARGMANN: I decided to pick up singing because it’s something I really loved to do. I practiced at home. But I mean, I would have to negotiate with my kids how much time would they let sing, because it was really not very nice to listen to. At that point, I was really fascinated by Christina Aguilera. So I decided to start recording myself singing a Christina Aguilera song. What my biggest problem in the beginning was, I couldn’t make the, in lack of better words, the big sound that she makes. So she has this amazing big, loud sound when she sings. And that wasn’t part of what my voice could do. I could make a very soft sound, or I could make a really sharp sound. That’s all I was able to do.

Bargmann had by now bought into Anders Ericsson’s deliberate-practice model. Which, she acknowledged, required a certain commitment.

BARGMANN: I decided that if I wanted to be serious about the project, I would need the best coach available. So I went online and then I started searching for the person I thought would be the best coach in Denmark.

The coach she found was initially reluctant to work with her. But Bargmann explained she wasn’t just pursuing a personal dream; she was exploring the science of expertise.

BARGMANN: So that was the start. And then, I committed to practicing an hour a day, because I knew the practice was important.

For a year and a half, Bargmann worked hard, practiced a lot, under the guidance of her coach. She seemed to be making progress, but it was slow.

BARGMANN: I felt that I wasn’t really improving enough because I didn’t get that big sound that I wanted. And my coach would be cheering for me, and he said, “It’s right about the corner. Just continue.” And then I remember it was summer, and suddenly I was singing, and the sound actually came. And in a song, I was able to make the big sound in a song. And that was a huge jump for me and really, really motivating.

Bargmann kept at it, practicing every day, focusing on improvement.

BARGMANN: So the next step was to stand in front of others and sing. And that was tough as well. But it was still a big step to move out of the practice room into performing in front of others and creating music.

Meaning: writing her own songs.

BARGMANN: That I worked on for quite a while.

She started training with other singers.

BARGMANN: And I think in that process I realized that the next step would be to start recording.

This phase was also bumpy, but she worked through it.

BARGMANN: And then I started working with the producer on what is now the music that I’ve released.

That’s right. Susanne Bargmann finally realized her childhood dream, and she released a record.

BARGMANN: It’s just called Sus B, which is my artist name.

In Denmark, she’s gotten a lot of radio play.

BARGMANN: So actually, the reception has been quite phenomenal.

Most of the songs are love songs.

BARGMANN: I don’t know why all good music is about love. And then there’s one song that more embodies the whole project of having the courage to start releasing music. It’s called “Fall Up,” where the message is more, “If you have something that you dream about, then do it, don’t hesitate.”

Bargmann wants her accomplishment to inspire others.

BARGMANN: I really believe that it can inspire people to: instead of limiting themselves to what they think they can, to actually choose something they dream of or they have a passion for, and then experience how they can improve.

[MUSIC: Jessie Torrisi, “Cannonball” (from Shake a Little Harder)]

Coming up next week on Freakonomics Radio – we’re back with a brand-new episode. It’s a great conversation with Michael Lewis, the author of great non-fiction books that often get turned into great non-fiction movies, including The Big Short, Moneyball, and The Blind Side. His latest book, though, this one is special – at least for me, and probably for a lot of you too. It’s an unbelievably vibrant portrait of Danny Kahneman and Amos Tversky, the two Israeli psychologists whose amazingly creative research led to the field of behavioral economics.

MICHAEL LEWIS: One of their great discoveries is that people don’t make clean, clear choices between things.

We talk about their research – and how Michael Lewis writes his books …

LEWIS: I write with headphones on that just plays on a loop the same playlist that I’ve built for whatever book I’m writing. And apparently I’m sitting there laughing the whole time.
Michael Lewis on Kahneman and Tversky – that’s next time, on Freakonomics Radio.

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Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Greg Rosalsky. Our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Alison Hockenberry, Emma MorgensternHarry Huggins and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • K. Anders Ericsson, Conradi Eminent Scholar and Professor of Psychology at Florida State University
  • Steve Levitt, Freakonomics co-author and William B. Ogden Distinguished Service Professor of Economics at the University of Chicago.
  • Malcolm Gladwell, author and staff writer at The New Yorker
  • Susanne Bargmann, psychologist and musician
  • Bob Fisher, soil conservationist, coach, and world record-breaking free-thrower

RESOURCES

ETC.

The post How to Become Great at Just About Anything (Rebroadcast) appeared first on Freakonomics.

December 23, 2016

The economist Dan Hamermesh, shown here practicing what he researchers, wrote a landmark paper in the economics of sleep.

Season 6, Episode 16

On this week’s episode of Freakonomics Radio: poor sleep can impair our cognitive function; sleep loss has been linked to adverse physical outcomes like weight gain and, increasingly, more serious maladies; and the Centers for Disease Control recently declared insufficient sleep a “public-health epidemic.” So are we treating the problem as seriously as we ought to be? And is it possible that lack of sleep can even explain the income gap? We speak with sleep researchers, economists, a psychologist and an epidemiologist to answer these questions.

To find out more, check out the podcasts from which this hour was drawn, “The Economics of Sleep, Part 1” and “The Economics of Sleep, Part 2.”

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post The Economics of Sleep, Part 1 (Rebroadcast) appeared first on Freakonomics.

December 21, 2016

Why are we all so obsessed with productivity? (Photo: Ulrich Baumgarten/Getty Images)

Our latest Freakonomics Radio episode is called “How to  Be More Productive (Rebroadcast)”  (You can subscribe to the podcast at Itunes or elsewhere, get the RSS feed or listen via the media player above).

In this busy time of year, we could all use some tips on how to get more done in less time.  First, however, a warning: there’s a big difference between being busy and being productive.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

[MUSIC: Beckah Shae, “Smile” (from Let it Snow)]

Hello, Freakonomics Radio listeners. The holidays are a lot of fun, of course, but they also bring stress. And, around here, some unrealistic demands. At least in my view they’re unrealistic. The elves who make this podcast have demanded a two-week holiday. I know, right? Anyway – that means that we’re regifting this episode. We first put it out last April and since then, nearly 2 million people have listened to it. It’s called “How to Be More Productive,” so I guess that’s why. Hope you enjoy it, whether this is your first listen or not. Happy holidays.

[MUSIC: Pat Andrews, “Get Faster”]

CHARLES DUHIGG: It’s about sitting down and deciding, “I’m in charge about what I do with my time and what my goals are and how I manage my focus and how I control my brain.”

ANDERS ERICSSON: With the right kind of training, any individual would be able to acquire abilities.

ANGELA DUCKWORTH: What specifically are gritty people like?  What beliefs do gritty people walk around with in their head?

LASZLO BOCK: So we were surprised that these things that everybody kind of says matter ended up not mattering.

STEPHEN J. DUBNER: So, Levitt, I don’t know if you know, but it is Self-Improvement Month at Freakonomics Radio.

STEVEN LEVITT: Yeah, I thought every month was Self-Improvement Month at Freakonomics Radio.

DUBNER: You seem to always be working on improving something about yourself. So what is it these days?

LEVITT: I’ve been working on two things. I am always working on golf and trying to be  better at golf.  And I’ve also been trying to learn German, which is a very different kind of endeavor for me.

[MUSIC: The Bad Things, “The Longest Bar in the World” (from The Bad Things)]

Steve Levitt is my Freakonomics friend and co-author; he’s an economist at the University of Chicago. Levitt is recently remarried, and his wife is German — which explains his desire to learn the language.

DUBNER: Talk about how you learn. Are you self-taught or not?  

LEVITT: I am primarily self-taught.But,  you know that one thing I value very highly is enjoyment and happiness. And I’m definitely willing to sacrifice being a better German speaker in order to actually enjoy the German practice I do. So, in some ways — it’s probably the exact wrong message to send to the people who are listening to this podcast — but I still think there’s some truth to it, right? One of the things that’s overlooked about  learning a new skill is that the only people who ever get good are the people who keep on doing it. And most people quit. probably rightly quit, because it looks enticing from the outside and it isn’t that much fun when they actually start trying to learn a new skill. But for me, with German, I definitely have been of the mind that it has to be fun. And if it’s not fun, I won’t do it.

[MUSIC: Wolfram Gruss “Busy Berlin”]

So that’s what Levitt’s working on – what are you working on? We asked Freakonomics Radio listeners to let us know.

AROON PARTHASARATHY: Hi, my name is Aroon Parthasarathy, and I live in Sydney, Australia.

JUSTIN XAVIER: My name is Justin Xavier. I live in Los Angeles,

NATALIA: Natalia. I live in Moscow, Russia.

AMY CORDER: Amy. I live in New Orleans, and I am an opera singer.

NATALIA:  Teacher of English.

PATRICIA ROSE: I’m a Ph.D. candidate.

CARLY: I am an environmental engineer, and I definitely could use some help getting more things done.

PAUL ORKISZEWSKI: My ambition is to improve my earning potential, learn more about the world, and unleash my inner-math geek.  

JOHN GRAF: I want to help my oldest child with their science fair project and work with my younger daughter on her comic book.

SHERNOFF: Learn to knit a scarf and try a new ethnic food.

JAY-R PATRON:  I most definitely want to up my guitar-playing skills.

GRAF: I want to read my 2-year-old to sleep every night and also take my wife to the movies from time to time.

DAN DIRSCHERL: I’d like to become a better American.

Okay, that’s a pretty big wish list. We’ve got our work cut out for us. Where do we start? Let’s start with … this guy.

DUHIGG: Okay. My name is Charles Duhigg.

Duhigg is a reporter and editor at The New York Times …

DUHIGG: … And the author of The Power of Habit and, more recently, Smarter Faster Better: The Secrets of Being Productive in Life and Business.

DUBNER: So, Charles when we put out a call-out to Freakonomics Radio listeners and told them that  we were working on self-improvement in several realms — productivity with you, but also expert performance with Anders Ericsson; and we asked people to tell us what they were most wanting to improve in their lives — I think productivity probably outpaced the others maybe 3:1 combined.

DUHIGG: Wow.

DUBNER: So plainly, the appetite for this is just off the charts and it got me wondering about why that appetite is so large.

DUHIGG: I think it’s because our experience matches so poorly with our expectation. Right? We’re living through this age where they keep on telling us, “Look, we have all these devices for you now.” Right. We have email and we have a communications revolution and we have computers in everything that you can possibly touch and the idea should be that life gets easier. And instead, it’s just getting harder and harder.  And that doesn’t seem like how things are supposed to go.

So how are things supposed to go? We’ll get into that.

*      *      *

We made this episode about productivity because that’s what you told us you wanted to hear an episode about.

PATRICIA ROSE: Hi, I’m Patricia. I’m a PhD candidate in environmental sciences. I’m aiming to work on productivity.

AARON PATHA: What I’d like to most improve is my productivity.

JUSTIN XAVIER: The thing I most want to improve about myself is my productivity, for sure.

BARRY: The thing I would most like to improve on is my productivity.

NATALIA: The thing I’d like to improve about myself is productivity.

JOHN GRAFF: I want to improve my own productivity.

CAMERON: Improve my productivity.

[MUSIC: Russel L. Howard III “Get Busy”]

When I told Steve Levitt that so many people wanted to hear about productivity, he was not at all surprised.

LEVITT: Productivity is the key to everything. If you can be 10 percent faster at getting the same thing done, then you got 10 percent of your time to do something you’d  rather do. So, when it comes to economics, if there’s a single measure we should care about it’s productivity of workers. I give a lot of credit to our listeners that they think like economists when it comes to productivity.

And how does Levitt rank himself on the productivity scale?

LEVITT: I’m actually strangely productive person, and I’m not quite sure why. You give me a pile of stuff to do, I get it done quickly.  Whether it’s something academic — or  when I got a new apartment, for instance. I took my four kids with me, and we did all of the furniture shopping for the entire apartment, for a six-room apartment, in under two hours, including the checking out and buying everything, with four kids!

DUBNER: Okay, how’d you do that? What are your tricks?

LEVITT: To tell the kids that everything looks great. “Let’s do it. Perfect. You got 15 more minutes and then we’re leaving. Let’s go.

On today’s show, Charles Duhigg will offer many more tricks – and deeper strategies – to help you become more productive, especially in a work environment but in your personal life as well. First, however, a warning:

DUHIGG: There’s actually a big tension and a difference between efficiency and productivity. There’s actually a big difference between being busy and being productive.

Duhigg’s most recent book, Smarter Faster Better, combines old-fashioned reporting and a survey of the academic literature to identify best productivity practices.

His first book, The Power of Habit, did the same for habit formation. I had assumed the second book was sort of a continuation of the first; but Duhigg sees it as the opposite.

DUHIGG: Because The Power of Habit is all about these decisions that you stop making, right? Choices that become automatic, that I simply stop thinking about. Whereas productivity is about re-grabbing control over the choices instead of simply reacting to what’s in my environment and all the cues around me; it’s about sitting down and deciding, “I’m in charge about what I do with my time and what my goals are and how I manage my focus and how I control my brain.”

DUBNER: I’m curious, when you talk about productivity, what are you talking about?  Because I think when a lot of economists think about productivity, we think about them thinking about how to squeeze another widget out of that production line.

DUHIGG: Absolutely. And I think for most people, that’s not productivity, right. I think what’s important to realize is that productivity means different things in different settings. And it’s not necessarily what economists mean when they say “just getting more widgets out of each machine each hour” or more cars off the assembly line for every hour that someone works. Instead, what it means is: helping people figure out how to achieve their goals with less waste and less anxiety and less stress and more opportunity to actually enjoy what they want to enjoy. So for some people, that might mean that I’m able to, like, blow through, you know, 30 emails in 30 minutes and get to inbox zero. But for other people it means I get to take my kids to school without having to rush, and I still feel okay when I get to the office.  But most importantly, what productivity really means is: it means a different way of thinking.

[MUSIC: j. cowit, “Lazy Susan” (from Metamorphosis World Peace)]

This is the crux of Duhigg’s book – that the only way you’ll change your outcomes is to think differently about how you’ve been arriving at those outcomes. It’s one of those statements that is obvious in retrospect but weirdly non-obvious to a lot of us caught up in the thrum of daily life. For instance:

DUHIGG: When electricity was first popularized, there was this huge wave of factories that replaced their steam engines with electrical engines. And almost none of the productivity of those factories rose initially. This has been referred to in economics literature as the productivity paradox. And as researchers went back and they tried to figure out why, what they found is that all the factory managers had arrayed all of the machines, had lined them up on the factory floor, so that they could have these steam pipes that would run from machine to machine. And when they electrified the plants, they left all the machines in the same places; they just replaced the pipes with wires. It took like 20 or 25 years for plant managers to start saying, “Look, the strength of electricity isn’t simply a new power source. It’s that we can move these machines in ways that we can have workers work more efficiently or we can use less people or we can create an assembly line.” And that’s where the productivity increase really came from.  And the same thing is happening today.

Meaning, it’s not enough to blithely accept the many new tools the digital revolution keeps shoving in our hands. We need to rethink how to best use them and toward what end.

DUHIGG: There’s this debate about whether the digital revolution is really increasing productivity, and when economists and people with common sense take a step back, what they say is, “Look, it’s not about all these gadgets and apps; it’s about learning new ways to think about possibilities, new ways to think about our capacity for work.” And when that really gets spread through the population,  that’s when productivity really increases.

That debate — about how much, or even whether, the digital revolution is actually increasing productivity — has been playing out here on Freakonomics Radio. One episode we did was called “Yes, the American Economy Is in a Funk – But Not for the Reasons You Think.” Another was called “How Safe Is Your Job?” Those conversations dealt mostly with the macro view. But hey, we’re all self-interested animals, aren’t we? So you want to know what the digital revolution means for you.

DUHIGG: All of us only have 24 hours each day, but some people seem to get a lot more done within that 24 hours, and they seem less stressed and sort of worked up about it. And the reason why is not because they’re kind of hacking themselves or they’re pulling strings. They’re not really focused on efficiency, what they’re focused on is trying to figure out what are the right goals that I should be chasing after?

DUBNER: Now, before we get into the specifics of what leads to a more productive life, whether in work or in the personal sphere, persuade us that the examples you’ll be using and the data that you’ll be presenting aren’t cherry-picked. In other words, persuade us that you’re not just telling success stories and then reverse-engineering them to present seemingly causal factors that might in fact be nothing more than correlation and perhaps even just coincidence.

DUHIGG: I talked to, I don’t know, four or five hundred people for this book. And I had this basic rule, which was: that when someone told me something that they felt made them more productive, that I wouldn’t include it in the book unless it seemed to be universal. And so if I talked to four or five hundred people, I probably heard 300 different ideas about how to increase productivity. But what I would find is that one set of ideas would work for a group and then another group would say exactly the opposite. So a good example of this is, like, the fanatical devotion on one goal at all costs. When I talked to people in Silicon Valley, they would say, “Here’s the most important thing on being productive, is that you choose, like, one outcome and you just remain persistent.” And then I would talk to people in big companies and they’d say, “Here’s the thing about being productive. You have to be flexible. You can’t commit yourself to one goal.” And this happened again and again and again, except that I did notice that there was this small handful of consistent ideas that kept on coming up. As I boiled through all of these stories and all of these papers that I was reading and all of these experts, there were really only eight things that came up again and again and again.  

[MUSIC: All Good Funk Alliance, “Slingshot Boogie” (from Slingshot Boogie)]

Okay, as you heard, according to Charles Duhigg and his band of productivity freaks, there are eight key tools or skills. And they are? I believe we need a sound effect here, please.

Thank you. Number one: motivation.

DUHIGG: We trigger self-motivation by making choices that make us feel in control. The act of asserting ourselves and taking control helps trigger the parts of our neurology where self-motivation resides.

DUBNER: Focus.

DUHIGG: We train ourselves how to pay attention to the right things and ignore distractions by building mental models, which means that we essentially narrate to ourselves what’s going on as it goes on around us.

DUBNER:  Goal-setting.

DUHIGG:  Everyone actually needs two different kinds of goals. You need a stretch goal, which is like this big ambition, but then you have to pair that with a specific plan on how to get started tomorrow morning.

DUBNER:  Decision-making.

DUHIGG: People who make the best decisions tend to think probabilistically. They envision multiple, often contradictory, futures and then try and figure out which one is more likely to occur.

DUBNER: Innovation.

DUHIGG: The most creative environments are ones that allow people to take clichés and mix them together in new ways. And the people who are best at this are known as innovation brokers. They’re people who have their feet in many different worlds and, as a result, they know which ideas can click together in a novel combination.

DUBNER: Absorbing data.

DUHIGG: Sometimes the best way to learn is to make information harder to absorb. This is known in psychology as “disfluency.” The harder we have to work to understand an idea or to process a piece of data, the stickier it becomes in our brain.

DUBNER: Managing others.

DUHIGG: The best managers put responsibility for solving a problem with the person who’s closest to that problem because that’s how you tap into everyone’s unique expertise.

DUBNER: Teams.

DUHIGG: Who is on a team matters much, much less than how a team interacts.

Okay, got that? Motivation, focus, goal-setting, decision-making, innovation, absorbing data, managing others, and teams. Some of these are obviously more geared toward workplace productivity, but we’ll see if we can’t smuggle them over the border into the personal realm.

DUBNER: I was really taken  with your first chapter about motivation.  And I wonder if you could talk for a minute about how control plays into motivation. In other words, if I’m a parent wanting to motivate what I think is a lackadaisical teenager in school,  what works, what doesn’t work and so on?

DUHIGG: So, in many ways, the foundation of motivation is what’s known as the “locus of control” in psychology. And everyone either has an internal locus of control, which means that they believe they control their own fate or an external locus of control, which means that they think things just happen to them and they’re powerless.

DUBNER: Now, wait a minute, when you say that everyone has one or the other, it can’t be that black and white, plainly, right? The world is not divided into the external and internal.

DUHIGG: But people exist along this continuum, right. And we’ve all met people who are one way or the other; we’ve all met people who sort of believe, “If I decide to climb that mountain, I can do anything.” And others who complain all the time, “You know, I wanted to get a better job, but my boss is mean to me, and I’m never lucky, and it doesn’t work out.” And  what’s interesting is that the influences of internal versus external locus of control are kind of surprising. Like, for instance, there’s been experiments that show that when teachers tell kids that they’re really smart, that they did well on a test because they must be really smart — that actually triggers our external locus of control because most people don’t believe that they have any influence over how smart they are. It’s either something you’re born with or it’s not.  Whereas when teachers tell kids, “You did great on this exam, you must have worked really hard” — that reinforces an internal locus of control because we all know, “I choose how hard I work.” And what we’ve found is that self-motivation and motivation in general seems to rely on believing like we’re in control.

DUBNER: Okay, so the implication is that there’s a certain kind of compliment or praise that is more powerful or that leads to higher productivity, yes?

DUHIGG: That’s exactly right.  What we know is that you can train people to believe that they’re in control of their own life, and more importantly, to get them addicted to that kind of pleasant sensation that kind of comes from being in control. One of my favorite examples of this is something that Mauricio Delgado, a neurologist, mentioned to me, is driving down the freeway. You know when you’re, like, stuck in traffic on the freeway and you see an exit and you know that it would take just as long to get home by taking that exit, but, like, your brain wants you to, like, turn the wheel and take the exit even though it won’t get you home any faster. That’s because we learn this kind of almost emotional pleasure that comes from taking control.

You can see how you can practice this as an individual. But institutions are trying to improve as well. Duhigg writes about the U.S. Marine Corps overhauling their basic training a while back …

DUHIGG: … because they were getting all these recruits who were kind of, like, wet socks. They didn’t know how to self-motivate. And so the guy who was in charge of the Marine Corps, Charles Krulak, who’s a general, said, “We need to start teaching people to have this internal locus of control. We need to teach them how good it feels to take control, to assert themselves, because then they’ll learn how to self-motivate.” And so he instituted a couple of rules and one of them was that you can only compliment people on things that are unexpected. So this drill sergeant told me that he never tells someone who’s a natural athlete that they just ran a good race. He only tells, like, the small kind of wimpy kids that they just did a great job running.  The Corps as a whole never tells anyone that there’s such a thing as natural-born leaders. Because that implies that you don’t have any control over whether you’re a leader or not. Instead what they do is they compliment shy people who take a leadership role. And they say to them, “Look, I know it was hard for you to do that, but you did a great job.”

[MUSIC: Aubrey Agard, “Mister Sunshine” (from Mister Sunshine)]

Coming up on Freakonomics Radio: how to make to-do lists that really work. How Google learned to build a better team. And how to define productivity on your own terms – as you’ll hear in a moment from our listener Hayley McCoy, from Bend, Oregon. I love Hayley’s level of self-examination, and I especially love how many times she can say the words “productive” and “productivity” in one sentence and still make perfect sense!

Hayley McCOY: Hi, Freakonomics. I would like to improve my productivity but I think there’s a hidden complexity in the pursuit of productivity. I grapple with the question of, “What is productive?” I like to engage in creative activities like painting, writing, reading, but is that productive? I’m always striving to know how my time would be best spent, which has really made me dive into philosophy lately. I’m also trying to define productivity in my terms. I guess I’ll try to be productive in defining productivity for myself so that I can start being productive.

*      *      *

I’m Stephen Dubner, host of Freakonomics Radio, which means this is my show, which means I more or less lead our production team. As I was reading Charles Duhigg’s book about productivity – it’s called Smarter Faster Better — I had a rather unsettling realization, which I told Duhigg about.

[MUSIC: Quel Bordel, “Aller En Soirees” (from Qui Ne Chanti Pass)]

DUBNER: In the chapter on teams, you write at some length about the qualities of a good team but particularly the qualities of a leader of that good team.  You write, “Teams need to believe that their work is important. Teams need to feel that their work is personally meaningful. They need to have clear goals and defined roles. Team members need to know that they can depend on one another. But most important, teams need psychological safety.” So, I have to say, when I read that list I realized that  I am the world’s worst leader imaginable, that I don’t do any of that. I don’t think about it.

DUHIGG: Well, I would actually guess that you’re better than you’re letting on.

DUBNER: You would guess wrong. I’m going to tell you and you should, uh, you should speak with the other people on my team and they’ll back me up.

DUHIGG: But I think you hit on something really, really powerful, which is that, that list of things that you just read, they are not efficient.  So one of the things that’s really important about creating the right group norms that make a team productive is that everyone has a chance to kind of socialize with each other a little bit, right? Cause you want to create this “high-average social sensitivity,” and the only way you do that is to get people to talk about their lives a little bit. Now, we’ve all had the experience where you go into a meeting and, like, for the first five minutes people just, like, talk about their weekend and their kids and who’s sick and they gossip and you think to yourself, “God, can we please just start this meeting? We’ve got business to get done.” And I have that same instinct, which is to say I want to prioritize efficiency. But study after study shows that if we spend a couple of meetings with that, five minutes of getting to know each other, over time, our group will actually be much, much more productive. So sometimes it’s about sacrificing the short-term efficiency for the long-term productivity.

Duhigg’s view of productive teamwork comes largely from a massive research project at Google.

DUHIGG:  We are lucky beneficiaries of the fact that Google decided to spend millions of dollars in four years trying to figure out how to build the perfect team.

Google is consistently named among the best American companies to work for.

DUHIGG: And they spent a lot of that time thinking that, like, the question was: who do you put together? Do you put introverts and extroverts? Do you want people who are friends away from the conference table or do you want, you know, a flat leadership system or like a really strong leader?

DUBNER: You write a little bit further, having to do with Google —and I believe it was Laszlo Bock who runs their — what’s that division called — the People …

DUHIGG: … People Operations.

BOCK: Hi this is Laszlo.

[MUSIC: The Harmed Brothers, “Carolina” (from Better Days)]

Yes: Laszlo Bock, senior vice president of People Operations at Google.

BOCK: I’m basically in charge of the care and feeding of our Googlers, our employees, and making sure they get here, they are happy, they are productive and they stay a long time.

Under Bock, Google ran two productivity studies.

BOCK: Years ago we did something called Project Oxygen and the underlying question behind Oxygen was, “Do managers matter?” And if they do, what can we do to make managers more effective? What can we do to create a place where management is essential and it’s as helpful as oxygen?

Bock says Project Oxygen was useful, but as important as a manager may or may not be, there’s the rest of the team as well.

BOCK: So we decided to look at teams as a unit of analysis. And Project Aristotle is all about figuring out how to make groups of people happier and more effective.  

And Google, being Google, looked at a lot of data:

BOCK: We looked at 200 different teams across every part of Google — every geography, all around the world, in sales, in marketing, in finance, and in engineering, everything we were doing. And the outcome metrics we looked at were not just performance ratings but measures of what kind of innovation came out of the team? How quickly were they moving? Did people stay on the team? Did they not? Were people happy? Were they not? What did other people outside the team think of that team’s performance? And then we spent a lot of time kind of crunching all those numbers and teasing through the qualitative interview data to try to isolate what actually was making a difference in team performance.

Google’s findings did not jibe with a lot of earlier academic research, or other conventional wisdoms.

BOCK: So for example, in the academic research it says consensus-driven decision-making is often better than, sort of, top-down direction.  And academic research says workload matters a lot. Having teams in the same location. We actually found none of those things were in the top five of what mattered in terms of effectiveness for teams.

Here’s how Charles Duhigg puts it.

DUHIGG: What matters isn’t who is on the team. What matters is how the team interacts.

BOCK: So we were surprised that these things that everybody kind of says matter ended up not mattering. For example, the most important attribute of a high-performing team is not who leads it or who’s on it or how many people or where it is. It’s psychological safety.

DUHIGG: … which means that everyone at the table feels like they have the opportunity to speak up and they all feel like each other is actually listening to them, as demonstrated by the fact that their teammates are sensitive to nonverbal cues.

BOCK: We ask if the team members feel that they can fail openly or do they feel that they are going to be shunned by failing? We ask, do they feel as if other team members are supporting or undermining them?  

Bock and his team identified five norms that the best Google teams had in common, beginning with psychological safety.

BOCK: That unlocks all kinds of goodness.  Another one of our norms is dependability. Dependability is the notion that: you tell me to do something, I’m going to get it done and you can rely on me to get work done. Structure and clarity, actually two things but they sort of relate. Basically the idea is: people should know what everyone’s job is and that should be a shared understanding across the team. Another norm is meaning — that the work should be personally meaningful to every person in the room. And the last thing is impact — that team members need to think and believe that their work matters and actually creates change.

Bock admits that most of these norms are pretty obvious. But that doesn’t mean everybody uses them. And there are other tricks a good manager should think about. For instance:

BOCK: “Are you having regular one-on-ones?” — which is obvious, like you should have one-on-ones with your team members. Turns out most people don’t ‘cause they are not that fun, they’re kind of boring, they take time. But when you do them, your team performs better.

Another example:

BOCK: Are you making sure everyone in your team feels included?  Obvious, kind of logical, we should do that. But not everyone does, if you think about meetings that you may have been in, there is often somebody sitting off to the side that sits quietly for the whole meeting and never says anything. Rarely does the person leading the meeting say, “Hey you know, we haven’t heard from Frank during this entire meeting. Frank, what do you have to say?” Or “Gail, you’ve been silent this entire conversation, do you have a perspective?”  And so having a checklist that says, “Are you checking on these things, are you calling out the quiet people?” goes a long way to making teams more effective.

But again, “effective,” like “productive,” isn’t necessarily the same as efficient.

BOCK: One of the hardest things about looking at team performance is that it’s really hard to figure out what outcomes you care about. We want teams in every way to be more productive and efficient but also happier and stick around longer.

Because continuity, in the end, can be extremely productive for any institution. But let’s say you work largely on your own, that you’re not a member of any work team, much less a leader — maybe you don’t even have a job per se; maybe you’re a craftsperson or a freelance consultant, or maybe an athlete or musician or a chef. In other words, you are on an island.

[MUSIC: Israel Nash Gripka, “Let Me Down” (from Israel Nash Gripka)]

When you don’t have a team leader to keep their eye on you, how do you think about productivity?

DUHIGG: I think that in general people know when they’re actually productive.

Charles Duhigg again.

DUHIGG:  If you sat down with someone and you said to them, “Are you productive?” they would give some anodyne answer, right? Like, “Yeah, I’m pretty productive” or “No, I’m not that productive.” And then you would say, like, “Tell me what you did yesterday. Did you spend your time wisely?” I think that people could go through their day and they would tell you, “Look, I spent a couple of hours, like, watching soccer with my kid and that might not seem productive, but honestly, that’s really important time that me and my son have together. And then I spent another couple of hours working on emails and that might seem productive from the outside, but actually what I should have done was I should have just deleted a bunch more of them or ignored them because  they really won’t matter a week from now whether I sent that response or not.”  That people are very good at actually analyzing whether they’re productive or not. The problem is that very frequently, we don’t stop to analyze. We don’t reflect on what’s actually happened. And that part of this idea of managing your own brain, learning how your brain works so that you can take control of your focus and your motivation and how you manage yourself and others, is that it forces us to really sit back and analyze: am I spending my time the way that is really meaningful to me or am I simply reacting to other people’s priorities and the busyness of life?  

DUBNER: One thing that I, and I think a lot of people wonder, especially if they are makers, you know, they’re responsible for their own projects, their own income, their own schedules and so on, but even if they are purely managers, even if they’re working within a firm, I think a big question is, how many projects or ideas seem to be the optimal number? You know, too few and we may not get much done, too many and we may never complete any. So what does the science have to say about that?

DUHIGG: There’s actually a really interesting study that was done, where a couple of MIT academics got access to hundreds of thousands of emails that this one firm had sent. People were corresponding to each other and they could correlate it with data on how many projects people were working on and how much profits they were bringing in. And what they found is that there are some people who don’t work on enough projects. So, they might work on two or three things at the same time and they’re just not maximizing their opportunities. But there are also some people who work on 10 or 12 projects at once and they’re stretched too thin and as a result, they can’t spend enough time actually devoting attention to each project. So what was optimal was the people who were somewhere in the middle. But what was really interesting was that the kinds of projects that they chose were critical to how productive they were. Now you would think that what people would want to do is they would want to find a bunch of similar projects so they’re doing the same thing over and over, faster and faster and faster. It’s exactly the opposite. The people who were most productive were the ones who were seeking out new and different kinds of projects because it taught them something new with each iteration. That’s why they would only work on a handful of projects, you know, four or five at any given time, is because working on something new, it takes a lot of time. To learn takes more time than simply to execute. And yet it turns out that over time, the more you learn, the more value you add, and, as a result, the more productive you are.

DUBNER: Talk for a minute about writing the perfect to-do list, and I’m curious to know whether you’ve been able to follow your own advice.

DUHIGG: I have, actually. So it used to be that I wrote to-do lists I think like most people did. I would start by writing at the top of the page a couple of easy tasks because I want something that’s going to kind of like —

DUBNER: Brush teeth.

DUHIGG: Yeah, brush teeth or like, you know, read all of my emails or turn on my computer. Sometimes I would actually write at the top of my list things that I had already done because it felt so good to, like, start the day by crossing it off and feeling accomplished and this is actually — within psychology, this is known as using a to-do list for mood-repair. And it’s the exact opposite of productive. Because what happens is that I cross a couple of the easy things off and then I feel like I’ve accomplished something and then I give myself permission to go check Facebook and then 45 minutes later I pay attention to what’s going on again.

DUBNER: Okay, fair enough, but let’s say, there must be some people who react in exactly the opposite direction, no? Some people who kind of feel like the pump is primed, and I’ve turned on my computer, and I’ve brushed my teeth and I’ve remembered to, you know, breathe, let’s say. Having accomplished all that, now I can, you know, buy that new insurance plan that I need to for my firm, which is the thing that I’ve been dreading.

DUHIGG: Sure, and the question then becomes how do you remind yourself of the bigger task?  And so what psychologists recommend is that on your to-do list you have two types of goals. At the top of the page you write a stretch goal. And the stretch goal should be that big ambition. And then underneath that,  you should write something that makes that stretch goal tangible and into a plan.  And one of the systems for doing this is this thing called SMART goals, right?

SMART – that stands for “specific,” “measurable,” “achievable,” “realistic,” and based on a “timeline.” The SMART-goal system was developed years ago within General Electric. Unlike the big, stretch goal, with a SMART goal …

DUHIGG: …  you take a component of this big ambition and you say specifically what you want to get done and how you’re going to measure it and is that achievable? Like  if you want to do something, do you have to clear your schedule in the morning? Is it realistic? If you’re going to clear your schedule , does that mean that you don’t turn on your email at all because you know it’s going to distract you? And what’s the timeline for getting the sub goal done?  And it’s very easy to do this with a to-do list. I do it every single morning and it takes me 45 seconds to figure out what my stretch goal for the day is, what my SMART goal  for when I get to my desk, what exactly I’m going to do right away. It’s almost a habit, but it transforms how much I get done because if you sit down and at the top of your list it says, “Go buy the insurance plan for my entire company,” and then underneath you have this, like, very distinct plan, like, specifically what you’re going to do when you first sit down, how you’re going to measure it, what you need to do to make it achievable and realistic, how much time it’s going to take, it’s really easy to start. You’ve basically gotten over the hump.

DUBNER: That’s such a good example. So, Charles, it’s a little after 5:30pm in the east where you and I are talking. And I’m just curious about your goal for the evening, maybe even your stretch goal for the evening. Some people look at 5:30 and they think “cocktail hour,” some people look at 5:30 and they think, “Let me get a little more work done.” What’s your stretch goal for the night?  

DUHIGG: My stretch goal is to make it home for family dinner. I have to say my wife and I have established a family stretch goal of having family dinner twice — at least twice a week during the weekdays and we’ve worked backwards to reorganize our days so that we can do that.

DUBNER: Way to go. Bon appetit.

DUHIGG: Thanks.

[MUSIC: Eric Hastings, “Dollar in My Pocket”]

And thanks to Charles Duhigg for trying to make all of us a bit more productive. Will it work? I hope so – for me, and for you. Let us know if this episode indeed feeds your productivity beast in any meaningful way. You can send your feedback via Twitter or Facebook or the iTunes podcast store. You can also send an e-mail to radio@freakonomics.com. I can’t promise to reply. In fact, there’s a very, very good chance I won’t. Because one way I stay productive is by saying “no” to just about everything I possibly can — and that includes replying to about 99 percent of my email. But I do read all of them, so please do let us know if you are getting more productive. And next week on Freakonomics Radio, we asked what talents or skills you wanted to get better at:

LAUREN MADRONICH: I would like to get better at asking critical questions, both scientifically and interpersonally.

SARAH CATE PFISHTER: I would really love the ability to become an expert performer.

JON BALL: I would like to not hate to workout and exercise.

CHERYL MECKLEY: My goal is to propel myself into pretty good improviser status one day.

SACHIN SHAH: I would love to be able to sing a sappy, romantic song for my wife while accompanying myself on the guitar.

KEN RYAN: In the spirit of [EDIT] the return of golf season , I would most like to shoot below 90 for the first time and then build upon that success

We talk to the pioneering research psychologist Anders Ericsson about deliberate practice, the 10,000-hour rule, and how to get really, really good at just about anything:

ANDERS ERICSSON: We [EDIT] find that with the right kind of training, any individual will be able to acquire abilities that were previously viewed as only attainable if you had the right kind of genetic [EDIT] talent.

We also try to sort out a little disagreement between Ericsson and Malcolm Gladwell over the 10,000-hour rule:

GLADWELL: I come from a very musical family. I know what musical talent looks like. I know that I don’t have it.

