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.”
In my last post, I reviewed how difficult it was to evaluate quarterbacks in the NFL draft. Essentially, I noted that there were several factors connected to where a quarterback was selected in the draft. But those factors failed to predict future performance. Given how difficult it was to just predict the future performance of veterans in the NFL, the difficulty people have forecasting the NFL performance of college quarterbacks is not surprising. In sum, “mistakes” on draft day in the NFL simply reflect the immense complexity of the problem.
In the NBA, though, it is a very different story. Veteran NBA players – relative to what we see in the NFL – are far more consistent over time. And although we cannot predict future NBA performance on draft day perfectly, we certainly know something. Part of that “something” that we know is that NBA teams make mistakes by focusing on the “wrong” factors.Right now, people are wondering how a player like Jeremy Lin could have been missed by NBA decision-makers.
Thousands of economics majors head off to industry each year to work as analysts. They’re lured by the promise that they’ll learn a lot, work hard, play hard and get ahead. But is it true? Who better to ask than the brilliant young analyst Elisabeth Fosslien. And as a good young analyst, she’s distilled her portrait of life as an analyst into charts. Having once lived the analyst life—my first job out of college was at the Reserve Bank of Australia, crunching numbers and making charts—all of these resonated with me.
Got a haircut at the beauty parlor down the street in Bonn, Germany. The young lady washed my hair first and dried it after very carefully — neither of which is done at home. The whole thing cost only €10, much less than I pay at the beauty parlor that my wife patronizes in Austin. On the price list, though, no price was as low as €10. I asked why, and was told they give a special price to those who are (as we might say in the U.S.) follically challenged. I observed a hirsute fellow in the next chair, whose haircut lasted much longer than mine. Clearly, the shop was engaging in cost-based price discrimination.
This is the first installment of a new Freakonomics.com feature from Sudhir Venkatesh. Each AI: Adventures in Ideas post will showcase new research, writing, or ideas.
A new book is garnering significant attention. In Going Solo
In our recent podcast called “The Dilbert Index,” we explored the idea of workplace morale. A recent study by Eric Gilbert, “Phrases That Signal Workplace Hierarchy,” provides an interesting window into who says what within firms, and why. From the abstract:
Hierarchy fundamentally shapes how we act at work. In this paper, we explore the relationship between the words people write in workplace email and the rank of the email’s recipient. Using the Enron corpus as a dataset, we perform a close study of the words and phrases people send to those above them in the corporate hierarchy versus those at the same level or lower.
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.
If you have one of those names that people are always struggling to pronounce, we have some bad news for you.
A new paper (ungated version here) by Simon M. Laham, Peter Koval, and Adam L. Alter finds that an easy name may confer advantages. The authors conducted five studies comparing easy- and hard-to-pronounce names (like Vougiouklakis or Leszczynska, for example): “Studies 1–3 demonstrate that people form more positive impressions of easy-to-pronounce names than of difficult-to-pronounce names.” While the first three studies focused on surnames, a fifth study analyzed both the first and last names of lawyers within law firms and found that “lawyers with more easily pronounceable names occupied superior positions within their firm hierarchy … The effect was independent of firm size, firm ranking, or mean associate salary.”
We’ve blogged before about the limits of willpower, the idea that “willpower itself is inherently limited.” A new essay by Sendhil Mullainathan and Saugato Datta speculates on the role of parents’ willpower limitations, particularly with respect to low-income parents:
Good parenting requires psychic resources. Complex decisions must be made. Sacrifices must be made in the moment. This is hard for anyone, whatever their income: we all have limited reserves of self-control, and attention and other psychic resources. …
In a recent podcast called “Save Me From Myself,” which is about the use of commitment devices, we discussed one such measure that’s intended to protect victims of domestic violence. It featured an interview with Brown economist Anna Aizer, co-author of this paper on the topic. A listener named Jay Turley wrote in:
This episode was very interesting, as usual. But the whole “domestic violence” section really irritated me.
As a male victim of domestic violence from a woman, I found it surprising that people such as yourselves completely bought into and promoted the now-disproved tenet that domestic violence equals male-on-female violence.
One of the great experiences of my stint in grad school was taking Advanced Macro classes from a fellow who at the time was regarded as a promising young professor at MIT — Daron Acemoglu. It was well worth making the bike trip from Harvard, down Mass. Ave., to learn from him. He is surely the most productive economist alive. And his frequent collaborator Jim Robinson may just be the most interesting political scientist. Their joint research program — figuring out what works and what doesn’t in economic development — involves asking some of the most important questions any social scientist can ask.
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.
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.
The sudden emergence of Jeremy Lin has led people to wonder about talent evaluation in the NBA. Two recent examples — from Stephen Dubner in this forum and from Jonah Lehrer at Wired Science — both take similar approaches. Both begin with the story of Lin, and then pivot to a discussion of the National Football League. In essence, each writer argues that talent evaluation in basketball and football is similar.
In my next two posts, I wish to address why I think talent evaluation in the NBA and the NFL is quite different.
Inspired by our podcast “Where Have All the Hitchhikers Gone?,” transportation scholar Alan Pisarksi organized a discussion session on the topic at the recent Transportation Research Board Annual Meeting in Washington D.C. Pisarski, who was also featured in our episode, hoped the event would encourage scholars to apply insights from the past to current issues in transportation policy.
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. …
Our latest full-length podcast, “How Biased Is Your Media?,” is about how academic researchers have been trying to measure the slant of your news.
