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Stephen J. Dubner

How Many Workers Is the Right Number for a Retailer? Stories from Trader Joe's, Michaels, and Whole Foods

A reader named Quinton White points us to an interesting article by Jim Surowiecki in The New Yorker about how retails firms are succeeding by hiring more workers and spending more money training and rewarding them. Surowiecki writes:

A recent Harvard Business Review study by Zeynep Ton, an M.I.T. professor, looked at four low-price retailers: Costco, Trader Joe’s, the convenience-store chain QuikTrip, and a Spanish supermarket chain called Mercadona. These companies have much higher labor costs than their competitors. They pay their employees more; they have more full-time workers and more salespeople on the floor; and they invest more in training them. (At QuikTrip, even part-time employees get forty hours of training.) Not surprisingly, these stores are better places to work. What’s more surprising is that they are more profitable than most of their competitors and have more sales per employee and per square foot.

3/26/12

The X-Prize Comes to the Nursing Home

We once put out a podcast called “Reading, Rockets, and ‘Rithmetic,” about how competition and prizes help drive innovation. Among the examples were the federal education program Race to the Top; Google’s “20 percent time” policy; and the X-Prize Foundation, whose founder and chairman, Peter Diamandis, remains one of my favorite radio guests ever, full of vigor and wisdom and optimism. (We’ll soon be featuring a Q&A on this blog with Diamandis and Steven Kotler, coauthors of the new book Abundance: The Future Is Better Than You Think.)

I’m happy to report that I am hardly the only person to be inspired by Diamandis. We recently got the following e-mail from David Sedgwick, an executive with a nursing-home company called the Ensign Group.

3/23/12

The Patent Gap

Women hold fewer than one in 10 patents. Why? And what are we missing out on?

3/23/12
4:46

Football Freakonomics Nominated for a Sports Emmy

I had a blast working with the NFL Network/NFL.com on our Football Freakonomics series this season, and now we’ve been nominated for a Sports Emmy in “Outstanding New Approaches, Sports Programming.”

I know it’s a cliché to say that it’s a thrill just to be nominated but holy cow, it really is! Especially when you see the other nominees in our category: CBS Sports, ESPN, NBC Sports, and another NFL Network entry.

3/21/12

Freakonomics: What Went Right? Responding to Wrong-Headed Attacks

Warning: what follows is a horribly long, inside-baseball post that most people will likely have little interest in reading, and which I had little interest in writing. But it did need to be written. Apologies for the length and the indulgence; we will soon return to our regular programming.

*     *     * 

I. Going on the attack is generally more fun, profitable, and attention-getting than playing defense. Politicians know this; athletes know it; even academics know it. Or perhaps I should say that especially academics know it?

Given the nature of the Freakonomics work that Steve Levitt and I do, we get our fair share of critiques. Some are ideological or political; others are emotional.

We generally look over such critiques to see if they contain worthwhile feedback, or point to an error in need of correction. But for the most part, we tend to not reply to critiques. It seems only fair to let critics have their say (as writers, we’ve already had ours). Furthermore, spending one’s time responding to wayward attacks is the kind of chore you’d rather skip in order to get on with your work.

But occasionally an attack is so spectacularly ridiculous, so riddled with errors and mangled logic, that it’s worth addressing.

The following essay responds to two such attacks. The first one was relatively minor, a recent blog post written by a Yale professor. The second was more substantial, an essay by a pair of statisticians in American Scientist. Feel free to skip ahead to that one (at section III below), or buckle up for the whole bumpy ride.

3/20/12

Did John Elway Sign Peyton Manning to the Broncos …

… because it was easily the best route to get rid of Tim Tebow?

3/19/12

End of Illness Author David Agus Answers Your Questions

We recently solicited your questions for David Agus, the oncologist author of The End of Illness. Now he’s back with answers, including: the numbers on taking aspirin, how to get the most from a doctor visit, and the top 10 actions to reduce your cancer risk. I can guarantee you that his answers will enlighten and thrill some people and enrage and confound others. Thanks to everyone for their participation, and especially to Agus for the thorough answers. 

Q. I’m a 4th year medical student, and I watched your interview on The Daily Show when it first aired and really took issue with the way you presented many of these things. It seemed that you simplified your “solutions” to the point that it may actually be dangerous for people to listen to what you suggested. For example, you implied that everyone should be taking aspirin.