Ten thousand hours, Malcolm Gladwell, a singing psychotherapist from Denmark – and more. That’s next week on Freakonomics Radio.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Arwa Gunja. Our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Greg Rosalsky, Alison Hockenberry, Emma MorgensternHarry Huggins and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

The post How to Be More Productive (Rebroadcast) appeared first on Freakonomics.

December 15, 2016

Hello Freakonomics Radio listener,

Ever wonder how the ideas you hear every week on Freakonomics Radio come to life? Our friends at WNYC Studios made a fly-on-the-wall documentary that illuminates the team’s creative process.

December 14, 2016

How can it be that medical error is the third-leading cause of death in the U.S.? And what’s to be done? (Photo: jasleen_kaur/flickr)

Our latest Freakonomics Radio episode is called “Bad Medicine, Part 3: Death by Diagnosis” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

By some estimates, medical error is the third-leading cause of death in the U.S. How can that be? And what’s to be done? Our third and final episode in this series offers some encouraging answers.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

DAVID KESSLER: “This is an American condition. This is an American disease. This has been one of the great mistakes of modern medicine.”

That’s David Kessler, who ran the Food and Drug Administration during the 1990s. Surely you know the condition, the disease, he’s talking about. President Obama has been talking about it …

PRESIDENT OBAMA: This crisis is taking lives. It’s destroying families. It’s shattering communities all across the country.

[MUSIC: Louis, “Rewind to Play” (from Louis)]

But what does Kessler mean when he says “this has been one of the great mistakes of modern medicine”?

OBAMA: Drug overdoses now take more lives every year than traffic accidents. A lot of time, they’re from legal drugs prescribed by a doctor.

What Kessler is talking about is a combination of good intentions, greed, and a complicated, changing relationship between doctors and their patients. The result: people dying every year from prescription drugs that are supposed to heal us, not kill us. That’s a sick twist, isn’t it? So how’d this happen?

KEITH WAILOO: It’s part of the recurring sense of hope and despair associated with these drugs that are supposed to solve problems, but they end up being problems in themselves.

The numbers are remarkable.

ANUPAM JENA: Prescription opioid use has gone up about 300-400 percent since the year 2000.

America is a world leader in the consumption of painkillers. Here’s what a 2007 report found:

WAILOO: We were consuming about 83 percent of the world’s oxycodone in the United States. And it is not because we had 83 percent of the world’s pain. It’s because we are a consumer society that believes in the power of the magic pill.

How did medicine get taken over by consumerism?

MARTIN MAKARY: Doctors used to practice medicine on sick and injured patients, and it was those two players in the healthcare system. And now the same two people in the room, the doctor and the patient — behind the room is a gigantic industry of people buying, selling, trading, bartering, discounting, marking up all of our services.

Today on Freakonomics Radio: the third and final part of our “Bad Medicine” series. This time, we look at the doctor-patient relationship. Who’s got the real leverage in that relationship?

MAKARY: They cope with their job by giving an angry patient what they want, not what they need.

What’s the number-one problem in healthcare?

MAKARY: I think the number-one problem is we don’t measure performance. We don’t measure the outcomes of patients in health care for 99 percent of the health care that’s delivered.

And … is it a better idea to just stay away from the doctor?

DUBNER: So I would think that you are a downright danger to your patients. How is it that you’re not?

JENA: Haha! No comment.

*      *      *

In the first two episodes of our “Bad Medicine” series, we looked at some of medicine’s biggest mistakes:

[MUSIC: Jack Miele, “Otis’ Theme” (from Jack Miele)]

JENA: Drilling holes into people’s skulls.

TERESA WOODRUFF: It would cause a whole series of malformations and probably a lot of fetal death.

VINAY PRASAD:  It was literally taking someone to hell and back.

And we looked at how better science is pushing medicine not always forward, but often backwards.

JENA: It is quite common to see practices that end up getting reversed. And the best estimates are that happens about 15 percent of the time.

We talked about who has been excluded from a lot of clinical trials.

TERESA WOODRUFF: The study of women in general became part of the collateral damage.

And, these days, who gets included:

BEN GOLDACRE: When you look at the evidence, what you often find is that trials are often conducted in absolutely perfect dream patients. People who are, by definition, much more likely to get better quickly. Now that’s very useful for a company that are trying to make their treatment look like it’s effective. But actually, for my real-world treatment decisions, that kind of evidence can be really very uninformative.

Today, in our final episode of “Bad Medicine,” we focus on those real-world treatment decisions. We focus on where health care really happens — when a patient gets together with a doctor, or another healthcare professional. And what’s one of the main reasons any of us might go to a doctor? That’s easy: because we’re in pain.

WAILOO: Pain illuminates what is, I would argue, a general problem in medicine.

Keith Wailoo is a Princeton historian who focuses on health policy.

WAILOO: That is to say, who’s to say what degree of pain a person is in and what constitutes truly effective relief, other than the patient themselves? And two different people might require different doses of medication to alleviate the pain.

In the late 1980s and early 90s, there was a push to mandate the recognition and treatment of pain. This culminated in the promotion of pain as the fifth vital sign, along with temperature, blood pressure, pulse, and respiratory rate. Which made pain the only vital sign that is determined not by objective measurement, but by the patient’s own assessment.

So doctors were put in the position of having to determine whose pain was worthy of a prescription pain-killer and whose wasn’t. Very often, doctors have decided “yes.” In 2015, more than 650,000 opioid prescriptions were dispensed per day in the U.S.

One result of this prescription onslaught? It is believed to have contributed to a recent uptick in mortality rates. Anupam Jena is a physician and a healthcare economist at Harvard.

JENA: Mortality rates in the U.S. have risen for the first time in 10 years.

Which is striking, considering that mortality rates have been falling for at least 100 years. The U.S. rise has been concentrated among a few groups — particularly white, middle-aged men and women. Among white men with a high-school education or less, the death rate has risen an astonishing 22 percent.

JENA: And the attribution of these issues is, in part, due to opioids. And this is a problem that was created by medicine.

DUBNER: And yet you certainly can’t blame your profession for that because it’s an effective drug when used well, correct?

JENA: Correct, yeah. You know like many drugs in medicine, they’re effective in certain situations. So for patients who fall at home and break their hip and have a hip fracture — opioids for situations like that are known to be effective pain relievers. Or in patients with cancer, particularly in cancer with bone pain, because of disease that has metastasized to the bone. Opioids in that situation have been shown to be highly effective in terms of reducing pain. But opioids for low back pain, or headaches, or knee pain, or hip pain or just chronic pain in general, opioids are not thought to be an effective strategy and yet we’ve seen the proliferation of their use in the last decade.

[MUSIC: Aaron Saloman, “Pensive Strut” (from Aaron Saloman)]

So how do you maximize the use of opioids when appropriate and minimize their overuse? That’s not easy; there are a lot of confounding factors. But it’s hard to come up with good prescribing protocols for pain relievers when you don’t even have good measurement for pain.

WAILOO: Because we don’t have any objective measures for actually figuring out what works, we are necessarily in a realm where not subjective assessment, but also trial and error medicine is necessary to figure out what works.

And to that end, Wailoo says …

WAILOO: We need to think about over-medication and under-medication as not two poles of the use of pain medicine, because then what we do is that we kind of just whiplash, like a pendulum. We go from believing that under-medication is a problem to believing that over-medication is a problem. What we need to do is to understand that both of these things can be a problem at the same time.

The American Medical Association, hoping to address this problem, recently turned back the clock; it recommended that pain be removed as a fifth vital sign. But how much will that help? Anupam Jena again:

JENA: As an economist, I think about supply and demand. So there’s the demand of patients, increasing demand by patients for opioids.

Once you’ve put the power in the hands of the patient or, just to call it what it is, in the hands of the consumer it can be hard to reclaim it. So how did we get here?

WAILOO: Yeah, so pain management was really emerging as a recognizable and legitimate area of medical practice and care in the 1960s, early 1970s, with the development of multidisciplinary pain centers.

Keith Wailoo again.

WAILOO: There was a general recognition that you needed more than just drugs to deal with people in chronic pain. You needed social workers, you needed surgeons, you needed psychologists, you needed a wide range of others as well as people with pharmacological expertise.

But those multidisciplinary pain centers were really expensive.

WAILOO: And so, you know one of the economic trends, since the 1980s, with the rise of cost containment, is to sort of see drugs as the cheapest and the fastest solution to our problem.

This coincided with a big shift in how drugs are marketed to the public.

WAILOO: Before the 1980s, the idea that you would see prescription drugs being advertised on television was laughable. It emerges in the mid-1980s that, you know, we’re sort of seeing government regulation as the problem and the market as the solution to our problems. And out of this era emerges this idea that people have the right to have the information at their disposal, about prescription drugs, and to bring that knowledge into the physician’s office in order to — not so much demand — but to shape clinical decision-making.

In fact, the aggressive marketing of Oxycontin as a safe pain medication led to criminal convictions for top executives at its manufacturer, Purdue Pharma, for misleading the FDA, clinicians, and patients about its risks. But just because one painkiller is declared risky doesn’t mean that consumers wouldn’t demand others pain-killers. Because, as Keith Wailoo told us earlier …

WAILOO: We are a consumer society that believes in the power of the magic pill.

[MUSIC: Emma Wallace, “Let’s Have Some Fun” (from Let’s Have Some…)]

And once consumers gained more leverage in the medical realm, guess whose opinions began to matter a lot more? Yep, the consumers’. In the form of those patient-satisfaction surveys you fill out after a doctor’s visit.

MAKARY: Yeah. It is a problem. That’s the problem, when we just measure things that are easy to measure.

That’s Marty Makary, a surgical director and health-policy scholar at Johns Hopkins.

MAKARY: By putting all this attention on customer satisfaction or consumer satisfaction or patient satisfaction, we’re creating a consumerist culture in healthcare. People come in, they want an antibiotic for their kid, and they don’t care what your diagnosis or explanation is, they want to walk out with that antibiotic prescription. Or you’re in pain and you want that pain script. If the doctor is under the microscope for their patient-satisfaction scores, you can imagine the perverse incentive here.

Indeed. A 2012 paper in the Journal of the American Medical Association pointed to an unintended consequence of this perverse incentive. “Physicians who do not comply with patient requests,” the authors wrote, “may be the recipients of poor ratings on patient satisfaction scores, possibly resulting in emotional, financial, and professional penalties.”

So imagine this. You are a doctor and your patient asks, maybe by name, for a prescription pain-killer. You may think the patient doesn’t really need it; you may, in fact, be worried they’ll abuse it, maybe even sell it. But if that consumer has the ability to punish you professionally … well, you might just write the scrip.

MAKARY: They respond to demands. They cope with their job by giving an angry patient what they want, not what they need, because they have to see five patients in an hour. I can tell you, emphatically, doctors are getting crushed out there. They’re getting crushed with record rates of burnout due to increasing overhead, higher malpractice premiums, declining pay, lowering Medicare reimbursement, being forced to see more patients in a single hour, corporate medicine.

On top of all that, Makary says, there’s a brutal paradox. Patient satisfaction is not a helpful metric when it comes to measuring health outcomes. Well, at least not helpful in the direction you might think it would be. A 2012 study found that the most satisfied patients had higher rates of hospitalization and higher mortality rates. Why? The authors suggest that more “satisfied” patients may request more discretionary treatments, which may increase the likelihood of adverse effects.

MAKARY: So, it’s a big problem. What’s important to a patient when they come to a doctor? The doctor’s patient satisfaction score? Well, that’s a piece of the doctor’s quality. But really what you’re interested in is the doctor’s judgment, and the doctor’s skill, and the doctor’s ability to empathize.

[MUSIC: Milan Grajetzki, “A Fistful of Soul” (from AtomTwist)]

Those are the sort of metrics, Marty Makary argues, that will help doctors treat patients better. So, coming up on Freakonomics Radio: now all you have to do is collect all the data on doctors’ judgment, skill, and empathy, right? But, again, not so easy — in part because of the sheer volume of that data …

MAKARY: We are doing more than we’ve ever done before. We are doing more procedures, giving more medications, hospitalizing more patients, diagnosing more things than we ever have in the history of medicine.

Also, why feedback for doctors is so important — especially for doctors who’ve been practicing a while.

JENA: What we find is that if you happen to be treated by a doctor who is 10 years or 15 years out of residency, your mortality within thirty days of being hospitalized is higher.

*      *      *

[MUSIC: Sonogram, “Wayfare” (from Wayfare)]

Marty Makary, the surgeon and health-policy scholar we’ve been speaking with, is a big advocate for medical reform. First step: improving the feedback loop. That is, what we know and, way too often, what we don’t know, about what actually works.

MAKARY: I think the number-one problem is we don’t measure performance. We don’t measure the outcomes of patients in healthcare for 99 percent of the health care that’s delivered.

Makary might be exaggerating a bit but still — how can this be? When you go in for medical treatment, don’t the health professionals who treat you find out if their intervention actually worked? The short answer is, often, no. But the longer answer is much worse.

The longer answer is that not only do medical interventions often not work; medical interventions will sometimes kill you. Marty Makary and a co-author, Michael Daniel, recently published a study arguing that the third-leading cause of death in the U.S., after heart disease and cancer, was … medical error. I’m going to say that again: the third-leading cause of death in the U.S., accounting for 10 percent of deaths annually, is medical error.

How can this be? Are doctors and nurses showing up for work stoned out of their skulls? Are they sneaking into hospital rooms at night and smothering their most annoying patients?  Are they surreptitiously removing healthy organs to sell them on the black market? If only! That would make the problem so much easier to solve. Why are so many deaths the result of medical error?

MAKARY: Well, I think anybody that practices medicine knows that medical errors are a function of the amount of things we do in healthcare.

“The amount of things,” meaning what?

MAKARY: We are doing more than we’ve ever done before. We are doing more procedures, giving more medications, hospitalizing more patients, diagnosing more things than we ever have in the history of medicine. Right here, today, in the United States. We have the most medicalized, the most diagnosed population in the history of the world.

In economic terms, you could say there’s both an oversupply and an over-demand of healthcare, since the supply and demand are both fueled by the setup of our healthcare-insurance system. Patients who buy expensive insurance want to get their money’s worth, and may over-consume, just as you might overconsume at an all-you-can-eat restaurant. And doctors who make money primarily when they do stuff may tend to do more stuff.

MAKARY: When we’re doing all of this stuff, it makes you wonder, does that mean we’re also making mistakes proportional to the amount of stuff we do?

Well, that sounds scary.

MAKARY: So first of all, I don’t want to scare people out there. Most doctors are doing the right thing and always will.

Alright, but how can it be that the people we entrust to heal us, the people who’ve worked their entire adult lives to learn how to heal us, may sometimes be killing us? To get to the answer, you first have to understand that for decades, we’ve been making a sort of clerical error.

[MUSIC: Another Cynthia, “3 Am” (from Another Cynthia)]

MAKARY: Our research found the methodological flaw in our country’s national health statistics. We use a billing code system to tally causes of death from death certificates. And people don’t just die from billing codes. They die from medical mistakes, communication breakdowns, overdoses, fragmented care, closed insurance networks, preventable complications, unnecessary treatments, and if you look collectively at this group of problems, let me call it “medical care gone wrong,” it’s got a significant burden in society.

But those complications and oversights and errors, Makary says, seldom wind up on the death certificate.

MAKARY: When you fill out the death certificate, you have to list the reason the patient died. Both the direct reason and the underlying reason a patient died. Well, we all knew what the real reason was, but you can’t put that on someone’s death certificate.

Why not?

MAKARY: When somebody experiences a fatal mistake — their heart stops and then you do CPR, then you pronounce them dead. What do you put on the death certificate when it says, “What was the cause of the patient’s immediate death?” That’s what really got us thinking and that’s what led to this study. Because you end up putting “cardiovascular arrest” and then it turns out what we put on the death certificates populates our country’s national health statistics. So when the government puts out every year, “these are the most common causes of death in the United States,” and by the way, that list is a big deal. That list informs all of our research funding, it informs all of our public health campaigns in America, that list is a big deal. You realize we’re misclassifying medical mistakes as other causes, and that medical mistakes don’t even show up on the list.

So Makary and his colleagues got hold of a mountain of data and started digging.

MAKARY: Well, we basically looked at the best available research on the topic from the New England Journal of Medicine and Health Affairs, and a big Medicare analysis, and something called the OIG report, it was a government report that was independent.

And what they’d find? Before I tell you that, let me tell you this. There’s a famous report, put out by the Institute of Medicine, in 1999, that set a benchmark for death by medical error. That report estimated there were between 44,000 and 98,000 deaths annually in the U.S. due to medical error.

Those are obviously large, and frightening, numbers — so large and frightening that I’ve heard many, many medical professionals insist those numbers had to be way too high. So … what number did Makary come up with? At least 250,000 deaths every year in the U.S. due to medical error. A quarter of a million people!

Before we get into the errors themselves, let’s think for just a minute about how the story of those deaths was hidden in the data. As we’ve noted throughout these three episodes on “Bad Medicine,” a lot of what we take as factual and empirical within medicine often isn’t very empirical at all. That includes how data from clinical trials are manipulated or misinterpreted. And, as Marty Makary argues, it includes how the cause of death is categorized.

That’s why he’s pushing for a fundamental reform: to require that doctors, when they fill out a death certificate, specifically indicate if a medical error was involved. Because how do you solve a problem if you don’t even acknowledge the problem? And with medical errors, the problem is both deep and broad.

JENA: Medical errors have a complex taxonomy.

That, again, is the Harvard doctor and economist Anupam Jena.

JENA: But for someone like me, I would just break them into two categories. There are errors of diagnosis and then there’s errors of commission, when a patient has surgery on the wrong leg or when a patient is given an antibiotic despite it being well-documented in the medical record that he or she has an allergy to that medication. Or when a patient receives a dose of insulin that is five times as much what it should have been because someone couldn’t read a doctor’s handwriting in the chart. There are errors that occur in the hospital because of poor hygiene and infectious-disease management where people get hospital acquired infections.

DUBNER: I’ve got to think that those errors of commission are extraordinarily rare though, yes?

JENA: Well, you would hope so but it turns out that they’re not. The Johns Hopkins study was actually more about those second set of errors.

DUBNER: So when I hear that, I as a potential patient, I say to myself, “Self, unless you are bleeding heavily or unconscious, just stay away from every doctor and certainly every hospital.”

JENA: Well hopefully if you’re unconscious you won’t be making that decision. Well, you know I think you also have to take a step further and say okay, when a diagnostic error occurs, what is the implication of that? Does it mean that the diagnosis is ultimately made later in a safe and effective way? Well, that’s much less alarming than if an incorrect diagnosis by a doctor leads to, let’s say, a biopsy that then causes longer-term problems.The only thing I would mention is that this is not just an issue of decisions that  are made by individuals. In fact, most of the thinking on this issue points to system-level problems that lead to diagnostic errors. 

[MUSIC: Interkosmos, “Tickticktock” (from Interkosmos)]

MAKARY: The problem is a system problem.

That’s Marty Makary again. Remember, here’s what Makary argued earlier:

MAKARY: I think the number-one problem is we don’t measure performance.

In other words: the medical system often fails to collect useful feedback.

MAKARY: Simple data, simple transparency.

Makary himself is a surgeon.

MAKARY: Ninety-nine percent of people that have surgery in the United States go home and no one documents or keeps track at a systematic level — that is, national or regional, or hospital — how the patient does. At six months, are you glad that you had your knee surgery done? At six months after hip surgery, are you walking again? Or a year after weight-loss surgery, what is your weight today? We don’t keep track of those things in health care for most of the procedures or treatments that we do. The problem is that how can you really come up with a quality metric if nobody’s tracking it?

This doesn’t mean doctors never check in with their patients. But the system simply isn’t designed to capture robust follow-up data.

MAKARY: Well, there’s a follow-up visit. You know, we’ll scribble some note. “Patient is doing well. Incision has healed nicely.” Who’s actually measuring the real patient-centered outcomes six months later? Or a year later? That is a giant opportunity in health care to fix the system by creating a marketplace centered around value, not just around quantity.

That, of course, would require incentives for doctors that reward preventive care and maintenance rather than just interventions. Makary points to a few areas of medical care where patient outcomes are well tracked.

MAKARY: But it’s only for a small sliver of medical care. It’s like heart surgery and cystic fibrosis outcomes.

In those cases, he says, money plays a big role.

MAKARY: It’s almost this hodgepodge of conditions where there’s been leaders and good funding or foundation support.

But absent good follow-up data, and absent good feedback in general, it’s hard to tell what works and what doesn’t. Of course this is true for anything, not just medicine. But with medicine, the stakes are high — and, if you’re the patient, the stakes are practically infinite. You are putting your life in someone’s care, and you only have one life (as far as we know).

Other choices might seem hard — which house to buy or how to invest your money, how to pick a career, or a college major. But if you’ve got a serious health concern, your choice of treatment, and doctor, is an existential choice. So, given a choice between two doctors, let’s say one fresh out of medical school and the other with fifteen years’ experience, which one do you go for?

JENA:  I think one question that any patient would have when they see a doctor is how much experience does my doctor have?

That’s Anupam Jena again. Most patients, he says, like the idea of a gray-haired physician.

JENA: Because the gray-haired physician has more experience; he’s seen more patients like me and he’s just going to take a better care of me.

That makes sense, doesn’t it?

JENA: But the challenge is that there has not been a lot of actual high-quality evidence to assess that issue.

So Jena and some colleagues set out to gather some evidence. But it wasn’t so simple as comparing patient outcomes for experienced doctors and newer doctors.

JENA: One problem that you’re going to run into is the notion that more experienced physicians will take care of sicker patients. So how do you get around that issue? The way that we’ve tried to get around it is to focus on a very specific group of doctors that are called hospitalists. Hospitalists are internal medicine doctors who focus on hospital-based care.

Jena is himself a hospitalist. Because of his research and teaching, he only sees patients for a month or two of each year; but he’s familiar with the hospitalist setup.

JENA: And the unique thing about these types of doctors is that they tend to work either shifts or scheduled work. For example I might work for two weeks and then my colleague is on for two weeks and then her colleague is on for two weeks.

DUBNER: Which is nice because we can isolate the effect of you, correct?

JENA: Exactly. So patients more or less end up getting quasi-randomized to physicians with different characteristics. So for example if you happen to get hospitalized in the first week of May, you may be treated by a group of doctors who on average have five years’ less experience than if you happen to get hospitalized in the second week of May. And we can basically see what happens if a patient happens to be treated by a doctor who is 20 years out of residency versus 5 years out of residency. And what we find is that if you happen to be treated by a doctor who is 10 years or 15 years out of residency, your mortality within thirty days of being hospitalized is higher.

Just to be clear, if you happen to draw a more-experienced doctor, you are more likely to die.

JENA: And so it does suggest that more experience actually could have a negative effect on outcome.

DUBNER: And what’s your best explanation for why that’s the case?

JENA: So I think the most likely explanation is two things. One is that the field of medicine is constantly evolving and there is always new knowledge, new evidence emerging both in terms of how to make better diagnoses and what are the right treatments for a particular patient. As you get further and further away from residency, I think what happens is that the knowledge that you had as a resident, which time that you spent 80 to 100 hours per week in a hospital, that knowledge gets somewhat ingrained in you. New knowledge isn’t picked up as rapidly. So I think what happens is older physicians are just less-up-to date, if you will. I’ll give you one caveat. We don’t see this effect among high-volume doctors — doctors who are seeing a lot of patients. So what that suggests that if you are an older doctor who is seeing a lot of patients, you are protected from this adverse effect. Which makes sense.

MAKARY: Unfortunately, some people come out of medical school or training thinking, “All right, I’ve mastered this body of knowledge or this skillset, and I’m good to go for the next 50 years of practice.”

Marty Makary again.

MAKARY: And the reality is, even as a tenured faculty at Johns Hopkins doing complex surgery in a group that does — you know, the four of us do the most pancreatic surgery of any group in the country — I’m still learning every day. And my senior, senior partner, who’s about to retire, he’s still learning the year before he stops operating every day. So, medicine is a career of learning. And I think the more feedback we can get, at any level.

That said, Anupam Jena’s research shows that surgeons are among the subset of physicians who do seem to improve with experience.


JENA: There’s a thought that muscle-scale experience in the surgical field over time improves outcomes, and we find that as well. But outside of surgery, when you’re thinking about the care of patients that requires a lot of cognitive skill and being up to date on current medications and diagnoses, we actually find that over time, older doctors do worse.

DUBNER: So someone like you — so, I don’t mean to turn this into an attack on you, but someone like you who a) medical school is getting further in the rear-view mirror as it is for every doctor, but additionally you’re only practicing for a couple of months out of the year, not full-time. So I would think that you are a downright danger to your patients. How is it that you’re not?

JENA: Haha! No comment. Well you know so usually when I work on service I am paired with someone who is a full-time clinician educator and there is a huge difference in the amount of knowledge.  And it’s very humbling to see that.

[MUSIC: Pat Andrews, “Difference in Me”]

Jena’s research looks specifically at physician experience as it relates to patient outcomes, but there’s another angle to consider when we talk about experience in the medical realm. Especially if you’re interested in reform. We have supposedly entered the era of evidence-based medicine. This is still relatively new ground.

PRASAD: The reality was that what we were practicing was something called eminence-based medicine.

That’s the physician and researcher Vinay Prasad.

PRASAD: It was where the preponderance of medical practice was driven by really charismatic and thoughtful, probably, to some degree, leaders in medicine. And you know, medical practice was based on bits and scraps of evidence, anecdotes, bias, preconceived notions, and probably a lot of psychological traps.

As outdated as that sounds now, keep in mind that a lot of our institutions including medical institutions are still “eminence-based.” Which is to say, in many institutions,  many big decisions were made by the highest-ranking people, who tend to have the most experience and people with a lot of experience tend to have fixed views on things. They’re attracted to the status quo, or some minor variation of it. Because that’s what they know; it’s what they trust and believe in.

Also, if you wanted to a bit uncharitable for a moment, we might argue the status quo is additionally appealing to senior people because well, because they’ve got theirs already. Their job, their status, their salary. And all that disruption that reformers like to talk about well, it’s messy. It’s time-consuming. It’s a pain in the neck. Like I said, that isn’t a charitable view, but I’m afraid it’s not wrong either. Change can be hard; uncertainty can be scary; true improvement can be elusive.

But one thing that’s so inspiring about all the people we’ve been speaking with for this series is how they embrace the notion that it’s okay to challenge the very institution that you’ve devoted your career to. In fact, with medicine, it’s a requirement.

I think back to something we heard from Philip Mackowiak, the doctor who unraveled the true story of 98.6:

PHILIP MACKOWIAK: As a medical historian, it is patently obvious to me that future generations will look at what we’re doing today and ask themselves “What was Grandpa thinking of when he did that and believed that? Look at us now how good we are. Why weren’t they that good?” And they’ll have to learn all over again that science is imperfect and to maintain a healthy skepticism about everything we believe and do in life in general, but in the medical profession in particular.

[MUSIC: Mark Van Overmeire, “Hsipaw” (from Impreciones)]

So what happens now? There’s a long list, and reasons to be excited. Marty Makary is particularly enthusiastic about new ideas for collecting better patient feedback.

MAKARY: Well, Washington state has a really neat program in select hospitals. After you have a certain operation, you get a text question. It says, “How functional are you after your surgery?” Here’s a scale from 1 to 5. “Are you glad that you had the procedure done? Do you feel that the alternatives were adequately explained to you before the procedure?” And those few questions populate a quality database and they keep track of outcomes. But that’s a rare thing in healthcare. We need to be doing that for every procedure in the United States. Everyone in the United States that has robotic surgery or a tonsillectomy or gallbladder removal or heart surgery or colon or whatever it is, should have some data that follows up and allows us to make conclusions about where we can do better, what’s working and what’s not working. You know, we just discovered — or rediscovered, if you will — that we don’t really need to treat appendicitis with surgery. You can come in with early appendicitis and we can give you antibiotics and it works more than 60 percent of the time. That’s cool, and we probably could have learned that if we had the right databases to look at those conclusions to say, “Hey, of those patients that refused surgery and we just gave them antibiotics for the last half century, how did they do?”

Makary says a lot of this change is being driven by players outside the medical establishment.

MAKARY: It’s happening, really, led by startup companies. The startup community in America is doing great things in healthcare and they’re starting to say, “Hey, can we track how well someone does after surgery? How was your experience? How was your outcome? How was the care you received after whatever procedure you had done?” With enough time and with enough patients, they’re going to actually be able to make conclusions about quality using firsthand patient data.

But given the complexities of medicine, Makary warns, we shouldn’t expect quick fixes.

MAKARY: First of all, it’s different in every area of medicine. If you’re a cardiologist or an OB or a psychiatrist, you can’t simply implement strategies to improve quality and standardize care in the same way. In my own field of surgery, we believe there’s something that can be done that’s called benchmarking. That is, we can see how we stand as a surgical group, as individual surgeons, relative to other surgeons in our region and nationally that take on similarly complex cases. That’s why we’ve proposed — and we have a grant to do this nationally — we want the doctors’ associations to come up with a metric of performance. We want to apply it to all the doctors in that specialty. And then we want to share the data with the doctors individually in a confidential, peer-to-peer, civil fashion. This is where you stand. This is where the rest of the country stands. We’re not making a judgment. We just want to share with you your data.

The point, Makary says, is improvement, not punishment.

MAKARY: As a matter of fact, firing people for making mistakes in hospitals is the absolute wrong approach. We need to learn from our mistakes, not send a message that if you have a concern or speak up or do a mistake we’re going to kick you out.

Doctors are already in a tough place, under attack from nearly every quarter — including, for these past few episodes, Freakonomics Radio. And the fear of making a mistake — or what may be construed as a mistake — is already so high that doctors practice way too much “defensive” medicine; that is, tests and procedures primarily meant to avoid a malpractice suit.

A 2010 study found that U.S. hospitals and doctors spent about $45 billion a year on defensive medicine. But if the present looks occasionally bleak, the good news is there’s plenty of optimism about the future of medicine — as we learned from the variety of clever and motivated people we’ve spoken to for this series.

WOODRUFF: Where science and medicine is going in the future is to more and more precision medicine, so that we can get closer to an autonomous and individualized diagnosis.

That’s Teresa Woodruff, a professor at Northwestern and director of the Women’s Health Research Institute.

WOODRUFF: When someone comes in with a cancer, there is a set of protocols, there is the way we treat, in general, populations, but we can’t tell the specific outcome for that individual. How will they tolerate that drug? Will it clear the circulation faster for one individual versus another — which means it might be more efficacious or less efficacious on an individual basis. Those are some of the precision medicine that eventually we have to get to.

DUBNER: So I promise not to hold you to the prediction I’m about to ask you to make, but in terms of precision medicine like you’re talking about whether it’s diagnostic, prescriptive, whatever it is I just want to know what kind of timeframe you see for that being a real practical everyday thing. Is it more like 2 to 20 years, or is it more like 50 to 100 years from now, somewhere in between or somewhere beyond?

WOODRUFF: I think science is becoming even more catalytic, so it’s going faster and faster and faster. Breakthroughs are coming about every day. And I suspect within the next 10 to 15 years we’ll really understand enough to get away from radiation and chemotherapy.  And that eventuality is the promise of basic science in medicine. And what that means is that every day as we discover more and more fundamental biology, about cells, or about animals, or about the way systems work, that translates into better and better medicines that ultimately will change the patient who is seen tomorrow versus the way the patient that’s seen today.

JEREMY GREENE: There’s a lot of promise right now that in the post-genomic world, some personalized medicine or precision medicine will allow us to do that much better.

Jeremy Greene, a physician and historian of medicine at Johns Hopkins.

GREENE: Although at present that’s still highly promissory except for a few very well circumscribed cases. Some people will or won’t respond to a certain drug for hypertension. You fish around you try one, you try another and then you find a cocktail that works for them. Other people will develop allergies to specific medicines. And then you’re constrained in ways that you hadn’t originally anticipated.

PRASAD: I think the game is going to be the same game, which is a game where, if we’re really honest, perhaps a lot of the low-hanging fruit in medicine has been plucked, some of the great interventions.

And that again is Vinay Prasad.

PRASAD: Now it’s a matter of sorting out interventions with medium to small benefits. But that’s okay, but with the medium and small benefit you really have to be sure that you can minimize bias. You can minimize the role of your own sort preconceived notions and that’s why we need careful, randomized studies.

But the biggest reason for optimism, Prasad argues, doesn’t have to do with better evidence, or better protocols, or better medicine, per se. It has to do with better thinking. And that, he says, is happening.

PRASAD: I see it everyday in medicine. I see it in movements like in the British Medical Journal’s really commitment to evidence to transparency, to data sharing. I see it in JAMA journal medicine’s commitment to knowing when more is harmful, when too much medicine is harmful, and that took many years for us to realize. I think we are increasingly allowing people with diverse points of view in medicine, contrarians, perhaps even like myself, to write articles in really important journals so they can be read and thought of by other people. So I think we’re at a moment where, you know we’re much more open to different ideas on how to move medicine forward.

[MUSIC: Brotherun, “Wishful Thinking” (from Brotherun)]

Here’s to moving forward! And here’s to your health, and even happiness, during the upcoming holidays. Thanks so much for listening to this three-parter on “Bad Medicine.”

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Stephanie Tam, with help from Arwa Gunja. Our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Greg Rosalsky, Alison Hockenberry, Emma MorgensternHarry Huggins and Brian Gutierrez. Special thanks to Andy Lanset at WNYC Archives. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Keith Wailoo, health policy historian at Princeton University
  • Anupam Jena, healthcare economist and physician at Harvard Medical School
  • Martin Makary, surgical director at Johns Hopkins Multidisciplinary Pancreas Clinic and health policy scholar at Johns Hopkins Bloomberg School of Public Health
  • Vinay Prasad, assistant professor of medicine at Oregon Health & Science University
  • Philip Mackowiakprofessor of medicine and medical historian at the University of Maryland
  • Teresa Woodruff, professor of obstetrics and gynecology and director of Women’s Health Research Institute at Northwestern University
  • Jeremy Greene, physician and historian of medicine at Johns Hopkins University

RESOURCES

ETC.

The post Bad Medicine, Part 3: Death by Diagnosis appeared first on Freakonomics.

December 11, 2016
Stephen Dubner prompts A.E. Kieren to explain exactly how hard it is to draw a certain part of the body. (Photo: Lucy Sutton)

Stephen Dubner prompts A.E. Kieren to explain exactly how hard it is to draw a certain part of the body. (Photo: Lucy Sutton)

During the Second World War, the U.S. Army recruited artists and art students to join a top-secret unit, the 23rd Headquarters Special Troops. The unit had a very specific — and unusual — mission: to create illusions that would distract the Germans from where the Allies were preparing to invade.

In one instance, the unit positioned hundreds of inflatable dummy tanks as if the U.S. were amassing a huge force, while giant speakers played recordings of rumbling tanks and soldiers building bridges. With these carefully planned deceptions, 1,100 men seemed like a battalion of 30,000. The group became known as the Ghost Army and its members included Ellsworth Kelly and Bill Blass, before they went on to their illustrious careers as an artist and fashion designer, respectively.

This week’s contestants try to fool the panelists with missing hands, missing bodies, missing scientific evidence. This week’s contestants try to fool the panelists: Hannibal Buress, comedian and host of Handsome RamblerAnnie Duke, professional poker player and decision-making expert; and Father James Martin, S.J., Jesuit priest and best-selling author.

Our “Real-Time Human Fact-Checker” is Negin Farsad, host of the podcast Fake the Nation and author of the book How to Make White People Laugh.

The post Fool Me Once: TMSIDK Episode 6 appeared first on Freakonomics.

December 7, 2016

Birth defects resulting from thalidomide led medical researchers to exclude women of child-bearing age from clinical trials. (Photo: AP/flickr)

Our latest Freakonomics Radio episode is called “Bad Medicine, Part 2: Drug Trials and Tribulations” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

How do so many ineffective and even dangerous drugs make it to market? One reason is that clinical trials are often run on “dream patients” who aren’t representative of a larger population. On the other hand, sometimes the only thing worse than being excluded from a drug trial is being included.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

In the mid-20th century, an exciting new drug hit the market.

TERESA WOODRUFF: It’s a small molecule that was produced in West Germany in the late 50s and early 60s.

It was a sedative, but not a barbiturate. So it wasn’t addictive, it didn’t clash with alcohol or other drugs and, according to its manufacturer, was entirely safe. They based this claim on the fact that no matter how much of it they fed the lab rats, the rats did not die. Once this new sleeping pill was made available, doctors discovered it did more than help people sleep.

WOODRUFF: It would combat for pregnant women morning sickness.

And so pregnant women all over the world were given the drug. It was called thalidomide.

WOODRUFF: The problem was the thalidomide would actually cross the placenta and impact the baby. And it would cause a whole series of malformations and probably a lot of fetal death.

Fetal deaths were thought to number at least 10,000. Among the babies who survived, there were serious birth defects:

WOODRUFF: Children that survived were deaf and blind, had a number of disabilities; they had shortened or lacked limbs.

