Should Tipping Be Banned?

Season 4, Episode 5

The practice of tipping is one of the most irrational, un-economic behaviors we engage in. It’s not in our economic best-interest to tip; essentially we do it because it’s a social norm -- a nicety. In this episode of Freakonomics Radio, Stephen Dubner looks at why we tip, what kinds of things can nudge tips upward, and what’s wrong with tipping overall. In the end, we wonder whether or not the practice of tipping should be eliminated altogether. Research shows that African American waiters make less in tips than people of other races, so tipping is a discriminatory practice. Later in the hour: if your parent has the gene for Huntington’s disease you have a 50% chance of getting it yourself. Huntington’s is a debilitating fatal disorder. People can do genetic testing to see if they will fall ill, yet only 5% of people choose to do so. Stephen Dubner talks to University of Chicago economist Emily Oster about her research on Huntington’s genetic testing, and the value of not knowing your fate.

The Cobra Effect

Season 4, Episode 4

If you want to get rid of a nasty invasive pest, it might seem sensible to offer a bounty as a reward. But the problem is: nothing backfires quite like a bounty. In this episode of Freakonomics Radio, we look at bounties on snakes in Delhi, India; rats in Hanoi, Vietnam; and feral pigs in Fort Benning, Georgia. In each case, bounty seekers came up with creative ways to maximize their payoff – and pest populations grew. Stephen Dubner and Steve Levitt talk about how incentives don’t always work out the way we expect them to. Later in the hour, if you want to write a book about Winston Churchill, you are going to have to pay. The Churchill estate is intensely protective of Sir Winston’s copyright, so much so that if you write a book about him, you are likely to go into the red. Stephen Dubner talks about who owns words, and what it will cost you to write a book about Churchill.

Spite Happens

Season 4, Episode 3

This episode of Freakonomics Radio explores our surprising propensity for spite. We discover the gruesome etymology of the phrase “cut off your nose to spite your face” (it involves Medieval nuns cutting off their noses to preserve their chastity). Stephen Dubner and economist Benedikt Herrmann talk about so-called “money-burning” lab experiments, in which people often choose to take money away from other participants – even when it means giving up some of their own cash. Also: why do we take pleasure in harming others? So much so that we’re willing to harm ourselves in the process? The answer may lie in our biology: Freakonomics Radio producer Katherine Wells talks with biologist E. O. Wilson about whether spite exists in nature. Later in the hour, we head to Bogota, Colombia, where the mayor used unconventional methods to bring order to the city: he hired mimes to mimic and embarrass people who were violating traffic laws -- and it worked. Then, Stephen Dubner talks to Robert Cialdini, best known for his research on the psychology of persuasion, about how peer pressure, and good old fashioned shame, can greatly affect the way people behave.  

How Much Does Your Name Matter?

Season 4, Episode 2

When Harvard professor Latanya Sweeney Googled her name one day, she noticed something strange: an ad for a background check website came up in the results, with the heading: “Latanya Sweeney, Arrested?” But she had never been arrested, and neither had the only other Latanya Sweeney in the U.S. So why did the ad suggest so? Thousands of Google searches later, Sweeney discovered that Googling traditionally black names is more likely to produce an ad suggestive of a criminal background. Why? In this episode of Freakonomics Radio, Stephen Dubner investigates the latest research on names. Steve Levitt talks about his groundbreaking research on names, economic status, and race. And University of Chicago economist Eric Oliver explains why a baby named “Cody” is more likely to belong to conservative parents, and why another named “Esme” was probably born to a pair of liberals.

Women Are Not Men

Season 4, Episode 1

Women are different from men, by a lot, in some key areas. For example, data show that women don’t: drown, compete as hard, get struck by lightning, use the Internet, edit Wikipedia, engage in delinquent behavior, or file patents as much as men do – and these are just some of the examples. Another way women are different from men? They have made significant economic gains and yet they are less happy now than they were 30 years ago. So, how do we explain this paradox? In this episode of Freakonomics Radio, Stephen Dubner looks at some of the ways that women are not men. Later in the hour, Dubner talks to Harvard psychologist Steven Pinker about his research on the history of violence. Pinker has a surprising and counterintuitive thesis: violence has declined and the world is a much more peaceful place than it has ever been.

Is There a Glass Ceiling in Corporate Crime?

