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Don’t Remind Criminals They Are Criminals

Psychologists have long argued about the power of priming, i.e the power of subtle cues and reminders to influence behavior.  For instance, there are a number of academic papers that find that if you make a woman write down her name and circle her gender before taking a math test, she will do substantially worse than if she just writes her name.  The idea is that women perceive that they are not good at math, and circling their gender reminds them that they are women and therefore should be bad at math.  I’ve always been skeptical of these results (and indeed failed to replicate them in one study I did with Roland Fryer and John List) because gender is such a powerful part of our identities that it’s hard for me to believe that we need to remind women that they are women! 

In an interesting new study, ”Bad Boys: The Effect of Criminal Identity on Dishonesty,” Alain Cohn, Michel Andre Marechal, and Thomas Noll find some fascinating priming effects.  They went into a maximum security prison and had prisoners privately flip coins and then report how many times the coin came up “heads.”  The more “heads” they got, the more money they received.  While the authors can’t tell if any one prisoner is honest or not, they know that on average “heads” comes up half the time, so they can measure in aggregate how much lying there is.  Before the study, they had half the prisoners answer the question “What were you convicted for?” and the other half “How many hours per week do you watch television on average?”  The result: 66 percent “heads” in the treatment where they ask about convictions and “only” 60 percent “heads” in the TV treatment.  Read More »



Do Game-Theory-Playing Traffic Lights Reduce Congestion?

That is what the headline of this fascinating article says. Here is a quote from the news report:

In lay language,” [Samah] El-Tantawy said in a U of T news release, “the [traffic lights] act as a team of players cooperating to win a game — much like players in a soccer match, where each player endeavors to score, but at the same time considers the ultimate goal of the entire team which is winning the match.

According to the article, travel times were reduced by 26 percent, which is fantastic, and which is what matters.

This doesn’t, however, seem to have much to do with game theory. Game theory is about one of two things: strategic behavior or finding sustainable equilbria. But the traffic lights don’t care about their own private utility.  There is no sense in which they are actors at all, as traffic lights just do what you tell them to do.  In economic terms, there is a central planner who sets the rules which the traffic lights obey. This new scheme provides a new and better set of rules (which, again, I emphasize is great), but I don’t think game theory should get the credit!

(Related: see our “Jane Austen, Game Theorist” podcast.)



Finally, I Was Right About Something

Seven years ago, I blogged about how nonsensical many airline rules and regulations seemed to be.

At the very top of my list was the prohibition on the use of electronics before takeoff and landing. The FAA finally gave into logic on this one, and airlines have been remarkably speedy in instituting the change.

(If you go back and look at the post, you will see that another thing I railed against was the announcement about “in the unlikely event of a water landing.”  There is no doubt this announcement is a complete waste of time, but not long after the post went up, Captain Sullenberger pulled off a water landing.  Thanks for nothing, Sully!)



The Nobel Prize Goes to an Odd (but Worthy) Economic Trio

I awoke yesterday to the happy news that two of my friends won the Nobel Prize in economics.*

Gene Fama was one of the three recipients.  He and I share two important beliefs about the world.  First, we value empirical research in economics — i.e., getting deep into the data to understand what is going on.  Second, we both believe that golf should be played quickly!  So every weekend, at least once, Gene and I get up before the sun rises and get in 18 holes (walking) in about 2.5 hours.  Gene is 74 years old — he didn’t take up golf until his sixties, and I’ve seen him post a scorecard with multiple birdies on it. 

Gene believes deeply and fundamentally in markets, which is why pairing his prize with Robert Shiller, a market skeptic, is quite odd.  But Shiller is a wonderful economist — someone whose work I read a lot and was inspired by early in my own career — and I’m glad he was chosen. Read More »



The Folly of Eminent Domain Takings of Failing Mortgage Loans

University of Arizona economist Price Fishback, who has been on this blog before, is one of the leading scholars of the economics of the New Deal. He has a great new set of insights to share on the U.S. mortgage mess. He’s also the co-author of the forthcoming book Well Worth Saving: How the New Deal Safeguarded Home Ownership, with Jonathan Rose and Kenneth Snowden.

 

The Folly of Eminent Domain Takings of Failing Mortgage Loans
By Price Fishback

Several cities around the country are considering using eminent domain to take control of troubled mortgages in their cities.  An Associated Press example of how the proposal will work calls for the city to use eminent domain to force the lender to accept $150,000 for a $300,000 mortgage on a home that has a current market value of $200,000.  The city would then refinance the loan while cutting the principal owed by the borrower to $190,000.    

Eminent domain requires a public purpose for the taking of an asset.   The public purpose claimed here is that property values and property tax revenues can be boosted by preventing a mass of foreclosure sales.  Real estate studies do show that increasing numbers of foreclosure sales are associated with lower housing values in nearby neighborhoods.  However, the spillover benefits of preventing foreclosures, tend to be focused on houses in nearby neighborhoods.  Read More »



How Much for a Margarita?

I was at a restaurant the other day which had an interesting feature: the two menus they gave us listed different prices for the same items. One menu quoted $12 per margarita and the other offered the exact same drink for $11.

For a split second I wondered whether the restaurant was carrying out some sort of pricing field experiment. I’m pretty sure, though, that wasn’t the case. Just regular old incompetence, I suspect.

I wouldn’t usually pay $11 or $12 for a margarita, but I was so curious in this circumstance that I went ahead and ordered one. (Well, actually, I ordered three by the time I was done.)

What was the true price? Strangely, it turned out not to be $12, or even $11. They charged me exactly $7.94 per drink.

Luckily, I didn’t know that in advance or I might have had a fourth margarita, which definitely would have been a bad idea.



Freakonomics Experiments Lottery Winners

If you have a tough decision to make, wander on over to FreakonomicsExperiments.com. So far we’ve helped more than 20,000 people make decisions, and the preliminary results look great.

As an incentive to get people who tossed coins at FreakonomicsExperiments to complete follow-up surveys, we promised to give away prizes via lottery. As evidence we kept our word, the complete list of winners is here. Read More »



Thanks to Freakonomics Blog Readers (Sort of), the Gneezy and List Book Finally Has a Title

A while back we held a contest for the new popular economics book written by Uri Gneezy and John List. The authors and their publishers picked some of their favorite title suggestions and then we ran a beauty contest to determine which title was most popular among blog readers. The deal was that the person who proposed the winning title would get $1,000. Another $1,000 was to be split between randomly selected beauty contest participants.

Before I tell you which title won, let me tell you about the naming of Freakonomics. We had such an impossibly hard time coming up with a good name until my sister Linda came up with “Freakonomics.” To make a long story short, the publishers hated that name for a long time, but finally gave in. The rest is history. Of course we were all just guessing — it would have been nice to have data, the way Uri and John did.

So what do the data say? The winner of the beauty contest, with 33 percent of the votes, was The Carrot that Moved A Mountain: How the Right Incentives Shape the Economics of Everyday Life. Congratulations to Ivy Tantuco who proposed that title and collected the $1,000 prize.(Congratulations also to Jenna Dargie and Melinda Reiss, who were the randomly chosen beauty contest winners and pocketed $500 each.) Read More »