Babies born with horribly malformed limbs, with missing or malfunctioning organs.  Because of the putatively super-safe drug their mothers took to prevent morning sickness. Thalidomide was on the market for roughly five years before it was banned. Its German manufacturer, Chemie Grünenthal, first denied the disastrous side effects before ultimately accepting blame. The history of medicine is full of tragic missteps. But thalidomide, coming as it did during a boom in global mass media, made more noise than most:

NEWS CLIP: The problem of tighter controls to prevent the distribution of dangerous drugs such as thalidomide is a matter of concern to the president at his news conference …

NEWS CLIP: Concern over the tragic effects of the new sedative thalidomide prompts President Kennedy …

NEWS CLIP: Already more than 7000 children have been born with some or all of their arms and legs missing … 

JOHN F. KENNEDY: Every doctor, every hospital, every nurse has been notified …

Although a few million thalidomide tablets had been distributed to doctors in the U.S. for trial use, it was never approved for sale here. That was thanks to a doctor at the Food and Drug Administration named Frances Oldham Kelsey. She didn’t believe the application from the American distributor offered complete and compelling evidence of the drug’s safety. President Kennedy later hailed Dr. Kelsey as a hero.

KENNEDY: The alert work of our Food and Drug Administration, in particular Francis Kelsey, prevented this particular drug from being distributed commercially in this country.

Even though the U.S. was an outlier in blocking thalidomide, the disaster had a number of lasting effects on American drug regulation. For one, the FDA established much more stringent rules for drug approval. It also rewrote the rules on what kind of people should be included in clinical trials.

WOODRUFF: Because of the effects on young women and on the fetus, it suggested that women shouldn’t be included in clinical trials because of the potential adverse events to the fetus.

Meaning: women were summarily excluded from early clinical trials for new drugs. On one level, this might make sense; it’s a protective impulse. But this impulse had a downside.

WOODRUFF: The study of women in general became part of the collateral damage of that pregnancy conversation. So there certainly are young women who are not pregnant who could be included in clinical trials and women in general could be included in clinical trials, to really understand some of the effects of drugs on their own health. And they were labeled as broadly vulnerable because of the potential to become pregnant. And I think that was part of a very rapid response to a very, very visible tragedy.

We see this all the time. Something terrible happens and we rush to introduce laws or regulations or just mores that respond to the terrible thing but, often, wind up overcorrecting. Think about the Three Mile Island nuclear-reactor accident in 1979. No one was killed, and the lasting health and environmental effects were negligible. But it was so frightening that it essentially killed off the nuclear-power expansion in the U.S. Even as other countries embraced nuclear as a relatively clean and safe way to make electricity — often using American technology, by the way — the U.S. retreated.

What’d we do instead? We burned more and more coal to make electricity. From an environmental and health perspective, coal is almost indisputably worse than nuclear. But that’s where the correction took us; that’s where the fear took us.

And the fear of another thalidomide took us to exclude most women from early-stage drug trials, and also to underrepresent women for a time in Phase 2 and 3 trials, even if the drug’s market included women. And, as you’ll hear today on Freakonomics Radio, that had some severe unintended consequences:

WOODRUFF: It’s just heartbreaking to know that so many women had to wake up in the morning and drive into the side of a mailbox because we didn’t have sex as one of the variables that we would study.

Also, when the only thing worse than being excluded from a medical trial was being included.

EVELYNN HAMMONDS: The use of vulnerable populations of African-Americans, people in prison, children in orphanages, vulnerable populations like these had been used for medical experimentation a fairly long time.

And: what happens when a new class of drugs comes to market with great clinical-trial results …

BEN GOLDACRE: But none of them have got evidence showing that they reduce your risk of heart attack or renal failure or any of the actual, real stuff that patients actually care about.

*      *      *

This is the second episode in a three-part series we’re calling “Bad Medicine.” It’s about the many ways in which the medical establishment — for all the obvious good they’ve done in the world — has also failed us. Last episode, we talked about how much we still don’t know, from a medical perspective, about the human body:

ANUPAM JENA: I would say maybe 30, 40 percent that we don’t know.

We talked about the fact that medicine hasn’t always been — and, often, still isn’t — as empirical as you might think.

VINAY PRASAD: You know, medical practice was based on bits and scraps of evidence, anecdotes, bias, preconceived notions, and probably a lot psychological traps.

We went over some of medicine’s greatest hits and its worst failures.

JEREMY GREENE: You take a sick person, slice open a vein, take a few pints of blood out of them …

On any list of medical failures, thalidomide is near the top. Although we should point out that long after it was found to have disastrous side effects on pregnant women, it’s had a productive renaissance. Thalidomide and its derivatives have been used to successfully treat leprosy, AIDS, and multiple myeloma. That said, its effect on pregnant women, as we heard, contributed to women being excluded from many drug trials. Thalidomide and another good-seeming drug that went bad, called DES.

WOODRUFF: Diethylstilbestrol, or DES, was manufactured in the early part of 1900s.

That’s Teresa Woodruff, who’s been telling us the thalidomide story.

WOODRUFF: I am the Watkins professor of obstetrics and gynecology at Northwestern University.

Woodruff also founded, and directs, the Women’s Health Research Institute at Northwestern. And she’s an advocate for something called oncofertility.

WOODRUFF: It’s a word that was coined only about 10 years ago. So what we did was to bring together both oncologists and fertility specialists. So many young people are surviving that initial diagnosis of cancer that we’ve really converted it over the last 20 years from a death sentence to a critical illness. Many of the young people will actually survive that initial diagnosis and live long lives. And so when they returned from that cancer experience many of them were sterilized by those same life-preserving treatments. And so we want to provide fertility options to both males and females. So we developed not only kind of the corridors of communication between oncology and fertility, but we also created new technologies that could provide new options for young women and for pediatric males and females.

So for Teresa Woodruff, as for many in the medical community, the future holds great promise. But so many decisions are informed by mistakes of the past. Like thalidomide and DES, which first became available in the 1930s.

WOODRUFF: So DES, it’s an estrogenic compound, was being prescribed to pregnant women to prevent miscarriage. Miscarriage was thought at the time medically to be caused at some level by low estrogen. And so supplying this estrogenic-like factor was thought to correct a really difficult problem.

DUBNER: Makes perfect sense. Was miscarriage in fact caused by an estrogen shortage?

WOODRUFF: It’s probably not. It’s multi-factorial. There may be some cases where low estrogen would have modest effect, but in general that’s not the case.

DES, as it turned out, wasn’t very effective in preventing miscarriage. Worse yet, it sometimes produced side effects that would become manifest only years later — in the offspring of women who’d taken DES. If affected boys and, especially, girls.

WOODRUFF: Well, the physicians just started reviewing the medical records of these young women who were now coming up with this very, very rare vaginal cancer. The onset of that disease is clearly estrogen-dependent and probably a very narrow window during pregnancy when estrogen would have that effect. You know, DES and Thalidomide are both tragedies, but it wasn’t that the physicians were going out trying to create an adverse problem for women who are pregnant. But as you look back across medicine, across science, we’re always learning.

In 1977, because of the tragic consequences of DES and thalidomide, the FDA made a big change. It recommended excluding from early clinical trials all “premenopausal females capable of becoming pregnant” unless they had life-threatening diseases. Which meant that many of the drugs that later came to market had been tested only on male subjects. Which could cause some real trouble for women.

WOODRUFF: A great example of this is the drug Ambien, which was just the latest of the large number of drugs that had adverse events in females.

Ambien is a sleeping pill whose main ingredient is a drug called zolpidem.  Americans love their sleeping pills — about 60 million prescriptions are written each year for roughly 9 million people. Some two-thirds of these medications contain zolpidem, which was approved by the FDA in 2007. But as it turned out, men and women metabolize the drug differently.

WOODRUFF: The drug maker actually have in the FDA filing the metabolism of this drug in males and females. And in fact knew that it cleared the circulation of males faster than it did females. But they only studied the efficacy on males, had no females in that efficacy study.

DUBNER: And when you say the clearance, it means how quickly the body is metabolizing, yes?

WOODRUFF: That’s right. How long that drug is available in the body.

DUBNER: Can you just explain that a little bit? Let’s say it’s a 150-pound male and a 150-pound female. I assume those will be different clearance rates. Can you explain why that is?

WOODRUFF: Right. It’s going to depend on individuals and so some drugs will go into the fat and will be available for longer, so how much fat exists and what kind of fat can take up some of the drugs. But probably the most important part of drug metabolism is the liver. And so males and females have different enzymes and different P450s that are on the liver. And so that can alter the way drugs get cleared. For example, women wake faster from sedation with anesthetics, so they recover much more slowly and have more reported pain events in hospital.

DUBNER: Talk for a few moments about the differences between females and males in medicine and/or medical science.

WOODRUFF: Well so I think one is hormones, and that’s what we often think about. Males have testosterone, and females have estrogen and progesterone. And so those hormones influence a lot of the biology of males and females in a very distinct and different way. But the fundamental way males and females differ is that every cell in a male’s body is XY and every female cell is XX. And the sex chromosomes actually also inform —  just like the other chromosomes within the cell — the overall function of that particular cell. And so understanding how chromosomal sex informs the biology of kidney cells or of eye cells or of muscle cells is really important. In addition there are anatomical differences between males and females. So heart size might differ, and that’s relevant to cardiovascular disease. And then the environment, the microbiome. We now know from a variety of studies that there is a sex to the gut microbiome that inhabits all of us.

DUBNER: So I would think therefore if I want to be a doctor or medical researcher, or running the FDA, or anywhere up and down the ladder, I would like to think that for the past 100 if not for the past 1000 years, I’ve been very careful to consider any treatment and how different people would accept it differently based on their biology.

WOODRUFF: Right, I think that’s the surprise to everyone. That, in fact, sex has not been a fundamental part of the way we look at biological systems. And at some level this is just the way biology has always been done, and then science keeps building on what was done in the past. And I think that’s the really critical question. Are there real adverse events that occur when you only use one sex? And the answer is: of course, yes. Something like eight out of the last ten drugs pulled from market by the FDA were because of this profound sex difference.

In the case of Ambien, the FDA was getting complaints for years from users who were sleepwalking, even sleep driving.

WOODRUFF: It’s just heartbreaking to know that so many women had to wake up in the morning — and they still got up — but they went out and drove into the side of a mailbox, because we didn’t have sex as part of one of the variables that we would study.

Eight hours after taking an Ambien, 10 to 15 percent of women still had enough zolpidem in their system to impair daily function, compared to 3 percent of men. The FDA’s ultimate recommendation: women should take a smaller dose than men. The federal government had acknowledged for years the problem of excluding women from medical trials. In 1993, Congress required that women be included in all late-stage clinical trials funded by the National Institutes of Health unless it was a drug taken only by men. But what that didn’t do …

WOODRUFF: What that didn’t do was include males and females in the animal studies and the cell studies that are the precursor to all — it’s the engine to all of medicine.

Meaning: drugs that might be useful for women, but not for men, might not even get to the earliest stages of testing.

WOODRUFF: It wasn’t that they were thinking, “Well, let’s make it hard on women to have this drug down the line.” I think they were thinking of trying to do the most clean study they could imagine. And the study group that they imagined were the simplest were the males.

Males were considered “simple” because they don’t have menstrual cycles that change hormone levels; they don’t get pregnant; they don’t go through menopause. As one researcher puts it, studying only men “reduces variability, and makes it easier to detect the effect that you’re studying.” But ultimately, the exclusion of women was deemed inappropriate. In 2014, the NIH spent $10 billion to include more women in studies, and in 2016, they decreed that all studies had to include sex as part of the equation:

WOODRUFF: And that date January 25, 2016 — to me there is a before and there is an after. And before that time, sex wasn’t a variable in the way time or temperature or dose has always been. And I think we’re going to see an enormous number of new discoveries simply because science now has an entirely new toolbox to work with.

So that’s progress. But, as we’ll hear later, drug companies still like to use very narrow populations for their drug trials — the better to prove efficacy, of course. So exclusion still exists. On the other hand, it wasn’t so long ago that exclusion from a certain kind of medical trial would have been a blessing.

HAMMONDS: The use of vulnerable populations — of African-Americans, people in prison, children in orphanages, vulnerable populations like these  had been used for medical experimentation a fairly long time.

That’s Evelynn Hammonds, a professor of the history of science and African-American studies at Harvard. And this is Keith Wailoo, an historian at Princeton.

WAILOO: You see it in the era when the birth-control pill is  being tested in Puerto Rico in the 1950s, and you see it in things like, the Tuskegee syphilis study, which extended from the 30s into the 1970s.

The Tuskegee Study of Untreated Syphilis in the Negro Male,” as it was called,  is one of the most infamous cases in U.S. medical history. Its goal was …

WAILOO: …  trying to understand the long-term effects of venereal disease as it developed through its various stages. And the study was being conducted on a group of really poor African-American men.

HAMMONDS: White government doctors working for the U.S. public-health service found approximately 400 African-American men presumed to all have syphilis.

WAILOO: The problems emerge after penicillin is discovered and more widely used. And the question that should’ve been asked is now that we have a series of effective treatments for venereal disease, ought we to continue a study of untreated syphilis, or ought we to provide treatment?

So even though a syphilis treatment became available, it was withheld from the men in the study. Put aside for a moment the short-term elements of this maneuver — the cruelty, the ethical failure. Consider the long-term implications: what happens when one segment of the population is so willfully exploited by the mainstream medical establishment? Well, that part of the population might develop a deep mistrust of said establishment.

A recent study by two economists, found that the Tuskegee revelation seriously diminished African-Americans’ participation in the healthcare system. They were simply less willing to go to a doctor or a hospital. The result? A decrease in male African-American life expectancy of about 1.4 years. Which, at the time, accounted for roughly one-third of the life-expectancy gap between blacks and whites. Coming up on Freakonomics Radio: with such a fraught history of inclusion and exclusion in medical studies, who does end up in clinical trials?

GOLDACRE: When you look at the evidence, what you often find is that trials are often conducted in absolutely perfect dream patients.

Also: how good are the new drugs that typically make it to market?

PRASAD:  I think if we’re honest with ourselves, we’ll have to admit that the majority of new cancer drugs offer sort of very small gains at tremendous prices.

And: what happens if you write about conflicts of interest among oncology researchers, and then you go to an oncology conference?

PRASAD: I always wear a bulletproof vest.

*      *      *

My name is Stephen Dubner. This is Freakonomics Radio, and this is the second of a three-part series we’re calling “Bad Medicine.” We don’t mean to be ungrateful for the many marvels that medicine has bestowed upon us; nor do we mean to pile on, or to point out the avalanche of obvious flaws and perverse incentives — but, well, it’s just so easy.

PRASAD: Doctors do something for decades and it’s widely done, it’s widely believed to be beneficial and then one day, a very seminal study contradicts that practice.

That’s Vinay Prasad. He’s an oncologist and an assistant professor of medicine at Oregon Health and Science University. He also co-authored a book about what are called medical reversals — when an established treatment is overturned. Which happens how often?

PRASAD: It’s widespread, and it’s resoundingly contradicted. It isn’t just that it had side effects we didn’t think about, it was that the benefits that we had postulated, turned out to be not true or not present.

How can it be that so many smart, motivated people — physicians and medical researchers — come up with so many treatments that go all the way through the approval process and then turn out to be ineffective, or even harmful? A lot of it simply comes down to the incentives.

PRASAD: So much of the research agenda, even the randomized-trial research agenda, is driven by the biopharmaceutical industry. And that’s not necessarily a bad thing. I think there’s many good things about that, that really drives many, many trials; it drives a lot of good products. It also drives a lot of marginal products, or products that don’t work. And the people who designed those trials are I think very clever. You can sort of tilt the playing field a little bit to favor your drug and the incentive to do so is often tremendous — billions of dollars hinge on one of these pivotal trials. And to some degree that’s because it’s a human pursuit. But to some degree we could have policy changes that could more align the medical research agenda with  what really matters to patients and doctors.

DUBNER: Let me ask you: in your own field, in oncology and in the particular cancers that you treat, how much more effective generally would you say the new cancer drugs are, than the ones that they are replacing or augmenting?

PRASAD: Let me say that there are a few cancer drugs that have come out in the last two decades that are really wonderful drugs, great drugs. One drug came out of work here, in the Oregon Health and Science University, by Dr. Druker, Gleevec, and that’s a drug that transformed a condition where maybe 50 or 60 percent of people are alive at three years to one where people more or less have a normal life expectancy. So that’s a really wonderful drug. But I think if we’re honest with ourselves, we’ll have to admit that the majority of new cancer drugs are marginal, that they offer sort of very small gains at tremendous prices, and to give you an example of that, among 71 drugs approved for the solid cancers, the median improvement in overall survival or how long people lived was just 2.1 months. And those drugs routinely cost over $100,000 per year of treatment or course of treatment.

DUBNER: But that points to one of the tricks that works so well — which is if it’s 2.1 months extra, and if the expected lifespan was, just let’s pretend for a moment, it was six months, then on a percentage basis that’s a massive improvement. So as the patient or as the pharma representative, I’m not talking about that length of time — which might be lived under physical duress and financial duress — but rather I’m thinking about goodness gracious, 33 percent life expectancy extension!

PRASAD: Right, a new drug improves lifespan 33 percent longer.

DUBNER: And who doesn’t want that, especially when you’re sitting there with your loved one in a horrible situation, facing the end?

PRASAD: The other thing that I’d point out is, those 2.1 months, these clinical trials that are often conducted by the biopharmaceutical industry, they really choose sort of the healthiest patient, the people who are the fittest of the patients. On average, the age is almost 10 years younger in pivotal trials for the FDA drug approval than in the real world. And then when you start to extrapolate drugs that have real side effects in very carefully selected populations, and small benefits, in carefully selected populations, to the average patient that walks into my clinic, who is older, who has other problems, who is taking heart medicine. There was a paper that came out about one of those costly expensive drugs for liver cancer, and in the pivotal trial it had the benefit of about two, three months, something like that. But in the real world, in the Medicare data set, it had no improvement in survival over just giving somebody good nursing care and good supportive care. And I think that’s the reality for many of these marginal drugs, when you actually use them in the real world, they start to not work so well, and maybe not work at all.

DUBNER: You’ve written and spoken about cronyism and conflicts of interest between drug makers and the doctors who prescribe drugs. I’m curious what happens when you go to an oncology conference. Are you an unpopular person there?

PRASAD: Stephen, I always wear a bulletproof vest when I go. No, but this has really been sort of the way medicine has operated for many years. To some degree, practicing doctors in the community having ties to the drug makers — that’s one thing — but increasingly, we see that the leaders in the field, the ones who design the clinical trials, who write up the manuscripts, who write the review articles, who sort of guide everyone in how to practice in those fields, they have heavy financial ties to drug makers. And there’s a large body of evidence suggesting that biases the literature of towards finding benefits, where benefits may not exist, towards more favorable cost-effective analyses when drugs are really not cost-effective. It’s a bias.

LISA BERO: Yes, well, we have a great deal of empirical data showing that funding sources and author financial conflicts of interest are associated with over-optimistic data.

That’s Lisa Bero. She’s a professor of medicine. She’s also co-chair of the Cochrane Collaboration, a global consortium of medical professionals and statisticians. Cochrane promotes evidence-based medicine by performing systematic reviews of medical research.

BERO: And in fact we have a Cochrane review on this very question. And this finding shows that if a drug study is funded by a pharmaceutical company whose drug is being examined, they’re much more likely to find that the drug is effective or safe.

How much more likely?

BERO: It’s about thirty percent.

Did you catch that? An industry-funded study is thirty percent more likely to find the drug is effective and safe than a study with non-industry funding.

BERO: And they’re likely to find this even if they control for other biases in the study. So by that what I mean, it could be a really well-done study, it could be randomized, it could be blinded, but if it’s industry-funded it’s still more likely to find that the drug works.

But if a study is well-done, how can the results be so skewed?

BERO: So it’s everything from, I mean, the question they’re actually asking, to how they frame the question, the comparators they use, how they design the study, how it’s conducted behind the scenes.

GOLDACRE: Trials are very often flawed by design in such a way that they are no longer the gold standard, no longer a fair test of which treatment is best.

That’s Ben Goldacre.

GOLDACRE: I’m an academic in Oxford working in evidence-based medicine, and I also write books about how people misuse statistics.

He’s also a doctor.

GOLDACRE: Yeah, that’s right. So I qualified in medicine in 2000, and I’ve been seeing patients on and off in the NHS for the past 15 years now.

One of Goldacre’s books is called Bad Pharma. He echoes what Vinay Prasad was telling us about the people who are chosen for clinical trials.

GOLDACRE: When you look at the evidence, what you’ll often find is that trials are often conducted in absolutely perfect dream patients. People who are, by definition, much more likely to get better quickly. Now that’s very useful for a company that are trying to make their treatment look like it’s effective. But actually, for my real-world treatment decisions, that kind of evidence can be really very uninformative.

Imagine you’re a doctor who’s treating a patient with asthma. Not hard at all to imagine:

GOLDACRE: Now asthma is obviously a very common condition, it’s about one in 12 adults.

With such strong demand for asthma treatment, there’s been a bountiful supply from drug makers, with dozens of clinical trials. A 2007 review of these studies looked at the characteristics of real-world asthma patients and how they compared to the people who’d been included in the trials.

GOLDACRE: They said, “OK, let’s have a look and see, on average, what proportion of those real-world asthma patients would have been eligible to participate in the randomized trials that are used to create the treatment guidelines which are then in turn used to make treatment decisions for those asthma patients. And the answer was, overall, on average, six percent. So 94 percent of everyday real-world patients with asthma would have been completely ineligible to participate in the trials used to make decisions about those very patients.

Of course it isn’t only with asthma patients where this happens.

GOLDACRE: It’s very common for randomized trials of antidepressants, for example, to reject people if they drink alcohol. Now that sounds superficially sensible. But actually I can tell you as somebody who has prescribed antidepressants to patients in everyday clinical practice, it’s almost unheard of  to have somebody who is depressed and warrants antidepressants who doesn’t also drink alcohol. So you need trials to be done in people who are like people who you actually treat.

If you look at the overall efficacy rate of most antidepressants, you’ll find it to be very, very low, if there’s any efficacy at all. And of course there’s the opportunity cost to consider:

GOLDACRE: Because you tend to prescribe one antidepressant at a time.

Which means while a patient is on one drug that may not be working, they can’t try another that might. Plus which, there are the side effects to consider. So a lot of drugs that look great on paper don’t do very well in the real world. Why? Part of it is what Ben Goldacre and Vinay Prasad were talking about — cherry-picking subjects for clinical trials. But Goldacre says there are plenty of other ways to manipulate trial numbers in the drug maker’s favor. What do you do, for instance, when research subjects quit a trial because of the treatment’s side effects?

GOLDACRE: What you see is people inappropriately using a statistical technique like Last-Observation-Carried-Forward to account for missing data from patients who dropped out of a study because of side effects.

“Last-Observation-Carried-Forward” is a statistical extrapolation — pretty much what it sounds like, and worth looking up if you’re interested in that kind of thing. You can see how an inappropriate use of such a technique would tilt things in the drug maker’s favor.

There’s also the widespread use of what are called surrogate outcomes, as opposed to real-world outcomes. Consider many of the drugs recently approved by the FDA to treat diabetes.

GOLDACRE: All of those drugs have been approved onto the market with only evidence showing that they improve your blood sugar. But none of them have got evidence showing that they reduce your risk of heart attack or renal failure or eye problems or any of the actual, real stuff that patients with diabetes care about.

Since all of those outcomes would be hard to test for in a clinical trial — and by “hard,” what I really mean is time-consuming and expensive — instead the researchers go for the simple surrogate outcome of whether their pill lowers blood sugar.

GOLDACRE: But actually it’s not correlated as well as you might hope. And the history of medicine is absolutely littered with examples of where we have been given false reassurance by a treatment having a good impact on a surrogate outcome, a laboratory measure, and then discovering that actually it had completely the opposite effect on real-world outcomes.

As in the case of the infamous CAST trial that we covered in Part 1 of this series, in which the drug that suppressed aberrant heart rhythms actually worsened survival outcomes. Now, we should point out that Ben Goldacre — and everyone we’ve been speaking with for our “Bad Medicine” episodes — fully appreciates that medicine is science and that failure is part of science. The human body is an extremely complex organism, with lots to go wrong. Diagnosing and treating even a simple problem can be very difficult. It’s easy to take potshots from the sideline at good ideas that went bad; it’s even easier to criticize pharmaceutical companies who seem much more intent on making money than on making good medicines.

But, as Goldacre points out, those companies are simply responding to the incentives that are placed before them. Incentives that don’t necessarily encourage them to do the right thing. Goldacre points to a massive eight-year study, called the ALLHAT trial, in which academic researchers compared various drugs, from a number of drug makers, that were intended to lower blood pressure and cholesterol. Two of these drugs were made by the American pharmaceutical company Pfizer.

GOLDACRE: Pfizer came along and they said, “Look, we’ve got this fantastic new blood-pressure-lowering drug, and we’ve got various grounds for believing it’s going to be better than old-fashioned blood-pressure-lowering drugs, but at the moment all we can tell you is that it’s roughly as good at lowering blood pressure.”

So Pfizer asked the ALLHAT researchers to test whether their drug actually reduced the real-world outcomes that really matter: heart attack, stroke, and death.

GOLDACRE: So the researchers said what all academic researchers have said to drug companies since the dawn of time, which was, “Thank you very much, that sounds like a fabulous idea, that will be about $175M please.”

Actually, Goldacre misspoke — it was only $125 million, and Pfizer’s share was just $40 million but still — $40 million!

GOLDACRE: And it’s so expensive simply because measuring real-world outcomes like that, especially before the era of electronic health records, was extraordinarily expensive.

So Pfizer pays in, and the trial begins.

GOLDACRE: It was timetabled to run for a very, very long time — many, many, many years. But it  was stopped early because the Pfizer treatment, which was just as good at lowering blood pressure, was so much worse at preventing heart attack, stroke, and death that it was regarded as unethical to continue to exposing patients to it.

The Pfizer drug we’re talking about was called Cardura. So where does Pfizer come out in all this?

GOLDACRE: It’s really important, I think, to recognize that Pfizer did nothing wrong here. Pfizer did exactly what we would hope all companies should do. They didn’t just say, “Oh, that’s fine, we’ve got some surrogate end-point data, we’ve got laboratory data showing it lowers blood pressure and that’s all we need.” Instead, they went out and they did the right thing. They exposed themselves to a fair test. They said, “We want to see if this treatment improves real-world outcomes that matter to patients” — heart attack, stroke and death — and they were unlucky. And it flopped.

The real problem, Goldacre says, is when drugs aren’t subjected to the real-world test.

GOLDACRE: The real bad guys here are the people who continue to accept weak surrogate end-point data. Like, for example, on the new diabetes drugs. It may well be that they lower the laboratory measure on a blood test but that doesn’t necessarily mean that they reduce your risk of heart attack, stroke, and death. And to find that out, we need to do proper randomized trials, which are admittedly longer and more expensive.

But there’s yet another problem. What happens if a proper randomized trial doesn’t show the efficacy a drug-maker was hoping to show? Well, there’s a good chance the world will never know about it, because of …

CHALMERS: Publication bias.

Iain Chalmers, a co-founder of the Cochrane Collaboration, is a major player in the evidence-based medicine movement.

CHALMERS: About half of the clinical trials that are done never see the light of day. They don’t get published. Isn’t that outrageous?

Which trials do get published?

CHALMERS: Trials that show results that are so-called “statistically significant” are more  likely to get published than those that don’t have those results.

Now, you might think: Well yes, it makes sense to publish trials where a medicine seems to work; and if it doesn’t seem to work, why is that important to publish? Ben Goldacre again:

GOLDACRE: So if you cherry-pick the results, if you only publish or promote the results of trials which show your favored treatments in a good light, then you can exaggerate the apparent benefits of that treatment.

As Chalmers tells us, there are all kinds of reasons why the results of an unsuccessful trial might not get published.

CHALMERS: It may threaten a commercial enterprise’s interests to publish a trial which is disappointing. It may be something which someone who has had a favorite hypothesis and been known for writing and speaking about it for years finds out that the first really good study to test the hypothesis doesn’t find any support for it. There’s laziness.

GOLDACRE: And that’s the real scandal here, is that you are allowed to legally withhold the results of these trials, and so people do. The results of trials are routinely and legally withheld, from doctors, researchers, and patients. The people who need this information the most. That is a systematic, structural failure.

The structure, that is, imposed by government regulators, by funding sources, by the markets themselves. All of which can be very hard to change. So: how does Ben Goldacre see the situation improving?

GOLDACRE: We’ve set up something called the AllTrials Campaign a couple years ago.  And the AllTrials Campaign is a global campaign to try and stop this problem from happening. So asking companies, research institutes, academic and medical professional bodies, patient groups, and all of the rest to sign up and to say all trials should be registered, so you publicly post on a publicly accessible register the fact that you’ve started a trial. Because that means we know which trials are actually happening, so we can see if some of them aren’t being published.

The AllTrials Campaign also urges the publication of what’s called a clinical study report:

GOLDACRE: And a clinical study report is a very long, very detailed document — hundreds, sometimes thousands of pages long, that describes in great detail the design of the study and the results of the study. And that’s really important because often a trial can be flawed by design in a way that is sufficiently technical that it is glossed over in the brief report that you get in an academic journal article about a trial. And those flaws can only be seen in the full-length clinical study report.

There’s also a growing momentum to curb conflicts of interest in medical research.

BERO: Well, I think we’ve already had great improvements in transparency and what’s really pushed the disclosure of funding sources has been the journals.

That’s Lisa Bero again, from the Cochrane Collaboration.

BERO: So if you publish something, you are required to disclose the funding source. And you know this is still not 100 percent enforced but it’s getting pretty close.

On the other hand, Bero says, a given researcher or investigator may have undisclosed biases or conflicts of interest.

BERO: And one sort of loophole is that the investigator themselves have to decide if something is relevant to the particular study. So they may say, “Well, I just don’t think it’s relevant.”

There’s another quirk in the medical industry that probably doesn’t serve the public good:

BERO: Drug companies evaluate their own products, whereas in software you usually get somebody external to check the quality of your project. Engineers get people to do the earthquake checks for them, who are independent from the people who built the bridge. So it’s a very odd system that we have, where the companies with an interest or stand to gain financially from testing the product are testing it themselves. So I think we need to change that.

And finally, there are the doctors themselves — the endpoint in this complicated, conflicted infrastructure that’s meant to deliver better medicine. Ben Goldacre — the gadfly physician who knows so much about bad pharma and bad medicine — acknowledges the entire system is due for reform.

GOLDACRE: And it’s a structural failure that persists because of inaction by regulators, by policy makers, by doctors and researchers, as much as because of industry, and none of us can let ourselves off the hook.

So next time on Freakonomics Radio, in our third and final episode of “Bad Medicine” — what’s a doctor to do?

WAILOO: I see the opioid story as part of the recurring sense of hope and despair associated with these drugs that are supposed to solve problems, but they end up being problems in themselves.

What to do about the troubling finding that more experienced doctors have worse outcomes than young doctors:

DUBNER: So I would think that you are a downright danger to your patients. How is it that you’re not?

JENA: Haha! No comment.

And finally — yes, finally — lots of reasons to be optimistic, at least cautiously so, about the future of medicine:

WOODRUFF: Where science and medicine is going in the future is to more and more precision medicine, so that we can get closer to an autonomous and individualized diagnosis.

That’s next time, on Freakonomics Radio.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Stephanie Tam, with help from Arwa Gunja. Our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Greg Rosalsky, Alison Hockenberry, Emma MorgensternHarry Huggins and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Teresa Woodruff, professor of obstetrics and gynecology and director of Women’s Health Research Institute at Northwestern University
  • Evelynn Hammonds, professor of the history of science and African-American studies at Harvard University
  • Keith Wailoo, health policy historian at Princeton University
  • Vinay Prasad, assistant professor of medicine at Oregon Health & Science University
  • Ben Goldacre, physician and senior clinical research fellow at University of Oxford
  • Lisa Bero, pharmacologist and co-chair of the Cochrane Collaboration
  • Sir Iain Chalmers, co-founder of the Cochrane Collaboration

RESOURCES

ETC.

MUSIC CREDITS

  • Rudy Pusateri, “Hot Springy Bass”
  • Jack Miele, “Otis Theme” (from Jack Miele)
  • Little Invisibles, “Headrush”
  • Blindfold, “Ambiharmina” (from Blindfold)
  • Jetty Rae, “Take Me To The Mountain” (from Jetty Rae)
  • Mike Barresi, “It’s All Good” (from All of Me)
  • Kero One, “When the Sunshine Comes” (from When the Sunshine Comes)
  • Jetty Rae, “Still Gotta Fight It” (from Jetty Rae)
  • Debbie Miller, “It’s Been a Day” (from Measures and Weights)
  • Beckah Shae, “Me First” (from Champions)

The post Bad Medicine, Part 2: (Drug) Trials and Tribulations appeared first on Freakonomics.

December 4, 2016
09_22_21-1

Panelists Austan Goolsbee and Angela Duckworth consult with contestants during the Wheel of Maximum Danger round. (Photo: Lucy Sutton)

A study of Roomba owners by the Georgia Institute of Technology in 2009 found that at least a few people considered their appliances to be as close as family members. Effects like light, motion and especially sound can lead us to sympathize with an appliance as mundane as a vacuum. That means that product designers are not just focused on how your appliances work; they make deliberate design choices to amplify the consumer’s emotional connection to a hunk of plastic.

But can a robot inspire passion?

The panelists for our “Passion Plays” episode are: Angela Duckworth, author of Grit: The Power of Passion and Perseverance, who interned alongside the most famous intern in our country’s political history (and also appeared on an episode of Freakonomics Radio called “How to Get More Grit in Your Life“); Austan Goolsbee, economist at the University of Chicago and former White House economist, who collects movie ticket stubs; and Keisha Zollar, actor, comedian, host of the “Applying It Liberally,” who is the proud owner of a semicolon.

Our “Real-Time Human Fact-Checker” is Negin Farsad, host of the podcast “Fake the Nation” and the author of “How to Make White People Laugh.

Also on this week’s episode: a beer recipe to bring on a desert island, some particularly uncomfortable sounds and a career that lacks female participation (besides the presidency).

The post Passion Plays: TMSIDK Episode 5 appeared first on Freakonomics.

November 30, 2016

We think modern medicine is pretty advanced, but what if we’re wrong about something as simple as the average body temperature? (Photo: The College of Physicians of Philadelphia)

Our latest Freakonomics Radio episode is called “Bad Medicine, Part 1: The Story of 98.6.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

We tend to think of medicine as a science, but for most of human history it has been scientific-ish at best. In the first episode of a three-part series, we look at the grotesque mistakes produced by centuries of trial-and-error, and ask whether the new era of evidence-based medicine is the solution.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

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We begin with the story of 98.6. You know the number, right? It’s one of the most famous numbers there is. Because the body temperature of a healthy human being is 98.6 degrees Fahrenheit. Isn’t it?

ANUPAM JENA: So, now I’m going to take your temperature, if you don’t mind just open your mouth and I’ll insert the thermometer.

PATIENT: Ah!

JENA: Perfect.

The story of 98.6 …

PHILIP MACKOWIAK: … dates back to a physician by the name of Carl Wunderlich.

This was in the mid-1800s. Wunderlich was medical director of the hospital at Leipzig University. In that capacity, he …

MACKOWIAK: Oversaw the care and the taking the vital signs on some 25,000 patients.

Pretty big data set, yes? Twenty-five thousand patients! And what did Wunderlich determine?

MACKOWIAK: He determined that the average temperature of the normal human being was 98.6 degrees Fahrenheit or 37 degrees centigrade.

This is Philip Mackowiak, a professor of medicine and a medical historian at the University of Maryland.

MACKOWIAK: Well, I’m an internist by trade and an infectious-disease specialist by sub-specialty. So my bread and butter is fever.

There’s one more thing Mackowiak is …

MACKOWIAK:  I am by nature a skeptic. And it occurred to me very early in my career  that this idea that 98.6 was normal and then if you didn’t have a temperature of 98.6 you were somehow abnormal just didn’t sit right.

Philip Mackowiak, you have to understand, cares a lot about what is called clinical thermometry. And if you care a lot about clinical thermometry, you care a lot about the thermometer that Carl Wunderlich used to establish 98.6.

MACKOWIAK: His thermometer is an amazing key to this story of 98.6 .

So you can imagine how excited Mackowiak was when, on a tour of the weird and wonderful Mutter Museum in Philadelphia, the curator told him they had one of Wunderlich’s original thermometers.

MACKOWIAK: I said: “Good heavens, may I see it?” And she said: “Sure, would you like to borrow it?” And I said: “Of course!” And so I was able to take this thermometer back to Baltimore and do a number of experiments.

The Wunderlich thermometer, Mackowiak realized, was not at all a typical thermometer.

MACKOWIAK: First of all, it was about a foot long, fairly thick stem and it registered almost two degrees Centigrade higher than current thermometers or thermometers of that era.

Two degrees higher — centigrade? Uh oh!

MACKOWIAK: In addition to that, it is a non-registering thermometer, which means that it has to be read while it’s in place. So it would have been awkward to use.

Mackowiak noticed something else about the original Wunderlich research.

MACKOWIAK: Investigating further it became apparent that he was not measuring temperatures either in the mouth or the rectum. He was measuring axillary or armpit temperatures and so that in many, many ways his results are not applicable to temperatures that are taken using current thermometers and current techniques.

