Can You Be Too Smart for Your Own Good? And Other FREAK-quently Asked Questions: A New Freakonomics Radio Podcast

Our latest podcast is called “Can You Be Too Smart for Your Own Good? And Other FREAK-quently Asked Questions.” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.) 

In this episode Steve Levitt and Stephen Dubner field questions from podcast listeners and blog readers. (You can listen to earlier FAQ episodes here, here, here, here and here.) In this installment, they talk about circadian rhythms (no, not cicada rhythms) and whether modern life is killing us; the incentives for curing cancer; if you can be too smart for your own good — which leads to a discussion of marriage markets and autism; whether legalizing gay marriage would affect the economy; and why people can be trusted to pay for bagels but not for music.

Once again, thanks for all of the great questions. As Levitt has said before, he really loves doing these FAQs, because …

LEVITT: The questions we get are so strange that you never could have made them up. 

Keep ‘em coming!

Audio Transcript

[MUSIC: Ed Hartman, “Simple Life”]


DUBNER: Hey Levitt, of all the things that are in your power to do at this very moment in time, what would be your very most favorite thing to do?


LEVITT: If I could be doing anything right now, what would I be doing?


DUBNER: Yeah.


LEVITT: Probably playing golf.


DUBNER: Alright if, let’s say, you can’t play golf what comes next?


LEVITT: Probably sleeping.


DUBNER: If you can’t be playing golf or sleeping what’s third?


LEVITT: Probably being here talking to you.


ANNOUNCER: From WNYC and APM, American Public Media: This is Freakonomics Radio, the podcast that explores the hidden side of everything. Here’s your host, Stephen Dubner.

[MUSIC: Aaron Saloman, “Hip Check”]


DUBNER: Every now and then, Steve Levitt and I ask you, our listeners and readers, to send us your questions. Then we try to answer them on this podcast. We call it FREAK-quently Asked Questions.


DUBNER: I like this question, it will be interesting to know if we can be of any help from David Rossetti. He says, “Is modern life, more specifically, the fact that we no longer follow our circadian rhythm killing us? There are all kinds of rises in diseases, cancer, autoimmune et cetera in developed countries that do not exist in numbers anywhere close to what they have elsewhere in the world. And no one really knows what’s going on. So could simply going to bed when it gets dark and waking up when it gets light reduce billions of dollars in healthcare costs, increase productivity, reduce addictions to alcohol and drugs and depression, et cetera. Levitt, circadian rhythms having to do with rise in diseases, and more broadly then tied to cost and productivity. You know anything about that?


LEVITT: We’re probably not the right people to answer David’s exact question, which is more of a medical question about is there a link between staying up all night and dying of things like cancer. And I do want to challenge his first premise, which is that cancer and heart disease and all those things are way higher in the developed world than in other places. In part it’s because in the developed world we’ve done such a good job of getting rid of the other things that kill you that you’ve got to die of something. So that’s the sorts of things that now kill us are the diseases of senescence, or old age, heart disease, cancer, things like that. But I think being realistic, and not knowing any of the facts, but just guessing, I cannot imagine that working the night shift in terms of life expectancy could take more than a year off your life, I mean maybe two years, but it would be amazing to me if the kinds of things that we’re talking about could matter that much. And my guess is actually that accidents, accidental death is the greatest thing that gets elevated when you work the night shift because you’re just so darn tired all the time that you end up getting into car crashes and falling down the stairs and things like that.


DUBNER: So if you’re saying maybe a year less of life expectancy, compare that for a minute to let’s say an unhealthy habit, whether it’s very poor diet, or let’s say smoking. You think that working the night shift continuously throughout your adult life would have less of a physiological detriment than the others?


LEVITT: That just my, that’s my conjecture. I don’t really know. But whatever it is, what I want to compare it to is the gains that we’ve had in the modern world that in some ways necessitate a bunch of people staying up all night to make it possible for the rest of us to have a great life. And the gains we’ve had in life expectancy over the last hundred years are probably, I don’t know, 35 or 40 years increased from maybe 50 years.


