Steven Levitt on Freakonomics and the State of Economics 11/9/20

Author and economist Steven Levitt is the William B. Ogden Distinguished Service Professor of Economics at the University of Chicago and host of the podcast People I (mostly) Admire. But he is best-known as the co-author, with Stephen Dubner, of "Freakonomics." The book, published in 2005, became a phenomenon, selling more than 5 million copies in 40 languages. Levitt talks with Econtalk host Russ Roberts about the book's surprising success, the controversy it generated, and how it shaped his career. Levitt says, for him, "economics is about going into the world and finding puzzles and thinking about how understanding incentives or markets might help us get a better grasp of what's really going on."
Links and transcript for this episode: www.econtalk.org/steven-levit...
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[@tombear9770]

dope interview, started with audio whilst washing up; then made some toast and coffee and sat down and enjoyed the video too; thanks chaps

[@johnmcdaniel144]

This interview changed my perceptions of Dr. Levitt and his work to date, in a positive light. I don't agree with everything he says (I'd be bored stiff if I did) but the greater insight into him as a person has been helpful. Thanks for the great interview.

[@joshuahuynh193]

What specifically do you not agree with? Speaking as a former economics major but work outside the field. Freakonomics has led me to many other great podcasts and I have always loved Levitt and his work. I’d like to know what might be considered controversial that I had not realized. Thanks.

[@aridas4798]

I came, I saw, I liked.

[@CJinsoo]

The monitoring option for convicts seems like a good idea and worth testing and evaluating. Monitoring the convict seems far less intrusive than the surveillance state practice of ubiquitous crime cameras, in addition to the obvious intrusiveness of living in prison.

[@h.skiprobinson7668]

Academia is often very co-dependent on the government. I understand the IVY League Schools acquire more money from the government than they do from student tuitions, even though their endowments are in the $billions.

[@pascalw.paradis8954]

I think I bought that book. Didn't read it though. 🔥🔥💰💰💰💰🔥🔥

[@h.skiprobinson7668]

Sadly, we don't control the platforms in which we can publish the papers. I just read, a relatively large group of scientists, in I think Norway did a study on Protective masks and social distancing and as of the other day were unable to get their study published. The article stated they were told their study was too controversial. Both the New England Journal of Medicine and the folks at JAMA turned them down.

[@thelaw3536]

Get a vpn and download it form their country

[@h.skiprobinson7668]

@@thelaw3536 They haven't published it yet waiting for someone to peer review.

[@h.skiprobinson7668]

I like the Prison Bracelet Release Program PBRP

[@mrrob24]

Any idea which Economist Dubner is referring to when he talks about fraud?

[@guilhermeyanaka7033]

It's easy to find. Just Google centipede game chess

[@ajmarr5671]

Why behavioral economics needs a Copernicus. (and by the way, freakonomics is much closer to the truth about how incentives work!) A major criticism of behavioral economics is that it is merely a compendium of the many ways economic behavior veers from the ‘rational actor’ model of individual incentive that is foundational to classical economics. However, neurologically based explanations of incentive are very different from this model, and arguably can explain many of the findings of behavioral economics from first principles, like the movements of the planets in the night’s sky from the Copernican theory of the solar system. Presented here is precisely this argument from the perspectives of evolutionary biology and affective neuroscience, with detailed explanatory sources linked below. Ultimately, the idiosyncrasies of behavior must be derived from first principles, namely an understanding from human neuroscience as to how incentive motivation works. Without this we are forced to rely on separate correlations between external observations and external events, with behavior acting in eccentric patterns like the planets in the night sky. In his critique of behavioral economics, the economist Jason Collins used just this analogy to describe how a lack of a deep and foundational understanding of how the world works can make the solar system seem positively deviant. “So, I want to take you to a Wikipedia page that I first saw when someone tweeted that they had found “the best page on the internet”. The “List of cognitive biases” was up to 165 entries on the day I took this snapshot, and it contains most of your behavioral science favorites … the availability heuristic, confirmation bias, the decoy effect - a favorite of marketers, the endowment effect and so on …. But this page, to me, points to what I see as a fundamental problem with behavioral economics. “Let me draw an analogy with the history of astronomy. In 1500, the dominant model of the universe involved the sun, planets and stars orbiting around the earth. Since that wasn’t what was actually happening, there was a huge list of deviations from this model. We have the Venus effect, where Venus appears in the evening and morning and never crosses the night sky. We have the Jupiter bias, where it moves across the night sky, but then suddenly starts going the other way. Putting all the biases in the orbits of the planets and sun together, we end up with a picture of the orbits that looks something like this picture - epicycles on epicycles. But instead of this model of biases, deviations and epicycles, what about an alternative model? The earth and the planets orbit the sun. Copernicus, of course, it’s not quite as simple as this picture - the orbits of the planets around the sun are elliptical, not circular. But, essentially, by adopting this new model of how the solar system worked, a large collection of “biases” was able to become a coherent theory. Behavioral economics has some similarities to the state of astronomy in 1500 - it is still at the collection of deviation stage. There aren’t 165 human biases. There are 165 deviations from the wrong model. So what is this unifying theory? I suggest the first place to look is evolutionary biology. Human minds are the product of evolution, shaped by millions of years of natural selection.” Perspective on incentive from evolutionary biology evonomics.com/please-not-another-bias-the-problem-with-behavioral-economics/ A lay account of incentive from affective neuroscience. www.scribd.com/document/495438436/A-Mouse-s-Tale-a-practical-explanation-and-handbook-of-motivation-from-the-perspective-of-a-humble-creature An academic account of incentive from affective neuroscience- Berridge lsa.umich.edu/psych/research&labs/berridge/publications/Berridge2001Rewardlearningchapter.pdf Berridge Lab, University of Michigan sites.lsa.umich.edu/berridge-lab/ And wiki list of biases en.wikipedia.org/wiki/List_of_cognitive_biases

[@econtalkwithruss]

Interesting! Thanks for contributing to the conversation!

[@ajmarr5671]

@@econtalkwithruss the focus on incentive, per Levitt's work, and in the media, by John Stoessel, is perhaps the most accurate way of looking at practical economics and demonstrate that one does not have to introduce intrinsic biases to explain behavior.

[@yamishogun6501]

I have to stick with avoiding video. Sort of like how I don't want to see Charlie talk on Charlies Angels.

[@h.skiprobinson7668]

thanks for the heads up.

[@Odysseusf]

I believe that this is the fraud paper he was talking about. Palacios-Huerta, Ignacio, and Oscar Volij. 2009. "Field Centipedes." American Economic Review, 99 (4): 1619-35. DOI: 10.1257/aer.99.4.1619 In the centipede game, all standard equilibrium concepts dictate that the player who decides first must stop the game immediately. There is vast experimental evidence, however, that this rarely occurs. We first conduct a field experiment in which highly ranked chess players play this game. Contrary to previous evidence, our results show that69 percent of chess players stop immediately. When we restrict attention to Grandmasters, this percentage escalates to 100 percent. We then conduct a laboratory experiment in which chess players and students are matched in different treatments. When students play against chess players, the outcome approaches the subgame-perfect equilibrium. (JEL C72, C93)

[@Odysseusf]

The rejoinder paper is rady.ucsd.edu/docs/faculty/Levitt_List_Sadoff_Checkmate_Backward_Induction_AER_2011.pdf