As it turns out, the esteemed Dr. Carl Wunderlich …

MACKOWIAK: … was not the most careful investigator ever to come on the scene.

The more Mackowiak looked into the Wunderlich data, and how the story of 98.6 came to be, the more he wondered about its accuracy. So he set up his own body-temperature study. He recruited healthy volunteers, male and female, and took their temperature one to four times a day, around the clock for about two days, using a well-calibrated digital thermometer in the patients’ mouths. What did he find?

MACKOWIAK: Of the total number of temperatures that were taken, only 8 percent were actually 98.6. And so if you believe that 98.6 is the normal temperature, then 92 percent of the time the temperature was abnormal. Obviously that’s not even reasonable.

In his study, Mackowiak found the actual “normal” temperature to be 98.2 degrees. Not a huge difference — and yet, the whole notion of a “normal” body temperature was looking more and more suspect. Why? A lot of reasons. Temperature varies from person to person, sometimes so much that one person’s normal would nearly register as nearly feverish for another person.

MACKOWIAK: It’s almost like a fingerprint.

Temperature varies throughout the day — it’s roughly one degree higher at night than in the morning, sometimes even more. And an elevated temperature isn’t necessarily a sign of illness:

MACKOWIAK: In women it goes up with ovulation, during the menstrual cycle. The temperature goes up during vigorous exercise and this is not a fever.

And so, Mackowiak concluded …

MACKOWIAK: Looking at a rise in temperature as a reliable sign of infection or disease is inappropriately simplistic thinking.

Inappropriately simplistic thinking. It makes you wonder: if the medical establishment believed for so long in an inappropriately simplistic story about something as basic as normal body temperature — what else have they fallen for? What other mistakes have they made? I hope you’ve got some time; it’s a long list:

JEREMY GREENE: You take a sick person, slice open a vein, take a few pints of blood out of them …

JENA: Drilling holes into people’s skulls.

VINAY PRASAD:  It was literally taking someone to hell and back.

TERESA WOODRUFF: It would cause a whole series of malformations and probably a lot of fetal death.

JENA: Lobotomies.

KEITH WAILOO: The overuse of a mercury compound.

EVELYNN HAMMONDS: The Tuskegee case.

WAILOO: Losing your teeth and having your gums bleed.

WOODRUFF: DES and Thalidomide.

PRASAD: We use sort of a cement.

WOODRUFF: Hormone replacement therapy.

WAILOO:  The Oxycontin and opioid problem.

MACKOWIAK: As a medical historian, it is patently obvious to me that future generations will look at what we’re doing today and ask themselves, “What was Grandpa thinking of when he did that and believed that?” And they’ll have to learn all over again that science is imperfect and to maintain a healthy skepticism about everything we believe and do in life in general, but in the medical profession in particular.

On today’s show: Part 1 of a special three-part series of Freakonomics Radio. We’ll be talking about the new era of personalized medicine; the growing reliance on evidence-based medicine; and especially — pay attention now, I’m going to use a technical term — we’ll be talking about bad medicine.

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We have a lot of ground to cover in these three episodes: medicine’s greatest hits, the biggest failures, where we are now and where we’re headed. In the interest of not turning a three-part series about bad medicine into a twenty-part series, we’re not even going to touch adjacent fields like nutrition and psychiatry. Maybe another time. Let’s start, very briefly, at the beginning.

Nearly 2,500 years ago, you had the Greek physician Hippocrates, who’s still called the “father of modern medicine.” You’ve heard, of course, of the Hippocratic Oath, the creed recited by new doctors. And you know the Oath’s famous phrase — “First, do no harm.” Even though, as it turns out, that phrase isn’t actually included in the Oath. It came from something else Hippocrates wrote.

Nor do many contemporary doctors recite the original Hippocratic Oath; there’s a modern version, written in 1964, by the prominent pharmacologist Louis Lasagna. The pledge begins: “I swear to fulfill, to the best of my ability and judgment, this covenant.” It’s a fascinating, inspiring document — and I think before we go too far, it’s worth hearing some of it …

LOUIS LASAGNA ADAPTATION OF HIPPOCRATIC OATH: “I will respect the hard-won scientific gains of those physicians in whose steps I walk, and gladly share such knowledge as is mine with those who are to follow. … I will remember that there is art to medicine as well as science, and that warmth, sympathy, and understanding may outweigh the surgeon’s knife or the chemist’s drug. I will not be ashamed to say “I know not,” nor will I fail to call in my colleagues when the skills of another are needed for a patient’s recovery. … Above all, I must not play at God. I will remember that I do not treat a fever chart, a cancerous growth, but a sick human being, whose illness may affect the person’s family and economic stability. My responsibility includes these related problems, if I am to care adequately for the sick. I will prevent disease whenever I can, for prevention is preferable to cure. … May I always act so as to preserve the finest traditions of my calling and may I long experience the joy of healing those who seek my help.”

It’s comforting to think about the thoughtfulness, the nuance — the massive responsibility — that doctors pledge before they attempt to diagnose or heal us. How well has that pledge been upheld throughout medical history? We’ll talk to a variety of people about that today, starting with this gentleman.

JENA: My name is Anupam Jena. I’m a healthcare economist and physician at Harvard Medical School.

So Jena, as both a practitioner and an analytic researcher, is especially useful for our purposes. Because one of the themes we’ll hit today, several times, is that medicine, even though it’s scientific, or at least scientific-ish, hasn’t always been as empirical as you might think — and sometimes, not very empirical at all.

DUBNER: Here is an easy question: can you tell me please the history of medicine, or at least Western medicine in, I don’t know three or four minutes?

JENA: Let me first answer the meaning of life.

DUBNER: Is that going to be easier?

JENA: That’ll take about five to six minutes. You know I would say how about three words: trial and error. I think if you think about medicine and how it has evolved — let’s just say in the last 100 to 200 years — the sorts of practices that at some point in history people thought were actually medically legitimate included drilling holes into people’s skulls, lobotomies. Even as late as in the 1940s-1950s, lobotomies were thought to actually have  a treatment effect in patients with mental illness, be it schizophrenia or depression. The practice of bloodletting, which is basically trying to remove the, quote-unquote, bad humors from the body was thought to be therapeutic in patients. Things like mercury, which we know is downright toxic, were used as treatments in the past. And that was in a time and place when I think it was very difficult to get evidence — but not only that, there was probably a perception of the field that didn’t allow for the ability to question itself. And in the last 50-plus years, probably 50 to 75 years, I think we’ve seen tremendous strides in the ability of the profession to constantly question itself.

DUBNER: So it’s easy to get indignant over the idea of these treatments that turned out to be so wrong. But understanding wellness and illness is hard, obviously. So when you look back at the history of medicine, do those interventions strike you as kind of shameful — you can’t believe you’re in the profession that tried things like that — or is that just part of the trial-and-error process that you accept?

JENA: I certainly wouldn’t call it shameful. The only thing that’s shameful is when someone doesn’t believe that they have the potential for being wrong and they don’t have that desire to inquire further about whether something actually works or doesn’t work. But the idea of trying things, particularly trying things that have a really strong plausible pathophysiologic basis, I think that there is nothing wrong with that. In fact, that’s what spurred scientific discovery and many of the treatments that we have now.

DUBNER: So, I have a broad question for you. The human body is, I think you and I would agree, and extraordinarily complex organism. And over history, doctors and others have learned a great deal about it. But if we consider the entire human body — from the medical perspective only, let’s leave out metaphysics and theology and what have you — from the medical perspective, how would you assess the share of the body and its functions that we truly understand and the share that we don’t really yet understand?


JENA: Huh, that’s a tough one. We’ve made a lot of headway, but to put a number on it — I would say maybe 30 percent, 40 percent that we don’t know.

JEREMY GREENE: Ooh, that’s a tough question for me to quantify.

I asked the same question of someone else.

GREENE: My name is Jeremy Greene. I’m a physician and a historian of medicine at Johns Hopkins.

So what’s Greene’s answer?

GREENE: There is a Rumsfeldian answer of the known knowns, known unknowns and unknown unknowns. A different way of answering that question would have to do with  what the idea of relevant science of medicine is.

For example?

GREENE: If you take for example the moment in Renaissance, the Vesalian moment when the opening of cadavers and description and rendering in precise three-dimensional chiaroscuro engravings of the human body was an exciting area for research that actually this humanist process of opening up cadavers, showing that the innards were not exactly what the ancient Greeks had described. And fast-forward that to the 21st century. How many organs are left still to be discovered now? Probably zero, although who knows exactly? So as a historian, rather than giving you a fixed percent of where we are, I can give you a Zeno’s paradox that we keep on getting close to that finite moment and then reinvent a new broader room for us to inhabit.

And that’s because there’s been a lot of progress in how we’re able to explore the human body.

JENA: There is the gross anatomy of the body, which you can see with your own eyes.

Anupam Jena again:

JENA: Then go a layer further and we’re now at the microscopic anatomy of the body. So now what do the cells of the body look like when they are diseased under a microscope.

And now …

JENA: Now go a layer further where you are now trying to understand things about the body that you can’t even see with the microscope. And that’s at, let’s say, the level of the proteins in the cell, or even further down, the level of the DNA that encodes that protein.

GREENE: By the end of the 20th century, there’s a very strong genetic imaginary, which really helps to then fuel the excitement behind the human genome project. It’s thought once we know the totality of the human genome, we’ll know all we need to know about bodies and health and disease.

Of course we already know a great deal. And, to be fair, for all the mistakes and oversights in medicine, there’s been extraordinary progress. What are some of medicine’s greatest hits?

EVELYNN HAMMONDS: I’m sure every historian of science medicine would give you a different set of hits.

That’s Evelynn Hammonds. She’s a professor of the history of science and African-American studies at Harvard.

HAMMONDS: The ones that I typically think about are the introduction of more efficacious therapeutics and medicines.

KEITH WAILOO: I would put something like the discovery of insulin right up there near the top.

That’s Keith Wailoo. He’s a Princeton historian who focuses on health policy.

WAILOO: It transformed diabetes from an acute disease into a disease that you live with. And to me, that is much more the story of what medicine has been able to do in the 20th century.

JENA: The medicine that comes to my mind is statins. Most cardiologists believe that probably statins should be in water by now. I mean, statins are a remarkable drug. They’ve been shown to have benefit in preventing heart attacks and prolongation of life among people who have had heart attacks and the same thing for stroke and other forms of cardiovascular disease. So they are probably, at least in the last 20 years, the biggest improvement. But there are many, many drugs that are like that.

These are, truly, awesome interventions, for which we should all be thankful. One of the most remarkable developments over the past century and a half is the unbelievable gain in life expectancy: in the U.S., and elsewhere, it nearly doubled! It might be natural to ascribe that gain primarily to breakthrough medicines. But in fact a lot of it had to do with something else.

WAILOO: A lot of the advances in mortality and morbidity have come from, really, changes in the nature of social life. Infectious disease as the source of high mortality in the early 20th century began to drop long before penicillin and the antibacterials came along, in the mid century, because of improvements in housing, sanitation, diet, and sort of tackling urban problems that really created congestion and produced the circumstances that made things like tuberculosis the leading cause of mortality.

HAMMONDS: For example, if you think about the reversal of the Chicago River — it used to flow into Lake Michigan, in the 19th — century, and people were dumping their waste into it, and every summer, there would be hundreds of deaths of babies and children from infant diarrhea because the water was so contaminated. They reversed the flow of the river so it flowed downriver towards the Mississippi. And that significantly improved the health of the people who lived there.

So we’ve got public-health improvements to thank. And yes, better therapeutics and medicines. Also: new and better ways of finding evidence.

PRASAD: I actually think the technology that really revolutionized how we think is the use of controlled experiments.

That’s Vinay Prasad. He’s an assistant professor of medicine at Oregon Health & Science University. Prasad treats cancer patients. But also:

PRASAD: The rest of my time I devote to research on health policy, on the decisions doctors make, on how doctors adopt new technologies, and when those things are rational and when they’re not rational.

Which means that Prasad is part of a relatively new, relatively small movement to make medical science a lot more scientific:

PRASAD: You know, if you think about medical science, for thousands of years what was medicine but something that somebody of esteemed authority had done for many years, and told others that it worked for me, so you better do it.

Even though medical science seemed to be based on evidence, Prasad says …

PRASAD: The reality was that what we were practicing was something called eminence-based medicine. It was where  the preponderance of medical practice was driven by really charismatic and thoughtful, probably, to some degree, leaders in medicine. And you know, medical practice was based on bits and scraps of evidence, anecdotes, bias, preconceived notions, and probably a lot psychological traps that we fall into. And largely from the time of Hippocrates and the Romans until maybe even the late Renaissance, medicine was unchanged. It was the same for 1,000 years. Then something remarkable happened which was the first use of controlled clinical trials in medicine.

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ANUPAM JENA: Alright, take a deep breath through your mouth, in and out.

JENA: Good, okay. One more.

JENA: One more.

Anupam Jena is an M.D. and a healthcare economist.

JENA: Alright, I’m going to lift up your shirt and listen to your heart.

In most developed countries, we tend to think of medicine as a rigorous science, and of our doctors as, if not infallible, at least reliable.

JENA: I think that the typical patient probably does look to their doctor for answers and they value very highly what that opinion is.

But as we’ve been hearing, the history of medical science was often “eminence-based” rather than “evidence-based.” When did evidence really start to take over?

JENA: Evidence-based medicine has become hugely important in the last 25 to 30 years.

The movement is a result, Jena says, of at least two factors: Number one:

JENA: We’re doing more randomized controlled trials and that tells us more information about what works and doesn’t work.

And, number two:

JENA: Improvements in computer technology have now allowed us to study data in a way that we couldn’t have done 30 years ago.

There’s also been a movement to collect and synthesize all that research and all those data:

LISA BERO: So our vision is to produce systematic reviews that summarize the best available research evidence to inform decisions about health.

That’s Lisa Bero, a pharmacologist by training, who studies the integrity of clinical and research evidence.

BERO: I’m also a co-chair of the Cochrane Collaboration.

The Cochrane Collaboration was founded in Britain but is now a global network. The “systematic reviews” they produce …

BERO: … are really the evidence base for evidence-based medicine. And we’ve been a leader in so many ways in developing systematic reviews. We were the first to regularly update these reviews. We were one of the first to have post-publication peer review and a very strong conflict-of-interest policy. And actually we were one of the first journals that was published only online.

Which means that whatever realm of medical science you’re working on, you can access nearly all the evidence on all the research ever conducted in that realm — constantly updated, available on the spot. Compare that to how things used to work — looking up some 5- or 10-year-old medical journal to find one relevant article that may well have been funded by the pharmaceutical company whose drug it happened to celebrate. How is Cochrane funded?

BERO: We are primarily funded by governments and nonprofits.

What about industry money?

BERO: We don’t take any money from industry to support any official Cochrane groups.

Which means, in theory at least, that the evidence assembled by the Cochrane Collaboration is pretty reliable evidence. As opposed to …

IAIN CHALMERS: … a whole variety of things. Opinion. What the doctor had been taught 30 years previously in medical school. Tradition. What they had been told to do by, or advised to do, by a drug-company representative that had visited them a week previously.

That is Sir Iain Chalmers, who co-founded the Cochrane Collaboration. He’s a former clinician  who specialized in pregnancy, childbirth, and early infancy. He was a medical student in the early 1960s. When Chalmers observed his elders in practice, he was struck by how much variance there was from doctor to doctor.

CHALMERS: OK, so some doctors would — if a woman had a baby presenting by the breach — would do a Caesarean section, without any questions asked, as it were. Or they may take different views about the way the baby should be monitored during labor. Or the extent to which drugs should be used during pregnancy for one thing or another. So lots and lots of differences in practices. It’s as long as your arm. It’s madness isn’t it?

When he became a doctor himself, Chalmers worked at a refugee camp in Gaza. And, as he discovered …

CHALMERS: Some of the things that I had learned at medical school were lethally wrong.

Like how you were supposed to treat a child with measles.

CHALMERS: I had been taught at medical school never to give antibiotics to a child with a viral infection, which measles is, because you might induce resistance, antibiotic resistance. But these children died really quite fast after getting pneumonia from bacterial infection, which comes on top of the viral infection of the measles. And what was most frustrating was that it wasn’t until some years later that I found that there had been six controlled trials comparing antibiotic prophylaxis given preventatively with nothing done by the time I arrived in Gaza.

And those studies suggested that children with measles should be given antibiotics. But Chalmers had never seen those studies.

CHALMERS: So I feel very sad that in retrospect I let my patients down.

This led Chalmers to embark on a years-long effort to systematically create a centralized body of research to help attack the incomplete, random, subjective way that too much medicine had been practiced for too long. He was joined by a number of people from around the world — many of whom, by the way, were more versed in statistics than in medicine.

CHALMERS: So we embarked on these systematic reviews, about 100 of us. And that resulted at the end of the 1980s in a massive, two-volume, one-and-a-half-thousand-page book. At the same time, we started to publish electronically.  

And so the Cochrane Collaboration became the first organization to really systematize, compile, and evaluate the best evidence for given medical questions. You’d think this would have been met with universal praise. But, as with any guild whose inveterate wisdom is challenged, as unwise as that wisdom may be, the medical community wasn’t thrilled.

CHALMERS: There was a great deal of hostility to it from, I’d say, the medical establishment. In fact, I remember a colleague of mine was going off to speak to a local meeting of the British Medical Association, who had basically summoned him to give an account of evidence-based medicine and what the hell did people who were statisticians and other non-doctors think they were doing messing around in territory which they shouldn’t be messing around in. He asked me before he drove off, “What should I tell them?” I said, “When patients start complaining about the objectives of evidence-based medicine, then one should take the criticism seriously. Up until then, assume that it’s basically vested interests playing their way out.”

It took a long while, but the Cochrane model of evidence-based medicine did become the new standard.

CHALMERS: I would say it wasn’t actually until this century. So one way you can look at it is where there is death there is hope, as a cohort of doctors who rubbished it moved into retirement and then death, the opposition disappeared.

PRASAD: Yeah, so that’s been the slower evolution.  

That, again, is Vinay Prasad, from Oregon Health and Science University.

PRASAD: The very first studies with randomization concerned tuberculosis.

This was in the  late 1940s.

PRASAD: And from then really until the 1980s, the end of the 1980s, we did use randomized trials, but they weren’t mandatory. They were sort of optional.

One big benefit of a randomized trial is that you can plainly measure, in the data, the cause and effect of whatever treatment you’re looking at. This may sound obvious but it is remarkable how many medical treatments of the past were conducted without that evidence. Anupam Jena again:

JENA: I think some of the biggest mistakes in the last century, let’s say from 1900 to 1950 — things like lobotomy used to treat mental illness, either depression or schizophrenia — those strike me as being some of the most horrific things that could be done to man without any really solid evidence base at all.

This is one of the trickiest things about practicing medicine day-to-day. Let’s say you’re a doctor, and a patient comes to see you with a persistent headache. You make a diagnosis, and you write a prescription. What happens next? In many cases, you have no idea.

The feedback loop in medicine is often very, very sloppy. Did the patient get better? Maybe. They never came back. But maybe they went to a different doctor. Or maybe they died? If they did get better, was it because of the medicine you prescribed? Maybe. Or maybe they didn’t even fill the scrip. Or maybe they did fill the scrip but stopped taking it because they got an upset stomach. Or maybe they did take the medicine and they did get better but … maybe they would have gotten better without the medicine? Like I said, you have no idea. But with a well-constructed randomized controlled trial, you can get an idea. Vinay Prasad again:

PRASAD: The moment I think in my mind that kind of set us on different course was a study called CAST.

CAST stands for Cardiac Arrhythmia Suppression Trial. It was conducted in the late 1980s.

PRASAD: CAST was a study that — one of the things doctors were doing a lot for people after they had a heart attack was prescribing them an antiarrhythmic drug, that was supposed to keep those aberrant rhythms, those bad heart rhythms, at bay. That drug actually, in a carefully done randomized trial, turned out not to improve survival as we all had thought, but to worsen survival. And that was a watershed moment, I think, where people realized that randomized trials can contradict even the best of what you believe. It really doesn’t matter in medicine that the smartest people believe something works. The only thing that really counts is what is the evidence you have that it works.

The rise of randomized controlled trials led to a rise in what are called medical reversals. Vinay Prasad wrote the book on medical reversals, literally. It’s called Ending Medical Reversal.

PRASAD: And you know, what is a medical reversal? Doctors do something for decades, it’s widely believed to be beneficial, and then one day, a very seminal study — often better-designed, better-powered, better-controlled than the entirety of the preexisting body of evidence — it contradicts that practice. It isn’t just that it had side effects we didn’t think about. It was that the benefits that we had postulated, turned out to be not true or not present.

For instance …

PRASAD: In the 1990s we would recommend to postmenopausal women to start taking estrogen supplements, because we knew that women before they had menopause had lower rates of heart disease, and we thought that was because of a favorable effect of estrogen. And then in 2002, a carefully done randomized control trial, found that actually, it doesn’t decrease heart attacks and strokes; in fact, if anything it increases them.

I asked Prasad what first got him interested in studying medical reversal.

PRASAD: So I think I started to get interested in this even when I was a student, and I saw that there were some practices that had been contradicted just in the recent past, but were still being done day in and day out in the hospital. I mean, the example that comes to mind is the stenting for stable coronary angina. A stent is a little foldable metal tube that goes in a blocked coronary artery and the doctors spring it open, and it opens up the blockage. And stents are incredibly valuable for certain things. If you have a heart attack and there’s a blockage that just happened a few minutes ago, and the doctor goes in and opens that blockage up, we’re talking about a tremendous improvement in mortality, one of the best things we do in medicine. But stenting, like every other medical procedure, has something called indication drift where, yeah, it works great for a severe condition, but does it work just as good for a very mild condition? And so over the years, doctors has used stenting for something called stable angina. And stable angina is just that slow, incremental, narrowing of the arteries that happens to sadly all of us as we get older. But the bulk of stenting was this indication drift, and we thought it worked and made perfect sense. And then in 2007, a well-done study showed that it actually didn’t improve survival, and didn’t decrease heart attacks, which were, even to this day studies show that most patients who undergo this procedure believe it will do those things, and in fact it’s been disproven for eight years.

And yet: while stenting for stable angina did decline, it didn’t disappear. The rate of inappropriate stenting, Prasad says, is still way too high. This obviously starts getting into doctors’ incentives — financial and otherwise — and we’ll get into more in Parts 2 and 3 of this series. As Prasad makes clear, there’s a long, long list of medical treatments that simply don’t stand up to empirical scrutiny. Some common knee surgeries, for instance, where orthopedic surgeons take a tiny camera …

PRASAD: …  take a tiny camera, make a tiny incision, and go in there, and actually sort of debride and remove those sort of scuffed and scraped knees. And in fact, people sort of felt a lot better. They had improved range of motion. There’s no argument there. But you’ve studied against, maybe just taking ibuprofen, or maybe just doing some physical therapy. What if you studied it against making the patient believe that you were doing the surgery, but you don’t actually do it? And, in fact, they’ve done those studies. Those are called “sham” studies. We give the appearance that, you know, we’re going to do this procedure, and the only thing we omit is actually the debridement of the menisci and the cartilage. And in fact, when you do it that way, you find that the entire procedure is a placebo effect. There’s another example where we use sort of a cement that we inject into a broken vertebral bone, and that again was found to be no better than injecting a saline solution in a sham procedure, and the cement itself cost $6,000, and I said, you know, at a minimum you can save yourself $6,000, and you don’t need to use the cement.

DUBNER: What would be the incentives for me to do the study that might result in a reversal? Because we know how publishing works — whether it’s in your field, in any academic field, or in the media as well — it’s the juicy, sexy, new findings that get a lot of heat. And it’s the maintenance articles, or the reversal articles, that nobody wants to hear about. So I would gather there are fairly weak incentives to doing the studies that would result in reversals — which also makes me wonder if there is a woeful undersupply of such studies, which means there probably would be even more reversals then there are.

PRASAD: Yeah, so I think that’s a fantastic question. One of the things that we did in the course of our research was we took a decade worth of articles, in probably one of the most prestigious medical journals, the New England Journal of Medicine, and there was about maybe 1,300 articles that concern things that doctors do. About 1,000 of those articles were something new, something that came off, that’s coming down the pipeline, the newest anticoagulant, the newest mechanical heart valve. And if you tested something new — exactly as you’d expect, 77 percent of those published manuscripts concluded that what’s newer is better. But we also discovered about 360 articles tested something doctors were already doing, but if you tested something doctors were already doing, 40 percent of the time, we found that it was contradicted or a reversal.

DUBNER: I’d love for you to talk about the various consequences of reversals, including perhaps a loss of faith in the medical system generally?

PRASAD: So if you find out something you were doing for decades is wrong, you harmed a lot of people, you subjected many people to something ineffective, potentially harmful, certainly costly, and it didn’t work. The second harm we say is this lag-time harm. Doctors, we’re like a battleship. We don’t turn on a dime. We continue to do it for a few years after the reversal. And the third harm is loss of trust in the medical system. And the deepest harm, and I think we’ve seen it in the last decade, particularly with our shifting recommendations for mammography and for prostate cancer screening, where people come to the doctor and they say, you guys can’t get your story straight. What’s going on? It’s a tremendous problem. And I’m afraid that probably what we are doing is what we are making people feel like that there’s nothing that the doctor does that’s really trustworthy. And I’m afraid that that’s sort of the deepest problem that we face, this loss of trust.

DUBNER: Okay, so how do you not throw out the baby with the bathwater? What are some solutions to a practice of medicine and medical research that results in fewer reversals?

PRASAD: So that is a million-dollar question. One is medical education. You know we have a medical education where for two years, students are trained in the basic science of the body. Only in the latter years, the third and fourth year of medical school, are students trained in the epidemiology of medical science, evidence-based medicine, in thinking not just how does something work, but what’s the data that it does work? And I’ve argued that needs to be flipped on its head. That the root, the basic science of medical school is evidence-based medicine. It’s approaching a clinical question knowing what data to seek, and how to answer that in a very honest way. So that’s one. The next category is regulation. And this is where you get into, you know, what is the FDA’s role, and what does the FDA do. And I think many people in the community hope that products that are approved by the FDA are both safe and efficacious for what they do. But you know, we were faced with a problem in the 80s and 90s that we had never faced before, which was the HIV/AIDs epidemic. And advocates rightly said that we need a way to get drugs to patients faster, maybe even accepting a little bit more uncertainty. I think that was right. And I think that’s still right for many conditions that are very dire, for which few other treatment options exist, and, which sometimes have very low incidence, so it’s very hard to do those studies because very few people have it. But what’s happened is that mechanism has been extrapolated to conditions that are not dire. That have very good survival. That don’t have few options, have many options, and that many people do have. So we’ve had again sort of a slippery slope for what qualifies for this accelerated approval. So I  think there’s ways in which regulation can be adjusted. And then I think the last thing is the ethic of practicing physicians. You know, we have to have an ethic where when we offer something to someone, and there’s uncertainty, we should be very clear about communicating uncertainty. I think it’s a tragedy today that no matter what you think of stenting for stable coronary artery disease, that so many people who are having it done believe something that is clearly not true, that it lowers the rate of heart attacks and death. That’s just factually not true, and the fact that many people believe that, I think speaks to the fact that as doctors, we allow them to believe it.

DUBNER: And let me ask you one last question. I have a pretty good sense of, having spoken to you for a bit, of what has prevented in the past medicine from being more scientific or more evidence-based, but what do you believe are the major barriers still that are still preventing it from becoming as evidence-based as you’d want it to be?

PRASAD: So we should be honest about what medicine is. In the United States, medicine is something that now takes, nearly or over 20 percent of GDP. It’s a colossus in our economy. We spend more on medicine than any other Western nation. We probably don’t get as much from it, from what we’re spending. Because it’s such a  large sector of the economy, the entrenched interest for the companies and the people who really profit from the current system, are tremendously reluctant to change things. I think we see that with, just for one instance, the pharmaceutical drug-pricing problem we’re having right now. I think no one will doubt that the pharmaceutical industry has made some great drugs. They’ve also made some less-than-great drugs. But does every drug, great or worthless, have to cost $100,000 per year? And I don’t invent that number. That’s actually the cost per annum of the average cancer drug being approved in the United States in the last year — well over $100,000 per year of treatment. I think there’s got to be a breaking point and people are recognizing that.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Stephanie Tam. The rest of our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Greg Rosalsky, Alison Hockenberry, Emma MorgensternHarry Huggins and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Anupam Jena, healthcare economist and physician at Harvard Medical School
  • Philip Mackowiak, professor or medicine and medical historian at the University of Maryland
  • Jeremy Greene, physician and historian of medicine at Johns Hopkins University
  • Evelynn Hammonds, professor of the history of science and African-American studies at Harvard University
  • Keith Wailoo, health policy historian at Princeton University
  • Vinay Prasad, assistant professor of medicine at Oregon Health & Science University
  • Lisa Bero, pharmacologist and co-chair of the Cochrane Collaboration
  • Sir Iain Chalmers, co-founder of the Cochrane Collaboration

RESOURCES

MUSIC CREDITS

  • Paul Avgerinos, “Times a Tickin”
  • Jack Miele, “Otis Theme” (from Jack Miele)
  • Christopher Norman, “Emerald” (from Strange Games)
  • Paul Avgerinos, “Ladies Day”
  • Nicholas Pesci, “Feeling Quirky” (from All The Feelings)
  • Baba Brinkman, “Seed Pod” (from The Rap Guide)
  • Morella and the Wheels of It, “Vincent” (from Shipwrecked)
  • Lerin Herzer and Andrew Joslyn, “Roots” (from The Girl and the Ghost)
  • Judson Lee Music, “Snoopin’”
  • Mike Barresi, “It’s All Good” (from Mike Barresi)
  • Additional Scoring by Jay Cowit

The post Bad Medicine, Part 1: The Story of 98.6 appeared first on Freakonomics.

November 27, 2016
Real-Time Human Fact Checker and WNYC Studios producer Sean Rameswaram reacts to an astonishing new fact. (Photo: Lucy Sutton)

Real-Time Human Fact Checker and WNYC Studios producer Sean Rameswaram reacts to an astonishing new fact. (Photo: Lucy Sutton)

“LOL” is one of the most commonly texted acronyms. It ostensibly means “laughing out loud” — or “lots of love” if you’re Winston Churchill — but a linguistics researcher from Columbia University challenges both of those meanings on this week’s episode of Tell Me Something I Don’t KnowIt’s not that the letters “LOL” stand for something else, but that LOL takes on its own implied meaning.

This episode, which we’re calling “Things That Come Out of Your Mouth,” also includes stories of marine regurgitation and a group of opera singers that no longer exists.

The panelists are: Frank Delaney, novelist, podcast host, and “the world’s most eloquent man,” John McWhorter, Columbia University linguist and host of the Lexicon Valley podcast, Mehmet Oz, better known as Dr. Oz, Columbia professor of surgery and TV host. Our “Real-Time Human Fact-Checker” is Sean Rameswaram, who produces podcasts for WNYC Studios, including Radiolab’s Supreme Court spinoff, More Perfect.

So what does “LOL” actually mean? You’ll have to listen to the podcast to find out.

The post Things That Come Out of Your Mouth: TMSIDK Episode 4 appeared first on Freakonomics.

November 25, 2016
(photo: Giuseppe Milo)

(Photo: Giuseppe Milo)

Season 6, Episode 12

On this week’s episode of Freakonomics Radio, first: we’re not asking that using a public restroom be a pleasant experience, but are there ways to make it less miserable? And then: how did the belt, an organ-squeezing belly tourniquet, become part of our everyday wardrobe and what other sub-optimal solutions do we routinely put up with?

The gist: public bathrooms — when you can find one — are often noisy and poorly designed. In this episode, we explore the history of the public restroom, the taboos that accompany it, and the public-health risks of paying too little attention to the lowly toilet.

We also look into how wearing suspenders fell out of favor — and the health, economic, and aesthetic implications of wearing a belt.

To find out more, check out the podcasts from which this hour was drawn: “Time to Take Back the Toilet” and “How Did the Belt Win?

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post Time to Take Back the Toilet (Rebroadcast) appeared first on Freakonomics.

November 23, 2016
"Front-of-the-house" employees are making plenty of money, but because their money comes primarily out of the customers' pockets via tips, it can't be redistributed to where it's needed: in the kitchen to retain staff. (photo:Yuri Arcurs/Getty Images)

Servers get tips and kitchen staff don’t, creating two tiers of employee. Danny Meyer wants to fix that. (Photo: Yuri Arcurs/Getty Images)

Our latest Freakonomics Radio episode is called “No-Tipping Point (Rebroadcast).”  (You can subscribe to the podcast at Itunes or elsewhere, get the RSS feed or listen via the media player above).

The restaurant business model is warped: kitchen wages are too low to hire cooks, while diners are put in charge of paying the waitstaff. So what happens if you eliminate tipping, raise menu prices, and redistribute the wealth? New York restaurant maverick Danny Meyer is about to find out.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

[MUSIC: Stephen Kellogg, “Thanksgiving” (from Blunderstone Rookery)]

Hello, Freakonomics Radio listeners. Did you know that roughly 15 million Americans will eat their Thanksgiving meal in … a restaurant? Makes sense, doesn’t it? No cooking, no cleanup — and, increasingly, no tipping. Including the service charge in a restaurant’s menu price isn’t a widespread trend yet, but it’s definitely on the radar, as you’ll hear in this episode, “The No-Tipping Point.” It’s what some people call an encore presentation; also known as an episode from the archives; also known, frankly, as leftovers. But hey — who doesn’t like a good turkey and cranberry and mayo sandwich the day after Thanksgiving? Some leftovers are delicious! Hope you think this one is — and we’ll be back next week with a brand-new show.

DANNY MEYER: The American menu price structure is completely false, but we’ve been taught to believe that it’s real.

[MUSIC: Dot Dot Dot, “Gonna Be A Good Day” (from Dot Dot Dot)]

That is Danny Meyer.

MEYER: And what’s happened is that every menu price you see obviously includes every single thing except paying your server.

Meyer is one of the most successful restaurateurs of his generation.

MEYER: And so we have been conditioned, after many, many years as consumers, to believe that the $25 chicken entree is $25. And then when we add the tip, we truly feel like it came out of a different pocket, and we don’t put that calculus into it.

Meyer does not like this two-pocket idea. And so:

MEYER: We’re now asking people to shift that long-held thinking and to take it out of one pocket. It’s the same math, but it’s a very different emotional calculus.

Today on Freakonomics Radio, remaking the restaurant business model from the inside out, because it needs remaking.

MEYER: We were actually co-conspirators in a system that was completely unsustainable.

And the restaurant business is already hard enough.

ABRAM BISSELL: Restaurants don’t make a lot of money. There’s a lot of expenses that I think people overlook when they think about how restaurants actually operate.

Things get even harder when you can’t find enough chefs to work for the going rate.

BISSELL: We were about 14 cooks short in the kitchen, which is about 50 percent of our staff .

Because if you want to make good money working in a restaurant, wouldn’t you rather work in the dining room, getting those fat tips?

VACHON: I think somewhere in the realm of say, $1,000 a week before taxes.

So, what happens when you eliminate tipping?

VACHON: They’ll say, “So I don’t tip, then, right?” I’m like, “Absolutely. It’s all taken care of. Hospitality is included.” “What about coat check?” “Coat check is also included.”

It’s a restaurant revolution by a man who’s been revolutionizing restaurants since the beginning:

MEYER: Another restaurateur was actually quoted as saying, “I wish that Danny Meyer had never come along, because he’s actually turned our customers into complete freaks, where they think they can get away with anything.” And it’s like, are you kidding me?

 

*      *      *

The Modern is the restaurant on the ground floor of the Museum of Modern Art in New York. It recently got its second Michelin star, under executive chef Abram Bissell.

CHEF: Let’s have a great service!

KITCHEN STAFF: Yeah!

We spent some time at The Modern not long ago – with Bissell, with a server-slash-bartender, with the general manager, and with el jefe, Danny Meyer. Eating, of course.

MEYER: That looks good.

DUBNER: Thank you. Looks great.

WAITER: Tarte flambée, with onions, bacon, and a carrot rilette over rye toast. A little bit of dill and horseradish.

MEYER: And I’m going to urge you to go first for the tarte flambée.

DUBNER: Because it’s better hot?

MEYER: Yup.

DUBNER: OK. I shall. Thank you.

Meyer is CEO of the Union Square Hospitality Group, which includes some of New York’s favorite restaurants: The Modern, Gramercy Tavern, Maialino, the Blue Smoke barbecue joints. Union Square also traffics in private dining, sports-arena catering, museum cafes. It also launched Shake Shack, which has gone international – and public, with a current market cap of roughly $1.5 billion. So to say that Danny Meyer is kind of a big deal in the restaurant world — well, he is; he’s a big deal. He opened his first restaurant, Union Square Café, in 1985, when he was 27.

DUBNER: Had you trained at all as a chef? Had you worked in restaurants at all by this point or no?

MEYER: No. Not at all.

DUBNER: Not at all. You’d eaten in restaurants?

MEYER: Eaten in restaurants. That’s all I’d ever known.

DUBNER: No family? Anybody in your family ever owned restaurants?

MEYER: Well, my dad was in the travel business back in St. Louis, but

DUBNER: What does that mean, “in the travel business”?