DUBNER: Just about…Yeah, well just about doubled in the U.S. for a U.S.-born male. It about doubled in the last…So rough 38 to 76. But again a lot of that is also hidden in childbirth, death in childbirth, which you know, is still higher in the U.S. than in some countries, but almost went away. And once you get rid of those deaths, it used to be that once you got to middle age you did have a relatively good chance of living longer.


LEVITT: Yeah, absolutely. So I just think that it’s part of modern life that we get tremendous consumption value from being able to be able to, you know, go drive late to Taco Bell and get whatever we want to eat. And if we get sick, the hospitals are open, and that the capital in the factories can be used productively by doing three shifts instead of two. So it’s not perfect. Look, all of us would rather be sleeping when it’s dark and be waking up to the sun and the roosters and stuff like that. But I think that it’s a cost of modernity. And you know, maybe the answer is how do you lower that cost, what can science and technology do to reduce the costs of that kind of thing. And one thing that I think we know is that it’s very difficult to be switching from daytime to nighttime to daytime to nighttime, which is what sometimes they do in police departments and in hospitals. I believe there’s a body of evidence that says you just kind of get used to the night shift if you do the night shift for years and years and years, in a way that moving back and forth is very hard.

 

[MUSIC: Erik Janson, “One More Time” (from Morning in Paradise)]


DUBNER: Alright, let me ask you this, here’s a question that came in…actually kind of two versions of the same question, one from Steve Adema, Adema, and one from Miguel Sandoval. The one asks, “Is there a hidden cost to intelligence, I feel a lot of people assume wrongly(?) there’s a tradeoff between intellectual and social ability.” And the other fellow asks,  “Can you be too smart for your own good? I’ve heard this used often, however, I tend to disagree that you can be too smart for your own good.” Levitt, you’re a relatively smart guy, have there been instances in your life where you’ve been too smart for your own good, and do you know anything about this more generally?


LEVITT: I can’t say I ever remember being too smart for my own good. I’ve seen other people. And I’ll tell you the biggest thing that happens in academics is that really smart people become convinced that they can trick, not just a single other person, but they can trick everyone at once. I’ve seen it a number of times where the smarter you are, the more you think you can get away with and it ends up being your undoing. The people who are really, really smart actually can run circles around people. But it’s the people who are one notch below the very smartest who I’ve seen get into a lot of trouble by thinking they’re too smart.


DUBNER: What about the related problem of domain transfer, people thinking that because they’re very good or very smart in one arena they kind of develop an attitude of confidence that you know, people talk about this with doctors sometimes, called the God complex. You think that if you can figure something out like the human body you can figure out just about anything. Do you see that?


LEVITT: Oh yeah, that’s what we’re doing right now. Isn’t that what our FAQs are? You and I are good at one thing. You’re good at writing. I’m good at taking a pile of data and making sense of it. And we sit here and talk like we’re good at answering questions about whether we’re smart. I mean, it’s exactly what we’re doing right now. And it’s something that you and I rail against all the time. And we have some fun with it just because we know we’re among friends on the podcast, but the people listening understand that we’re just kind of screwing around when we answer these questions, we’re not really giving the truth. Now, if you go back to that first question about the tradeoff, yeah the social tradeoff. I think there are at least two really good reasons to believe that people who are intelligent will not possess particularly good social skills. And one of those is if I take just the example of math ability, there’s a lot of evidence that autism is a sort of extreme form of “mathiness,” thinking like a mathematician or lke a scientist, and that interferes with the way that you think about people and interact with people. And so I think there are some genetic reasons why being smart in a math way might get in the way of being good with people. I think we’ve all seen some of that. I think the other thing is just what you invest in, right? So when you’re a kid if you’re smart, you invest in the things that smart kids invest in: doing well in school, impressing people, trying to get into college. And if you’re not smart, you make a lot of investment in being social and being the cheerleader type or the homecoming king, and those investments are really important.


