Twenty Years of Freakonomics (with Stephen Dubner)

Stephen Dubner: Thanks, Russ. Very comfortable to be right here.

Stephen Dubner: Yeah. I imply, to leap to the top, it has been a outstanding expertise. I had labored at The New York Occasions for a number of years as an editor. Now, I used to be off alone as a author. This was going to be my third e-book; and my editor on the time, his title was Hugo Lindgren, requested me to put in writing this profile–this man, Steve Levitt, at Chicago. I knew Levitt’s title solely as a result of he had written, by that time, a well-known paper with John Donahue, a authorized scholar, concerning the relationship between the legalization of abortion in the USA and the crime price, arguing that crime finally fell, in some massive half, due to the legalization of abortion, which led to fewer undesirable kids. So it is a massive concept and concept that Freakonomics has develop into identified for, as a result of we included it in that e-book.

I really turned down the project a few occasions as a result of Levitt was not the–I referred to as Levitt, I chatted with him a bit, and I informed him, ‘I am engaged on this e-book concerning the psychology of cash.’ And, he says, ‘Oh, God, I do know nothing about that. Nothing.’ He stated, ‘I do not know something about cash. I do not know something about behavioral economics,’ which was true on the time. Levitt–I believe he most likely knew Thaler, however they’d by no means executed actually a lot collectively.

However then, I used to be going to be in Chicago for one thing else, a completely completely different reason–to give a chat on a special e-book I would written. And I believed, ‘Let me learn some extra of Levitt’s papers simply to see what he is all about.’ And I began to learn them. I am like, ‘Oh, my gosh. This man is so fascinating.’ What I used to be actually struck by was that he approached his lane inside econ–a sort of utilized microeconomist–in a method and with a ardour and with a way of journey and enjoyable that I attempted to method my lane inside nonfiction writing.

He did what he wished to do. He did not observe the group. I believed he was an actual inventive thinker. And so, I went out, and I spent–he tells a narrative. I believe he is exaggerating slightly bit. He stated that I requested him for an hour or two for an interview, which–I do not know–maybe I did to start with, however I ended up staying for a number of days. And that’s true. And I keep in mind calling my spouse from the resort after the primary day I spent with Levitt, and I stated, ‘I don’t know if anybody goes to care in any respect about this text that I am writing on this man, however I’m simply having such a great time. He is bought an fascinating mind. I ask a query that I believe I type of know the place he’ll go together with it, then he goes someplace completely completely different.’

And in addition, for me, this was a giant deal. I appreciated economics. I appreciated economists. I would learn a whole lot of economics by this level, however as an novice, as a journalist. I would additionally learn a whole lot of psychology, and sociology, and anthropology. That does not make me an anthropologist or a sociologist, and I definitely wasn’t something like an economist. However Levitt, from day one, actually turned a trainer for me. The best way that he defined an idea, the way in which you’re taking that idea right into a sure information set, the way in which you attempt to determine the incentives that is likely to be at play, the way in which you then look to the info to both help or don’t help or refute the truth of these incentives–it was like getting a grasp class.

After the article got here out, there was a whole lot of curiosity from quite a lot of publishers for a e-book of some sort. Folks have been calling Levitt, asking him to put in writing a e-book, and he would inform them, ‘Have you ever ever learn my educational papers? You do not need me writing a e-book.’ Folks have been calling me to put in writing a e-book as a result of I am the author, and I stated, ‘Properly, I do not wish to write a e-book a few man that I simply wrote an article about, as fascinating as he’s, and I’ve bought this different e-book I am occurring.’ Really, Levitt referred to as me and said–we weren’t buddies in any respect. We weren’t antagonistic in any respect, however I used to be a journalist; he was a topic. However then, he referred to as and stated, ‘These individuals are asking me to put in writing a e-book. I do not know what to do.’ I stated, ‘Properly, if you wish to write a e-book, you have to get an agent to discipline the requests and work out who is sweet, who’s dangerous, what they need, what you wish to do.’