3/16/12

Show and Yell (Ep. 66)

Season 2, Episode 2

We have just released a series of five one-hour Freakonomics Radio specials to public-radio stations across the country (check here to find your local station), and now they’re hitting our podcast stream as well. If you are a dedicated podcast subscriber, then some of this material will be familiar to you. These new shows are what might best be called “mashupdates” — that is, mashups of earlier podcasts that have also been updated with new interviews, etc.

Today’s episode is called “Show and Yell” (download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below).

3/15/12
61:01

Show and Yell

Is booing an act of verbal vandalism or the last true expression of democracy? And: when you drive a Prius, are you guilty of “conspicuous conservation”? This is a “mashupdate” of “Hey, Baby, Is That a Prius You’re Driving?” and “Boo … Who?”

3/15/12
61:01

White House Economist Alan Krueger Answers Your Questions

We recently solicited your questions for Alan Krueger, chairman of the President’s Council of Economic Advisers. Below are Krueger’s answers, in which he talks about the Bush tax cuts, the American Jobs Act, and why NFL coaches should go for it on fourth down. Thanks to everyone for participating.

Q. The recovery from the recent recession has been great for corporate profits, but not so great for employment. I think that this is a natural result of the fact that when demand is insufficient, corporations focus on improving productivity rather than on producing more goods and services.

What can be done to increase employment? –Adam

3/14/12

Some Links We Like

1. Can a company called Dwolla drastically reduce vendors’ credit-card fees? (HT: Anthony Farrell)

2. A potential “game-changer in the field of [organ] transplantation” — stem cells from the donor may replace anti-rejection drugs.

3. Teaching math in prison. (HT: Arts & Letters)

4. Writer’s block? New study on the best time of day to be creative.

3/9/12

Are We Living in a Loss-Averse World?

Three years ago today, the S&P 500 closed at 676.53.

Today, it opened at 1366.50.

As Businessweek asks: where’s the party for this bull market?

The article, by Whitney Kisling, is interesting throughout, exposing the massive pessimism still attached to the markets despite this steep recovery. It is well worth a read for anyone who believes (or wants to believe) that behavioral economics has a lot to teach us about real-world investing behavior.

3/9/12

It’s Not the President, Stupid

Isn’t it time to admit that the U.S. economy doesn’t have a commander in chief?

3/8/12
5:24

Question of the Day: Does a Lack of Exposure to the Arts Lead to Disaster?

A reader named Matt Radcliffe writes:

I’ve been working on a project concerning musical theater performance. I have a hypothesis which seems intuitive enough to me — that a lack of exposure to creative arts can lead to disastrous results for individuals (lack of education, poverty, etc).

I can find a plethora of research that proves the opposite (exposure to creative arts can lead to success), but I can’t find anything towards my hypothesis.

3/6/12

My Target-Date Fund Is Bigger Than Yours

We’ve banged the drum quite a bit on the need for greater financial literacy. If you care about such things, you might want to take a look at a new working paper by Pierluigi Balduzzi and Jonathan Reuter called “Heterogeneity in Target-Date Funds and the Pension Protection Act of 2006” (abstract; PDF).

That isn’t the sexiest title ever, and if you don’t care at all about personal finance or investing then you probably shouldn’t go near it. But if you care even a little bit, the paper has some interesting lessons even beyond the fairly narrow focus of Target-Date Funds. A Target-Date Fund is, in a nutshell, a mutual fund whose asset allocation automatically shifts over time as the target date approaches.

3/5/12

Some Links Worth Reading

1. C. Kirabo Jackson finds that college-prep programs — with payments — really do work for inner-city students.

2. The Stanford Technology Law Review digs deep into Intellectual Ventures’ role as “mass aggregator” of patents; Business Insider‘s writeup: “It’s an ugly business. But it’s also perfectly legal.”

3. A 3D printer that makes bowls and ceramics out of sand.

4. British medical students turn to prostitution.

3/2/12

Bring Your Questions for End of Illness Author David Agus

Here’s an obvious but sobering thought: every one of us will someday get sick and die. And here’s a happier thought: with ever-advancing medical technology and research, we can now avoid many kinds of illnesses and add more years to our lifespan.