DUBNER: That’s interesting. That’s a good point. Let me ask you this though about…I’m curious hearing you talk, I think about gender. So I think two things about gender and smartness. So one is, you know, why is the autism spectrum so much more, why are there so many more males in it than females. I have a friend, Mehmet Oz, Dr. Oz, who I’ve known for a long time, before he was famous, and he’s always been brilliant and kind of great. And he was telling me not long ago that with boys, he puts it the way only a scientist would, there’s a lot less quality control with boys, he said. Right? So for girls who are going to be carrying the next generation, their wiring needs to be kind of further along than boys who can survive in a different way. But it makes me think when you’re talking about the relation between smartness and either success or social ability, you’re answering from the perspective of a male. What about for women? Do you think women are penalized more for being smart or smarter than their peers than men are, and if so, on what dimensions?


LEVITT: Certainly in the marriage market, in the dating market, smart women don’t get rewarded in any way like smart men get rewarded. I think we wrote a little bit about it in Freakonomics, didn’t we, about the dating? And smart men who had a lot of education did quite well, but women who had a lot of education did poorly.


DUBNER: It was hard to tease out the education for women and the income, because both of them were turnoffs for the other men, right?


LEVITT: If you go back to the 1960s and you look at the marriage rate of highly educated women, it was really low. It was shockingly low. That they were…Of all the people in society least likely to be married, it was women who went and got Ph.D.’s. So I think women really do pay the price for, at least historically have paid the price for being too smart and too successful. Although I think that’s…Certainly the data suggests that that’s changing. And that’s my feeling as well that there’s a lot more room for smart women in society today than there was.


DUBNER: Is it that there’s more room for smart women in society or is it the matching markets are better? There are better, easier ways for smart women to find the men that they want to find than there used to be.


LEVITT: Well, it’s certainly true that places like Silicon Valley where it used to be that men who would be, say, computer programmers would marry women they met in college. I think now they’re more likely to marry other women who are computer programmers. So to the extent that men and women are more and more doing the same jobs, I think that that does help very much successful women to meet the kind of men who are equally successful. But that’s also according to some people, including a student of mine, Hays Golden, is one of the reasons why autism is going up. Because the men who are good at math are now much more likely to have babies with the women who are good at math, and that seems to be triggering an increase in autism.

 

[MUSIC: Niels Nielsen, “We Are Youth” (from Cmon Vultures Part: 1)]


DUBNER: Coming up on Freakonomics Radio: since fighting cancer is big business, what’s the incentive to find a cure?  


LEVITT: So I would say the incentive for a cancer cure is not really a market incentive, it’s a being a hero kind of incentive.


[UNDERWRITING]

 

ANNOUNCER: From WNYC and APM, American Public Media: This is Freakonomics Radio. Here’s your host, Stephen Dubner.

 

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


DUBNER: Here’s a question from someone names Dallas, “Would making marriage legal for the LGBT community improve the economy? Is so, how much?”


LEVITT: Well…


DUBNER: Pass?


LEVITT: No, let’s see…I would say, I don’t think that would have a big impact on the economy for a couple of reasons. First, I think that when you talk about marriage versus not marriage, if all you’re talking about is just everyone has the same relationship you just change the title of the relationship, then maybe you’re talking about having some big weddings, but that to me feels like Keynesian economics, and the idea that if there’s more demand for things that will make the economy better. But I think the modern view of the world, or at least my modern view of the world is that for the economy to be better, you need to be better at making things, right, so that the supply side of the economy, productivity is everything. If we can make workers more productive then we end up being richer. But consumption…Is...You know, if people just consume more stuff, I’m very much of the view that things like stimulus, government stimulus and what not, just aren’t very successful because what you need to do is figure out how to make everybody more productive and produce...


DUBNER: Okay, but let’s talk about let’s say a couple that’s not married that wants to be married and is not able to versus a couple that wants to be married and is able to legally and some of the economic changes that might take places around that. Let’s say healthcare consumption or at least paying for healthcare, how much they’re actually paying. Let’s say taxation, a married couple’s actually going to pay more than two individuals not. Can you imagine any way around those avenues in which it has any kind of real impact, or is it still not much of an issue in your view?