He stated, ‘Properly, are you aware an agent?’ I stated, ‘Yeah, I’ve the most effective agent on this planet: Suzanne Gluck with William Morris.’ He stated, ‘Properly, are you able to join me?’ So, I linked them. They talked, they appreciated one another. After which Suzanne–I imply, the explanation I like this story is it reveals how most of the issues that we expect we know–how they bought to be that way–did not get to be the way in which we expect. If Suzanne Gluck hadn’t had that decision, there would have been no Freakonomics, as a result of she stated, ‘Why do not the 2 of you do that collectively?’ And I believed, ‘Properly, that is loopy,’ as a result of he was a topic I used to be writing about as a journalist. However, there was no battle of curiosity. It wasn’t like I wrote about him hoping to get a e-book. Levitt thought, ‘Properly, I do not actually know if I like Dubner that a lot. He is sort of a ache within the neck. He is a journalist asking all these questions.’

However then, we began to simply speak and hang around, and it was a blast.

And that began–we started to hatch out a plan for: If we have been going to put in writing a e-book, what wouldn’t it be? Truthfully, we approached it with a way of marrying two sturdy nonfiction realms–journalism and educational analysis. So, we’re coming at this from a sort of shared background of: info matter, fact-checking issues, and so forth. However, we additionally wished to inform fascinating tales based mostly totally on the analysis that Levitt had executed.

So, we wrote it. It was actually enjoyable to put in writing it. We did not have nice expectations, regardless that we knew that there was some expectation. After which, when it got here out, it simply did, like, stupidly effectively. All good issues stored occurring over and over, and we simply marveled at it. And so, twenty years later, it sort of glided by in a blur. I believe we each tried to make the most of the benefit that we bought and hold doing good work, and that is the place we at the moment are.

Stephen Dubner: Okay. How was it? I am curious to know–

Stephen Dubner: since you’ve learn it now rather more just lately than I’ve.

Stephen Dubner: I would like to discipline these questions, as a result of I–

Stephen Dubner: Hmm. Yeah.

Stephen Dubner: Yeah. So, to start with, I very a lot recognize your saying that. I clearly agree. I believe when something turns into fashionable, there is a reliable motion nearly at all times to problem it, whether or not it is a political motion, a popular culture factor, no matter. That is simply, I believe, the character of humankind almost–especially if it is coming from inside your realm.

The explanation the e-book is written the way in which it’s, is, I imagine, due to one thing I discussed earlier, which is that Levitt and I have been coming from two completely different traditions the place we each actually valued open considering, analysis, info, fact-checking, and many others., and many others.

One of many issues about your field–about educational economics–that I actually beloved after I first began studying econ papers was that, not like analysis papers within the different social sciences–psychology, definitely, sociology, anthropology, and many others.–they’re all slightly bit completely different. Each self-discipline has its idiom and its traditions. However, the econ papers, particularly those written for the higher journals, had typically a template that I discovered actually engaging, which is: Right here is the thesis or argument that this paper is about to make. I will describe the info, the methodology, the challenges, the findings, and many others. However, earlier than I inform you why I am fairly positive that the proof I am providing in favor of my thesis is probably the most compelling set of proof that might verify this thesis, let me attempt to give you some different doable explanations.

That is what economists do a lot extra typically than the opposite social scientists, in my expertise at the very least. I am not going to say that I am 100% authoritative on that, as a result of I am not a historian of academia, however that is the way in which I see issues, having learn a whole lot of papers in all these realms.

To me, it feels slightly bit extra like a few of the arduous sciences. It is why I typically actually get pleasure from talking with physicists the identical method that I get pleasure from talking with economists, as a result of some economists–just like some physicists–are actually good at a posh dynamic system, a whole lot of inputs and a bunch of outputs, and determining what the heck is inflicting what. And that may be a really troublesome factor to do, particularly in fashionable society.

Stephen Dubner: That is proper.

Stephen Dubner: Yeah. I believe there are a few causes for that. One is: I really like journalism, however I believe journalism is extremely flawed. You understand, I used to be at The New York Occasions for a bunch of years. There have been a whole lot of nice journalists there. There have been a bunch of not-great journalists there as effectively. I had an extremely instructive interval there as a result of my job was–I used to be an editor on the Sunday Journal, which meant that I might assign articles to writers, a few of whom weren’t Occasions workers, lots of whom have been freelancers. Typically an project that had been assigned elsewhere would come throughout my desk, and I might be the editor of that, after which I might work with that piece and that author to get it publishable.