The oncologist David Agus lives halfway between those two thoughts. He is a professor at USC, the founder of Oncology.com, a co-founder of Navigenics, and now the author of The End of Illness. Most impressively, perhaps, he was recently a guest on The Daily Show

The End of Illness is Agus’s take on how the body works and why it fails. Along the way, he challenges a lot of conventional wisdom about health with academic studies and his own medical experience. Arguments in the book include: that taking vitamins may increase the risk of cancer; that sitting at a desk all day may be as damaging as smoking; and that you can tell something about a patient’s health based on whether she wears high-heel shoes. One review of the book reads: “A ‘rock star’ doctor says throw away the vitamins, load up on baby aspirin, and keep moving.”

3/1/12

How do the Times and the Journal Report a Drop in Wall Street Bonuses?

As a writer, I tend to think about media bias from a different perspective than the average media consumer, and also different from academic researchers who try to identify media bias via data analysis, as described in our recent podcast “How Biased Is Your Media?”

I tend to think about subtle but telling things like word choice and sentence structure — what is the journalist emphasizing, or downplaying, and why? — but also an article’s placement, inclusion or exclusion of outside quotes, and choice of headline (which, for the record, is usually written by an editor and not the reporter him/herself).

Above all, I tend to compare articles from different newspapers that are based on the same event. This is to me one of the simplest but most powerful ways to take the pulse of a newspaper’s culture. If, for instance, two newspapers publish articles based on a simple event — a state comptroller’s report about Wall Street bonuses, for instance — one can read a little bit of institutional attitude into the two papers’ resultant articles.

3/1/12

The Social Pressure of Charitable Giving

We recently heard from John List, the economics-of-charity guru, about the use of lotteries in fund-raising.

Here now is a new List paper, co-authored with Stefano DellaVigna and Ulrike Malmendier, published in the Quarterly Journal of Economics, called “Testing for Altruism and Social Pressure in Charitable Giving.”

2/29/12

Levitt Is Ready for the Senior Tour

Steve Levitt has made no secret of his desire to become a good-enough golfer to someday play the Champions Tour, for players 50 and older. 

After watching his amazing performance last week, I now believe Levitt does stand a chance of landing on a senior professional tour. But not in golf.

I was out in Chicago for a couple of days to work with Levitt. After a long day, we went out for dinner at a place called Seven Ten. It has food, beer, and bowling alleys — just a couple of them and nothing fancy. Old-school bowling.

After the meal, I tried to get Levitt to bowl a game or two. He wasn’t interested. Said he was worried about hurting his golf swing. (Puh-leeze.) He said he’d watch me bowl. I can’t think of anything less fun than bowling alone except having someone sit and watch you bowl alone. So I lied and told him that bowling would probably be good for his golf swing — the heavy ball could loosen up his joints, yada-yada, etc. 

He finally agreed when I suggested the loser pay for dinner.

2/28/12

John List Explains Why Lotteries Are in Fact a Good Fund-Raising Mechanism

We recently ran on a post on a reader’s query about the economics of a 50-50 fund-raiser. John List, the University of Chicago economics-of-charity wizard (related podcast here), wrote in with a comment:

The intuition of the reader is slightly off.  Although not directly a 50-50 charity drive, we have explored the efficacy of lotteries both theoretically and empirically.  As John Morgan (from Berkeley) has elegantly shown, under standard assumptions (no risk-loving or lottery-loving behavior is necessary), lotteries outperform the simple ask (what we call a VCM).  Lotteries obtain higher levels of public-goods provision than a voluntary contributions mechanism (VCM) because the lottery rules introduce additional private benefits from contributing.

2/27/12

Some Links We Like

1. Why people hate economists (HT: Ian McKay)

2. The Planet Money crew holds a live literary event, “Money Greed and Power.”

3. Excellent article by Howard Beck on Jeremy Lin‘s improvement over past two years; also explains why Golden State cut him:

Unfortunately for the Warriors, they hardly had a chance to assess Lin’s off-season transformation. The N.B.A. lockout prevented them from working with him until camps opened in early December. He was on the court for maybe 90 minutes before the Warriors cut him in a move to clear payroll room to chase a free-agent center.

2/27/12

The Days of Wine and Mouses (Ep. 64)

Season 2, Episode 1

We have just released a new series of five one-hour Freakonomics Radio specials to public-radio stations across the country. (Check here for your local station.) These new shows are what might best be called “mashupdates” — that is, mashups of earlier podcasts that have also been updated with new interviews, etc.

