What Do You Want to Know About Fighting Poverty With Cash Payments?

If you happen to be in New York on Mon., Nov. 11, you might want to come see Richard Thaler and Dean Karlan talk about "using evidence and behavioral economics to fight poverty." The event (info here) is run by the Innovations for Poverty Action, of which Karlan is president. I will moderate the Thaler-Karlan discussion -- which means I get to ask them any questions I want about whether and why it is a good idea to fight poverty by giving cash directly to poor people rather than the traditional means of directing aid toward institutions and hoping that it trickles down fruitfully. (There are, of course, more options than just those two.)

In our recent podcast called "Would a Big Bucket of Cash Really Change Your Life?,” we looked at whether a windfall helps a family across the generations. The short answer, at least in the case of the 19th-century land lottery that we discussed: no.

The Tax Man Nudgeth: A New Marketplace Podcast

Our latest Freakonomics Radio on Marketplace podcast is called “The Tax Man Nudgeth."  (You can download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript.)

The U.S. tax code is almost universally seen as onerous and overly complicated. There is always talk in Washington about serious reform -- Michigan Reps. Dave Camp (R.) and Sander Levin (D.) are currently working on it -- but, Washington being Washington, we probably shouldn't hold our breath.

So in this podcast we decided to take a look at the tax code we’re stuck with for now and see if there are some improvements, however marginal, that are worth thinking about. We start by discussing the "tax gap," the huge portion of taxes that simply go uncollected for a variety of reasons. We once wrote about a clever man who helped close the gap a bit. In this episode, former White House economist Austan Goolsbee tells us why the government doesn't try too hard to collect tax on all the cash that sloshes around the economy.

You'll also hear from Dan Ariely, who has an idea for turning the act of paying taxes into a somewhat more satisfying civic duty.

Love Behavioral Economics? Want to Work for the British Government? All Right Then …

A lot of people write to us looking for work -- which, sadly, we are nearly always unable to provide. But once in a while we do hear of a good opportunity for the Freakonomically inclined. To wit:

The U.K. Cabinet Office's Behavioural Insight Team -- better known as the Nudge Unit because of its allegiance to the excellent Richard Thaler/Cass Sunstein book Nudge -- is looking to expand. Here's the job listing. Some relevant excerpts:

Successful candidates will need to show that they:
1. have a good understanding of the behavioural science literature
2. have an understanding and ideally ability to conduct randomised controlled trials to test policy interventions; and
3. are highly motivated individuals capable of developing innovative solutions to often complex policy problems.
4. are strong team players

Candidates should be prepared to work on potentially any aspect of government or wider public sector policy. For example, over the past year the team has led work on health, energy, fraud, electoral registration, charitable giving, consumer affairs, the labour market, and access to finance for SMEs [that's Euro-speak for "small and medium enterprises"]

Your End of Days: Would Life-Length Testing Save the Government Money?

A Spanish company announced this summer that it can help determine when people will die by using a blood sample, a $700 test, and research that earned three American geneticists the Nobel Prize in medicine in 2009. Though the test has its critics, and though it won’t offer an exact date for one’s death, it does promise to reduce uncertainty about longevity by examining a tiny part of DNA that reveals biological age as opposed to chronological age. Successive generations of the test are likely to improve in predictive power.

Our ignorance about an individual’s longevity is the source of a number of problems. Many of them are personal, but some have implications for society writ large, and taxpayers in particular. So one wonders: if the government can make you confront the calorie content of your diet, can it also make you confront your mortality?

If the government were to mandate “life length” testing, it could help resolve the intractable lifetime savings problem. Pervasive under-saving among households is a result of our impatience, to be sure, but it is certainly also a consequence of the fact that no one knows how long his savings need to last. Save too much and you miss out on having fun when you're alive. Save too little and you end up broke and reliant on the social safety net that taxpayers fund.

World Water Day: Nudges for Safe Water

What if a simple ‘nudge’ could massively increase the use of safe water in poor countries?

Today is World Water Day, a day to raise awareness for something we take for granted in America: clean water. Normally I yawn at Hallmark-meets-poverty-program type publicity stunts. Reminds me of many a microcredit “awareness” campaign that paraded superstar microentrepreneurs on a stage, ignoring the need for rigorous evidence to find out if microcredit actually works.

From Push to Nudge: A Q&A With the Authors of the Latter

“‘Libertarian paternalism’ is just the sort of phrase that makes me stop paying attention,” Levitt recently blogged. But he (and I) couldn’t stop reading about it in Richard Thaler’s and Cass Sunstein’s book, Nudge, which uses urinals, ABBA, and Homer Simpson (and cutting-edge research) to argue that by simply giving more thought to the way […]

Nudge

I am not a huge fan of what people call “behavioral economics,” which is a subfield of economics that expands the standard economic models to incorporate systematic biases in the way humans act. I’ve written about some of my concerns elsewhere, so I won’t reiterate them here. I don’t deny that the insights that emerge […]

What Do an Underfunded 401(k) and a Dialysis Patient Have in Common?

Both of them would be better off if the default option were switched to opt-out as opposed to opt-in. This is hardly surprising but, sadly, it is still news. Let me explain. One of the reasons that some people don’t contribute to their 401(k) plans is because they usually have to “opt in” to the […]

Writing for Money

Here’s a very interesting review of a very interesting-sounding new book on Mark Twain, by Peter Krass. The review, published in the Wall Street Journal, was written by one of my favorite business journalists, Roger Lowenstein, who has written good books on Warren Buffett and Long-Term Capital Management and good recent articles on immigration and […]

Why Pay $36.09 for Rancid Chicken?

In light of our anonymous poster’s Starbucks story (see “A $2 Cup of Coffee”), here’s my own tale of food and economics: An old friend came to town not long ago and we met for a late lunch on the Upper West Side. Trilby ordered a burger, no bread, with brie; I ordered half a […]