LEVITT: Yeah, it sounds to me a lot like a bunch of transfers. You know, I don’t think that people are going to…They’ll have to make different choices, maybe distort their choices less if they’re married. Let’s take the healthcare market. Now maybe it’s true that because of spousal coverage, people will make a different set of choices, but that seems to me like a crazy way to think about the problem. We have a terrible healthcare system in which employment and healthcare should not be linked. We should fix that problem first and not try to back door it through…


DUBNER: Right, but until we fix, until we fix that problem, at least having it linked to one person in a couple’s employment rather than two, is that an improvement or dis-improvement?


LEVITT: I think that’s a triviality. On issues like this, whether it’s this or abortion, or capital punishment, I mean these are issues that economically are just not very important. I mean it just doesn’t…Capital punishment isn’t very important to crime. And abortion in dollars and cents is not important at all. But they stand for something much, much greater. They represent, you know, what America means, or ideology, or personal rights, or whatever. And the relative importance of the issues of liberty and fairness and things are, have got to be a hundred times bigger than the direct economic impact, so I think it’s just confusing the issue to even talk about economics when these are, these are moral issues not economic issues. That would be my good answer to that question. So skip all that other junk I said.

 

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

 

DUBNER: Levitt, this is interesting, a question from Damon Beaven, or Beaven. “What would be the economic impact of a cheap, readily available cure for cancer?” Here’s the basic scenario he writes, “Imagine that somehow we find a cure for cancer that involves something cheap and simple like drinking a spinach smoothie with every meal for five days. We have entire industries and charities that are geared toward finding cancer cures and treatments. What would be the economic impact of those industries and charities were suddenly out of the business overnight? One reason I ask is because I often argue that there’s no clear market incentive to find a cure for cancer. Treatments are expensive and there are repeat customers.  It’s a nice profit model. A cure would slowly eliminate the customer base for treatment. So other than altruism, where is the incentive for a cancer cure?”

 

LEVITT: So I would say the incentive for a cancer cure is not really a market incentive, it’s a being a hero kind of incentive. That there are so many doctors out there, researchers, medical researchers who if they could be the one who was forever remembered as the one who prevented cancer, who got rid of cancer, they would do anything to do that. So I think there are really strong incentives out there. And they aren’t exactly market incentives, although I think that person would be quite rich anyway. But incentives that are even more powerful than markets. But on the flip side this is a really important point in economics that many people don’t understand, it is always better to be able to get something for nothing than to have to put real resources into doing it. So any time that we can find a way to get rid of a problem for nothing, we want to do it. So we right now invest enormous resources in trying to fight cancer. But if we didn’t have to spend those resources fighting cancer, we would spend them on something else that people liked. And the world would be a much better place. A good example of this is labor. Let’s say that instead of it taking eight hours for a person to produce, you know, 100 wallets, or whatever their job is, let’s say they could do that in four hours, they could produce 100 wallets, well then they just bought four free hours of leisure. That would be a great thing. The less labor you need, the less capital you need to make something the better. So there’s this crazy Keynesian argument about oh you need people to be busy, you need demand and whatnot, okay but it absolutely, for certain, no doubt about it, if you can suddenly make things for free that used to cost you money, the world is a much better place. Because you just reallocate all the resources you were, “wasting” on solving cancer before, and put them to do something else.

 

DUBNER: It also makes me think of on a smaller scale, but not insignificant, what happened in this country and elsewhere with polio, right, which is that at one point, even though polio was never that mass of a disease, it was crippling for those who had it, if it didn’t kill them it crippled them, and most of the money was put into treatment. And then there came…And for a long time there was not much thinking about the idea of a vaccine, it wasn’t really the main line of thought. But then it came to be, and then the vaccine mentality took and a vaccine, two vaccines were actually created. So Damon’s question is a little bit like saying, you know, the incentives of the people who make the iron lung are so strong that they will prevent anybody else from actually pursuing a vaccine. But as we’ve seen over and over again, those aren’t the same people and they pursue different paths.