MEYER: So, it meant a lot of different things.

[MUSIC: Pat Andrews, “French Cafe”]

Among the things it meant: designing driving tours through the French countryside for Americans who were embracing the European way of life.

MEYER: There was always French spoken at the table, especially when my parents didn’t want us to know what they were talking about. There was always a bottle of wine on the table. And I got an early opportunity to connect to this world — which then, when I was seven years old, we got to go to France and I kept a journal.

From the outset, Meyer saw restaurants as much more than a place to just buy a meal.

MEYER: You know, we are social creatures. And there’s only so much socializing we can or want to do at home.

So yes, he’d be in the food business, but primarily in the hospitality business.

MEYER: It just struck me as being so odd that there was this adversarial relationship that had been created between restaurant-goers and restaurateurs, as if the restaurant didn’t want you to be happy. And it just blows my mind that, whether it starts with the reservation-making process or whether the chef is willing to make a substitution for something that you don’t love on that dish — like, “I’d rather have mashed potatoes than sautéed carrots with my chicken,” and the chef says, “No, we don’t do it that way,” — I just never understood that.

The New York Times described Union Square Café as the place where, quote, “fine dining finally lost its haughty attitude.” The restaurant gave customers comment cards — not something that nice restaurants typically did. And in 1990, Meyer banned smoking at Union Square Café, more than a decade before it became law in New York.

MEYER: Everyone was saying, “You’re crazy. You’re going to put yourself out of business. No one is ever going to eat there again.” And we only got busier. And I take some strength in that because I’m hearing some of those same choruses of people saying, “You’re crazy to eliminate tipping at The Modern and at your other restaurants, because you’re going to put yourself out of business.”

Meyer’s anti-tipping stance goes back a long time, at least to 1994, when he floated the idea in the Union Square Café’s newsletter. “The American system of tipping,” he wrote, “is awkward for all parties involved.”

MEYER: I believe that hospitality is a team sport. And the same way as if you went to a soccer game — the ticket you bought would include the seat, but it wouldn’t only include the strikers and not the goalie and expect you to pay the goalie separate based on what you, as a fan, thought of the goalie’s performance or the defenders’ performance that game. And so, in the restaurant business, we’ve had this economic policy that apparently dates back to the Civil War, which is where people got paid zero dollars by the restaurant, which basically means that the waiters are working not for me, but you, as freelancers.

[MUSIC: The Civil Tones, “Sanctimonious Bee” (from City Stoopin’)]

A few years ago, we put out an episode of Freakonomics Radio called “Should Tipping Be Banned?” We noted that the American model of tipping — not just in restaurants but in all kinds of service jobs — is hardly the global norm. And as the Icelandic business professor Magnus Torfason told us, it is not a norm worth emulating.

MAGNUS TORFASON: The more tipping you see in a given country, the more corruption you generally see in that country as well.

Tipping in restaurants is particularly problematic. Not only because it lies in some weird gray zone between optional and mandatory. Not only because it lets a restaurant pay its waitstaff well below the minimum wage while making the customer responsible for the difference. But also because, as Michael Lynn from the Cornell School of Hotel Management explained, tipping can be discriminatory:

MICHAEL LYNN: Attractive waitresses get better tips than less-attractive waitresses. Slender women get better tips than heavier women. Both groups, blacks and whites, will tip a white server more than a black server. And that’s even controlling for perceptions of service quality. It’s discriminatory. 

So what would Michael Lynn do about tipping?

LYNN: You know, I think I would outlaw it.

Danny Meyer had his own set of reasons for wanting to get rid of tipping, primarily economic reasons.

MEYER: I’ll tell you that one of the motivating factors was really believing that we were actually co-conspirators in a system that was completely unsustainable.

OK, this requires some unpacking. Some explaining about the economics of the restaurant business. You probably already know that most restaurants don’t succeed: 60 percent fail within their first three years, although that’s not much worse than for any independent business. There’s also the relatively low profit margin in restaurants:

BISSELL: About seven percent.

DUBNER: Sorry?

BISSELL: Seven percent.

That’s Abram Bissell, the executive chef at The Modern, one of the most beloved and best-reviewed restaurants in New York, which earns just seven cents for every dollar it takes in.

BISSELL: Restaurants don’t make a lot of money. The profit margin — from the plates, to the tables, to just keeping the lights on — there’s a lot of expenses that I think people overlook when they think about how restaurants actually operate. But definitely our largest expense is labor, is the physical people in it.

This is where it gets interesting. There are two large categories of employees: the waitstaff, who take care of the customers, and the kitchen staff, who prepare the food. They’re generally called “front-of-the-house” and “back-of-the-house” employees. Now, ask yourself a question: which job is “harder”? Well, both jobs are hard, in a number of ways. But would you say that working front of the house is way, way, way harder than working in the kitchen? Or that it requires much more qualification or experience? Probably not. And yet that might be the conclusion you’d reach if you looked at the two groups’ paychecks.

SIMON KING: The discrepancy between the culinary team and the front-of-house team has grown more and more over time.

That’s Simon King.

KING: I’m the general manager of The Modern.

DUBNER: And general manager means you do what, exactly?

KING: I’m responsible for every aspect of it. So regarding the business, the finance, the people, the leadership, the direction, the creativity.

So this growing wage discrepancy between back and front of the house …

KING: Quite alarming statistics, that in the period of time since Danny’s had Union Square Café , in that 30 years, the front-of-house salary has increased by over 300 percent. But in that same period of time, the culinary team is in the mid-20s, or the early 20 percent. I mean, that is a colossal difference.

[MUSIC: Torches, “Ocean”]

Where did this massive wage discrepancy come from? One big factor: tipping. Since tipping is based on a percentage of the bill, front-of-the-house compensation rises when restaurant prices rise. And restaurant prices have risen, especially at high-end places like The Modern. Bissell again:

BISSELL: We went through a huge evolution in food over the last 10 or 15 years, where people demanded higher-quality ingredients. It was no longer that we were trying to ask people to eat organic and locally sourced, but it started to become, “I will only eat organic and locally sourced.” So that started to drive prices of menus up. A server has made better money over the years as the price of food as gone up. It just hasn’t balanced out between the back. And I think a lot of it is: if you can’t physically see what’s going on in the kitchen, you don’t see those people, and you don’t necessarily understand the way that the restaurant works.

And, Danny Meyer:

MEYER: I also think it’s really important to understand that while it’s wonderful that if you order a $100 bottle of wine and you’re a 20-percent tipper, the waiter’s going to make $20as opposed — for your pulling the same cork as the guy at the next table only bought a $40 bottle of wine and his server gets $8 for that. What about the cook in the kitchen that makes the exact same dollars whether we served 300 people tonight, 200 people tonight? Whether he shaved white truffles over your pasta or parmigiano over your pasta? There’s just something that’s not right.

So at a place like The Modern, where the average bill is around $50 per person for lunch and $100 for dinner, you can make a lot of money waiting tables. In the kitchen? Not so much. Abram Bissell again:

BISSELL: Yeah, for 10 years, it had been the same pay rate.

DUBNER: Give us a sense of the disparity in wages between front of house and back of the house.

BISSELL: Well, we say there was a 300-percent difference between a senior level — so someone that would actually be serving the food, server level, or captain level in our restaurant — and a senior-level cook. So someone that was cooking let’s say meat or fish or roast.

DUBNER: So a senior cook might have been earning 50 grand a year, and the senior server…

BISSELL: Senior cook was more like about 24.

DUBNER: No!

BISSELL: So we were at a definite breaking point in the industry. And that had been the same for almost a decade.

DUBNER: How good do you have to be to be a senior cook at a restaurant like this? How much training and experience, I mean?

BISSELL: I think you have to have a certain amount of natural talent, but a lot of it is experience. I would say about five years of professional New York City cooking.

DUBNER: How do you find even one person in New York who’s that good to work at a restaurant like this and pay them 24 grand, much less more than one, presumably?

BISSELL: It’s very hard. This last summer, we were in one of the worst droughts we’ve been in. We were about 14 cooks short in the kitchen, which is about 50 percent of our staff, short in the kitchen at one time. And that doesn’t change how we operate. We’re still a full restaurant.

DUBNER: So when there’s a cook shortage like that , what is the cause of that? Does it mean that people don’t exist out there that have the skills, or that for the wage you were offering, you just couldn’t get people in the door?

BISSELL: I think it’s a little bit of both. We were up at CIA recently—

That is the Culinary Institute of America, not the Central Intelligence Agency.

BISSELL: And they still have the same amount of students graduating that they did five years ago.

While it may be true that the CIA is graduating the same number of chefs, there are a lot more cooking schools than there used to be and a lot more graduates.

Pamela VACHON: I think in the post-Food Network world, I think there are a lot more, sort of, educated people who are pursuing that maybe right out of college. Like, it’s become a very sexy enterprise.

That’s Pamela Vachon, who works at The Modern.

VACHON: So I am half-and-half, a server and a bartender here. I was the same at a previous Danny Meyer restaurant.

DUBNER: Which one?

VACHON: Blue Smoke.

Vachon did not set out to be a front-of-the-house employee. She went to culinary school and planned to work in kitchens.

VACHON: So, culinary school was a six-month certificate program. It’s called the Institute of Culinary Education. But, that is designed to be a short certificate program, not a degree program. If you go to the CIA, you get a two-year associate’s degree at minimum and you can even pursue a bachelor’s degree there .

DUBNER: And you can spend a lot of money doing that.

VACHON: Exactly. So my six-month program was a $30,000 enterprise.

DUBNER: No way.

VACHON: And that is a great-value culinary school, quite frankly, for what you get.

DUBNER: It just makes me think that we’re in not necessarily a culinary-school bubble, but all events have conspired to make that a really, really, really good business. People worry about for-profit colleges generally, but 30 grand for six months!

VACHON: To enter a field that historically pays $11 or $9 an hour right out of the gate.

Vachon’s first job out of culinary school was in the kitchen, at Gramercy Tavern, yet another Danny Meyer restaurant.

VACHON: And I enjoyed that and it was a valuable experience, but I thought while I’m working it’s much, much harder work and it is significantly less pay

Which led her to move from back of the house to the front.

VACHON: And I think you won’t find a front-of-house employee in the city who doesn’t think that this is an unfortunate divide between front and back of house, in terms of how hard they work and how it’s impossible for them to benefit from tips.

[MUSIC: Fumihito Sugawara, “The Truth in the Deep Blue” (from This Goes)]

And this is the central dilemma that Danny Meyer’s no-tipping crusade is meant to address.

MEYER: I’m basically just trying to shift the economics because there’s unfortunately a law that states that tips, while they may be shared amongst every server in the restaurant, may not be shared with anyone who does not spend at least 80 percent of their time face-to-face with you.

That’s a New York State law; it varies by state. In any case: in New York, the waitstaff may pool their tips, which evens things out from one front-of-the-house worker to the next. But legally, those tips can’t be shared with the kitchen workers, which creates two distinct categories of restaurant employee: the ones up front, who collectively profit from the generous tipping activity of customers who’ve been well trained to leave 15 or 20 or 25 percent of the bill; and the employees in the back, who, despite spending a lot of time and money to acquire their skills, and despite working very, very hard, make a relatively low fixed salary.

MEYER: When I learned a statistic that for the first time in my entire career, that we had more culinary grads working in the dining room than in the kitchen, that was the moment when I said, “That has to stop,” because they didn’t go to cooking school to be servers.

So you’ve got a huge wage discrepancy in a business that’s already barely turning a profit. Some employees are making plenty of money but, because their money comes primarily out of customers’ pockets, you can’t redistribute that money where you need to, in the kitchen, which makes it hard to attract and retain kitchen staff. For years, Danny Meyer and his colleagues looked for ways to make up for this wage imbalance without raising menu prices even further.

MEYER: We looked at benefits. We looked at any possible way we could do this. So, for example, we were offering extra discounts to dine in our restaurants. Well, that backfired, because while it’s all well and good to say you can have 20 percent off or 40 percent off to eat in one of our restaurants, I can’t even afford to pay my rent, so thanks a lot for giving me a discount on something I can’t afford anyway. Then we tried another benefit, which was to buy MetroCards for people who worked in the kitchen, so that at least they wouldn’t have to reach into their pocket with post-tax dollars to pay for transportation. We’ve always offered health insurance. We’ve always offered life insurance. We’ve also instituted, two years ago, a matching 401(k) plan. But then we started to learn that, once again , “it’s nice of you guys to offer to match what I’m putting into my own retirement, but I can’t even afford to put anything into my own retirement, so I don’t even qualify.”

Abram Bissell describes the other cost savings they tried to find at The Modern. The flowers, for instance.

BISSELL: Our arrangements are almost two feet shorter than they were , and that’s a substantial savings over a year.

And also:

BISSELL: Buying things in bulk. Buying our glassware in bulk, four times a year saves a little bit. There’s all kinds of things, like: slimming down the actual amount of items on the menu, making the menus a little smaller. Less products, actually brings those costs down as well.

But none of these small changes could fix the big problem. To Danny Meyer, the big problem was by now obvious:

MEYER: We just knew we had to go cold turkey on this whole tipping thing.

[MUSIC: Chris Lago, “The Way We Used to Bleed”]

Coming up after the break: going cold turkey on tipping means upsetting the waitstaff, doesn’t it?

MEYER: You’re wrong.

And: if you want to catch up on earlier Freakonomics Radio episodes – like “Should Tipping Be Banned?” or the one called “Is It Okay for Restaurants to Racially Profile Their Employees?” You can check out our archive at Freakonomics.com, or on iTunes, where you can also subscribe to this podcast and, if you can find it in your heart to do so, give us nice rating or review. Thanks.

*      *      *

[MUSIC: From Indian Lakes, “Anything” (from Able Bodies)]

Danny Meyer, CEO of the Union Square Hospitality Group, decided that one of his highest-profile restaurants, The Modern, would eliminate tipping in favor of a pricing model called “hospitality included,” or H.I. The decision was driven primarily by economics, with a side serving of social justice.

MEYER: So it’s one thing for me to say that our company stands for enlightened hospitality, meaning taking care of our team even before taking care of our guests. But increasingly, as the cost of living kept going up in New York City, especially relative to debt that a lot of cooks had from going to culinary school, what was occurring to us is that we were doing a pretty good job of taking care of half of our team and a pretty awful job of taking care of the other half. And the tipping system, which prevents tips from being shared with cooks, unfortunately, is part of the problem. But we were part of the problem by sustaining the tipping system.

The Modern was hardly the first or only restaurant in America to get rid of tipping. But, given Meyer’s high profile — and the fact that he also created the fast-food nirvana Shake Shack, a non-tipping restaurant by nature — his decision got massive media coverage.

NEWS CUT: These days some restaurants are serving up your favorite meals and saying, “hold the gratuity.”

CBS News: Restaurant legend Danny Meyer plans to take tipping off the menu.

NEWS CUT: Stop tipping.

NEWS CUT: To skip the tip.

CBS: Tipping will soon be off the table at all 13 Union Square Hospitality Group restaurants.

There were all kinds of questions. How much would the restaurant have to raise prices in order to pay its waitstaff what they were losing in tips? How much of a raise would kitchen workers get? Would servers now earn a lot less? And if so, wouldn’t they all just quit? Would customers get the service they were used to if they didn’t retain the leverage of the tip? There were so many questions that Union Square Hospitality held a town-hall meeting, open to the public. This was in November, a few weeks before the policy would take hold at The Modern. Union Square’s chief restaurant officer Sabato Sagaria talked about the new H.I. menu prices:

SABATO SAGARIA: So the true cost of dining at one of our restaurants will be represented in that price, and that price is going to vary in terms of how much it’s been marked up. So some of the items, like a cup of coffee, is still going to be priced like a cup of coffee today, and others will go up at varying rates. But the main thing to know is that when you get that check, at the bottom, that amount that you’re reaching in your wallet, your pocket to pull out your wallet, is going to be about the same as it is today.

“The same as it is today” meaning that the new, “hospitality included” price should equal roughly what the customer used to pay once you added a tip. Now, how would employee wages at The Modern be affected? The lowest-paying kitchen jobs — washing dishes, cleaning floors and so on — would rise to $12 an hour, up from less than $10. Cooks would now start at $14 an hour. And what about front of the house? Here’s Erin Moran, Union Square’s chief cultural officer:

ERIN MORAN: Our dining-room team will be receiving a base hourly wage of $9 an hour up from $5 an hour from the tipped minimum wage. And in addition to that, we will be implementing what we’re calling a revenue-share program, which essentially means that we will be allocating a portion of our revenues and distributing them to our dining-room teams in addition to their base compensation of $9 an hour.

Which, presumably, would make whole the waiters and waitresses while also paying the kitchen more fairly, which might help reduce some of the traditional tension between those two groups. There were other potential upsides of H.I. to consider: Customers wouldn’t have to feel that extra money is being extracted from them at the end of the meal, and even at the coat check. Here’s Danny Meyer:

MEYER: “I’m really happy I don’t have to fish in my wallet for dollar bills and buy my coat back for the 80th time.”

And, if you’re a server, no longer are you so financially reliant on the kindness of strangers, or worried that an off night in the restaurant means an off night for your wallet. Simon King, general manager of The Modern, also saw H.I. as a way to smooth out the inevitable rough edges of waiting tables, like fighting for shifts on Thursday, Friday, and Saturday nights.

KING: So for years, people have worked those nights, never had a chance to have a weekend off, because they needed to work a Saturday to make their wage. And now, you can work Monday through Friday if you want to. You can work lunches — you don’t have to work all these nights — and still receive the same money, or very similar to before. It’s a colossal change. Some may decide the busy nights is for them. Others may say, “well, you know what, having a night with my child — tucking my child into bed is something I’ve never done.” Maybe something trivial, a lot of people take for granted. It’s something, for me, very special.

[MUSIC: Chris Dupont, “Walk Next To Me” (from Outlier)]

When we first visited The Modern in December, the new “hospitality included” pricing had started just a few weeks earlier. Pamela Vachon is the front-of-house employee we heard from earlier:

DUBNER: So are you making more or less?

VACHON: It feels like making the same. So, certainly in terms of pay, obviously it’s a new system. I think that there are still a few things to iron out. On the old system, your length of your shift didn’t really have a factor in terms of how you or anyone else got paid out of the tip pool. Whereas in the H.I. system, there is a multiplier that takes into account how many hours you’ve worked. So the value of our shares, under the revenue-share system, can increase or decrease depending on how well they manage the staff on the floor.

I asked Simon King what he’d seen so far:

DUBNER: So give me the early report. Who likes it? Who’s ambivalent? Who doesn’t like it?

KING: I think, on the whole, we were prepared for all kinds of reactions from the public. It’s such a cultural part of American way of life. It would be naive to think it wouldn’t be such a big deal. It is a bold move. But a pleasant surprise for us was — the best compliment I had from the very first couple of days from my team was, “it was just like another busy day, actually Simon. It wasn’t anything different.” That’s probably the best comment we had. Granted, there are some few individuals who prefer the old system; some are reluctant to change. But the vast majority have really embraced it.

And we talked to executive chef Abram Bissell:

DUBNER: What are you hearing from other chefs?

BISSELL: “Does it work?”

DUBNER: And what do you tell them?

BISSELL: It absolutely does.

Danny Meyer, as the ultimate boss — who is also responsible to Union Square Hospitality Group’s investors — was not ready to make any grand conclusions:

MEYER: I’d say it’s probably too soon to tell, but so far, so good. It’s gotta prove itself out, business-wise.

But Meyer did promise to check back in with us later — once the hospitality included pricing wasn’t so brand-new — to see if there’d been a waitstaff walkout, or maybe a customer revolt over the higher menu prices. So, we spoke with him again in early February:

MEYER: As of today, I have one piece of good news, which is that December of 2015, where The Modern had instituted hospitality included for five or six weeks at that point, December 2015 was the most profitable December The Modern has ever had. And that was with hospitality included. And all of our leaders in all of our restaurants are actually clamoring to be next. They all want to do this, because they’ve seen some pretty compelling statistics.

DUBNER: Let me just be pure devil’s advocate for a minute. So if you tell me that in the first complete month after H.I. was instituted, that you had — that was your most profitable month, or your most profitable December, did you say, or most profitable month?

MEYER: Both.

DUBNER: Both, OK. So the devil in me might say, well, that makes perfect sense, because you raised your prices to make up for the lack of tipping, and it makes perfect sense that you’re able to be more profitable then. And the only potential loser in that scenario is the customer who might be paying a little bit more , or the front-of-the-house server, who I would have to assume is making less, but tell me if I’m wrong.

MEYER: You’re wrong. Happy to tell you that. No, because as a matter of fact, if the very, very first constituent we wanted to take care of were the people who work for us, we were not looking to take from one pocket and put it into the other. So the true cost to us of doing all the things we want to do, which is: to increase the hourly compensation of our kitchen cooks by almost 20 percent, to keep our waitstaff at least whole and we guaranteed our waitstaff that for at least the first three months, we would keep them whole relative to exactly what they would have made under the old system. That’s very easy to do. That’s just math. We know exactly what our revenues are. We knew that before we made this shift, on average at The Modern, a guest would leave 21 percent gratuity. So what we decided to do was to keep our waiters whole, raise our opening managers’ compensation to at least $50,000, and pay our cooks $2 more an hour. And so you say, “Well, so how’s this all working, and why is the guest not paying too much?” And the only way I can explain it to you — because I never would have guessed we would already be profitable this early on — we thought this would be a long slog, and that we would ultimately be more profitable by doing the right thing because we would have less turnover, we would have more applicants, a better product that more people would want to come try. The only answer I can give you as to why this happened so quickly is that The Modern, of all of our restaurants, has been the beneficiary of unprecedented public relations associated with the initiation of hospitality included. And so the number of people eating at The Modern this year, relative to any other year, in the month of December, which is already your busiest month, was dramatically higher than any other December we’ve had. And I’ve got to feel that the just unprecedented amount of notice about Hospitality Included encouraged more people than ever to come road test it.

DUBNER: So that is an unbelievably interesting and delicious irony, that coverage of the restaurant that was instituting, you know, big-time no tipping draws enough customers to the restaurant that the no-tipping policy becomes a second-tier story to the fact that it just works — I mean, now, let me say this. And I say this with the utmost admiration. People are sort of talking about you as if you’re Mother Teresa, or as if you’ve cured cancer, whereas in fact, really, all you’ve basically done is turned an optional charge into a set charge when you eat at a restaurant. It’s not that big a deal, really, is it?

MEYER: I am no Mother Teresa. Although in one respect, I am.

DUBNER: That was only rhetorical, but go for it.

MEYER: No, but in one respect, I am. Because I would say that this is an example that I hope many businesses try to set, which is that doing the right thing is the most profitable thing. And I’m completely comfortable saying that we really, really hope that this turns out to have been a very smart business move. Look, I can tell you that in the very, very short time that we’ve been doing this, job applications in the kitchen have gone up 270 percent on average for the whole time. Now, we were facing an average of minus-50 percent for the previous seven months. So we couldn’t hire cooks. What about servers, the category of people that we are most concerned about? Because we all know that servers are only nice to you in expectation of getting a big tip. What if I were to tell you that our server applicant pool over the last four months at The Modern has grown 25 percent the first month, 100 percent the second month, and in the most recent month, the applicant pool has grown by 215 percent? And at the same time, turnover in those three months has already gone down in both categories. So we’re, we’re really, really excited about this. We think that this is something that’s, that’s time, and others are going to follow. And, in fact, since you and I first spoke, a good five really important restaurateurs and chefs in New York City alone, not to mention throughout the country — have already announced that they’re shifting .

DUBNER: Since hospitality included, has the average check, which now includes hospitality, gone up or down, or stayed flat, compared to the average old check with the tip included?

MEYER: It’s been just about exactly the same. And that, Stephen, that’s the reason that we thought this was going to take longer to turn into a profitable structure, because the way we calculated things as we were planning this out, we really thought that the total cost of doing everything we wanted to do for staff members was north of 30 percent. Somewhere north of 30 percent. But we also knew that if your credit card bill at the end of the month was basically ten percentage points higher than it would have been if you were a 20 percent tipper, that you would feel that, and you might just think twice about coming back to the restaurant. And we also follow the OpenTable feedback we get, and we’ve noted quite happily that the average of all of The Modern experiences, both for food and for service, have gone up about — I’m trying to see — 12 percent since we’ve instituted hospitality quotient.

DUBNER: Danny, you acknowledge that The Modern benefited from the coverage of its move to Hospitality Included, or no tipping. What about other restaurants that want to try this and won’t get the coverage, which is to say, just about all of them? Maybe especially restaurants that have a less affluent clientele and lower prices. How do you think this will work for them?

MEYER: Well, we’re going to find that out ourselves, because I want you to know, we are those restaurants. Remember, we did not roll this out in all of our restaurants. We only rolled it out at The Modern. And we, just like everybody else, are waiting to see how it goes. So the next restaurant we picked, which is Maialino, does not have the same kind of check average as The Modern has, and also serves breakfast, for example, which The Modern doesn’t serve. So we’re going to see, how does this work in the morning time? How does it work at a very, very active, less expensive bar, with snacks that are open all day? And like all the other restaurants you’re asking about, Maialino is not going to get the same four-month amount of global press coverage that The Modern got. So we’ll find out, but I’m really confident about it.

[MUSIC: Clip Art, “Politics of Ghosts” (from Culler)]

DUBNER: So let me make sure I understand this. You said that at The Modern, you guaranteed front-of-house staff a salary equivalent to their old salary that had tips, for a three-month period.

MEYER: Yeah, let’s just be careful. We call it “compensation,” because when it’s an hourly worker, it’s actually legally not considered a salary…

DUBNER: Very good.

MEYER: But, compensation.

DUBNER: Do you suspect as of now that you will be able to continue that guarantee at that level?

MEYER: Not sure. Not sure. We’re right now trying to ask ourselves, well, so, which are the dates where we had to pony up extra? Which are the dates where the new system actually paid them even more? And then of course, because it’s winter, you’ve got to correct for things like closing on the blizzard a couple Saturdays ago, which actually was a big win for people, because on a day when there would have been tipping and you close the restaurant, nobody would have come in and gotten anything. And so, it’s too soon to tell, is really the best answer I can give you. But I will tell you that if we weren’t feeling so confident that not only is the waitstaff and formerly tipped employee pool doing well, but that we can make this work for the business, we never would have pulled the lever and said, “Let’s go to a second restaurant.”

DUBNER: So the front of house, for the time being, is making roughly what they were making before. You said that you have increased kitchen salaries by about 20 percent. You said that applications for both are up. My question is, what about the relationship between kitchen and front of house, I guess before and after? Kitchen was, in just about everybody’s view, underpaid, and how has that changed at The Modern, and how does that affect, I guess, you know, the customer?

MEYER: Well, you’re asking a fantastic question, because there’s a couple things that are hard to measure economically, but they get to the core of why we did this in the first place. The first one – speak to waiters who have undergone this change, and what you hear from them is, even apart from the economics, “I feel better coming to work.” And the two reasons that they have most told us is that they love the fact that there’s just no longer this bubble hanging over their head during the course of your meal where they’re wondering and you’re wondering, “Is the only reason I’m being nice to this guy so, you know, so I can pick his pocket at the end of the meal?” They love getting rid of that. They love the dynamic that suggests that they’re doing it because they are a hospitality professional. And that feels really, really good to them. The other thing that our servers love is that they don’t have to feel guilty at the end of an incredibly busy Friday or Saturday night, when they’re all high-fiving, but only behind closed doors because they don’t want the kitchen staff, who only worked harder for the exact same amount of money, to feel bad about it. So everybody just kind of emotionally is loving the fact that we can be transparent.

[MUSIC: Phil Symonds, “Sicilian Sandman”]

For someone so enmeshed in every dimension of his restaurants, it’s worth noting that Danny Meyer almost did not end up in the restaurant business at all. Over lunch at The Modern back in December, he was telling me about his early days in New York. He had thought about becoming a journalist, maybe getting into politics. Then he started making a lot of money at a company that sold electronic tags to stop shoplifters. But he decided that was not his destiny. Finally, he decided, he’d become a lawyer. He started making plans for law school, and prepping for the LSATs.

MEYER: And literally on the eve of taking my LSAT, I was out to dinner with my aunt and uncle and my grandmother here in the city, at an Italian restaurant that I still go back to for inspiration called Elio’s, and everyone was having a great time drinking wine and eating pasta, except for me and my uncle turns to me and he said, “Why the, why the long face? What’s going on?” And I said, “I’ve got to take my LSATs tomorrow.” And he said, “Well, you want to be a lawyer, of course you’ve got to take your — what’s wrong?’ And I said, “The problem is that I don’t want to be a lawyer.” And he basically dropped his fork and he said, “Do you realize how long you’re going to be dead?” And I said, “No, why?” And he said, “I don’t know either but a hell of a lot longer than you’re going to be alive. Why in the world would you do something you don’t want to do?” I said, “’Cause I don’t know what else I would do.” And he said, “What are you talking about, you don’t know what else you would do? All I’ve ever heard come out of your mouth your entire life is how much you love restaurants.” I said, “So should I go eat in restaurants for the rest of my life?” “No, no, you fool!” “You should go open a restaurant.” And it just had never occurred to me.

[MUSIC: Joshua R. Mosley, “Epic March”]

Coming up next week on Freakonomics Radio: the first of a three-part series we’re calling “Bad Medicine.” Because medicine, as wonderful and life-saving as it can be, has also been a house of horrors …

ANUPAM JENA: The practices that at some point in history people thought were actually medically legitimate included drilling holes into people’s skulls, lobotomies. The practice of bloodletting. Things like mercury, which we know is downright toxic

But that kind of stuff is all ancient history, right?

PHILIP MACKOWIAK:  It is patently obvious to me that future generations will look at what we’re doing today and ask themselves “What was Grandpa thinking?

 You’ll hear how a lot of medical research excludes at least half the population:

TERESA WOODRUFF:They only studied the efficacy on males, had no females in that efficacy study.

And you’ll hear about the rise of evidence-based medicine:

JENA: I think the strength of the field is that it is able to question itself and try to produce better evidence.

That’s next time, on Freakonomics Radio.

*     *     *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Kasia Mychajlowycz and Arwa Gunja. The rest of our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Greg Rosalsky, Alison Hockenberry, Emma MorgensternHarry Huggins and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Danny Meyer, Chief Executive Officer, Union Square Hospitality Group
  • Abram Bissell, Executive Chef, The Modern
  • Simon King, General Manager at The Modern
  • Pamela Vachon, server/bartender at The Modern
  • Magnus Torfason, Assistant Professor, University of Iceland School of Business
  • Michael Lynn, Professor, Cornell University School of Hotel Administration

RESOURCES

ETC.

  • The Restauteur (2010), a documentary by Roger Sherman following Danny Meyer in the months before opening two new ambitious restaurants, Eleven Madison Park and Tabla, back in 1998.

The post The No-Tipping Point (Rebroadcast) appeared first on Freakonomics.

November 20, 2016
Contestant

Contestant Ashbell McElveen reveals the connection between ice cream and slavery. (Photo: Lucy Sutton)

In 1933, in the midst of the Great Depression, President Franklin Delano Roosevelt sat down to a meal that cost less than eight cents. The meal marked the start of the first government program distributing food to the hungry.

On this week’s episode of “Tell Me Something I Don’t Know,” you’ll learn what thrifty foods made up that meal. You’ll also hear about the history of ice cream, the textural allure of super-colloids, a nutty fact about the Iran nuclear deal, and the dulcet tones of a surprisingly versatile musical instrument.

The panelists are: Zeke Emanuel, medical doctor and chief architect of the Affordable Care Act, former White House chef Sam Kass, author of The Happiness Project Gretchen Rubin. Our “Real-Time Human Fact-Checker” is Sean Rameswaram, who produces podcasts for WNYC Studios, including Radiolab’s Supreme Court spinoff, More Perfect.

So was that meal — chosen by First Lady Eleanor Roosevelt, not Sam Kass — delicious? You’ll have to listen to the podcast to find out.

The post Things That Go In Your Mouth: TMSIDK Episode 3 appeared first on Freakonomics.

November 16, 2016
Umpire

A study found MLB umpires, loan officers and asylum judges are all susceptible to the gambler’s fallacy. (Photo: Keith Allison/flickr)

Our latest Freakonomics Radio episode is called “How to Make a Bad Decision.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

Some of our most important decisions are shaped by something as random as the order in which we make them. The gambler’s fallacy, as it’s known, affects loan officers, federal judges — and probably you too. How to avoid it? The first step is to admit just how fallible we all are.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

Let’s say I flip a coin and it comes up … heads. Now I flip it again … hmm heads again. One more time … and … wow, that’s three heads in a row. Okay, if I were to flip the coin one more time, what are you predicting? Here’s what a lot of people would predict: “Let’s see, heads-heads-heads … it’s gotta come up tails this time.” Even though you know a coin toss is a random event, and that each flip is independent — and therefore the odds for any one coin toss are … 50-50. But that doesn’t sit well with people.

Toby MOSKOWITZ: That doesn’t sit well with people.

Toby Moskowitz is an economist at Yale.

MOSKOWITZ: We like to tell stories and find patterns that aren’t really there. And if you flip a coin, say, ten times, most people think — and they’re correct — that on average you should get five heads, five tails. The problem is they think that should happen in any ten coin flips. And of course it’s very probable that you might get eight heads and two tails and it’s even possible to get ten heads in a row. But people have this notion that randomness is alternating. And that’s not true.

This notion has come to be known as “the gambler’s fallacy.”

MOSKOWITZ: This is a common misconception in Vegas. You go to the slot machine, it hasn’t paid out in a long time and people think, “Well, it’s due to be paid out.” That is just simply not true, if it is a truly independent event, which it is, the way it’s programmed.

DUBNER: So Toby, you have co-authored a new working paper called “Decision-Making Under the Gambler’s Fallacy,” and if I understand correctly, the big question you’re trying to answer is how the sequencing of decision-making affects the decisions we make. Is that about right?

MOSKOWITZ: That’s correct. In fact, the genesis of the paper was really to take this idea of the gambler’s fallacy, which has been repeated many times in psychological experiments, which is typically a bunch of undergrads playing for a free pizza, and apply it to real-world stakes, where the stakes are big, there is a great deal of uncertainty, and these decisions matter a lot.

Some of these decisions matter so much they can mean the difference between life and death. So these probably aren’t the kind of decisions we should be making based on a coin toss.

*      *      *

So Toby Moskowitz and his co-authors, Daniel Chen and Kelly Shue, have written this interesting research paper. It’s called “Decision-Making Under the Gambler’s Fallacy.” It’s the kind of paper that academics publish by the thousand. They publish in order to get their research out there, maybe to get tenure, etc. So it matters for them. Does it matter for you? Why should you care about something like the gambler’s fallacy? Well, we often talk on this program about the growing science of decision-making. But it’s funny. Most of the conversations focus on the outcome for the decision-maker. What about the people the decision is affecting? What if you are a political refugee, hoping to gain asylum in the United States? There’s a judge making that decision. What if you’re trying to get your family out of poverty in India by starting a business and you need a bank loan? There’s a loan officer making that decision. Or what if you’re a baseball player, waiting on a 3-2 pitch that’s going to come at you 98 miles an hour from just 60 feet, 6 inches away? That’s where the umpire comes in.

MOSKOWITZ: We’ll start with Major League Baseball – that was a simple one.

Moskowitz and his co-authors analyzed decision-making within three different professions – baseball umpires, loan officers, and asylum judges – to see whether they fall prey to the gambler’s fallacy. Because …

MOSKOWITZ: … there’s all kinds of possible areas where the sequence of events shouldn’t matter, but our brains think they should and it causes us to make poor decisions.

Decisions that are the result of …

MOSKOWITZ: What I would call decision heuristics.

A “heuristic” being, essentially, a cognitive shortcut. Now, why choose baseball umpires?

MOSKOWITZ: Because baseball has this tremendous data set called PITCHf/x, which records every pitch from every ballgame and what it records is if you look at the home-plate umpire — where the pitch landed, where it was located within or outside the strike zone, and also what the call was from the umpire.

Moskowitz and his colleagues looked at data from over 12,000 baseball games, which included roughly 1.5 million called pitches – that is, the pitches where the batter doesn’t swing, leaving the umpire to decide whether the pitch is a ball or strike. As they write in the paper: “We test whether baseball umpires are more likely to call the current pitch a ball after calling the previous pitch a strike and vice versa.” There were 127 different umpires in the data. The researchers did not focus on pitches that were obvious balls or strikes.

MOSKOWITZ: If you take a pitch dead center of the strike zone, umpires get that right 99 percent of the time.

Instead, they focused on the real judgment calls.

MOSKOWITZ: So the thought experiment was as follows — take two pitches that land in exactly the same spot. The umpire should be consistent and call that pitch the same way every time. Because the rules state that each pitch is independent in terms of calling it correctly — it’s either in the strike zone or it’s not.

The first thing the PITCHf/x data shows is that umpires are, generally, quite fallible.

MOSKOWITZ: On pitches that are just outside of the strike zone – they’re definitely balls, but they’re close – on those pitches, umpires only get those right about 64 percent of the time. So that’s a 36 percent error rate, it’s big.

DUBNER: Slightly better than flipping a coin, but not much.

MOSKOWITZ: Not much. Better than you and I could do though, I would say.

And how does the previous pitch influence the current pitch?