A few of the largest names in journalism, I might get their uncooked manuscripts, and I am like–not that this is not very good–although there was a whole lot of that–it was that this isn’t very well-reasoned.

I at all times thought that, to be a great journalist, you have to be at the very least fairly good at three main areas: analysis or reporting–you’ve bought to search out info, materials, information, no matter it’s.

Then there’s the considering. Which means being a great vital thinker. This dramatic occasion occurred as soon as. How anomalous is it? Properly, let’s give it a way of magnitude. Let’s give it a time sequence, and many others., and many others. So, there’s that skill to critically assume.

After which, there’s the writing. Only a few folks, in my expertise, are actually good in any respect three of these, and those which might be are fairly well-known for fulfillment. However, I believe that there is a whole lot of journalism that’s dedicated with good intention that’s lacking at the very least a kind of three.

However, I had a whole lot of different benefits right here. I had a colleague–a co-writer–who was actually good at instructing me the nuances to make with these arguments. So as an example, I do not know the way lengthy the part is within the e-book. It is most likely solely, I do not know, half a web page, one page–you would possibly remember–but we determined to–as we’re explaining, I believe we’re explaining the diploma to which the various things that oldsters do have an effect on the result of their kids. And at one level, we’re discussing a bunch of things having to do with the variety of books within the dwelling, visits to cultural establishments, and many others., and many others., and many others. We’re making an attempt to explain how one can persuade your self that these measurements are correct, or at the very least helpful. And so, Levitt stored saying, ‘Properly, you know–.’ I would say to him, ‘How do you try this?’ He’d say, ‘Properly, we use a regression evaluation.’ ‘Okay, what’s a regression evaluation?’

And so, Levitt then–I keep in mind having this dialog with him on the telephone as a result of he was in Chicago, I used to be in New York. We talked for hours and hours and hours of him describing precisely how an economist like him otherwise you would use regression evaluation to take a set of data–like this set of knowledge that he had, which I believe, on this case, was from the Nationwide Childhood Studying–NCLS?–

Stephen Dubner: ELCS. What does that stand for?

Stephen Dubner: Yeah, so that is what I am saying. Levitt and I might just–it was as if I used to be a comparatively brilliant, perhaps highschool sophomore who appreciated the thought of economics however had by no means studied it formally. And Levitt, in the course of the course of the e-book, we principally had an econ masterclass that was constructed round not simply me studying the ideas, however constructed round utilizing these ideas to clarify, to put in writing, to make use of good rhetoric, to flesh out the analysis that he had executed, and do it in a method that might persuade the listener that what we’re describing might be principally correct, whereas, as you stated, making an attempt to caveat it as a lot as we will. And additionally displaying our homework as typically as we will. [More to come, 20:23]

Levitt wrote a paper referred to as one thing like–it was one thing concerning the general crime drop in the USA that occurred within the Nineteen Eighties and Nineties, and his paper was referred to as one thing like “4 Components that Influenced the Crime Drop and Seven that Did Not,” or one thing like that.

Stephen Dubner: Within the e-book, we then undergo the 4 and the seven, or regardless of the quantity was; and we clarify why it’s that, whereas one would possibly like to imagine that, as an example, capital punishment is a large deterrent towards future criminals, the way in which that capital punishment has traditionally been carried out on this nation, it does not act as a deterrent in any respect, and the info for that have been fairly clear. So, yeah, present the homework, talk clearly, be extraordinarily clear and sincere with the reader. These have been actually the hallmarks of how we have been making an attempt to put in writing this e-book.

Stephen Dubner: I imply, it has been the expertise of a lifetime. I considered myself as a author and as a journalist from the time I used to be sufficiently old to stroll. Actually, we had a household newspaper. I used to be the youngest of eight children, so it was very arduous to get a chunk in the household newspaper. My dad was a newspaper man. My mother was really a greater author than my dad, however she was a full-time mother with eight children, and she or he was sort of a farm girl, pioneer hero. My mom was completely superb, a complete position mannequin for me.