LEVITT: Yeah, I think that’s right. If you compare that more to something more like car seats, I think it is true that right now, the people who make car seats are the same kind of people who might push for other ways to keep kids safe in cars. And there I think there are more obstacles. It’s just the world of medicine the particular pharma companies who make a particular cancer drug have zero control over the thousands of medical researchers who are scattered across the globe trying to solve these problems. So I think you’re exactly right, that there’s no cartel which is blocking the production of a cancer vaccine, it’s just a really hard problem that people are trying to make headway on and not yet succeeding.

 

[MUSIC: Two Dark Birds, “Run For Daylight” (from Songs for the New)]


DUBNER: Levitt, here’s a question from Marie. She writes, “Since people are genuinely fair and pay for bagels on the honor system…” Okay that’s referring to our bagel study in Freakonomics, we can explain that a little bit more. “…why does this not apply to song downloads? Or do most people pay for music? I do, but my students don’t if they can get it for free from their friends or online. Is the payment on the honor system only for smaller businesses where people feel a personal attachment?”


LEVITT: I think that’s a great point. I think that on these issues of honor it’s very predictable the kinds of factors which make people be honest. One is scrutiny. If you know you’re being watched you’re much more likely to be honest. I think if you believe that the recipient of the money is deserving you very much tend to be honest. And I also think that if you are in settings which in general evoke honesty, like it happens to be inside of a church or a hospital, I think again you’re more likely to be honest. Okay, so how do we compare from the bagels, which have a lot of these features of scrutiny, and the bagel man was a sort of sympathetic character who didn’t have a lot of money, to big business and the downloading of songs. And I think here it’s my impression that there’s an amazing generational break where people who grew up having to pay for music when they were young, people of our generation, Dubner, understand the idea that you should pay for music and it doesn’t seem strange. Whereas, I do think with young people the natural instinct is the internet is a place for free things and that they deserve to get their music for free.


DUBNER: So let me just explain for people the bagel business a little bit. So this was a guy a former economist in the D.C. area who distributed bagels and in some places donuts. The American Diabetes Association office for some reason consumed like half of his donuts, and everybody else mostly wanted bagels. But he would deliver them and put a box out for money. And he would post the price and he would then come back later to collect the money. And it worked. It was an honor system scheme that worked. But I think the key difference is…So a ton of people…So there are all these pay what you wish schemes and honor system schemes that have floated up in the last many years. And I think there are a couple huge differences between them and the bagel story that people don’t get. One is it wasn’t a pay-what-you-wish, the bagel thing. There were prices posted. A bagel costs whatever, a buck, and with cream cheese a buck and a half. So what’s interesting to me about this is not only do a lot of people pay something, but they pay exactly the right price in part because it seems, and we’ve written about this a good bit, that you can really herd people into doing what you want them to do simply by telling them that everybody else is doing it and by kind of setting the parameters. Right Levitt? It seems that people are much more willing than they might think to kind of go along with the herd.


LEVITT: Yeah, that’s absolutely true. But this is also a case of technology where you and I don’t actually know how to steal music.


DUBNER: Well, I do.

 

LEVITT: Do you know how to steal music?

 

DUBNER: I do.


LEVITT: Oh, I don’t know how to steal music.


DUBNER: I could teach you.


LEVITT: Ok.


DUBNER: I think the other thing about the bagel story that people miss and they try to apply it to other instances is that he, Paul Feldman, the bagel guy, had some real leverage which was this: if the payment rate from the whole group in a given office fell below a certain amount, he would stop bringing them bagels. And that’s what all these other schemes almost never have. Well they may have it, and it may be a bright line, but you don’t know when you’re getting to it. So if you know that this thing that you want and that’s being offered at a price that you have to contribute a certain amount toward will no longer be delivered to you, a nice warm bagel to your office, then that’s not really as altruistic as people seem to think. And so therefore it doesn’t surprise me that when there’s no leverage exerted that people would steal as much as they can get away with.

 

[MUSIC: Ruby Velle & The Soulphonics, “My Dear” (from It’s About Time)]


DUBNER: Alright, thank you very much.


LEVITT: Alright, sorry that was terrible.


DUBNER: No that was fine.


LEVITT: It was one of my worst performances in ages.