The most common meme in this realm says that the mainstream media leans to the left. Frank Rich, a former op-ed columnist at the New York Times, who is now a writer-at-large for New York Magazine, says recent history proves this just isn’t true. Take, for instance, how his former employer handled the lead-up to the war in Iraq:
RICH: I think it flies very much in the face of the assumption that the so-called liberal media are out to doom Republicans or conservative causes. The New York Times promoted dubious evidence of Saddam’s weapons programs on its front page. The New York Times is thought by many on the right to be a so-called liberal slanting paper. The Washington Post, also, less elaborately, failed to really vet the evidence. The networks, CBS, NBC, and ABC are often considered by the right to be liberal news organizations. None of them questioned at all the rationale for going to war in Iraq.
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.
The picture on this t-shirt is a joke. It states: “Always give 100% at Work: 12% Monday; 23% Tuesday; 40% Wednesday; 20% Thursday; 5% Friday.”
But it’s interesting that its creator chose not to spread the work evenly across the week. His/her view of labor supply suggests a temporal dimension that seems sensible: More work on Monday than on Friday, more on Tuesday than on Thursday, with peak work effort on Wednesday. In terms of labor productivity, this does not seem very far wrong.
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?
Our latest podcast is called “How Biased Is Your Media?” (You can download/subscribe at iTunes or get the RSS feed.)
It includes an interview with University of Chicago economist Matthew Gentzkow, who discusses a study he coauthored with Jesse Shapiro about newspaper bias. They used a sample of 433 newspapers and sorted the phrases favored by Congressional Democrats and Republicans.
As Linsanity continues, an illustration by Bobby Bernethy is making the rounds:
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.
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.
The American League believes in comparative advantage, and has a designated hitter bat for the pitcher. I prefer this: I believe in comparative advantage and division of labor (and being a White Sox fan from age 5, I like the American League anyway).
This afternoon we heard a performance of Pagliacci, before which an announcer informed the audience that the soprano was ill, but would act the role while another—the designated soprano—sang from the side of the stage. The acting was better than usual, and so was the singing—an illustration here of comparative advantage. The overall effect wasn’t good: Opera is both acting and singing, and it was absurd and disconcerting to separate them. The production function for opera requires one person doing both—division of labor makes no sense in this case.
(HT to FWH)
Our recent podcast about commitment devices, called “Save Me From Myself,” continues to elicit responses from readers sharing their own experience. The other day, Amber told us about joining the Air Force as a commitment device.
Here’s another pair of stories. The first is from Philip Veysey, who lives in Madrid. He is looking for some advice:
Hi guys,
I listened with interest to your podcast about commitment devices and I thought I would share my own which I devised as a way to curb my unnecessary clothes shopping. I found that I was buying simply more clothing that I needed and although this wasn’t causing me any major problems, I realized that it was really wasteful and I decided to think of incentives to make me stop.
A new paper from psychology researchers Mark Van Vugt and Wendy Iredale finds that acts of male kindness may not always be quite what they seem. From Science Daily:
Two experiments were undertaken. For the first, 65 men and 65 women, all of an average age of 21, anonymously played a cooperation game where they could donate money via a computer program to a group fund. Donations were selfless acts, as all other players would benefit from the fund, whilst the donor wouldn’t necessarily receive anything in return.
Players did not know who they were playing with. They were observed by either someone of the same sex or opposite sex — two physically attractive volunteers, one man and one woman. Men were found to do significantly more good deeds when observed by the opposite sex. Whilst the number of good deeds made by women didn’t change, regardless of who observed.
For the second experiment, groups of males were formed. Males were asked to make a number of public donations. These increased when observed by an attractive female, where they were found to actively compete with one another. When observed by another male, however, donations didn’t increase.
A reader, who is also a lawyer, writes in with an interesting example of incentives in the courtroom. He tells us about a particular judge in New Hampshire, who developed a strategic approach to collecting fines: I thought you might be interested in this little experiment in economics. People cannot be sent to jail, under the Constitution, for being poor — . . .
A podcast listener named Amber writes in to say:
I recently listened to your podcast on commitment devices, which finally gave a name to something that I recently had been contemplating and finally contracted myself to.
There is a lot of background to this story that neither would interest you nor better illuminate the value of my commitment device, so I shall skip that and instead tell you that I recently enlisted in the U.S. Air Force with the hope that the training and experience will not only make me into a better person for the benefit of my country and my state, but that it would replace some of my bad habits with more honorable ones.
The ideal outcome of this device is that, by the end of basic training, I would be a more compassionate leader, a more resilient individual, and a more capable collaborator. There is something tremendously beautiful about surrendering to such an extreme situation as basic training.
For a singularly grim, if fiercely literary, assessment of the earth’s environmental fate, the grizzled wisdom of Cormac McCarthy is always there to deliver the dark pronouncement that we’re flat-out doomed. “The way of the world is to bloom and to flower and die,” explains the judge in McCarthy’s masterpiece, Blood Meridian. “[B]ut in the affairs of men there is no waning and the noon of his expression signals the onset of night.” Darkness, in essence, will fall at the very moment when we think we’re out-of-our-mind brilliant.
Brilliance in conventional environmentalism has thus far been embodied by the caricature of hybrid-driving solar evangelists with soft spots for local farms, grass-fed beef, and re-useable shopping bags adorned with inscriptions of ecological virtue. Such popular solutions to our environmental quandary come not only with the eager endorsement of a progressive political establishment, but with the added appeal of basic pragmatism. Drive a more fuel-efficient car, eat locally, seek energy-efficient light fixtures, and vote “yes!” for public transit initiatives — such ideas simply make sense. And thus they’ve become the nuts-and-bolts of modern environmentalism.