MOSKOWITZ: Just as a simple example, if the previous pitch was a strike, the umpire was already about half a percent less likely to call the next pitch a strike.

Half a percent doesn’t seem like that big an error. But keep in mind that’s for the entire universe of next pitches — whether it’s right down the middle, or high and outside, or in the dirt. What happens when the next pitch is a borderline call?

MOSKOWITZ: So if you look at pitches on the corners, near the corners — that’s where you get a much bigger effect. So as an example, if I see two pitches on the corners, one happened to be preceded by a strike call, and one that didn’t — the one preceded by a strike call, the next pitch will less likely be called a strike about three-and-a-half percent of the time. Now if I increase that further, if the last two pitches were called a strike, then that same pitch will less likely be called a strike 5.5 percent. So those are pretty big numbers.

DUBNER: And let me just ask you, other than finishing location of the pitch, what other factors relating to pitch speed or spin or angle, etc., did you look at and/or could you control for, and is that important?

MOSKOWITZ: You always want to control for those things, because some people might argue, “Well, maybe they see it differently if it’s a 98-mile-an-hour fastball or an 80-mile-an-hour slider or curve. Maybe that changes the optics for the umpire.” So we try to control for all that, and the beautiful thing about baseball is that they have an enormous amount of data. We threw in things like the horizontal spin and vertical distance of the pitch. The movement of it, the speed. The arc when it leaves the pitcher’s arm to when it crosses the plate. We also controlled for who the pitcher was, who the batter was, and even who the umpire was.

DUBNER: Since you’re controlling for the individual umpires, I assume you have a list of the best and worst umpires, yes?

MOSKOWITZ: On this dimension, yes. And it turns out they’re all pretty much about the same. So you could either view them as equally good or equally bad. There wasn’t a single umpire that didn’t exhibit this kind of behavior. They all fell prey to what we interpret as the gambler’s fallacy in terms of calling pitches. Which stands to reason because they’re all human.

Hunter WENDELSTEDT: One of the biggest things you have to do when you’re an umpire is be honest with yourself.

That’s Hunter Wendelstedt.

WENDELSTEDT: Well, now I’m a Major League baseball umpire. I’ve been in the Major Leagues full-time since 1999. So I’ve been able to travel this great country doing something I love and that’s umpiring baseball games.

Wendelstedt’s father, Harry, was also a major-league umpire, an extremely well-regarded one. Harry also ran the Wendelstedt Umpire School, near Daytona Beach, Florida, which Hunter now runs during the off-season. They start with the fundamentals.

WENDELSTEDT: You hold up a baseball. “Here is the baseball. Here are the measurements of the baseball. Here is the weight of the baseball.” Same thing with the bat, and you go step by step. There is a proper way for an umpire to put their mask on and take their mask off so as to not block their vision. Different ways to ensure that you got the best look you can. And that’s the first 7 to 11 days.

If you’re fortunate enough to make it as an umpire all the way to the majors, you know you’ll be subject to a great deal of scrutiny.

WENDELSTEDT:  Because now on any given day at every major league stadium, you have cameras, most of them high-definition, super-slow-motion, that are critiquing every pitch and every play.

Wendelstedt is a fan of the PITCHf/x system that Toby Moskowitz used to analyze umpire decisions.

WENDELSTEDT: Because once these pitch systems got into place, it’s been a great educational tool for us. Because you look at it and we get a score sheet after every game we work behind the plate, and it tries to see if you have any trends. And it really helps us become a better-quality product for the game of baseball.

We sent Hunter Wendelstedt the Moskowitz research paper which argues that major league umpires succumb to the gambler’s fallacy.

WENDELSTEDT: I was reading that, I got nervous. But that was really interesting. That’s just stuff I’ve never even thought about. It’s kind of blowing my mind in the last couple days. It’s pretty neat.

But Wendelstedt wasn’t quite ready to accept the magnitude of umpire error the researchers found.

WENDELSTEDT: I think it’s very interesting and I really look forward to studying that some more, because running the umpire school and all that, I gotta keep up on the trends and the way that the perception is going out there also.

Wendelstedt did say that if an umpire makes a bad call – whether behind the plate or in the field – you don’t want to try to compensate later.

WENDELSTEDT: If you miss something – the worst thing to do, you can never make up a call. People are like, “That’s a makeup call.” Well, no, it’s not, because if you try and make up a call – now you’ve missed two. And that’s something that we would never, ever want to do.

The Moskowitz research paper only analyzed data for the home-plate umpire, the one calling balls and strikes. For those of you not familiar with baseball: there are four umpires working every game — one behind home plate and one at each of the three bases. The umps rotate positions from game to game, so a given ump will work the plate only every few games. Interestingly, baseball uses six umps during the postseason, adding two more down the outfield lines — which has always struck me as either a jobs program or a rare admission of umpiring fallibility. Because if you need those two extra umps to get the calls right during the postseason, doesn’t that imply they ought to be there for every game? In a more overt admission of the fallibility of umpires, baseball has increasingly been using video replays to look at close calls. In such cases, the calls are overturned nearly half the time. Nearly half the time! Calls by the best umpires in the world. Which might make you question the fundamental decision-making ability of human beings generally — and whether we’d be better off getting robots to make more of the relatively simple judgment calls in our life, like whether a baseball pitch is a ball or a strike. But, human nature being what it is – and most of us having an undeservedly high opinion of ourselves as good decision-makers – we probably won’t be seeing wholesale automation of this kind of decision-making anytime soon. Making decisions, after all, is a big part of what makes us human. So it’s hardly surprising we’d be reluctant to give that up. But if the gambler’s fallacy is as pronounced as Toby Moskowitz and his colleagues argue, you might wish otherwise. Especially if you are, say, applying for a bank loan in India …

MOSKOWITZ: And we got a little bit lucky here.

“Lucky,” meaning some other researchers had already run an experiment

MOSKOWITZ: … with a bank in India and a bunch of loan officers on actual loans.

And the data from that experiment allowed Moskowitz and his co-authors to look for evidence of the gambler’s fallacy. Because …

MOSKOWITZ: … What they did was they took that data and they reassigned them to other loan officers.

Which allowed for a randomization of the sequence of loan applications.

MOSKOWITZ: Suppose you and I look at the same six loans. I happen to look at them in a descending order, you happen to look at them in ascending order, let’s say alphabetically, just some way to rank them. And then the question is, “Did we come to different decisions just purely based on the sequencing of those loans?”

Now, keep in mind these were real loan applications that an earlier loan officer had already approved or denied. This let the researchers measure an approval or denial in the experiment against the “correct” answer — although the correct answer in this case isn’t nearly as definitive as a correct ball or strike call in baseball. Why? Because if a real loan application had been denied, the bank had no follow-up data to prove whether that loan actually would have failed.

MOSKOWITZ: But the loans that were approved — we can look at the performance of that loan later on. You could see whether it was delinquent or didn’t pay off as well. So unlike baseball, where we know for sure there is an error, here, it’s not quite clear.

DUBNER: How much did loan officers in India fall prey to the gambler’s fallacy?

MOSKOWITZ: So you and I are looking at the same six set of loan applications, and the sequence in which I received them — suppose I had three very positive ones in a row, then I’m much more likely to deny the fourth one, even if it was as good as the other three.

The analysis showed that the loan officers got it wrong roughly eight percent of the time simply because of the sequence in which they saw the applications.

DUBNER: Talk for just a minute why this kind of experiment, a field experiment, is inherently, to people like you, more valuable than a lab experiment with a bunch of undergrads trying to get some free pizza, for instance.

MOSKOWITZ: That’s right. Well, in this particular case, this is their job, first of all, so you’re dealing with experts in their own field, making decisions that they should be experts on as opposed to maybe very smart undergrads but making a decision on something they haven’t had a lot of experience doing and shouldn’t be considered experts doing. The second thing is incentives.

Ah, incentives. One beauty of the original experiment was that it had the loan officers working under one of three different incentive schemes. Which allows you to see if the gambler’s fallacy can perhaps be overcome by offering a strong-enough reward. Some loan officers operated under a weak incentive scheme …

MOSKOWITZ: … which basically meant you just got paid for doing your job, whether you got it right or wrong, what we would call flat incentive.

Then there was a moderate incentive scheme …

MOSKOWITZ: … which is: we’ll pay you a little more if you get it right, and then pay you a little bit less when you get it wrong.

And, finally, some loan officers were given a strong incentive scheme:

MOSKOWITZ: … which was, We’ll pay you a little bit more to get it right, but we’ll punish you severely for getting it wrong. Meaning you approved it when it should have been denied, or you denied it when it should have been approved. Then it costs you money.

So how was the gambler’s fallacy affected under stronger incentives?

MOSKOWITZ: Well, this was the most interesting part.

With the strongest incentive at play – where the loan officer was significantly rewarded or punished for not messing up an application simply because of the order they read it …

MOSKOWITZ: We found that that eight percent error rate, or I should say what we ascribe to the gambler’s fallacy affecting decision-making, goes down to 1 percent.

DUBNER: Wow.

MOSKOWITZ: Doesn’t get eliminated completely, but pretty nicely. We then looked at what the loan officers did in order to get that 8 percent down to 1 percent — it turns out they ended up spending a lot more time on the loan application. If they make a quick decision they rely on these simple heuristics of, “Well, I just approved three loans in a row, I should probably deny this one.” But if I’m forced to actually just use information and think about it slowly because I really want to get it right – because I get punished if I don’t – then I don’t rely on those simple heuristics as much. I force myself to gather the information and I make a better decision.

DUBNER: Or, to put it in non-academic terminology, if you’re paid a lot to not suck at something, you’ll tend to not suck.

MOSKOWITZ: If effort can help, that’s right.

Coming up next on Freakonomics Radio:

MOSKOWITZ: Let’s hope that federal asylum judges aren’t deciding 50 percent of their cases based on sequencing.

Also: how stock prices are affected by when a company reports earnings:

SHUE: It makes today’s earnings announcement seem kind of less good in comparison.

And, if you like this show, why don’t you give it a nice rating on whatever podcast app you use. Because your approval means everything to us.

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Even if you’ve never watched a baseball game in your life, even if you don’t care at all whether someone in India gets a bank loan, you might care about how the United States runs its immigration courts. And whether it decides to grant or deny asylum to a petitioner.

MOSKOWITZ: This is clearly a big decision, certainly for the applicants, right? I mean, in some cases, it could mean the difference between life and death, or imprisonment and not imprisonment, if they have to go back to their country, where they’re fleeing for political reasons or something else.

These cases are heard in immigration courts by federal judges. Each case is randomly assigned — which, if you’re an applicant, is a hugely influential step. As Toby Moskowitz and his coauthors write, New York at one time had three immigration judges who granted asylum in better than 8 of 10 cases; and two other judges who approved fewer than 1 in 10. So as the researchers compiled their data to look at whether the gambler’s fallacy is a problem in federal asylum cases, they focused on judges with more moderate approval rates. The data went from 1985 to 2013.

MOSKOWITZ: So we looked only at judges that decided at least 100 cases in a given court and only looked at courts or districts that had at least 1,000 cases. Among that set, across the country over those several decades, you’re talking about 150,000 decisions and I think it was 357 judges making those decisions. So quite a large sample size.

The researchers controlled for a number of factors: the asylum seekers’ country of origin; the success rate of the lawyer defending them; even time of day — which, believe it or not, can be really important in court. A 2001 paper looked at parole hearings in Israeli prisons to see how the judges’ decisions were affected by extraneous factors — hunger, perhaps. This study found that judges were much more likely to grant parole early in the day – shortly after breakfast, presumably – and again shortly after the lunch break. So Moskowitz and his colleagues tried to filter out all extraneous factors, in order to zoom in on whether the sequencing of cases affected the judges’ rulings. Keep in mind there’s also no way to measure a “correct” ruling.

MOSKOWITZ: When a judge denies a certain case, we don’t know for sure if that was the right or the wrong decision. So I want to qualify that because what we can show is whether the sequencing of approval or denial decisions has any bearing on the likelihood that the next case is approved or denied. And that we show pretty strongly.  

DUBNER: So what does it look like for an asylum judge to be affected by the gambler’s fallacy?

MOSKOWITZ: So if the cases are truly randomly ordered, then what happened to the last case should have no bearing on this case, right? Not over large samples. And what we find is that’s not true. If the previous case was approved by the judge, then the next case is less likely to be approved by almost one percent. Where it gets really interesting is, is if the previous two cases were approved, then that drops even further to about one-and-a-half percent. And if these happen on the same day, that goes up even further, closer to 3 percent. And then obviously if it’s two cases in the same day it gets even bigger, it starts to approach about 5 percent. So those are pretty big numbers, especially for the applicants involved. Or to put it a little differently, just by the dumb luck of where you get sequenced that day could affect your probability of staying in this country by five percent, versus going back to the country that you’re fleeing. That’s a remarkable number, in my opinion.

DUBNER: And in a different arena, if I hear that a baseball umpire might be wrong 5 percent of the time, I think, “Well, but the stakes are not very high.” But in the case of an asylum seeker, this is a binary choice. This is not a one ball or strike out of many. This is I’m either in the country or I’m not in the country. And so what did that suggest to you about the level of the severity that the gambler’s fallacy can wreak I guess, on different important decisions, whether it’s for an individual or – I guess I’m thinking at a governmental level – “I refused to declare war on a given dictator three times in the last five years, but the fourth time gets harder,” I guess, yeah?

MOSKOWITZ: Yeah I think that’s right. You can imagine the poor family that happens to follow two positive cases. Even if their case is just as viable, their chances of getting asylum go down by 5 percent. That doesn’t sound like much, but compare that to what it would be if the reverse had been true. If the two cases preceding them were poor cases and were denied, then their chances of being approved go up by five percent. That becomes a 10 percent difference just based on who happened to be in front of you that day. Total random occurrence. So you wouldn’t expect the magnitudes to be huge. Let’s hope that federal asylum judges aren’t deciding 50 percent of their cases based on sequencing.

DUBNER: So the lesson if I’m seeking asylum, or any other ruling, what I really want to do is bribe someone to let me get to the judge right after he or she has rejected the previous few applicants, right? Other than that….

MOSKOWITZ: It would be worth it.

DUBNER: Well, plainly it would be really really really worth it, unless you get caught bribing and then obviously get rejected for asylum because of just that. So you’re telling us the data from the decision-maker’s side. What about the the seeker’s side? Is there anything that can be done to offset this bias?

MOSKOWITZ: I’m not sure there’s much you can do. You’re at the mercy of courts. I suppose if you have a particularly good lawyer, maybe there is a way to lobby. I mean, I am told the cases are randomized, I assume that’s true. But who knows. Like you said, maybe bribes is a bit extreme. But maybe there is a way…

DUBNER: Well, feigning illness at least, to break the streak.

MOSKOWITZ: Yes exactly. I mean there is all kinds of things that perhaps a good lawyer could do.  

The evidence that Moskowitz and his colleagues present is, to me at least, fairly compelling evidence that decision-makers in these three realms – courts, banks, and baseball – make occasional poor decisions based on nothing more substantial than the order they faced the decisions. But what if these researchers are just wrong? What if there are other explanations?

MOSKOWITZ: No, that’s a fair question. There are certainly other possible things to consider, and we try to rule them out. The first and the most obvious thing would be that the quality or merits of cases has that similar pattern. That seems hard to believe. We believe the randomization of cases, certainly in the loan-officer experiment, where we know it’s randomized because we did it and these other economists randomized it themselves, we know we can rule that out. So I don’t think that’s an issue, but, maybe just the quality of cases has this sort of alternating order to it and these guys are actually making the right decision. We don’t think that’s true and in baseball we can actually prove it by showing that they’re getting the wrong call.

It’s also interesting, to me at least, that what the Moskowitz research is pushing against is an instinct that a lot of people are trying to develop, which is pattern-spotting.  More and more, especially when we’re dealing with lots of data, we look perhaps harder than we should for streaks or anomalies that aren’t real. We may look for bias that isn’t necessarily bias. Our umpire friend Hunter Wendelstedt brought this up when we asked whether, as most baseball fans believe, umpires treat certain pitchers with undue respect.

WENDELSTEDT: Well, you know, here is the thing about it. You take Clayton Kershaw —  the umpire is going to call more strikes when Clayton Kershaw’s out there. Why? Is it ‘cause we like him better? No, it’s because he throws more strikes. He’s a better pitcher than a rookie that’s just coming up from getting the call up from the New Orleans Zephyrs. It’s one of those things – the reason why Greg Maddux and John Smoltz – they’re in the Hall of Fame for a reason.

Toby Moskowitz points to one more barrier to unbiased decision-making, related to the gambler’s fallacy but slightly different. It’s another bias known as …

MOSKOWITZ: …sequential contrast effects. That sounds like a very technical term, but it’s a pretty simple idea. The idea is if I read a great book last week, then the next book I read, even if it’s very very good, I might be a little disappointed. Because my reference for what a really good book is just went up.

DUBNER: And you can see how that phenomenon would really be important in let’s say job applicants or any kind of applicant, yeah?

MOSKOWITZ: Correct. We see this all the time, that the sequence of candidates that come through for a job, I think, matters. Both from the gambler’s fallacy as well as from sequential-contrast effects.

Kelly SHUE: So I along with a couple of other researchers were interested in this idea of sequential-decision errors.

That’s Kelly Shue.

SHUE: I am an associate professor of finance at University of Chicago, the Booth School of Business.

She’s also one of Toby Moskowitz’s co-authors on the gambler’s fallacy paper. And she’s a co-author on another paper, called “A Tough Act to Follow: Contrast Effects in Financial Markets.”

SHUE: And I was talking to some asset managers in New York and they said that when they consider earnings announcements by firms, their perception of how good the current earnings announcement was is very much skewed by what they have recently seen.

So Shue and her colleagues collected data on firms’ quarterly earnings announcements from 1984 to 2013, to see how the markets responded.

SHUE: We look at how that firm’s share price moves on the day of the earnings announcement and in a short time window before and after that announcement.

And what did they find?

SHUE: So what we find is that if yesterday an unrelated large firm announced a very good earnings announcement, it makes today’s earnings announcement seem kind of less good in comparison. And on the other hand, suppose yesterday’s earnings announcement was pretty disappointing then today’s news, all else equal, looks more impressive.

Before you go thinking that stock-market investors are particularly shallow, Shue notes that contrast effects like these have been widely observed in lab experiments.

SHUE: So what they’ve shown is that subjects will judge crimes to be less egregious if they have recently been exposed to narratives of more egregious crimes. College students will rate pictures of their female classmates to be less attractive if they’ve recently been exposed to videos of more attractive actresses. So we believe something fairly similar is happening in the context of earnings.

In this research as well as the gambler’s fallacy research, the timing of the consecutive decisions really matters. Toby Moscowitz again:

MOSKOWITZ: Meaning if the decisions that you’re making occur very close in time then you tend to fall prey to the sequencing effect. So take the judge’s example, for instance. We find that if cases are approved on the same day, then the likelihood of the next case that same day goes way down. If those cases were one day removed, the effect gets a lot weaker. Or in fact if there is a weekend in between the decisions, then it’s almost nonexistent. So if the judge approved a bunch of cases on Friday, that really doesn’t have much bearing on what happens Monday.

Moskowitz has tried to apply this insight to his own decision-making, when it comes to grading students’ papers.

MOSKOWITZ: If I see a sequence of good exams, that may affect the poor students who happen to be later in the queue in my pile. But one of the things I try to do, mostly just because I don’t want my head to explode, is I take frequent breaks between grading these papers and I think that breaks that sequencing, my mind sort of forgets about what I did in the past because I’ve done something else in between.

DUBNER: What do you do during your breaks?

MOSKOWITZ: Go for a walk. Check email. Get some coffee. Maybe work on something else. Or, my students don’t want to hear this, but occasionally I’ll grade an exam if front of a baseball game and I’ll stop and watch a couple of innings.

DUBNER: Obviously every realm is different. A loan officer is different from a baseball umpire is different from an asylum judge is different from a professor grading papers and so on. But what they all would seem to have in common is a standard of competence or excellence or whatnot. And so is there any way for all of us to try to avoid the bias of the gambler’s fallacy, to try to I guess connect more with an absolute measure, rather than a relative measure?

MOSKOWITZ: Well, that’s a very good question. I think it does depend on the field. Obviously if you think about asylum judges, the absolute measure sort of your overall approval or denial rate might be good from a judge’s perspective, but it’s certainly not great from the applicant’s perspective if you make a lot of errors on the side. The errors may balance out, but to those applicants, there is huge consequences.

Now that Moskowitz has seen empirical proof of the gambler’s fallacy, he sees it just about everywhere he looks.

MOSKOWITZ: My wife, who is a physician, claims that she thinks that happens. I would also argue test-taking. My son who’s actually studying a little bit for the SSATs, he’ll say things like, “You know, know I’m not sure what the answer to number 4 was but the last two answers were A so it can’t be A, right?” And you sort of caution, “That may not be right. And so it depends on whether the test makers have any biases either.”

DUBNER: And then it becomes game theory, which becomes harder and more fun.

MOSKOWITZ: Exactly. That would actually be a more interesting test, wouldn’t it, if student just figured that out and let them in.

Moskowitz plays tennis, where there’s plenty of opportunity for a rethink on the sequencing of shots.  

MOSKOWITZ: If you’re serving for instance, one of the best strategies is a randomized strategy, like a pitcher should do in baseball. And I’m not very good at being random, just like most humans. I’ll say to myself, “Well, I hit the last couple down the middle. Maybe I should go out wide on this one.” But that’s not really random. What I should do is what some of the best pitchers in baseball do. Rumor has it Greg Maddux used to do this, which is, recognizing that he is not very good at being random, he would use a cue in the stadium that was totally random. For instance, are we in an even or an odd inning? And is the time on the clock even or odd? Some other cue that would just give him a sense of, “Well, I’ll throw a fastball if the clock ends on an even number and the inning’s even I’ll throw a slider if it’s an odd, I should say to myself, “If the score is if it’s even or odd, whatever, if I count five blades of grass on the court as opposed to three.” Something that’s totally random and has nothing to do with it, allows me to supply that random strategy, which my brain is not very good at doing. Most people’s brains are not.

DUBNER: It’s an interesting paradox, that it takes a pretty smart person to recognize how not smart we are at doing something so seemingly simple as being random, because it wouldn’t seem to be so difficult, right?

MOSKOWITZ: I would say that’s fairly true in general that the smartest people I know are so smart because they know all the things they don’t know and aren’t very good at. And that’s a very tough thing to do.

Interesting. “The smartest people know all the things they aren’t very good at.” Me? I’ve never been very good at learning just when to end a podcast episode. I’m going to start working on that right … now.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Harry Huggins. The rest of our staff includes Shelley Lewis, Jay Cowit, Merritt Jacob, Christopher Werth, Greg Rosalsky, Alison Hockenberry, Emma Morgenstern and Brian Gutierrez. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

RESOURCES

MUSIC

  • Judson Lee, “Wanna Be Spy”
  • From Indian Lakes, “Paintings” (from Able Bodies)
  • Aaron Saloman, “Easy Speak”
  • Steve Rice, “Take Me Out To The BallGame”
  • Judson Lee, “Beating Around the Bush”
  • Elkins Thompson, “Life Sentence” (from My Feet Won’t Reach This Ground)
  • Paul Avgerinos, “Work It Out Blues”
  • Human Factor, “Hip Hoe”
  • Beckah Shae, “You, I” (from Rest)
  • Ivan Rosenberg, “Fly Up The River” (from Clawhammer and Dobro)

The post How to Make a Bad Decision appeared first on Freakonomics.

November 13, 2016
Social-media scholar danah boyd (left) confers with contestant Helen Beilinson during the Wheel of Maximum Danger round. (Photo: Lucy Sutton)

Social-media scholar danah boyd (left) confers with contestant Helen Beilinson during the Wheel of Maximum Danger round. (Photo: Lucy Sutton)

Did you know that in the 1800s, Army officers tested a certain African mammal as an upgrade to the typical mules and horses they used as pack animals in the American Southwest? So what were they and what happened to them? On this episode of Tell Me Something I Don’t Know, you’ll hear this and other tales from the natural world, including stories about marine animals that will either live forever or kill you, the history of what one might call “literal kangaroo courts,” and the wonders of poop soup.

The panelists are: Simon Winchester, author of many nonfiction books, including “The Professor and the Madman,” danah boyd, founder of Data & Society and Chris Gethard, comedian and playwright/star of the off-Broadway show “Career Suicide.” Our “Real-Time Human Fact-Checker” is Jody Avirgan, who hosts and produces podcasts for FiveThirtyEight.

And that African mammal story? It involves a young Douglas MacArthur and the Civil War. You’ll have to listen to the podcast to find out more.

The post It’s Alive! TMSIDK Episode 2 appeared first on Freakonomics.

November 11, 2016
(Photo: Tony Alter)

(Photo: Tony Alter)

Season 6, Episode 10

When you take a sip of Cabernet, what are you tasting? The grape? The tannins? The oak barrel? Or the price?

Believe it or not, the most dominant flavor may be the dollars. Thanks to the work of some intrepid and wine-obsessed economists (yes, there is an American Association of Wine Economists), we are starting to gain a new understanding of the relationship between wine, critics and consumers.

One of these researchers is Robin Goldstein, whose paper detailing more than 6,000 blind tastings reaches the conclusion that “individuals who are unaware of the price do not derive more enjoyment from more expensive wine.”

So why do we pay so much attention to critics and connoisseurs who tell us otherwise?

Along the way, you’ll hear details about Goldstein’s research as well as the story of how his “restaurant” in Milan, Osteria L’Intrepido, won an Award of Excellence from Wine Spectator magazine. (And not how you’d think!)

Also featured: Steve Levitt, who admits his palate is “underdeveloped,” describing a wine-tasting stunt he pulled on his elders at Harvard’s Society of Fellows.

Also, you’ll hear from wine broker Brian DiMarco who pulled a stunt of his own on his very wine-savvy employees. DiMarco also walks us through the mechanics of the wine-purchase business, and describes how price is often a far-too-powerful signal to our taste buds.

Plus, selective outrage — why we get so upset over some things, and then not over others.

Marius the giraffe lived at a zoo in Copenhagen. Zoo officials said he was a “surplus” animal: too genetically similar to other giraffes, and therefore he couldn’t breed. It was kinder, they said, to kill him. So they fed him some rye bread (“his favorite food”), shot him in the head, and dissected him in front of a crowd of onlookers, including kids. Next they fed his corpse to the lions. Perhaps not surprisingly, the world reacted with outrage.

How did this compare to the outrage expressed over the killing of hundreds of thousands of people during the ongoing civil war in Syria? Not quite commensurate. Ammiel Hirsch, senior rabbi at the Stephen Wise Free Synagogue in New York, noticed this disparity, and he talks about it with Stephen Dubner.

You will also hear from Wall Street Journal reporter Jose de Cordoba, whose article about the Mexican avocado trade perhaps should have outraged people but didn’t. De Cordoba explains how most avocados eaten in the U.S. are “blood avocados,” made to pass through a criminal cartel that extorts, kidnaps, and kills.

To find out more, check out the podcasts from which this hour was drawn: “Do More Expensive Wines Taste Better?” and “Which Came First, the Chicken or the Avocado

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post Do More Expensive Wines Taste Better? appeared first on Freakonomics.

November 10, 2016
Trust Fall

Social trust has been falling for decades — in part because our populations are more diverse. (Photo: klndonnelly/flickr)

Our latest Freakonomics Radio episode is called “Trust Me” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

Societies where people trust one another are healthier and wealthier. In the U.S. (and the U.K. and elsewhere), social trust has been falling for decades — in part because our populations are more diverse. What can we do to fix it?

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post. And you’ll find credits for the music in the episode noted within the transcript.

*      *      *

[MUSIC: Tim Besamusca, “Infinite Euphoria” (from Tim Besamusca)]

You may have noticed that we recently held a Presidential election. I think you’d agree it was pretty wonderful. According to statisticians, it set all-time highs in civil discourse and social unity. How are we so fortunate? Because America — as we all know, and appreciate — is a place where people really trust one another:

VOICES ON THE STREET:

FEMALE 1: No, I don’t think most people can be trusted because I think everybody’s always looking for an angle.

MALE 1: Generally speaking, I don’t think most people can be trusted.

FEMALE 2: Society seems to have been changing and separating and many, many people more than before, I think, are out just for themselves.

[MUSIC: Aubrey Agard, “Mister Sunshine” (from Aubrey Agard)]

Oh. Apparently I was wrong. Apparently we don’t trust one another so much. What’s that? Oh – and apparently we didn’t set all-time highs in social unity during this election? Sorry, my mistake. I guess I was thinking of Australia?

David HALPERN: Australia is the one which looks like it’s bucking the trend and moving towards higher social trust in the last 20-30 years.

Or maybe I was thinking of the Netherlands?

HALPERN: They are now close to 70 percent in levels in those who think others can be trusted.

In America, meanwhile – if we’re being honest – we’re not much on trust these days. Just think of this past election. We mistrusted the candidates and their parties. We mistrusted the police and the FBI. We mistrusted the polls and some people even mistrusted the election result. But wait – maybe there’s a bright side. Maybe it’s healthy for a society to be untrusting, to be skeptical; maybe it keeps us on our toes, always looking for ways to improve. What’s that? Oh. I’m wrong about that too, Professor?

Robert PUTNAM: We would be much better off if we were living in a much more trustworthy society. Trustworthiness, in short, is a really big deal.

All right, then. Today on Freakonomics Radio, a simple mission: to determine why social trust is such a big deal – and how to get more of it. Wouldn’t you like to know how to do that?

VOICE ON THE STREET:

FEMALE 3: Ummm, I think that might be a trick question.

*      *      *

“Social trust” is what, exactly?

HALPERN: It’s just one of those things. It’s sort of like the dark matter of the economy and society, it matters very greatly and yet we don’t seem to focus on it very much.

[MUSIC: Nicole Reynolds, “Wonderin’” (from Unordinary Mind)]

That is one of my favorite academic-slash-policy wonks in the world, David Halpern.

HALPERN: I’m the head of the U.K.’s Behavioral Insights Team, often known as the Nudge Unit.

The Nudge Unit applies the findings of behavioral science to do things like increase tax payments, decrease medical errors, and conserve energy. It also looks into broader ideas — like social trust. As Halpern was saying, social trust is …

HALPERN: Social trust is an extraordinarily interesting variable and it doesn’t get anywhere near the attention it deserves. But the basic idea is trying to understand what is the kind of fabric of society that makes economies and, indeed, just people get along in general. It’s clearly so critical for a whole range of outcomes.

Outcomes like economic growth.

HALPERN: This is a more powerful predictor of future national growth rates than, for example, levels of human capital or skills in the population.

Outcomes like individual health.

HALPERN: Basically, having someone or feeling that other people can be trusted or people you can rely on in your life is worth a great deal. It’s roughly the same positive effect in a series of studies as giving up smoking. And smoking is really, really bad for you so, you know, social isolation, essentially, is incredibly bad for your health.

So can people like Halpern reliably measure the level of social trust in a given place?

HALPERN: Yes, you can do it in a number of ways. You can ask people how many names have they got in their Fil-o-Faxes or in their phones, which will give you some sense of their social networks. You can also measure more subtly with asking a question around social trust: “Do you think other people can be trusted?” essentially. That’s the question we’ve been asking, in fact, for decades.

And?

HALPERN: There’s very big national differences in this. Countries range from, you know, many countries like Brazil where less than 10 percent of people would say that most others could be trusted to countries like Norway where more than 70 percent of people would say most others can be trusted. Countries like the U.S. and the U.K. are sort of halfway in between, typically in the range 30-40 percent of people say others can be trusted.

Places with a lot of social trust also have a lot of what’s known as social capital.

Stephen J. DUBNER: So most people are familiar with physical capital and financial capital, of course. Can you compare social capital to those in any meaningful way?

HALPERN: The answer is, yeah, you, in fact, can have a go at doing it. So you can literally work out how much more do people tend to earn if they have more names in their networks, they know more people, or they trust more people in general. You can ask both at the individual level and you can also ask it really importantly at the community, or even national, level. So to what extent is it an advantage in terms of your economic growth or your health outcomes to live in a country or a place where people say most others can be trusted. And the answer is it turns out some really quite large numbers indeed.

If social trust and social capital are so important, why don’t we talk about it all the time – or at least during political campaigns?

HALPERN: So it’s an issue that’s got long roots, but it doesn’t mean that governments had done very much about it until very recently. I should explain that I, myself, wrote a book a number of years ago on social capital, specifically working with, at the time, with Bob Putnam at Harvard.

[MUSIC: Eric Hastings, “Keep a Secret”]

PUTNAM: Sure, um, my name is Bob Putnam. I teach public policy at Harvard University.

Putnam is also the author of the landmark book Bowling Alone, which was published in 2000. But he started thinking about social capital decades earlier. It began with a question about Italian politics.

PUTNAM: Some parts of Italy are way more efficient than any state in America, and other parts of Italy are way more corrupt than any place in America. And the question is why? Why are some places better governed than others?

The answer, Putnam concluded, didn’t have to do with economic development, or education level, or politics.

PUTNAM:It was the degree to which there was a dense, civic network in a community. If there was a dense, civic network, so that people in those places behaved with respect to one another, in a trustworthy way, their governments worked better. And I dubbed that concept “social capital.”

Meaning?

PUTNAM: The core idea of social capital is so simple, that I’m almost embarrassed to say it. It is that social networks have value. Social networks have value first of all to the people who are in the networks. For example, there’s a huge amount of work on how social networks help us find jobs.

Social networks also exert other, more indirect leverage.

PUTNAM: They have effects on bystanders and not just effects on the people in them. Communities that have high levels of social capital benefit in many ways. Their kids do better in school. They have lower crime rates. They have, other things being equal, higher economic growth rates. Many, many benefits both personally and collectively.

Having made these observations about the power of social capital in Italy, Putnam returned to the U.S.

PUTNAM: And I was worried, just as a citizen, not as a scholar, I was worried that ever since I personally began to vote, which was way back in the 1960s, America seemed to be going to hell in a handbasket. And I said to myself, I wonder whether social capital might have something to do with this collapse of American civilization?

So he began looking for measures of connectivity in American civic life. Membership in parent-teacher organizations, for instance:

PUTNAM: That is, what fraction of all parents in any given year belong to the PTA? And I discovered to my shock, that actually PTA membership had been declining a lot.

He looked at membership numbers among Rotary clubs; among scout troops; among bowling leagues. Participation was falling in all these groups.

PUTNAM: We were becoming more and more isolated. Or, as a friend suggested to me once, “You mean we’re bowling alone?”

HALPERN: It’s a really enormous effect.

David Halpern again, from the British Government’s Behavioral Insights Team. As obvious as the benefits of social capital might seem:

HALPERN: We almost seem to hardly notice that it’s there. So it’s incredibly consequential and we see it in lots of areas of policy that we touch on.

DUBNER: So you write this about low trust: “Low trust implies a society where you have to keep an eye over your shoulder, where deals need lawyers instead of handshakes, where you don’t see the point of paying your tax or recycling your rubbish since you doubt your neighbor will do so, and where employ your cousin or your brother-in-law to work for you rather than a stranger who’d probably be much better at the job.” So that has all kinds of business and ultimately economic implications. However, when you talk about high trust being good for us on a personal level, whether it’s health or individual income, do the two necessarily go in hand? In other words, can we have a society that has a business climate where there isn’t a lot of trust and, therefore, you do need all those lawyers instead of the handshakes, but where you have good social trust among neighbors, family and friends, communities and so on, or are they really the same thing that you’re talking about?

HALPERN: Well, there is a key distinction and Bob Putnam has often made this too, between what’s sometimes called bonding social capital and bridging social capital.

PUTNAM: Social capital is about social networks. But not all social networks are identical, and one important distinction is between ties that link us to other people like us, that’s called bonding social capital.

HALPERN: Bonding social capital often refers to your closeness to your friends, your relatives, those that are immediately around you. It’s particularly important, it turns out for, things such as health outcomes.

PUTNAM: Because, empirically, if you get sick, the people who are likely to bring you chicken soup are likely to represent your bonding social capital.

So bonding social capital is plainly important – but it’s primarily about our ties to people we’re close with. When it comes to how our broader society gets along – that’s where bridging social capital comes in.

HALPERN: Do you trust, not just your immediate neighbor, but those people in your community more generally or, indeed, even relative strangers who you meet in everyday life in your country or your society?

PUTNAM: So my ties, my friendships to people of a different religion or a different race or a different economic class or a different occupation or a different age, that’s bridging social capital.

HALPERN: That tends to be really important…

PUTNAM: …really important especially in a modern, diverse democracy like ours. And therefore, what worries me most about trends in America is the decline in bridging social capital.

[MUSIC: The Fog People, “Without You” (from Sleepwalking Showtunes)]

It’s something we saw plenty of during the presidential election. So much distrust among so many separate constituencies – a constant splintering and re-splintering instead of the drawing-together that America likes to be known for. So, coming up on Freakonomics Radio, we look at an experiment designed to measure trust along racial and ethnic lines. The news is not good.

Ed GLAESER: A lot of the cheating was across racial and ethnic lines.

But there is some good news. For instance:

HALPERN: People that go to university end up trusting much more than those who don’t.