DUBNER: No there were really good spots. Do you still have 10 minutes or no?

 

LEVITT: You know, I should probably go in a couple actually.

 

DUBNER: Alright, I think we’re good. Good job, Levitt.

 

LEVITT: OK…Great.


[CREDITS]

 

 

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  1. tmeier says:

    Three more things with regard to the title question I have noticed. People tend to understand others according to the framework of their own personality so if you are very rational for example you can have a hard time coming to grips with how less rational people think. This makes social interaction difficult and I think it’s the source of the ‘smart people have poor social skills’ stereotype. It isn’t so much smart people as very rational people who have this problem.

    The second thing is what we call intelligence is really no more than some expression of capability or a cluster of capabilities and it seems to have no correlation with emotional balance. Since human intelligence seems to serve rather than direct our emotions it doesn’t do much for you to be an intelligent neurotic, it likely only makes your neurosis more of a problem. Good judgement, what is meant by wisdom is the product of emotional balance, enough intelligence is also required to understand the problem about which you must decide but emotional balance is the vital part. Intelligence without emotional balance is like giving a gun to a monkey, no matter how trustworthy he seems, never give your gun to a monkey.

    The other thing is part of what we call intelligence is simply having a very sensitive brain, one that picks up and retains information and relations quickly and easily. It strikes me this may have something to do with why so many very intelligent people (at least intelligent in the aspect described) seem to be a bit unbalanced.

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    • Gary says:

      ” no matter how trustworthy he seems, never give your gun to a monkey. ” This is my new favorite quote. Thank you. It can be used in so many situations.

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      • tmeier says:

        Words to live by. My favorite is: “When you sit down to a hand of cards and you don’t see anyone who looks like a sucker then it’s you”.

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    • Kevin Remillard says:

      Does it seem that more monkeys have guns? And that intelligent, well adjusted, homecoming kings (in the traditional sense) are more disarming?

      Thumb up 1 Thumb down 1
    • K says:

      Intelligence can be seen as way of acting that is consistently based on logic and rationality first and foremost.
      It is indeed baffling for someone who is used to act that way to deal with people who are not, and whose behavior is very inconsistent and often based on external influences.
      If one were to make a list of all the irrational things and beliefs associated with the vast majority of people, it is really not hard to understand why someone who has an aversion to irrationality would suffer from loneliness and other psychological issues associated with it.

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      • tmeier says:

        You could define intelligence that way, that’s part of the problem, you can define intelligence any number of ways because it’s meaning comes down to being capable of figuring out what works. Logic and rationality like other mental attributes are products of evolution. Perhaps they reflect some ultimate reality and maybe they are just a tool evolved to help us survive, like our hands or an elephant’s trunk, an adaptation with a lot of uses but ultimately limited in ways the possessor does not perceive.

        The problem of defining intelligence is like the problem of Darwin’s ‘survival of the fittest’. How do you define ‘fittest’? Why, those who survive of course. How do you define intelligence? Those who solve the problem, by whatever means.

        http://scholasticadministrator.typepad.com/.a/6a00e54f8c25c98834017c317442ea970b-500wi

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  2. Enter your name... says:

    > Look, all of us would rather be sleeping when it’s dark and be waking up to the sun and the roosters and stuff like that.

    I don’t think that’s what he was asking about, because shift work doesn’t affect enough people to cause the major differences he’s talking about.

    I think he was asking about average people staying up a couple of hours past sunset in the evening because they want to watch television shows or read a book or clean house after supper, rather than going to bed. Most people with daytime jobs (or no job—42% of American adults are retired or otherwise not employed at all) have a realistic choice between getting up at 5:45 a.m. (current sunrise in my area) and cleaning house so that they head for bed shortly after 8:15 p.m. (current sunset), or getting up later in the morning and going to bed later in the evening. Most of them choose sleeping later in the morning and going to bed later in the evening.