Our podcast "Women Are Not Men" looked at a variety of gender gaps, including the fact that the vast majority of violent crime is committed by men. A new paper by Darrell J. Steffensmeier, Jennifer Schwartz, and Michael Roche in the American Sociological Review finds that women are less likely to be involved in corporate crime as well:

Typically, women were not part of conspiracy groups. When women were involved, they had more minor roles and made less profit than their male co-conspirators. Two main pathways defined female involvement: relational (close personal relationship with a main male co-conspirator) and utility (occupied a financial-gateway corporate position). Paralleling gendered labor market segmentation processes that limit and shape women’s entry into economic roles, sex segregation in corporate criminality is pervasive, suggesting only subtle shifts in gender socialization and women’s opportunities for significant white-collar crimes. Our findings do not comport with images of highly placed or powerful white-collar female criminals.

“Men lead these conspiracies, and men generally prefer to work with men,” Steffensmeier told the Washington Post. “If they do use women, they use them because they have a certain utility or they have a personal relationship with that woman and they trust her.”

When the Store Gets Crowded, the Shopper Buys Safety

A new research paper (abstract; PDF) by Ahreum Maeng, Robin J. Tanner, and Dilip Soman looks at how a shopping environment affects buying patterns. From the press release:

New research by Ahreum Maeng, an assistant professor in the KU School of Business, finds that socially crowded environments lead consumers to be more conservative. Specifically, Maeng finds that consumers in crowded settings prefer safety-oriented options and are more receptive to prevention-framed messages than promotional messages — for example, preferring a toothpaste offering cavity protection over a toothpaste promising a whiter smile. Maeng also finds consumers in crowded settings are less willing to make risky investments. 

“Consumers in crowded environments get conservative and safety-focused,” Maeng said. “We believe this is because people in socially crowded settings activate an avoidance system that results in a more prevention-focused mindset. This, in turn, makes socially crowded individuals more likely to choose options that provide prevention-focused benefits.” 

Maeng points out that the research has important implications for retailers as well as policymakers.  “For example, our findings indicate a store would benefit by selling and marketing products differently on a crowded Saturday during the holidays versus a Tuesday morning in August,” she says. “And even within the same day, stores might consider changing their signage or product placement to account for different levels of crowding.”

The Long-Term Effects of Birth Control

A new working paper (PDF; abstract) by Martha J. Bailey, an economics professor at the University of Michigan, analyzes the effects of increased access to birth control in the 1960s and 1970s:

This paper assembles new evidence on some of the longer-term consequences of U.S. family planning policies, defined in this paper as those increasing legal or financial access to modern contraceptives. The analysis leverages two large policy changes that occurred during the 1960s and 1970s: first, the interaction of the birth control pill’s introduction with Comstock-era restrictions on the sale of contraceptives and the repeal of these laws after Griswold v. Connecticut in 1965; and second, the expansion of federal funding for local family planning programs from 1964 to 1973. Building on previous research that demonstrates both policies’ effects on fertility rates, I find suggestive evidence that individuals’ access to contraceptives increased their children’s college completion, labor force participation, wages, and family incomes decades later.

Predicting the End of the Government Shutdown

Flip Pidot, co-founder and CEO of the American Civics Exchange, writes to let us know that the exchange has recently added cash prizes to their political prediction markets and is currently running two parallel government shutdown prediction markets, allowing for an interesting experiment:

At American Civics Exchange, we've just begun to implement cash prizes in our political prediction market (a sort of interim maneuver on our way to regulated exchange-traded futures).

For the government shutdown, we're running two parallel markets - one in which traders buy and sell different shutdown end dates (with play money), yielding an implied odds curve and consensus prediction (below), and another in which traders simply log their best guess as to exact date and time of resolution (with no visibility into others' guesses), with the closest prediction winning the real-money pot.

With Age Comes (Economic) Wisdom

A new study seems to confirm the adage that older means wiser, at least when it comes to making decisions about economic matters. From ScienceDaily:

To conduct their research, [Ye] Li and his colleagues recruited a group of 336 people -- 173 younger (ages 18 to 29) and 163 older (ages 60 to 82) -- and asked them a series of questions that measured economic decision making traits. They also administered a battery of standard fluid and crystallized intelligence tests.

These traits included temporal discounting (how much people discount future gains and losses), loss aversion (how much the valuation of losses outweigh gains of the same magnitude), financial literacy (understanding financial information and decisions) and debt literacy (understanding debt contracts and interest rates).

They found the older participants performed as well or better than the younger participants in all four decision-making measures. The older group exhibited greater patience in temporal discounting and better financial and debt literacy. The older participants were somewhat less loss averse, but the result did not reach standard levels of significance.

"The findings confirm our hypothesis that experience and acquired knowledge from a lifetime of decision making offset the declining ability to learn new information," Li said.

(HT: R.E. Riker)