And when we went out to the streets of New York and asked people the standard survey question – “Generally speaking, would you say most people can be trusted?” – we got plenty of affirmatives:

VOICES ON THE STREET:

FEMALE 4: I think so, generally. There’s more good people in the world than there are bad people, so that leads me to believe that you can trust people.

MALE 2: Yeah, I would say they could. I that that’s maybe a naive assumption on my part — like to believe there’s good in everyone.

FEMALE 5: I’ve had great experiences with strangers. I think in the majority of cases, people are good. I trust people. Yeah.  

*      *      *

[MUSIC: Pailboy, “Bonita Slice” (from Pailboy)]

So what have we learned thus far? We’ve learned that social trust seems to be quite powerful, and desirable. But how do you get more of it? You can’t just magically turn up the social trust in a given place. You can’t force everyone to join the PTA or a church group or whatever. So rather than solving for x, where x is “how to increase social trust,” let’s first solve for y, where y is “when social trust and social capital are low, why are they low?”

PUTNAM: The short version is that in the short run, increases in diversity seem to be correlated with decreases in social capital.

That’s Bob Putnam again. He and others have observed over and over that diversity – racial, ethnic, religious, and so on – make trust more elusive. Consider some research done by the Harvard economist Ed Glaeser:

GLAESER: Trust is everywhere in economic transactions. So we wanted to contribute to this literature. And one of the things that seemed very important to us was measuring trust, was measuring social capital.

Rather than relying solely on survey data, Glaeser and his colleagues set up an experiment. Not that experiments are perfect, either.

GLAESER:  So we took a bunch of Harvard undergraduates, because what could possibly be more representative than that?

They tried to measure trust in a variety of ways, including a game where students were paired with each other, with one sending money to the other without being sure whether they’d get the money back.

GLAESER: It’s basically meant to mimic the idea of an investor giving money to a firm, and the firm then chooses whether or not to cheat the investor or not.

Some students treated their partners fairly; others, however, essentially cheated, keeping most or all of the money for themselves. When did that happen? It happened when the two players didn’t look alike.

GLAESER: A lot of the cheating was across racial and ethnic lines. And this was primarily white on Asian, meaning the whites were cheating the Asians. And I think there are lots of cases in the world in which we’ve seen racial fractionalization be related to less-than-perfectly functioning social relations.

DUBNER: Do you think that more ethnically homogenous societies — you know, one argument behind Scandinavian economic and social successes is that they tend to produce better social outcomes, and do you think there’s evidence for that?

GLAESER: I do. It is true for example, that welfare states are both more generous in ethnically homogenous places, and it’s almost assuredly true that they’re also more functional. They function better in more ethnically homogenous places. It’s just easier in lots of ways. There are downsides to that. I mean, I happen to love Stockholm. It’s a great city, but certainly one can argue that small, homogenous places are not necessarily as creative as they might be.

HALPERN So I think there are lots of benefits for being in an ethnically and culturally mixed society.

David Halpern again.

HALPERN: Look, I’m speaking to you today from London, one of the most diverse cities in the world and it has a deep vibrancy that follows from that. I mean the real challenge for us is can we have our cake and eat it? What is it that drives and enables diverse and interesting, sort of, varied populations, cities, countries, to be able to live together well? That’s the real challenge.

PUTNAM: Every place in the world, including us, and Canada, are all going to be more ethnically diverse 25 years from now.

And that’s Bob Putnam.

PUTNAM: Diversity, in the long-run, is a big advantage.

But, he warns:

PUTNAM: It’s not easy to do diversity. That diversity brings out the turtle in us. That, that in a more diverse setting, everybody kind of pulls in and disconnects from their neighbors.

[MUSIC: Torches, “Dirt Tears” (from Head Full of Rust)]

But look: if the world is becoming more diverse; and if diversity tends to lower social trust; and if social trust is so important – shouldn’t we be looking at ways to handle this problem?

HALPERN: I think so, although, let’s face it, there isn’t that much work really doing intervention studies to figure it out.

PUTNAM: What strategies I would want to emphasize for moving in a positive direction would be more contexts in which people connect with one another across lines of race or economics or gender or age.

Some classic examples of that – sports teams; the military; and university:

HALPERN: People that go to university end up trusting much more than those who don’t, particularly when they go away residentially. It doesn’t look like it’s explained by income alone. So there’s something about the experience of going off as a young person in an environment where you have lots of other young people from different backgrounds and so on, hopefully, and different ethnicities. You learn the habits of trust because you’re in an environment where you can trust other people; they are trustworthy. And you internalize these habits and you take them with you the rest of your life. So we tend to not think of going away to university as being the reason why you’re doing it is to build social capital and social trust, we think about learning skills and so on, but it may well be that it has as much, or even more value, in terms of culturing social trust going forward. The question is: do you have to do that in university, can you do it another way? So in the U.K., following partly an American lead, the government has championed a national citizen service. And what this means is for every young person, essentially a 17-year-old, increasingly, starts off with a — not everyone does it alone, but more and more every single year, goes and does voluntary experience, community service. This deliberately includes a couple of weeks which are residential and deliberately includes mixing with people from all different walks of life. Look, it’s only limited data, but in terms of before-and-after data, we see significant impacts in terms of higher levels of trust between groups and individuals, as well as instantly higher levels of life satisfaction and well-being too. So it looks like we can do something about it.

[MUSIC: Lucy Bland, “Rewrite” (from Down to Sea Level)]

It’s also helpful, David Halpern says, simply to look at the countries where social trust has been rising, and see what they’re up to. The Netherlands, for instance.

HALPERN: In the most recent data, it looks like it’s one of the biggest risers. So the Netherlands had pretty similar levels of social trust in the 1980s to America and the U.K., but whereas we have now drifted down towards sort of 30-odd percent, they are now up close to 70 percent in levels of those who think others can be trusted. 

DUBNER: What would you say it’s caused by?

HALPERN: Well, I mean, one of the characteristics of the Netherlands, and you have to be a bit careful when you pick off one country, is it has wrestled quite hard with the issues of, not just inequality, but social differences. They’ve really tried to do a lot in relation to making people essentially build cohesion. Particularly Amsterdam, is a very famous area for — it’s long been an extremely multicultural city. It’s had issues over that over time, but they’ve really in a sort of succession of governments have tried to quite actively make groups get along with each other in quite an active way. So that may itself, of course, root in the Netherlands, it’s quite a deep culture of a strong sense of the law, being trustworthy and that contracts will be honored and so on. It’s what helped to power its economic success in previous centuries, so it does have that tradition also to draw on.

And what role does technology play in social capital, especially the “bridging social capital” that people like Halpern and Putnam say is so important? In his book Bowling Alone, Putnam found that social capital was relatively low in the U.S. in the early 1900s and rose fairly steadily through the 1960s. But that’s when the decline began.

PUTNAM: I looked hard to find explanations and television, I argued, is really bad for social connectivity for many reasons.

“More television watching,” Putnam wrote, “means less of virtually every form of civic participation and social involvement.”

HALPERN: As Bob sometimes put it, I think, rather elegantly, when we were looking forward in terms of technology or the Internet and of course, even pre-Facebook and so on, would it be, in his words, a “fancy television”? In other words, it will isolate us more and more. Or would it be a “fancy telephone” and would connect us more and more?  Because technology has both those capabilities. So when I played video games when I was a kid, you basically did them mostly by yourself or with a friend. When I look at my teenage kids playing videos, they’re actually talking to each other all the time. To some extent it looks like, to me, that we get the technology that we want, and even this is true at sort of a societal level. So one of the arguments you can make, in my view is true anyway, by explaining some of these differences in the trajectories across countries is in Anglo-Saxon countries, we’ve often used our wealth to buy technology and other experiences. That means we don’t have to deal with other people — the inconveniences of having to go to a concert where I have to listen to music I really like, I can just stay at home and just watch what I want and so on and choose it. And even in the level of, if I think about my kids versus me growing up, I mean when I was growing up we had one TV and there were five kids in the household. You know, had to really negotiate pretty hard about what we were going to watch. My kids don’t have to do that and probably not yours either. There are more screens in the house than there are people. They can all go off and do their own thing. To some extent, that is us using our wealth to escape from having to negotiate with other people, but that isn’t necessarily the case. Some people and some countries seem to use their wealth more to find ways of connecting more with other people. And the technology has both these capabilities and we can’t just blame it. It’s the choices we’re making and how we use it and the technology which we’re, kind of, asking and bringing forth.

DUBNER: It reminds me a bit of — we once looked into the global decline of hitchhiking, for instance.  One of the central reasons being that people no longer trusted strangers to not kill each other, really, is what it boiled down to, even though there was apparently very little killing involved, but just the fear of one. And yet now, Uber is a 60-some billion-dollar company that’s basically all about using technology to lure a complete stranger into your car. Which, I guess, argues, if nothing else, the fact that technology can be harnessed very much in either direction. 

HALPERN: That’s right. Indeed, so, as you say, there’s actually two points here, and there’s a really important behavioral one, which I think we’ve only figured out in recent years to bring together these different literatures, how does it relate to behavioral scientists versus those people studying social capital? We look like we have certain systematic biases about how we estimate whether we think other people can be trusted. And in essence, we overestimate quite systematically the prevalence of bad behavior. We overestimate the number of people who are cheating on their taxes or take a sickie off work or do other kinds of bad things. This doesn’t seem to be just the media, although that may reinforce it. It seems to be a bit how we’re wired as human beings. So why is that relevant and why does this have to do with technology? Actually, technology can help you solve some of those issues. So when you’re buying something on eBay or you’re trying to decide where to go using, you know Trip Advisor, you’re actually getting some much better information from the experiences of other people as opposed to your guesstimate, which is often systematically biased. So it turns out it’s a way we can sometimes use technology to solve some of these trust issues. Not just in relation to specific products and “Should I buy this thing from this person?” but, potentially, more generally in relation to how do we trust other people because, ultimately, this social trust question must rest on something. It must be a measure of actual trustworthiness. 

The United States, for all the factionalism and bitterness we’ve seen during the presidential campaign and – let’s be honest – for years and years preceding, is actually well-positioned to re-generate social trust, even as the country becomes more diverse. Why? Because, as Bob Putnam argues, we’ve done it before. A lot.

PUTNAM:. If we were talking in America in the 1920s or 1930s, the difference between Irish people and Italian people would have been enormous. I have some friends who got married in the 1960s, he was from an Italian background, she was from an Irish background, and when they got married everybody called it a “mixed” marriage. Parents on both sides all said mixed marriages never work. And now that seems like a joke because what’s happened in the ensuing years is that the line, the sharp line between the Italians and Irish has just disappeared in America. It’s not that they don’t know that they’re from Irish or Italian backgrounds, but it no longer has that same salience. We’ve done this repeatedly over our own history. This current wave of immigration is not the first time that we have had a big wave of immigration that causes turbulence and then when you come out the other side we’re all better off. I mean, look it happens that my ancestors came to this country in 1640, so we’ve been here forever. And we were doing just fine. And, then the Dutch arrived. Now don’t get me started on the Dutch. It was really hard for us to get along with the Dutch, and then eventually we got along with the Dutch, and then we forgot they were Dutch. And then they were just us. And then the Germans arrived, and they were really difficult, and we had a lot of, a lot of trouble assimilating the Germans. And then after awhile, we got adjusted to them, and we sort of didn’t even notice that the Germans were Germans, and then we invented, at that point, a term called Anglo-Saxon, to refer to the Dutch and the Germans and us. And then we had a lot of trouble when the Irish arrived. I hope you see that there’s a smile on my face. We’ve done this a lot!

Coming up next week on Freakonomics Radio: have you ever heard of the gambler’s fallacy?

Toby MOSKOWITZ: So the gambler’s fallacy is expecting that if you’ve had a streak of a couple of outcomes in a row, that the next outcome is much more likely to go another way, and that’s just simply not true.

Well, it turns out that gamblers aren’t the only people who get fooled by the gambler’s fallacy.

MOSCOWITZ: We look at Major League Baseball umpires, we look at loan officers, and we even look at federal court asylum judges.

And what do the umpires think of this?

Hunter WENDELSTEDT: One of the biggest things you have to do as an umpire is be honest with yourself.

That’s next time, on Freakonomics Radio.

*      *      *

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. Today’s episode was produced by Greg Rosalsky. The rest of our staff includes Arwa Gunja, Jay Cowit, Merritt Jacob, Christopher Werth, Caitlin Pierce, Alison Hockenberry, Emma Morgenstern and Harry Huggins. If you want more Freakonomics Radio, you can also find us on Twitter and Facebook and don’t forget to subscribe to this podcast on iTunes or wherever else you get your free, weekly podcasts.

Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Robert Putnam, Professor of Public Policy at Harvard University
  • David Halpern, Chief Executive of The Behavioural Insights Team
  • Ed Glaeser, Professor of Economics at Harvard University

RESOURCES

ETC.

The post Trust Me appeared first on Freakonomics.

November 9, 2016

This BONUS Freakonomics Radio episode is an old one we thought you might want to hear in light of our very dramatic and surprising Presidential election. It’s called How Much Does the President Really Matter?” The U.S. president is often called the “leader of the free world.” But if you ask an economist or a Constitutional scholar how much the occupant of the Oval Office matters, they won’t say much.

A photograph of president-elect Donald J. Trump, lit up with flood lights, in a suburban Iowa backyard. (Photo: Tony Webster/flickr)

A photograph of president-elect Donald J. Trump, lit up with flood lights, in a suburban Iowa backyard. (Photo: Tony Webster/flickr)

Our next regular episode of Freakonomics Radio will hit your feed as it always does. In the meantime, I hope you find this episode useful, as dated as it is. For instance, some of the scholars we talk to have moved on to a new institution; baseball manager Joe Maddon has since won a World Series, but with the Chicago Cubs, not the Rays; and there’s not a single mention of Donald Trump or Hilary Clinton in this episode. It’s about the role and power of the presidency itself. You can find a full transcript of the original episode here.

You may also want to check out a more recent episode of ours called “Has the U.S. Presidency Become a Dictatorship?” Or, depending on how you’re feeling today, maybe not.

(You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.) 

The post BONUS EPISODE: How Much Does the President Really Matter? appeared first on Freakonomics.

November 6, 2016
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Did you know there is one particularly dangerous time of day to vote? If not, you’re not alone. Neither did the celebrity panelists on the first episode of Tell Me Something I Don’t KnowDebora Spar, president of Barnard College of Columbia University and author of “Wonder Women: Sex, Power, and the Quest for Perfection,” Anthony Marx, president of the New York Public Library and former president of Amherst College and Andy Zaltzman, comedian, political satirist and host of The Bugle podcast.

Find out what other types of “Strange Danger” the audience contestants present to the panel and host Stephen J. Dubner, as they attempt to vie for the top prize.

In this episode the real-time fact-checker Jody Avirgan (who, as a host and producer of FiveThirtyEight, knows more than a little something about the election) is on hand to help sort out the true from the not-so-true.

Normally we’d make you listen to the podcast to learn the answer to the question about the perils of Election Day (aside from acute anxiety about the impeding end of civilization). But even though it will spoil a bit of the surprise, it’s important enough to reveal now: The most dangerous time of day to vote is between 4:00pm and 8:00pm.

According to contestant Dr. Donald Redelmeier (a friend of Freakonomics), this is “likely a combination between more driving, more rushing, more distractions, altered pathways and unfit motorists.” This all leads to about a 19% increase in life-threatening traffic fatalities on election days compared to the normal Tuesday in the United States. “That increase rolls over all parts of the country, extends to all recent decades, is significantly larger than the increase that occurs on New Year’s Eve,” Redelmeir tells the panel, “and also occurs regardless of whether a Democrat or a Republican is eventually elected.”

 

 

 

 

The post Listening to This New Podcast Could Save Your Life on Election Day appeared first on Freakonomics.

November 4, 2016

Season 6, Episode 9 4332012254_44ca1af7e2You have perhaps come across the phrase homo economicus, which describes a model for human behavior as seen through the lens of economics. In this hour, you’ll hear Freakonomics Radio producer Greg Rosalsky embark on a long and tortuous process to live his life like homo economicus. Is this even possible? If so, is it desirable? Even if it’s better for an individual, is it good for society?

In his quest, Rosalsky is guided by the wise and charming Richard Thaler, the University of Chicago economist who has dragged the homo economicus model into the modern era, helping to pioneer the field of behavioral economics.

Thaler counsels Rosalsky on how to get a seat on the subway, how to play the dating market, and whether to pay for public goods like free music in the subway. Rosalsky also ponders whether voting is a rational act and gets some advice from Bryan Caplan, author of The Myth of the Rational Voter. Rosalsky also draws on the economic wisdom of Katherine Milkman, Mancur Olson, and Gordon Tullock.

You can subscribe to the Freakonomics Radio podcast at iTunes or elsewhere, or get the RSS feed.

The post Should We Really Behave Like Economists Say We Do? appeared first on Freakonomics.

November 2, 2016
President Obama and the SBST team

President Obama with the White House “nudge” team, led by Maya Shankar (in red). (Photo: whitehouse.gov)

Our latest Freakonomics Radio episode is called The White House Gets Into the Nudge Business(You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

A tiny behavioral-sciences startup is trying to improve the way federal agencies do their work. Considering the size (and habits) of most federal agencies, this isn’t so simple. But after a series of early victories — and a helpful executive order from President Obama — they are well on their way.

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post, as well as credits for the music in the episode.

*      *      *

Hey, this is Stephen Dubner. We’ve got a brand-new episode coming up. It’s about a behavioral-sciences startup in the White House. I think you’ll like it. But first I want to tell you about something else you might like. It’s a whole new podcast I’m starting, called Tell Me Something I Don’t Know. You may remember hearing a pilot episode we did, here on Freakonomics Radio, a while back. But now it’s its own thing, a permanent addition. You can go to iTunes right now, or wherever you subscribe to podcasts, and sign up – it’s free, of course. Here’s a very quick preview of what you’ll be getting.

The Freakonomics mission has always been pretty simple – to tell you things you always thought you knew, but didn’t; and things you never thought you wanted to know about, but do. And now we’ve come up with a whole new way of doing just that, with this new podcast, called Tell Me Something I Don’t Know. It’s still journalism, still factual, but it’s also a game show where contestants from the live audience try to — well, they try to tell  us something we don’t know.

Every night there’s a new theme and three celebrity panelists to help us sort out what’s worth knowing and what’s not. You’ll hear from comedians like Hannibal Buress, Keisha Zollar, and Chris Gethard.

You’ll hear from professional smart people like Barnard College president Deb Spar, New York Public Library president Tony Marx, and non-fiction author Simon Winchester. You’ll hear from Gretchen Rubin, Austan Goolsbee, Annie Duke, Sam Kass, Dr. Oz, Andy Zaltzman, and more – all working their very hardest in the service of learning valuable new information.

The first episode of Tell Me Something I Don’t Know drops on November 7th. Go subscribe right now on iTunes or wherever you get your podcasts. And if you want to be a contestant on Tell Me Something I Don’t Know, or get tickets to a live taping, visit TMSIDK.com. Also, follow TMSIDK on Twitter, Facebook and Instagram.

Just to be clear: this new show is not replacing Freakonomics Radio; this sucker isn’t going anywhere. All right now, on to this week’s episode of Freakonomics Radio.

*     *     *

[MUSIC: Dominik Hauser, “Drumline for Snares” (from The Malleability of the Movie March: The Musical Landscapes of Dominik Hauser, Vol. 8)]

Fort Bragg is a massive Army base in North Carolina, home to more than 45,000 active-duty personnel alone — and then there are reserves, civilians, contractors, family members, and Army retirees. How much money does an Army retiree have to live on? Well, it depends when they started saving. Consider a relatively new Army recruit, Private Thurman Dixon. He’s still a teenager, just signed a six-year contract out of high school. He’s only paid $700 every two weeks, but the Army covers the basics: housing, uniforms, cafeteria food, healthcare, and so on. Which means Dixon can spend most of his paycheck on whatever he wants.

Thurman DIXON: Shoes, clothes, video games, out to eat. I mean what else do I need to spend money on? I don’t really have any necessities or any things that I have to pay for. So a lot of it is just having fun.

It’s a lot more fun than, say, peeling off 10 or 15 percent of each paycheck and putting it in a savings or retirement account.

DIXON: I’m a terrible saver. So when I get paid I feel like I can just blow through the money and that, “Oh, I’ll get paid again in two weeks, so it’s really nothing.” But maybe that’s the problem. Maybe we just spend too fast and too much. We don’t really think about saving.

Granted, Thurman Dixon is young. So he’s got plenty of time to catch up. But it turns out he is not much of an outlier when it comes to retirement savings and military personnel. Only 44 percent of them enroll in the government’s Thrift Savings Plan, or TSP. That’s a retirement and investment program for federal employees. Among civilian employees, that rate is nearly double: 87 percent. Now, keep in mind these are different populations. The military has a lot of young, low-paid people …

Maya SHANKAR: Yeah, but I think actually the greatest reason for this difference is that civilian employees are automatically enrolled in these plans, but military service members have not been. 

[MUSIC: Judson Lee Music, “Classic Laugh”]

That’s Maya Shankar. She’s a White House policy advisor – and then some. She’s the star of today’s episode; we’ll hear more from her in a bit. Shankar’s point about participation rates in the government savings plan is really basic: some federal employees are automatically signed up and others, like military personnel, aren’t. What would happen if they were? And how would that happen? Well, when we spoke to Private Dixon, he’d just transferred to Fort Bragg from the base where he trained.

Moving bases is a common occurrence in the U.S. military. When you arrive at your new base, you go through an orientation process. You meet with administrative staff. You get assigned to a unit. You fill out a lot of paperwork — a lot of paperwork. The Department of Defense recently decided to use this moment — this lot-of-paperwork moment – to run an experimental pilot program at Fort Bragg. To see if they could increase enrollment rates in the TSP retirement program. Rather than incoming personnel simply being told about the existence of TSP – as something they might, possibly want to take part in – now they were first shown a video:

VIDEO: TSP is like a 401k. It’s an investment program in which hundreds of thousands of service members participate.

And then, they were required to make a yes or no decision on enrollment.

ANTUENET JONES: Soldiers are actually afforded the opportunity to make a choice, an active choice.

That is Antuenet Jones, who runs the Personnel Services Branch at Fort Bragg.

JONES: No trickery involved. We have no influence over their choice whatsoever. We just pretty much provide them with the opportunity and the information to make a choice.

This pilot program ran for five weeks. What happened? What did the data show? You’ll learn that, and much more, right after the break.

*     *     *

A Department of Defense pilot program at Fort Bragg showed that a slight tweak in how military personnel are exposed to a retirement-savings plan — essentially, just forcing a yes or no answer rather than leave it open-ended – this led to an increase in take-up of roughly 8 percentage points …

SHANKAR: Which would, if scaled up, help the service members and their families who undertake over 640,000 transfers to new military bases every year.

Maya Shankar is a senior policy advisor at the White House Office of Science and Technology Policy. She’s also the founder of a little-known governmental unit that helped set up the Fort Bragg pilot. Her unit is known as the SBST, for Social and Behavioral Sciences Team.

SHANKAR: Which is a group of applied behavioral scientists that works across the federal government to translate insights about human behavior and how we make decisions and how we act on them into improvements in public policy. 

Such as?

SHANKAR: Yeah, so we’re doing everything from helping low-income students go to college and helping student-loan borrowers get back on track with their repayments. We are trying to help the reentry population find work and support when they leave prison, helping families in Flint stay safe in the face of the lead in water crisis that’s going on. We’re also working to help farmers get access to small-business loans, and to make sure that low-income students have access to school lunches at school. 

This isn’t what Shankar planned on doing with her life. She planned on being a concert violinist.

[MUSIC: Niccolò Paganini, “Capriccio, Op. 1, N. 13: Allegro” (from Paganini: 24 Capricci Op. 1 for Solo Violin)]

SHANKAR: Yeah, so I started playing violin at the age of six .

DUBNER: And you grew up where, Maya? 

SHANKAR: I grew up in Cheshire, Connecticut. So, my dad is a physics professor and my mom helps international students get green cards and visas to study in the United States. 

At age nine, she auditioned for the Juilliard School of Music in New York, and was accepted.

SHANKAR: And so that started my weekly travels from Cheshire, Connecticut, to New York every Saturday. My mom and I would get up at 4:30 in the morning, go to the train station, travel there, and then I would engage in nearly 10 hours of classes. And it became very serious and when I started studying with Itzhak Perlman in ninth grade , so now I was going multiple times a week to New York and I think at that point, that was really a crystalizing moment when I realized, “Okay, I think this is actually what I want to do in my future.”

But at 16, Shankar suffered what turned out to be a serious hand injury, a tendon tear.

SHANKAR: I was playing a Paganini caprice, number 13

DUBNER: Oh, that’s not such an easy piece, is it?

SHANKAR: It was very challenging. Probably exceeded my technical prowess, which is why I got into trouble. 

DUBNER: How despondent were you when you realized that this dream was done? 

SHANKAR: I was really quite devastated because I was so deeply involved in the musical world. And when you lose something like that, your goal is to basically start putting the pieces back together. And I was very worried that I would never find anything that I loved more than I loved music. 

The summer before college, Shankar was helping her parents clean out their basement.

SHANKAR: And I ran into an old course book of my sister’s that was called The Language Instinct by Steven Pinker and I remember reading just the first ten or fifteen pages, and I was immediately gripped. In that moment, I just wanted to understand everything there was to understand about how our brains were wired and how we learn and the interaction between nature and nurture .

[MUSIC: Mokhov, “Mysterious Dream” (from Revel Revival)]

Shankar went on to study cognitive science – an undergraduate degree at Yale, a Ph.D. at Oxford, and a postdoc at Stanford. It was at Stanford, studying the science behind decision-making, that she got inspired to do what she’s now doing. She was having coffee with an adviser of hers …

SHANKAR: … who told me the story of the national school lunch program, which offers low-income students free and reduced-price meals at school. And I remember hearing that unfortunately many, many kids who are eligible for free meals at school were actually going hungry every single day because of a burdensome application process. And this was really remarkable to me, right? You don’t think about barriers like application processes as actually deterring kids from being enrolled in programs. But I was excited to hear that the U.S. Department of Agriculture took steps to eliminate the need for an application altogether for those students whose eligibility could be determined through existing administrative data. And since the policy change, over 12 million kids had been automatically enrolled into free meals. So I heard this story. It had huge emotional resonance for me. I saw firsthand an example of the behavioral insight of automatic enrollment being applied to a pressing policy challenge. And it was a light-bulb moment for me. I realized that this was the sort of work that I wanted to be doing in my career. But I also realized that there was tremendous potential to more systematically apply these insights to public policy. And that without a coordinated effort, there was no guarantee that, you know, the latest behavioral science would actually find its way into government. You know, we really needed a pipeline.

Shankar’s vision was a dedicated team, within government, that could range across departments and help test out and apply behavioral insights. Which sounds like a good idea, right? But Shankar was only in her mid-20s, and had spent most of her adult life in academia.  She sent an e-mail, out of the blue, to the White House’s deputy director for policy in the Office of Science and Technology Policy. In 2013, she got a job as a senior policy advisor. By 2014, the SBST was up and running.

DUBNER: How did that happen? Did the President just hand you a bunch of money and an office full of staff and say “go for it, Maya!”? 

SHANKAR: Absolutely not. That’s not how it happened.

How it did happen was that Shankar built a team bit by bit and then persuaded federal agencies, one by one, to let her team collaborate with them.

SHANKAR: I had to inspire organic interest and allow them to see the inherent value of what it was I was proposing. There was no high-level mandate that I could point to and there was no budget I had to help execute on this goal.

If this idea sounds familiar – embedding a behavioral-science team within a federal government – you may have heard about about a similar project in the U.K.

David HALPERN: Hi, I’m David Halpern, I’m the head of the U.K.’s Behavioural Insight Team, often known as the Nudge Unit.

We’ll be hearing from Halpern at length in next week’s episode, about a particularly interesting project the Nudge Unit is working on. But, long story short: a lot of the work that Halpern’s team has done in the U.K., and elsewhere, is the kind of stuff that Maya Shankar wanted to do with her team in the U.S. They began with some pilot projects — with the Department of Education, the Department of Veterans Affairs, Health and Human Services. They earned a few early wins with simple behavioral nudges. Increasing college enrollment among low-income students, for instance, by texting reminders to complete certain tasks, like applying for financial aid. They had a similar success with ObamaCare applicants. In 2015, President Obama himself issued an executive order – called “Using Behavioral Science Insights to Better Serve the American People” – and that made SBST substantially more legit.

DUBNER: How big is the SBST staff now? 

SHANKAR: We have roughly 35 people. 

DUBNER: Okay. And are most of them researchers who actually work for the unit, or are there many researchers that are academics affiliated elsewhere? 

SHANKAR: Well, I built the team as a cross-agency effort so that it’s part expert behavioral scientists and also part expert policy and program makers. Because no matter how much expertise you have in behavioral science, if you’re not intimately working with program staff who understand the nuances of program implementation and are working with the populations those programs serve day in and day out, you’re really going to be missing a huge part of the puzzle. So we have around 20 dedicated behavioral scientists, and then representation in roughly 20 agencies across the federal government. 

DUBNER: And how does the White House view the ROI on SBST? Is it seen as something that should be hugely revenue-positive because it’s theoretically, you know, improving and streamlining so many processes? 

SHANKAR: Yeah, I think that’s right. I mean in every instance, we are leveraging existing program funds to run these sorts of projects, so we don’t have an independent budget to actually run programs. And in all cases, we’re just trying to make the programs work more effectively and more efficiently, which means you’re getting more bang for your buck in terms of taxpayer dollars. And so what we’ll do in those cases is we’ll start most conversations with our federal agency partners with the question: “So what are the problems you’re already trying to solve? What are the goals you’ve already articulated for yourselves?” And then we look to the research literature in behavioral science to try to identify all of the tools and behavioral techniques that we might have at our disposal to help our agency partners achieve those goals more effectively and efficiently.

For instance: the Bureau of Prisons had developed a re-entry handbook to help the 40,000 people who are released every year from Federal prisons.

SHANKAR: And SBST was brought in to help on the development of the handbook and to make sure that behavioral insights were integrated into its content. And we proposed a number of different changes, but among them were developing checklists that featured action steps inmates and former inmates could take before release. And then, longer term. And the reason why it was so important to distill all of the recommendations into these time sequenced checklists is that in many cases, the proper sequencing of actions is very important for preventing setbacks. So for example, encouraging individuals to obtain a birth certificate prior to release can then accelerate their getting a government-issued photo ID upon release and applying for work. We also addressed individuals as community members versus ex-convicts because we know from social psychology that people are far more likely to act in ways that are consistent with the identity that they associate with.

DUBNER: Let me just push back on one element of that. So when you talk about the handbook for released prisoners having checklists and action steps … You know, it makes me think about one potential failure of so much government policy, which is that the kind of people who typically design policy have a totally different set of behaviors than the people who the policy is meant to serve. In other words, people like you, Maya Shankar, follow instructions, you’re a cooperator, you exercise a lot of self-control and self-discipline in your personal and professional lives. Someone who is just getting out of federal prison, almost by definition, didn’t do most of those things. And so I’m curious how you try to create or influence policy for populations that would respond to incentives or cues very differently than you, the people sitting in the White House or elsewhere. 

SHANKAR: Well I think I’ll push back on your point, which is I think they may have had an instance in which they didn’t follow the rules or didn’t demonstrate self-control. But that doesn’t necessarily inform their day-to-day behaviors or the way that they’ve acted subsequently or even prior to the crime they committed. In fact, the individuals that I’ve spoken with who have left prison are highly motivated. They want to be compliant. They want to get themselves back on a path to success, and are really eager to take proactive steps. So I think it’s wrong for us to falsely generalize from an isolated instance something deeper about that person’s psychology and the way that they act. And so I think that’s the first answer to your question. I think the second is that part of the design process was actually bringing in a formerly incarcerated individual, in this case a Second Chance Fellow, to weigh in on the design of the guidebook. To make sure that we were talking about mental health in appropriate ways. To make sure that we were framing resources in ways that would resonate with this population. And so, again that’s part of the behavioral-design process is making sure that real people who’ve actually gone through these experiences and the challenges associated with re-entry have a say in the content that goes into a guide like this. 

Coming up on Freakonomics Radio: the need for government streamlining is, shall we say, rather large:

SHANKAR: So, there’s the income-based repayment plan. There is income-contingent plans. There’s the pay-as-you-earn plan, there’s the revised pay-as-you-earn plan, and there’s income-sensitive plans.

Also: does Army private Thurman Dixon commit to the retirement-savings plan?

DIXON: So, that may be a big problem for me.

And remember: if you like your factual material served up with a side of game show, go subscribe right now to my new podcast, Tell Me Something I Don’t Know.   

*      *      *

Maya Shankar is a 30-year-old cognitive scientist by training who now runs the White House’s Social and Behavioral Sciences Team.

SHANKAR: We call ourselves SBST. 

DUBNER: You don’t call yourselves the S-Team, The Brain Unit? 

SHANKAR: Just SBST, yeah. 

DUBNER: OK. 

SHANKAR: But if you have ideas for a snazzier name, we’re definitely open.

DUBNER: You know what? Why don’t we put out the call to listeners, to Freakonomics Radio listeners, you can tweet us and Maya — what’s your Twitter handle, is it @SBST? 

SHANKAR: Yeah @SBST. 

DUBNER: That’s a problem right there. You’re going to have to remember that.

[MUSIC: Dorian Charnis, “Modern Bebop”]

DUBNER: I guess my greatest curiosity about everything we’ve been talking about, which is that it feels like you and maybe people within the agencies themselves are trying to come up with fixes to policies that are obviously well-intentioned, but just aren’t being taken advantage of fully. And so I guess that really is the big question, which is you feel there’s a necessity for your unit, and I’m guessing a lot of people would argue the same, but you know, just as a medical treatment is almost never as effective as a vaccine that prevented you from ever getting sick in the first place, I’m just curious. …

SHANKAR: You’re absolutely right. I would say it’s akin to having a behavioral Band-Aid. So you don’t want to put a behavioral Band-Aid on a broken program to make it marginally more effective. Instead you want to come in at the outset to define the fundamental features of the program so that you don’t need the Band-Aid at all down the line. So by way of illustration, let’s take the design of student-loan repayment plans. So to help students better manage their debt, the Department of Education offers what are called income-driven repayment plans. And this helps student-loan borrowers manage their debt. Because it limits their monthly  payments to a percentage of their monthly incomes. But within this plan category, there are many, many options that are slightly different and this can lead to a fairly complicated choice set. So, there’s the income-based repayment plan. There is income-contingent plans. There’s the pay-as-you-earn plan. There’s the revised pay-as-you-earn plan, and there’s income-sensitive plans. 

DUBNER: All right, I quit, I don’t want any plan. 

SHANKAR: Yeah! I mean don’t give me the pop quiz, I’m going to fail it, right? And I work in government. So here’s the thing, right? If you involve behavioral scientists in the process after you’ve developed all the plans and they’re set in stone, the behavioral scientists might be able to help design messages to students about these plans that utilize behavioral strategies. So they are maybe delivered from an effective messenger, they use social norms, they present decisions in terms of losses versus gains. And you might expect to see some improvements at the margins, right? Maybe a two- or three-percentage point increase. By contrast, if you bring in behavioral scientists at the outset , they might mention research showing that offering individuals more choices isn’t actually more beneficial. In fact, research shows that complex choices can deter people from participating in programs and making choices altogether. And so in this case, the behavioral scientists might recommend that you actually just consolidate all of these plans into a single income-driven repayment plan in order to simplify the choice and promote participation. And this was the sort of proposal articulated in our FY ‘17 budget

DUBNER: So you sound like you’re far too kind and politic a person to say so, but it must be frustrating to look at the policies that your unit is trying to help refine or optimize or streamline and you just say that, “Wow, these are not really occasional bugs that we’re looking at. These are features of these programs, that they make it really hard for people to do what they’re designed to do.” To what degree are you willing to admit that that is frustrating? 

SHANKAR: Well, I think progress is incremental. If you don’t see progress as incremental, it’s going to be hard to keep morale high within the federal government. But I think that we’ve seen the evolution happen firsthand within the federal government, which is that if you start small, and you celebrate small wins, eventually you will have built the trust and the credibility to actually engage in more powerful and more ambitious behavioral projects. 

An example of this incremental approach? The SBST’s work with the Department of Defense that we heard about earlier. Trying to get people like Private Thurman Dixon at Fort Bragg enrolled in TSP, the government’s Thrift Savings Plan.

DIXON: I’m a terrible saver.

When Shankar first met with the Department of Defense, she wondered: why not just automatically enroll military personnel in TSP?

SHANKAR: As would be the first thought of most behavioral scientists, is “Okay, we have the solution, right? Automatic enrollment is the ideal proposal here.” 

DUBNER: Which private firms have been doing for 10, 20 years now. 

SHANKAR: Absolutely. I mean President Bush signed into law the Pension Protection Act, which facilitated automatic enrollment, in 2006. So from a behavioral perspective, automatic enrollment is the ideal proposal. But, as you can imagine, proposing a substantial change in retirement policy that is going to affect over a million employees every year is a pretty hard sell on day one. So we began with a lighter-touch pilot in which we sent emails to 800,000 service members that prompted them to enroll.