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    • James says:

      I don’t think the “average people staying up later” really flies, either. Not everyone is constrained by the tyranny of the alarm clock. Me, for one. I’m self-employed, work from home, and can work whatever hours I want. So my typical spring/summer pattern is to get up about 8:30 (a couple hours after sunrise), start doing actual work about 10, take off in the afternoon, and work again ’till around midnight.

      My biorhythms just don’t seem to deal well with early mornings. Even though I love them, the only times I’ve been able to experience being fully awake at that time is the few weeks after I’ve returned from extended stays in Europe, before my internal clock readjusts to local time.

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  3. Enter your name... says:

    I think there is an interesting parallel in the LGBT question and the cure-for-cancer question. The Keynesian response to same-sex marriage (legalization will enhance the economy by supporting demand for wedding-related purchases) overlooks the broader context: if you can’t spend your money on a big wedding bash, that doesn’t mean you won’t spend your money. Skipping the wedding because of legal issues means that you can spend your money on something else, like a car or expensive artwork or eating dinner out for a year, just like obviating the need for spending money on polio or cancer treatments means you can spend your money on something else.

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  4. Ryan N says:

    Wasn’t a study done BY the record companies that showed that the people who pirated the most music on average also spent the most on music?

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  5. John Rybock says:

    I was a little taken aback at the comment that if a worker could make a hundred wallets in 8 hours, and can now make them in 4 hours, they’ve bought themselves 4 hours of leisure time, and that’s a good thing. I don’t often think this listening to Levitt, but this seems to be the disconnect between economists and the actual economy. If I’m a person working out of my home, sure that works. But people work for companies. And if the past 30 years have shown us anything, this is how it works – The Wallet Company makes a change so a worker makes wallets twice as fast. So now, the workers don’t get to work half as long, they get to make twice as many wallets. Productivity has doubled! And the people at the top who make the financial decisions reward themselves with bonuses and raises over how smart they were to double productivity, and the worker will work just as many hours for pretty much the same pay.

    We’ve seen productivity, which Levitt mentioned being the key to driving an economy, shoot up in the past 30 years. And wages for the average worker have been stagnant, while upper management’s compensation in comparison matches the productivity increase, not their worker’s pay.

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    • Nate says:

      Either that, or half the workers get 100% leisure time (laid off).

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    • James says:

      This assumes, though, that there is a market for twice as many wallets. If the market demand for wallets is fixed (which seems fairly reasonable), the Wallet Company probably will respond by (since our culture more-or-less demands a 40 hour week) laying off half the workers. The laid-off workers can then seek jobs with ad agencies, where they’ll try to create an artificial demand for wallets: “Sally, don’t date that guy. He’s carrying last year’s wallet!”

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    • tmeier says:

      Hidden due to low comment rating. Click here to see.

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      • John Rybock says:

        Economics, as actually practiced, is pretty complicated, with many, many interconnections. And my main point was that the podcast had a statement that seeming glaringly naive about how business in the modern world actually works. There is a bit of irony that one of the things I learned from Freakonomics is to stop and really look at where the incentives are, and in the modern business world, the people who decide who get to benefit from increases in productivity have, very not surprisingly, seen that most of it goes to them. And as a manager myself, I have an issue with your comment, tmeier – the huge wage difference we’re seeing occur for the past 30 years, the one that is shrinking a true middle-class and making economic mobility more difficult, seems justified by that type of thinking. “Oh, wow, they couldn’t do it without me, aren’t I special?” Yes, when I hit the targets I’ve been given, there are parts that I have clearly come up with and put the sweat into. But I also get a lot of feedback and ideas from my team. And no matter how good an idea I have, if my team does not make it happen, it’s irrelevant. It’s all of us who get things done, and when that leads to greater profits, that should benefit us all. In reality, it rarely does.

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      • tmeier says:

        Hidden due to low comment rating. Click here to see.