If you are a charter subscriber to our podcast (remember this one on the dangers of safety, or this one on the obesity epidemic?), then some of this material will be familiar to you. If you are one of the people who have heard these new shows on the radio and wondered when they’d hit the podcast stream — well, that time is now. We’ll be releasing all five hours over the next ten weeks.

This first episode is called “The Days of Wine and Mouses.” (Download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.) Here’s what you’ll be hearing:

When you take a sip of Cabernet, what are you tasting? The grape? The tannins? The oak barrel? Or is it the price? Believe it or not, the most dominant flavor may be the dollars.

2/27/12

The Days of Wine and Mouses

Do more expensive wines taste better? And: what does one little rodent in a salad say about a restaurant’s future? This is a “mashupdate” of “Do More Expensive Wines Taste Better?” and “A Mouse in the Salad.”

2/27/12
57:48

Should You Be Guarding Your Old Fry Oil?

This seems like a relatively hard way for a thief to earn a living, but a 38-year-old New Yorker has been arrested for siphoning off used cooking oil from a pair of restaurants in Connecticut. From the Westport News:

Until two or three years ago, restaurateurs had to pay to get rid of used fry grease. Now they are able to sell it to a few companies in the area, who turn it into bio fuel that can be used to heat houses or operate diesel engines. …

2/24/12

Bring Your Questions for White House Economist Alan Krueger

The Council of Economic Advisers last week released its annual Economic Report of the President.  The CEA’s report, which dates back to 1947, aims to provide “an overview of the nation’s economic progress” while presenting “the Administration’s domestic and international economic policies.”  This year’s report lays out the “defining issue of our time”:

One of the fundamental tenets of the American economy has been that if you work hard, you can do well enough to raise a family, own a home, send your kids to college, and put a little money away for retirement. That’s the promise of America.

The defining issue of our time is how to keep that promise alive. We can either settle for a country where a shrinking number of people do very well while a growing number of Americans barely get by, or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.

2/23/12

The Dilbert Index? (Ep. 63)

Our latest Freakonomics Radio on Marketplace podcast is called “The Dilbert Index?” (Download/subscribe at iTunes, get the RSS feed, listen via the media player above, or read the transcript below.) It’s about workplace morale and the measurement thereof.

This segment was largely crowd-sourced from Freakonomics blog readers — so: thanks! It began with a blog post in which a reader named Tim Wadlow asserted that the direction you park in your company lot may say something about company morale. We then opened up the blog to further observations on company morale. One of the most interesting: the “Dilbert Index,” as described by a reader named Damon Beaven:

BEAVEN: I look for the number of Dilbert comics and that seems to be inversely proportional to the level of morale. A lot of Dilbert comics seems to be like a passive aggressive way of an employee complaining.

We also take a step back and ask the basic questions like: How much does company morale matter to a company’s bottom line? What’s the best way to measure morale? And, in the realm of unintended consequences, what happens when a company tries to cut down on sick days?

2/23/12

The Dilbert Index?

Measuring workplace morale — and how to game the sick-day system.

2/23/12
6:15

Some Links We Like

1. An early fan of Jeremy Lin.

2. How Boston Beer Co. gave beer-drinkers an IPO advantage.

3. A truck where students can stash their phones before school. (HT: Kottke)

4. Levitt once asked what WikiLeaks really affected. Bill Keller answers: “The most palpable legacy … is that the U.S. government is more secretive than ever.

5. Fewer cars are lemons; fortunately, Akerlof already got his Nobel.

2/21/12

Football Freakonomics: What Can Linsanity Teach Us About the Upcoming NFL Draft?

In his first six NBA starts, Jeremy Lin averaged 24.3 points and 9.5 assists while leading the Knicks to six straight wins. 

If those numbers were attached to someone like Kobe Bryant or LeBron James, you wouldn’t bat an eye. But until a couple weeks ago, Lin was little more than roster fodder, an undrafted player already cut by two teams and about to be cut by his third. That’s when a desperate coach who had run out of able-bodied point guards threw him into the fire. The rest – for the moment, at least – is history.

Let’s be honest: the reason we’re hearing so much about Lin is because he was overlooked. This might lead you to think he’s a true anomaly, a great game-time athlete who somehow slipped through a pro sports league’s finely-tuned talent-scouting machine. But if you look closely at the NFL, you’ll find Jeremy Lins all over the place.

2/17/12

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