My dad died after I was a child, so my mother was the energy of that household. Writing was only a massive a part of what I did and the way I considered myself. After which began a highschool newspaper, wrote for the school newspaper, and many others.

Then I bought waylaid slightly bit. I did music. I would additionally at all times executed music, and my first profession actually was taking part in in music. I bought in a band. We have been dangerous at first. We bought higher, we stored going, we bought a document deal. Moved to New York, after which I made a decision that I didn’t need that life in spite of everything. We have been on the rock star path, and I made a decision that was not a wholesome pursuit for me.

Then I bought again into writing, went to grad college for writing. What Freakonomics Radio has been for me is just a method to, as a author, have my very own venture each week the place there’s an thought, there’s analysis, there’s discovering the suitable voices to debate the analysis; then there’s interviewing, typically, a number of folks. That is all executed with the assistance of a whole lot of producers that we’ve got on the present. Not lots, however a small group of nice producers that we’ve got on the present.

We interview often three, 4, 5 folks per episode. Then we’ve got a whole lot of tape; then we take that tape and deal with it the way in which that an economist would deal with a giant information set. It’s a must to work out what’s most precious, what’s most consultant, what’s most fascinating, and many others. Then you definately put collectively a script and write narration round it. It is principally like writing a giant journal piece, or perhaps a e-book chapter, each week.

And it is exhausting. I would not suggest it to anybody. It’s a must to be completely bonkers–and bonkers for it–to do it; however I am bonkers for it. I really like the training. I really like the neighborhood. I really like talking with individuals who’ve devoted years of their lives to analysis and excited about these, typically arcane, however fascinating areas.

After which, I really like our neighborhood of listeners. Each time we do any sort of call-out for information–for occasion, we put out a call-out just lately. We’re engaged on an episode about what’s referred to as the physician shortage–the doctor scarcity in the USA. Which is a extremely sophisticated subject, rather more than you’d assume. We simply put out a call-out. We might already interviewed a number of folks. We simply wished slightly bit extra tape. We wished to listen to from physicians themselves, no matter their experiences were–on the entrance finish, on the again finish, medical college, no matter. And we simply bought, within the final couple of days, this flood of emails–probably, I do not know, 100, 200 emails–from probably the most fascinating, passionate, well-intentioned people who find themselves so considerate about issues that go effectively past their day by day lifetime of apply.

That could be a neighborhood that we’ve got constructed through the years by being credible, by being curious, by being not a jerk. I believe simply not being a jerk will get you far in journalism, as a result of I believe lots of people you interview, their view of journalism is that somebody right here is out to get me, out to show me flawed.

I ask a whole lot of questions of individuals, like, ‘I do not perceive the way you come to this conclusion. Are you able to share with me your proof?’ And, if they offer me the proof and the proof appears to me to not be very substantial, I will say, ‘That proof does not appear very substantial. How are you aware that your discovering is correct versus what might be one other rationalization?’ I really feel that people who find themselves sensible and sincere are actually good at answering these questions. And, if they are not, then they’re often both not that sensible or not that sincere; or, they’re promoting one thing. Lots of people are promoting issues. I am not a lot of–I do not go for that, so I attempt to keep away from that.

Stephen Dubner: Properly, even worse, although, we asked–I should not say worse. Higher. We requested for voice memos, so it is emails with voice, so it is a whole lot of materials to type by way of.

Stephen Dubner: Oh. Yeah. I believe a whole lot of issues. They’re most likely not binary modifications. It isn’t like I used to imagine in Santa Claus, and now I did not. Sadly, there aren’t that many binary switches. I want there have been. It will make life easier.

I’ve come to essentially, actually, actually assume arduous about what the most effective type of–not simply authorities, however the most effective type of an financial system is. I believe we have all executed a whole lot of considering on that within the final 10, 12, 15 years. I believe we’re at a real–I do know the phrase ‘inflection level’ is overused, and I believe it means nearly nothing to anyone anymore. However, it looks like we’re at some extent the place sufficient folks at the moment are questioning what the correct of an financial/political system is, for lots of people to really feel that we’re on actually shaky floor.