This was in 2015. Shankar and her SBST team came up with an experimental plan: sending out eight different e-mails, each using a variant of a behavioral nudge or two, to see what led to the greatest uptake. Some e-mails emphasized exactly how to enroll; some emphasized the financial upside of enrolling. The level of personalization varied as well.

SHANKAR: And we found from that pilot that our most effective message doubled enrollment rates. 

DUBNER: And what was the most effective message? 

SHANKAR: Yeah, the most effective message was one that was personalized and that highlighted that even small investments today can lead to very large gains in the longer term.

The Department of Defense, Shankar says, was so impressed that it let SBST set up the Fort Bragg pilot. There, service members were approached in person rather than by e-mail. And given the TSP form as part of their routine orientation, with a yes/no option. No one is forced to check off “yes” …

SHANKAR: But you have to submit the form in order to complete the orientation process, and that’s the key feature. 

Roughly 12,000 people transfer into Fort Bragg in a given year. This year, one of them was Major Christian Martinez. He’s been in the military for 22 years, and he’s known about TSP for a long time.

CHRISTIAN MARTINEZ: My dad worked for the postal service and he had TSP. So I’d heard about it before.

Martinez watched the informational video.

VIDEO: If you have any additional questions about the Thrift Savings Plan, there are links…

Then he was handed the TSP form that required a yes/no choice. After 22 years, he finally said yes.

MARTINEZ: I didn’t really make the decision until right now. The form was up there. The video was up there. It was a trigger point. “Yeah, I got to do this.”

The nudge worked for Major Martinez. But how about Private Dixon?

DIXON: Definitely not today. Definitely not today. I think the reason I don’t do it is because I can’t touch it. So say I put something aside and then I spend all my money and I want to go touch it, I can’t. So that may be a big problem for me and to why I haven’t started it yet. But soon it should definitely be on the top of my list to get it done soon.

One paradox of retirement savings is that the younger you are when you start saving, the better off you’ll be. Compounding gains and dividends really are something close to a miracle. But: when you’re young, your salary is at its lowest, which can make diverting even a little bit to retirement feel like a stretch. An Army private like Thurman Dixon, remember, is only paid $700 every two weeks. So I wanted to ask Maya Shankar if the barrier that he said was keeping him from signing up – that he couldn’t touch the money – was really the primary barrier.

DUBNER: So, I’m guessing that there are a lot of military members on the very low end of the income scale who just feel like, “There’s not enough money to put away, and that you may be nicely offering me this Thrift Savings Plan, but it doesn’t really provide me that much. So how do you think I can afford to do that if I’m just trying to pay my bills?” I mean, sometimes a clever policy solution will actually highlight a different kind of problem than you were planning to encounter. Is one of the problems that military personnel are often paid very very little? 

SHANKAR: Well, our work is focused on lifting barriers to access or engagement for individuals who want to sign up for a program or take a specific action but aren’t doing so, because they don’t have access to clear information about the program, or are deterred by a complex application process. So sending an email reminder about enrolling in a retirement savings plan is going to make the difference for someone who wanted to enroll but just needed a reminder to do so. It’s not going to make the difference for someone who didn’t want to enroll because, for example, they were, you know trying to make a down payment on a home or didn’t actually have the resources to save. 

Still, the SBST’s interventions with military retirement funding have been so successful that the Department of Defense is embracing the solution that Shankar hoped for from the very beginning.

SHANKAR: We’re advising on a new policy change that’s going to automatically enroll military service members into retirement savings plans starting in 2018. I mean, it’s just been a remarkable collaboration.

DUBNER: SBST came into existence and still exists under a liberal or at least a Democratic government. So I’m just curious about the reception in the greater world beyond just Washington. I guess, a., how aware people are, voters are, about the work you’re doing? And b., what kind of pushback you may have felt. In Britain, there was this feeling that, “Nudge Unit. They’re going to tell us how to respond to this, how to buy that, how to decide upon this, and we don’t think that’s the role of government at all.”

SHANKAR: So I think it’s important to first point out that, as you know — you’re obviously deeply ensconced in the behavioral-science world — there’s no default-less state in the world. So regardless of whether SBST is involved, every program has a default design. If you go to a restaurant, menu options are listed in a particular order, and we know from research that people are more likely to pick the first option that they see from a set of options. And quite frankly if you’re a veteran and you’re asked to fill out a burdensome application form that requires referencing 15 different resources — well, that’s a default too. And chances are that those requirements are actually nudging you away from accessing the benefits that you’re entitled to. So in other words, programs have a default design that’s going to influence people one way or the other. I think that with time, people are starting to realize that we can either use evidence to inform the design process in the way that we structure those defaults to get better program outcomes, or we can kind of leave them to chance or leave them to accident. I think that one mechanism that we’ve used to make sure that the public is fully apprised of our work and that we’re fully transparent, is to publish the results of everything that we do. So we publish the results of interventions that worked, we publish the results of interventions that don’t work, those that generated null results. We provide really detailed accounts of what every intervention looked like and what the analysis looked like and what the population looked like because this is a back-and-forth between our team and the public. And I think this transparency coupled with the fact that when people actually see what we’re doing in practice, they feel a lot of confidence that what we’re doing is benevolent and is serving program goals. I mean, you can think about theoretical risks, but when you actually see a team’s work documented in a report, it might assuage some of your concerns. 

One SBST intervention that hasn’t worked – yet – was a pilot program aimed at curbing the abuse of prescription opioid pain relievers. Drug overdose has become the leading cause of accidental death in the U.S.; in 2014, more than 47,000 people died. Roughly 40 percent of those deaths are said to be related to prescription pain relievers, although — and this may be material for a future episode of Freakonomics Radio — I’ve seen data suggesting that the lethality of legal prescription medicine is overstated, that it’s primarily heroin and illegal, synthetic fentanyl that are responsible. In any case, the Obama Administration had been working hard to bring down fatal drug overdoses. Maya Shankar and the SBST team took aim at doctors with the highest rates of opioid prescriptions.

SHANKAR: So, they were I think in the top one percent of prescribers, and we simply sent them letters saying that they were in fact in the top one percent that the Department of Health and Human Services had taken note of this, and we tried to use social-norming effects, right? If they felt like they were truly outliers, then it might curb their prescribing habits. But we also wanted to give them concrete steps they could take if they in fact wanted to change their prescribing rates. So we gave them a set of good-prescribing practices to help nudge them in right direction. And we found that it didn’t work. And we have a lot of ideas about why it might not have worked. For example, the letters didn’t actually require that doctors sign off on it and send it back, and so you can imagine it getting to a doctor’s office and an administrative assistant opens the envelope, sees that nothing is actually required of them and then tosses it into the waste bin.

With those lessons in mind, SBST is trying a new version of the doctor letters.  The results aren’t in yet, but here’s how it works:

SHANKAR: In the redesigned version, we emphasized the negative consequences of inappropriate prescriber behavior, we sent letters to prescribers multiple times. And we also included a signature line at the bottom of the letters that went out. We know in the area of flu vaccines that simply asking people to commit to a moment in time when they’re going to get their vaccinations and then signing the end of the form even though they never actually have to send that form back to anyone, it’s just for themselves, can actually boost vaccination rates. And so we use that same principle here. 

President Obama’s executive order has made SBST a permanent part of the federal government.

SHANKAR: And I think that this has been our greatest institutional win .

DUBNER: Okay, so when you had this idea and made it happen within the White House. Until then, you had been mostly a student for the previous bunch of years, so you weren’t some longtime practitioner of either behavioral sciences or a longtime practitioner of policy making, and yet you, fairly fresh out of the postdoc, are ultimately made head of this new White House unit, which on the one hand is awesome, and congratulations. On the other hand, I guess from the outside you could argue it’s a signal that maybe the White House wasn’t very serious about this or wasn’t really expecting all that much out of a unit like that. 

SHANKAR: Yeah, it’s a great question, I mean I think the President has created an environment that is inherently dynamic and entrepreneurial. And I think it allowed people like myself to come in with an idea and test out whether it could happen at all in government. And so I think that that’s led to a very interesting evolution. Which is because I came in without a mandate and without having the authority to simply create this team, what happened as a result is the evolution of the team ended up being far more organic. And I remember at the time thinking, “Man, this is kind of frustrating.” Right? I wish there was an easier way for us to get to yes, and that I could simply tell our agency projects, “Please take this risk. Run this early pilot with me.” But, you know what we’ve come to see is that in the longer term, this approach, this organic approach to actually having to convince our agency colleagues to run behavioral projects with us, doing the upfront work to convince them early on that there was inherent value in what we were proposing, organizing brown bags on behavioral insights 101, giving examples of success stories in which behavioral insights was applied to policy. Making sure that we aligned our recommendations with their existing priorities and goals. That all has helped in the longer term because I think it’s actually fostering true cultural change and buy-in in agencies. And for that reason, many of our early pilots with agencies have effortlessly led to longer-term collaborations at the request of our agency partners. So you can easily imagine that if I came in and I was able to order these pilots – well, as soon as I left those pilots, that work would probably leave with me. But because we were required to get their buy in, they started demanding this work. They started becoming internal champions for the work. And now we have a government that has a number of internal champions within the agencies that see the value and hopefully help the whole effort persist. 

Shankar also points out that an evidence-based approach to policy making seems to be gaining bipartisan momentum. Who knows if this’ll prove to be just window-dressing – but, for instance, Democratic Senator Patty Murray recently paired up with Republican House Speaker Paul Ryan to co-author the “Evidence-Based Policymaking Commission Act.

SHANKAR: Which was signed into law by President Obama this past March and the bill establishes a 15-member commission to study how best to strengthen, expand the use of data, to evaluate the effectiveness of federal programs. So I think the fact that we have support on both sides of the aisle makes us very optimistic about the future of this team’s work.

DUBNER: So, Maya, in addition to your SBST role, I understand you’ve been recruited by the United Nations to serve as the first behavioral-science adviser to the U.N. — with, I understand zero funding and zero staff. So what does that actually mean? 

SHANKAR:  Well they must have thought, “Well, this girl seems like she’s a glutton for punishment. So we similarly don’t have a budget or mandate, so why don’t we bring her in to try to build a team here?

[MUSIC: Leo Islo, “Higher Living”]

We’ll keep an eye on Maya Shankar and I’d suggest you do too. For all the whinging we do on this podcast about the inefficiencies and irrationalities within government, it’s nice to see someone at least trying to be more efficient and rational. Next week on Freakonomics Radio, we talk to Shankar’s U.K. counterpart David Halpern about building social trust:

HALPERN: Social trust is an extraordinarily interesting variable and it doesn’t get anywhere near the attention it deserves. But the basic idea is trying to understand what is the kind of fabric of society that makes economies and, indeed, just people get along in general. It’s an issue that’s got long roots, but it doesn’t mean that governments had done very much about it until very recently.

That’s next time, on Freakonomics Radio.

Freakonomics Radio is produced by WNYC Studios and Dubner Productions. This episode was produced by Christopher Werth. Our staff also includes Jay Cowit, Merritt JacobGreg Rosalsky, Noah Kernis, Alison Hockenberry, Emma Morgenstern, Harry Huggins and Brian Gutierrez. You can subscribe to this podcast on iTunes or wherever else you get your podcasts. If you want more Freakonomics Radio, check out our archive, where we have every past episode. And you can also find us on Twitter and Facebook.

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Here’s where you can learn more about the people and ideas in this episode:

SOURCES

  • Maya ShankarSenior Advisor for the Social and Behavioral Sciences at the Office of Science and Technology Policy

RESOURCES

Additional music scoring by Jay Cowit

The post The White House Gets Into the Nudge Business appeared first on Freakonomics.

November 1, 2016
TMSIDK stage

A contestant tries to wow host Stephen J. Dubner and panelists Sam Kass, Gretchen Rubin and Zeke Emanuel. (Photo: Lucy Sutton.)

A while back, we tried out a new idea on a special edition of Freakonomics Radio — a game show we called Tell Me Something I Don’t Know. You might remember it. It was so much fun that we decided to launch a whole new podcast series. It’s been in the works for a while and it’s finally here! A preview episode of the first season of TMSIDK is now available.

Please take a minute to subscribe and, if you like the sound of the preview episode, please please PLEASE leave a rating and/or review on iTunes — it’s really important in helping launch a new show.

Like all the Freakonomics stuff we do, TMSIDK is still journalism, still factual — but disguised in the most sparkling conversation you can handle. In each episode, audience contestants get on stage and tell us something fascinating (or earth-shaking, or just plain weird) while a panel of three experts tries to sort out what’s worth knowing and what’s not.

The panelists are drawn from an eclectic group of wise people — like Barnard College president Debora Spar; New York Public Library president Tony Marx; former White House economist Austan Goolsbee; the Jesuit writer and thinker James Martin; bioethicist Zeke Emanuel; former White House chef Sam Kass;  Microsoft researcher danah boyd; the heart surgeon and TV doctor Dr. Oz; poker champ Annie Duke; the linguist John McWhorter; the Grit author Angela Duckworth; and the happiness guru Gretchen Rubin.gethard-and-contestants

We also have plenty of comedians and humorists, including Keisha Zollar, Chris Gethard, Frank Delaney, Andy Zaltzman, and Hannibal Buress. And occasionally a globetrotting adventurer like author Simon Winchester.

sjdIt’s all hosted by Stephen J. Dubner, who is accompanied each night by a real-time human fact-checker to keep everyone (mostly) honest.

Please subscribe today, so you don’t miss a single episode. The first one will be out on November 7. Season 1 will run six episodes — and we’re already taping Season 2 in New York City (in December and January), so come be a contestant or get tickets to see the show.sean-and-wmd

You can follow TMSIDK on Twitter, Facebook and Instagram. Even better, come be a contestant on the show. We’re taping our second season in front of a live audience in New York City in December and January. And you can get tickets to see it here.

The post Announcing the Debut of Tell Me Something I Don’t Know appeared first on Freakonomics.

October 26, 2016
Team Sky

The British cycling outfit Team Sky used a strategy of “marginal gains” to win four Tours de France since their founding. (Photo: Jaguar MENA/flckr)

Our latest Freakonomics Radio episode is called “In Praise of Incrementalism.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above.)

What do Renaissance painting, civil-rights movements, and Olympic cycling have in common? In each case, huge breakthroughs came from taking tiny steps. In a world where everyone is looking for the next moonshot, we shouldn’t ignore the power of incrementalism.

MUSIC: Eric Goetz, “Everything You Know” (from Present and Accounted For)

Below is a transcript of the episode, modified for your reading pleasure. For more information on the people and ideas in the episode, see the links at the bottom of this post, as well as credits for the music in the episode.

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Our previous episode of Freakonomics Radio was called “In Praise of Maintenance.” We asked if our cultural obsession with innovation has led us to neglect the fact that things also need to be taken care of. We talked about sewers:

Ed GLAESER: Certainly, Rome understood that engineering and infrastructure was a huge part of making its city function.

About bridges …

Larry SUMMERS: It’s a remarkable and not a very happy tale.

We talked about housework:

Ruth SCHWARTZ COWAN: They’re doing almost as much unpaid maintenance work as they are paid work.

And we talked about the nuts and bolts of the digital economy:

Martin CASADO: I mean, all of that is infrastructure.

We wound up talking about a pet project of mine — which is trying to digitally archive all my work and personal files:

Chris LACINACK: So this is about maintenance. It’s losing the 200 pounds and then staying that weight.

This project was daunting — until someone helped me frame it differently:

One step at a time. Increment by increment. It got me to thinking about the value of incrementalism in a moonshot world. It got me to thinking that incrementalism is to the moonshot, what maintenance is to innovation. And so, this week on Freakonomics Radio: “In Praise of … Incrementalism.” Or, if that’s too wonky for you, how about this: What do the Italian Renaissance, the Tour de France, and the civil-rights movement have in common?

Linda HIRSHMAN: We all like a dramatic story. But things don’t happen out of the blue, and it’s so interesting to get a true picture of why change happens, rather than this sort of phony all of a sudden picture.

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Ed Glaeser is an economics professor at Harvard. I wanted to ask him about my “incrementalism” idea.

DUBNER: So my argument here is that, um, generally we are encouraged and trained, really, to look for big-bang successes, in all realms — education, health care, politics, you name it — and while I understand the impulse to find these magic bullets — it’s exciting, it’s sexy, it’s all those things — it strikes me that much progress if not most throughout history has really been a series of incremental gains. What’s your take on that?

GLAESER: Oh, I think almost surely that’s true. You know, I like these examples from the arts, you know, you can really see each innovation in each painting and each step along the way. If you think about the glory of the Italian Renaissance, it’s a piecemeal process. When Brunelleschi first puts together the mathematics of linear perspective, of making two-dimensional spaces seem three-dimensional — you know, Donatello, his friend, puts it in low-relief sculpture. It moves to Masaccio, who finally puts it into a painting, in, in in Brancacci Chapel, St. Peter finding the, the coin in the belly of a fish. Fra’ Filippo Lippi takes up the ball. Botticelli takes up the ball, each person incrementally improving on the last person. Each person exploring the implications of this new idea. It’s not that, you know, Da Vinci comes along and then all of a sudden the world is different. It’s that he’s built on a century of incrementalists, some of whom are pretty big incrementalists but incrementalists nonetheless, who are really creating this revolution.

Glaeser is plainly an erudite fellow, especially for an economist. But just so you don’t think he spends all his time thinking about Renaissance art and ignoring his own discipline – well, we talked about that too.

GLAESER: You know, within the field of economics, there are larger or smaller parts of those increments, but we’re a field that builds on itself, and it’s sort of a striking fact that within economics, that the Nobel Prize doesn’t really give awards for single papers, so much as it does for a series of contributions by a particular person. And that’s surely as it should be, because there’s rarely, truly, sort of one paper on itself is so, revolutionary that it changes things. It’s more that people build on things. It often takes dozens of extra ones to figure out what it means, and what it what it implies for the wider world.

DUBNER: So plainly you appreciate incrementalism in your own field, and in other fields. Uh, do you feel that puts you a little bit in the minority? Do you feel that our culture and political and social culture is always looking for some version of the moon shot?

GLAESER: I don’t know. I mean, I think this is more a Silicon Valley thing than a Cambridge thing. I think maybe I believe in incrementalism because I’m so painfully aware of the very incremental nature of my own contributions. But it’s certainly true that in the political sphere we are always looking big bang solutions. We’re looking for a leader who will make everything right by coming around the corner, and inevitably we’re incredibly disappointed that somehow or other this new leader didn’t magically change everything. The more that you just think that the right answer is just to elect one person who will magically fix anything, the less that you actually pay attention to what really matters, which is the nit and grit of everyday decision-making, of everyday governance.

DUBNER: So civil-rights reform strikes me as one where, incrementally, there have been massive improvements, and yet it seems as though the appetite for an overnight  solution to every civil-rights issue is kind of expected. And when that doesn’t happen, there’s massive hue and cry — even though, overall, the trend has been moving in the right direction. You see that as well, or do you think I’m wrong on that?

GLAESER: No, no I agree totally with that. And it required people who — the NAACP for example, which worked for decades before the Civil Rights Act, right, to move the ball forward. Often in, you know, ways that were important, but seem today quite modest. I mean fighting up to the Supreme Court. Fighting the attempts to zone by race, for example, which it did in the teens. Right? You know, American segregation would’ve been even worse if cities could explicitly zoned by, by race, but they couldn’t. Fighting restrictive covenants as it did in the 40s. Fighting segregation in American schools as it did in the 50s. Decade by decade, increment by increment. And once we start thinking that there’s a silver bullet, we lose that, we lose the fact that we need to be working day by day, over decades, to affect change.

MUSIC: Lucy Bland, “Backseat” (from The Ruiner)

So let’s take a look at a recent story that’s been decades in the making.

JUSTICE KENNEDY: The Court now holds that same-sex couples may exercise the fundamental right to marry in all states; no longer may this liberty be denied to them.

SCOTT PELLEY: Today, in one of the most momentous civil-right decisions in its history, the Supreme Court found gay and lesbian Americans have a Constitutional right to marry.

In 2015, the Supreme Court ruled that same-sex couples have a constitutional right to marriage. “Marriage,” wrote Justice Anthony Kennedy in the majority opinion, “is a keystone of the Nation’s social order … There is no difference between same- and opposite-sex couples with respect to this principle.”

JUSTICE KENNEDY:The challenged laws excluding same-sex couples from marriage cannot stand under the Constitution.

In 2001, the Pew Research Center found that a majority of Americans opposed same-sex marriage. The margin was 57 percent against to 35 percent in favor. But by 2015, those numbers had practically flipped. Which would seem to indicate a rather sudden shift.

Linda HIRSHMAN: People often say to me, “Wow, gay marriage. It succeeded so quickly!” They say that all the time. We all like a dramatic story. But things don’t happen out of the blue, and it’s so interesting to get a true picture of why change happens, rather than this sort of phony, all-of-a-sudden picture.

That’s Linda Hirshman. She’s a legal scholar who used to practice labor law – she argued two cases before the Supreme Court and briefed and managed a third. She’s also the author of several books, including Victory: The Triumphant Gay Revolution. The revolution, Hirshman argues, was incremental.

HIRSHMAN: It wasn’t the explosion that the popular narrative makes it out to be.

So, to understand how we got here:

PAMELA BROWN: A historic day here at the Supreme Court, Jay. You can probably hear gay-rights advocates to my right cheering this decision.

You have to go back to a time when life for gay men and women in America was very different.

JOSEPH McCARTHY: There’s another group about which I hesitate to talk, but I think the picture isn’t complete unless we do.

HIRSHMAN: It got very bad during the Joseph McCarthy period.

JOSEPH McCARTHY: This unusual State Department affliction, homosexuals…

HIRSHMAN: So the sort of Red Scare stuff that went on in America started in World War II. And right after WWII it really ramped up and the government used the fact that people were gay as evidence that they were subversive. And they fired them if they worked for the government, so it was a very dark period in gay history.

One of those people was Frank Kameny. He was a Ph.D. astronomer from Harvard.

HIRSHMAN: He was hoping to become an astronaut.

Kameny worked with the Army Map Service of the U.S. Army Corps of Engineers.

HIRSHMAN: And they caught him in a bathroom in San Francisco and they fired him.

This was in 1957.

HIRSHMAN: And he said that’s unconstitutional. You can’t fire me just because I’m gay. And he sued the United States.

Kameny lost, and appealed. He lost again on appeal. In 1961, Kameny petitioned the U.S. Supreme Court, but was turned down.

HIRSHMAN: It was too soon. But things in America were starting to break up. And just at that moment, Frank Kameny had the courage to resist.

The civil-rights movement was growing – sit-ins, Freedom Rides, eventually the March on Washington, D.C., in 1963. Frank Kameny wanted to do something similar for gays and lesbians. There was a gay-rights group, founded in Los Angeles in 1950, called the Mattachine Society. The name came from mattachino – Italian for a court jester who spoke truth to power. Kameny started a Washington chapter of the Mattachine Society, and he organized protests outside the White House and other federal buildings.

FRANK KAMENY: Every American citizen has the right to be considered by his government on the basis of his own personal merit, as an individual.

That’s Kameny speaking outside the State Department in 1965. At the time, the State Department argued that gay men and women were national-security risks because they could be easily blackmailed.

KAMENY: Certainly some homosexuals are poor risks. This is no excuse for penalizing all homosexuals.

Their protests were ineffective. Here’s then-Secretary of State Dean Rusk.

Dean RUSK: Well, I understand that we’re being picketed by a group of homosexuals. [Laughter] The policy of the department is that we do not employ homosexuals knowingly. And if we discover homosexuals in our department, we discharge them.

From the tone of Rusk’s voice, you get a sense of just how much stigma was attached to homosexuality. You have to remember – being gay at the time could not only get you fired; it could also land you in jail. Nearly every state at the time had sodomy laws. Was there at least some support from the medical community? Hardly:

Charles SOCARIDES: Homosexuality is in fact a mental illness, which has reached epidemiological proportions.

That’s Charles Socarides, a psychiatry professor, interviewed for a 1967 CBS News report called “The Homosexual.”

SOCARIDES: The fact that somebody’s homosexual — a true, obligatory homosexual — automatically rules out the possibility that he will remain happy for long in my opinion.

HIRSHMAN: Kameny had figured out as soon as he got active that there could be no equality for gay and lesbian people while they were classified as crazy.

Indeed, Socarides’s view was hardly a marginal one. The American Psychiatric Association classified homosexuality as a mental disorder. The Mattachine Society and other groups set out to change that classification.

HIRSHMAN: And they went about it in a very incrementalist way. They went to the people in the American Psychiatric Association who were studying the question of the diagnoses. They’re a medical association, so they had scholars who were studying it. So the gay organizers approached the scholars and said, “You’re wrong. You’ve got to do real research into this.”

It helped, perhaps, that Frank Kameny was himself a scientist. Hirshman says he could spot flaws in the scholarship about homosexuality. For instance, most of the studies relied solely on gay psychiatric patients.

HIRSHMAN: I mean once somebody is going to the psychiatrist to be helped, he’s part of a population that’s not representative of the whole gay population, right? He’s already in need of psychiatric help or he wouldn’t be there in the first place. You have to look at a representative sample of the whole population and see if they seem to be in distress, which they did not, except from the persecution of course. And to see if they were functioning according to the other indices of good mental health. And they were. The numbers were overwhelming, once the psychiatrists stopped looking at their own patients.

Homosexuality was finally removed from the list of mental illnesses in 1973.

HIRSHMAN: To their credit, these doctors, at the end of the day confronted with the science, did change their position. I interviewed, before he died, the psychiatrist who was in charge of the APA at the time and he said it was the greatest accomplishment of his life. 

So that was progress. But consensual sex between two people of the same gender was still illegal in most states, and those laws gave the police enormous power over gays and lesbians.

MARTIN BOYCE: They were always on the lookout for us. They tormented us. They just didn’t leave us alone.

That’s Martin Boyce, a longtime New Yorker who participated in the famous Stonewall riots in 1969.

BOYCE: The amount of people that had trouble with the police or were sent to some sort of institution or were brutalized one way or another, with the police not intervening or being on the side of the brutalizer, was growing. I don’t think any of us did not know someone who really, really suffered real consequences. If not ourselves, then somebody.

The riots were set off by a police raid of the Stonewall Inn, a gay bar in Greenwich Village. In retrospect, the riots were a turning point in the gay-rights movement. But it would take a long time to gather enough momentum to challenge the legal system.

HIRSHMAN: Quietly during those years in various states and around the country, state courts and state legislators had been decriminalizing sodomy. So gays were now not crazy, and they then attacked the premise that their behavior was criminal. And they were succeeding pretty well.

But many states still had sodomy laws. The movement’s ultimate goal was to take the fight all the way to the Supreme Court, which could invalidate all the state laws at once. In 1986, at the height of the AIDS epidemic, the American Civil Liberties Union thought it found a perfect test case in Michael Hardwick, a gay man who’d been arrested for sodomy in Georgia.

HIRSHMAN: In the gay legal bureaucracy, it was felt they reasonably could expect now to get a national judgment that criminalizing gay sex, as opposed to not gay sex, which is not criminal, was a violation of the equal-protection clause.

The ACLU did take the case, known as Bowers v. Hardwick, to the Supreme Court. And …

HIRSHMAN: They lost it, 5-4.

The majority ruled that the right to engage in sodomy was not constitutionally protected. Linda Hirshman says it was a devastating defeat for the gay community.

HIRSHMAN: The opinion is reprehensible and they were already suffering from AIDS.

But, she says, it also made gay-rights advocates even more determined.

HIRSHMAN: Sometimes a defeat like that is so insulting that it radicalizes the community.

By now, the right to marry was becoming another significant plank in the gay-rights platform. Here, from back in 1974, is Frank Kameny talking about it on PBS:

KAMENY: Exercise by homosexual couples of the right to marry detracts not one iota from the rights of heterosexual couples to marry. Homosexual marriages interfere with no one individually. And such marriages impair or interfere with no societal interests.

The question was how the goal of gay marriage could be achieved through the courts. Hirshman says that one source of inspiration was found in the African-American leadership, particularly the NAACP, that pursued civil-rights legislation in the 1950s and 60s.

HIRSHMAN: They followed an incremental pattern more cleanly than any other social movement because the NAACP controlled it.

Thurgood Marshall, who eventually became the first black Supreme Court Justice, was head of the NAACP’s legal strategy. In that capacity, he argued several cases before the Supreme Court, including the landmark Brown v. Board of Education of Topeka, which in 1954 desegregated public schools.

HIRSHMAN: The closest that we’ve come in American social history to having a dictator is Thurgood Marshall. The Inc. fund, the NAACP legal-defense fund, controlled the money that you needed to spend to prove a school desegregation case. And accordingly, they got to say in what order that very fundamental question of school desegregation was presented to the Supreme Court. So they challenged, for instance, a law school that segregated its one black law student out from the class of white law students by roping him off. I mean they didn’t tie him up, but so important was the maintenance of racial caste. And it’s hard for a Supreme Court in the 50s to look at that and say, “Oh, that’s okay.” So in fact the court said it was unconstitutional. Okay now, if it’s unconstitutional to segregate a state law school, why isn’t it unconstitutional to segregate state colleges? And from there to the grade schools, which was the socially the most explosive decision.

The gay-rights movement had no dictator, like Thurgood Marshall. Nor was there a single, dominant organization like the NAACP. But, Linda Hirshman says, there was a consensus beginning to form among activists that the gay-marriage fight would be the hardest one to win. Which meant continuing to focus on the sodomy laws – and fighting anti-gay discrimination in the labor and housing markets and elsewhere.

HIRSHMAN: They very smartly went back to the drawing board with the sodomy laws. And kept getting them struck down by state courts and reformed and reversed in state legislatures until it was an outlier in America to make sodomy criminal.

Finally, in a 2003 case called Lawrence v. Texas, the Supreme Court overturned Bowers v. Hardwick, thus invalidating all remaining sodomy laws.

BOYCE: And that I think was the most important decision of them all.

That again is Martin Boyce, veteran of the Stonewall riots.

BOYCE: I mean once that happened, then it was going to be a matter of time. I don’t know how much time. It could have been many more years of incrementalism. But I knew it was going to happen.

“It” being the legal right for same-sex marriage. Gay-rights advocates won the legal battle in a number of states – Massachusetts was first, in 2004 – although they subsequently had to fight off a proposed federal amendment to the Constitution that would have defined marriage as a union between a man and a woman. They kept working to shift public opinion. In 2012, President Obama, who had previously opposed same-sex marriage, changed his position:

Barack OBAMA: At a certain point I’ve just concluded that for me personally it is important for me to go ahead and affirm that I think same-sex couples should be able to get married.

The same-sex marriage movement, as triumphant as it was, in some ways came out of order. There were other, perhaps more fundamental goals to still accomplish — for instance, winning nondiscrimination protections for the LGBTQ community throughout the U.S. Still, as Linda Hirshman points out, the marriage movement did work, and it worked because of the incremental steps that added up to victory. Hirshman has written a number of books on social movements. We asked if she had any advice for one social movement that’s dominating headlines these days: Black Lives Matter.

HIRSHMAN: I have lessons that I think any future movement can learn from the gay-rights movement, and they are as follows: Put your own interest first. Do not take up every conceivable progressive issue that somebody in your movement thinks is interesting. At the beginning, new movements don’t have a lot of spare capital and they need to spend it on their issues and the things that will keep them together rather than fragment them. The gay movement did that. Two, take the moral high ground. The AIDS epidemic forced the gay movement to take the moral high ground, and they did it beautifully and then they used it in the marriage fight perfectly. And the third lesson is have weekly meetings. I am not convinced that social media is a substitute for the kind of social, deep rich social contacts that emerge from physical proximity to one another. The next steps that Black Lives Matter can take are reasonable ones for them to take next, okay? The availability of technology in the form of video cameras and phone cameras empowers them to take bolder action than they would be able to take without the technology. So their next steps look about right to me. They’re bold, but they are in a sense incremental. I mean saying, “Don’t shoot me while I’ve got my hands in the air” does not strike me as a radical position. They then have to move to much more profound issues like the organization of the police force and their training and the way that people use local taxes against communities of color like in Ferguson. Those are bigger bites, but it’s time I think for those to be addressed as well.

MUSIC: Andrea Wittgens and Sugartown, “Alibi Was Just An Afterthought” (from Alibi)

Coming up next on Freakonomics Radio: if the incremental approach can help produce widespread social change, what can it do for your retirement savings?

DAVID LAIBSON: It’s hard to imagine how you go from what seems like a little bit of money to being a millionaire but that’s exactly the way it works when you work out the math.

And… can incrementalism win you the Tour de France?

DAVE BRAILSFORD: Probably not, but it can contribute.

*      *      *

MUSIC: Nicholas Pesci, “Feeling Quirky”

Let me ask you a question: where do you get your financial advice?

Jim CRAMER: Let me tell you how I see it.

Maybe you tune in Jim Cramer to see where the market’s headed?

CRAMER: Crystal-clear short-term signal [Sell! Sell! Sell!] to sell the automakers for the moment.

Or maybe you follow a different money guru.

CLIP: Squawk Box! Weekdays at 6am on CNBC!

Mike SANTOLI: We know why these stocks look cheap.

PRESENTER: Dan, walk over to the smart board.

David LAIBSON: It depresses me that so many people giving so much bad advice have such a big audience and get paid for it.

That’s David Laibson

LAIBSON: I’m a behavioral economist at Harvard University.

Laibson’s done a lot of amazing research over the years – really amazing, you should look it up – mainly focused on how people make decisions. And how a lot of those decisions are suboptimal – and what should be done about that. Consider saving for retirement. A lot of people don’t follow the incremental approach.

LAIBSON: They love to hear the get-rich-quick story, and people dispensing those stories get big audiences. And some of them even have good historical track records and they get even bigger audiences, until of course they get a bad track record. It’s very easy to get sucked into a false prophet, and there’s so many of them in the financial-services industry.

In study after study, the data overwhelmingly show that individual investors are no good at picking stocks.

LAIBSON: Even the pros are no good at that game. The ability of a mutual fund that does well in one year to do well in the next year is close to perfect chance. So you’re just making a mistake. It’s a very natural mistake. I understand the mistake, because we all look out at the world and say, “Hey, I can see good companies and bad companies.” The problem is that that goodness and badness is already priced in. So you’re not the first one to figure out that Amazon’s a good company. You’re not the first one to notice that this car maker is starting to make bad products and no one is buying their vehicles. Everyone is seeing what you’re seeing. All that information is priced in already. You don’t have an advantage in playing the market.

So what’s a better way to think about saving for retirement?

LAIBSON: One has the impression that it’s impossible to save enough for retirement — and to a certain extent, it is impossible if you start at age 50. But if you start early in life, and every year, you contribute let’s say 10 percent of your income, and maybe there’s an employer match, so now we’re up to maybe 15 percent, and you invest that savings in a diversified mutual fund, stocks and bonds, and you have low fees, and you keep going at that year in and year out, and you don’t decumulate prematurely — it’s amazing how that process produces millions of dollars of retirement savings. So it’s kind of hard to imagine how you go from what seems like a little bit of money each year to being a millionaire but that’s exactly the way it works when you work out the math.

DUBNER: So what you’re describing is not at all a secret to anyone who’s ever read any basic personal-finance or investing book. And yet, as we know, there are a lot of people who don’t follow that. Talk to me for a minute about what we know about the people who have the ability and the resources, the income to accomplish exactly that plan but don’t do it. Is it just too boring, is it too much work, is spending here and now just too exciting to divert that saving today?

LAIBSON: It’s a lot of elements. One element is investing is complicated. So one of the ways that success is achieved is by employers auto-enrolling their employees in these plans and then auto-escalating their savings rates. Also the employer picks a good default investment fund, again diversified, stocks and bonds, mostly stocks when young, moving more and more to bonds as you age. Low fees. Passive investments, so rather than having active management, which is costly, you have passive investments that implies lower fees. And when the employer puts all those pieces in place, people go with the flow. They don’t opt out. They don’t say no. In fact, they say, “Thank you so much. I’m so glad you did this for me.’” But if all those pieces aren’t there, we go off the rails. So our employer may not offer such a plan. That’s a problem for approximately half of the private-sector workforce. There are so many ways in which, unless the right conditions are there, we end up doing what comes natural, which is postponing saving or, even if we save, decumulating. That’s another big risk factor. Maybe I’m at a firm for 10 years; I’ve now accumulated a considerable pool of funds. I leave that firm to go to another firm. Rather than rolling the money over to an IRA or leaving the money in the original employer’s plan, I take that savings as a distribution and now I’m spending that money. So in fact, rather than building the beginning of the snowball that’s going to roll into something enormous, I’ve made my savings vanish and I start again from zero at the next firm. So there’s a lot of ways in which, even though we know we should save for retirement, we fail unless the right conditions exist for us to succeed. It’s those workers who accept those defaults and who take advantage of these modern retirement savings systems, employer-based retirement savings systems, who end up thriving in retirement.

One more conversation today, before we wrap things up, on incrementalism.

DUBNER: Shall I call you Sir Brailsford, Sir Dave, how does that work?

Dave BRAILSFORD: No, no. It was a nice thing to happen at the time but in reality gets you an upgrade on flights and a few hotels rooms but that’s about it really. So let’s stick to “Dave.”

Dave Brailsford was knighted for helping turn Great Britain into a perennial titan in the sport of cycling.

BRAILSFORD: Prior to th