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      • pbasch says:

        Let’s grant everything you say. But, if I remember correctly, Leavitt said that the economy does better when people are more productive. He did not say that management does better when its workers are more productive, which is what you’re saying. Maybe Leavitt meant that, but he didn’t say that. I would love a clarification on what exactly he means by “the economy does better.” It certainly doesn’t mean anything obvious, like people wages go up, or American workers feel richer, because our rise in productivity over the past 30 years has been accompanied by stagnant wages. It could be that, under Leavitt’s economic theories, that doesn’t matter – that that’s a political consideration. I don’t know. I mean, I suppose if one person had the entire GDP as their own money, and everyone else had nothing and lived in abject misery, our average GDP per capita would be the same. Based on what little I know about his economic philosophy, I don’t think he thinks inequality or the disparate spread of income is really a problem, as long as gov’t is small. Maybe I’m wrong, though.

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    • Al says:

      There are three very important points left out of this discussion.

      First, let’s remember that all employee/employer relationships are started with a voluntary interaction. You are not forced to work for anyone nor do you have the right to any job or wage.

      Which brings us to the second point. Risk. The founders of the company took the initial risk of investment to get the company going. Most successful business owners probably had a few failures before finding success. Because they took all the risk, they have the right to employ who they like and pay them what they want, again assuming the employee voluntarily agreed to the initial contract. If you are unhappy with your wage, you can renegotiate or quit. Anyway, I’m sure we can all agree that risk should be rewarded over no risk at all.

      Lastly, government interference in the “free market” has incentivized companies to keep wages down. The highest corporate tax rates in the world coupled with crippling regulations have turned jobs overseas and kept wages down.

      The last thing I’d like to say is that the only reason Levitt’s point about productivity sounds unrealistic is because most of us are stuck in the “trade time for money” paradigm. Once you can position yourself to be paid based on results, you can indeed enjoy that leisure time.

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  6. fbai says:

    the discussion of online music piracy missed a group of individuals. i’m 40, so i’m in the so-called generarion x. people of this age range remember what it was like to pay for music and of course in the pre internet days we did. what we also experience was several format changes in that span. what this meant for a lot of people was buying the same music over and over gain when the current format became obsolete. as you may remember, converting your music to the new format was never very easy until we moved from cds to mp3s. this was very expensive.

    i believe that it also alienated people. rightly or wrongly, people began to feel abused by the music industry. take this with the fragility of previous formats (you may remember how vigilant you had to be with vinyl and cassette tapes to avoid damage) and you have perfect storm for creating disgruntled customers. so, many of these music lovers feel like they’ve already paid many times over for this music and don’t feel the record companies deserve any more of their money.

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    • Enter your name... says:

      I was thinking about exactly this question the other day, when I found an old cassette tape. If I convert it to an MP3 myself (I hear you can get something that plugs a tape into your computer), is that “piracy”? If I find a copy of the same song/same album/same performer online, is that “piracy”? I’ve already paid the label and the artists for the right to listen to this music.

      (In this case, I probably won’t do anything at all, because I haven’t missed this dusty tape.)

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      • Nate says:

        ” If I convert it to an MP3 myself (I hear you can get something that plugs a tape into your computer), is that “piracy”?”

        No.

        ” If I find a copy of the same song/same album/same performer online, is that “piracy”?”

        If by piracy you mean copyright infringement, yes.

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  7. Galia says:

    Dear Levitt and Dubner,

    In your podcast from 5/23, titled “Can You Be Too Smart for Your Own Good”, you said something that was quite revealing about your view of women. You said something like:

    In the 1960′s the marriage rate of the highly educated women was shockingly low.
    Of all people in society these women were least likely to get married.
    Women paid the price for being too smart and too successful. Women were penalized for being smart.

    Did it ever occur to you that the reason these smart women in the 60′s didn’t get married is because they chose not to get married, and not because it was a put-off to men?
    I believe these women saw the new possibilities available for women, and being a wife was not as appealing.
    Only later, as men grew to be more accepting of this change in women, is when smart women didn’t consider it degrading to get married.

    I’m happy to expand on that if you’re interested, but I think you get what I’m saying.

    Thanks!
    Galia

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  8. Thomas Romer says:

    this show is MESSED up on Stitcher. The file is corrupted and skips all over the place in the Cancer section.

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    • Suzie says:

      It plays for us just fine on Stitcher, Thomas. Sorry you are having trouble. Perhaps update your App?

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