The primary, I might say, 5 to eight years of my fellowship with Steve Levitt and the opposite economists across the College of Chicago, it was very straightforward to subscribe to a sure type of late-period Milton Friedman, Free to Select ideology, about which I nonetheless assume there’s a terrific, nice, nice deal of worth. I might additionally argue that I believe Milton Friedman is sort of broadly misquoted, misunderstood by his opponents.

However, I believe the degrees of inequality–it’s not simply the degrees of inequality. It is the way in which wherein wealth is being created within the U.S. financial system particularly, that’s so heightened and so siloed off from the way in which that the remainder of the individuals who take part within the financial system goes. I believe that is a subject that wants a whole lot of examination, a whole lot of daylight.

We have executed fairly a number of episodes through the years, and we’ll proceed to do, on one avenue of that concept, which is the position of personal fairness. And once you take a look at non-public fairness firms–which are made up of individuals, typically very good folks; and I do know many of those folks, I am buddies with them–and they’re taking in cash from investors–who are additionally fairly often good folks, well-intentioned folks, lots of them institutional buyers who signify universities, hospitals, and pension funds, all of whom are well-intentioned, all of whom imagine in all the great issues {that a} good society has–I do really feel that when that amount of cash will get rolled up and begins to be utilized to all types of companies that, up to now, have been smaller scale.

So we’re seeing non-public fairness rolling up. We have executed episodes on pet care, pet healthcare. You see the roll-ups in pawn retailers, automotive washes, all types of human well being services–dentists, and physician’s offices–and so on, and so forth. The proof from folks like–I wish to say Josh Lerner, who I wish to say is MIT [Massachusetts Institute of Technology], however perhaps Harvard, perhaps MIT–

Stephen Dubner: Yeah. So, the proof from Josh is sort of combined on the outcomes for each prospects of those corporations, workers of those corporations. For shareholders, it tends to be good. However, a whole lot of the more-reported and anecdotal proof is far worse for patrons and workers.

I might say, as a shopper myself, my expertise is that once you’re coping with a agency that you have handled for a very long time, and rapidly they begin sending 20 emails as a substitute of 1, and not one of the 20 is sensible, they usually’ve all bought a authorized disclaimer that lengthy on the finish that has nothing to do with every little thing, and you may’t really work out what they’re asking you to do; and they’re asking you to do one thing that they used to do–they’re asking you now to do your individual paperwork and purposes and safety. Care for your individual safety hygiene, and so forth. That is what it seems to be like when corporations that was run fairly effectively however have been extra mom-and-pop, at the moment are being ramped up and run by a extra distant company being.

So, I believe we have all had that have. And that’s only a shard of the mountain of, I believe, the path that the financial system has been heading in, as a result of scale actually issues to buyers.

So, I believe there are a whole lot of potential downsides of that. I believe there are additionally potential upsides, too. My private-equity investor buddies will inform me that they typically come into these sectors or corporations that nobody else needs, after which they flip them ‘spherical and make them higher for customers and workers. And, I do know that is true in some circumstances. However I’ve really–that’s been a giant awakening for me.

Stephen Dubner: I agree. I agree. It is a subject that I discovered myself exploring over and over and over on Freakonomics Radio, for the very causes that you just stated. I believe it is wildly naive for anybody to be a sort of financial anarchist nowadays whereas having fun with issues like air con and cell transportation and cell expertise. I believe most individuals perceive how hypocritical that is–to say, ‘No, no, no, I do not like finance, capitalism, and many others.’ whereas many of the instruments that I am utilizing to attempt to assail it have been created by entrepreneurs, inventors, funders, and many others., and many others. So, let me declare that as a basis.

It is why I find–this goes to sound like an oxymoron, perhaps–but I search out what I might contemplate consultant edge circumstances. So, what I imply by that’s: after I would executed a number of items about what non-public fairness funding will usually do in a sector like pet healthcare–we did, I believe, a two-part sequence on that the place we talked to all differing types of individuals from the business, on all sides of it, and customers, and so forth. And, by having good, deep conversations with folks of their space of experience, you be taught a whole lot of fascinating stuff.

So, as an example, I realized that {one of the} massive causes that pet veterinary retailers, let’s say–whether it is a surgical procedure store or a normal pet care shop–why they’re so, as an instance, inclined to a non-public fairness takeover is as a result of they have been often based by one or two or perhaps three vets–whatever–20, 30, 40 years in the past. They constructed a apply; it is a profitable apply. They put their whole lives into it, and now they positive wish to retire and get the profit. They’d prefer to promote the enterprise, and the enterprise is price lots. They have a repute, they have clientele, they have institutional information, and so forth. So, who do they promote to? Properly, what usually would occur in most companies up to now is the subsequent technology of proprietor would come from the agency.

So, who’re the vets who at the moment are, as an instance, between–and changing into a vet, it is a very sophisticated, lengthy, and costly course of. Appropriately. Drugs is sophisticated. And so, you are coping with veterinarians who could also be between, as an instance, early 30s and late 40s. Properly, guess what? They do not have the cash to purchase the apply as a result of the world has gotten costlier to dwell in. Veterinary college has gotten a lot costlier, and a whole lot of them are nonetheless working off their vet college debt.

So, what do you do? Who’s the subsequent purchaser? Properly, the subsequent purchaser in that case–the finest eligible buyer–is going to be, as an instance, a non-public fairness investor who is available in and says, ‘I like what you do. I just like the folks you’ve got bought lined as much as take over subsequent. I will provide you with this worth to take over, and now we’ll modernize issues.’

So, in concept, you possibly can see why that occurs the way in which it does, and the way it might go effectively, or the way it might go poorly. Most of the great and horrible issues which have occurred on this planet are the results of one or two individuals who make selections, and people folks both make good selections or dangerous selections, or they’re both good folks or dangerous folks.

I do not imply to make the quadrant that direct. However, Hitler was finally a fairly dangerous man who was actually good at doing dangerous stuff, but it surely took a lot to perform that. That wasn’t going to occur by itself. Equally, individuals who construct nice things–it takes an unbelievable quantity of will, funding, and so forth. I might by no means low cost how troublesome and costly it’s and the way unlikely it’s to construct any nice success, whether or not it is inside capitalism, academia, and so forth. So, I at all times take that as a given.

Once I discuss in search of out a consultant edge case, I consider somebody like a man named Pete Stavros at KKR [Kohlberg, Kravis, Roberts, & Co.]. So, after we might executed a few episodes on the upsides and principally downsides of personal equity-funded consolidation within the pet healthcare business, we did a follow-up of types the place I talked to Pete Stavros, who’s a senior accomplice, senior government, no matter, at KKR–one of the massive non-public fairness corporations, {one of the} largest, {one of the} first–who has made it his mission to, inside the realm of KKR operations, give you a plan that might reward the staff of the corporations that KKR buys.

So, KKR will purchase a agency from the non-public homeowners. They are going to attempt to enhance the operations of that agency. They may attempt to minimize prices. They may attempt to improve revenues. However, within the meantime, they might give the existing–and perhaps even future–employees of that agency a chunk of the pie. Which is to say that when KKR would finally promote that operation–because non-public fairness corporations do not hold on to those corporations for too lengthy; that is not their model–then these workers would money out.

So, they develop into, in essence, an employee-owned firm–to a small diploma. The overwhelming majority of it’s owned by the company, the massive buyers. However, that, to me, is a mind-set about this type of subject, this type of problem–if you wish to name it that–of hyper-intensive, hyper-leveraged, hyper-successful capitalism, understanding that you have to additionally combine the human scale–the human scale on this case being: How are you going to deal with the individuals who do the work?

That is, Russ, the place I felt like economics as a self-discipline actually wanted to degree up within the final 30 years, and I believe did, and partly by way of the work of the behavioralists. Now, I do know that a whole lot of economists–a lot of old-school economists, a whole lot of macroeconomists, certainly–might low cost a whole lot of the work of the behavioralists. And, if we speak concerning the behavioralists as a camp, usually, we might begin with Danny Kahneman and Amos Tversky, who, in fact, weren’t economists however have been psychologists. After which Richard Thaler, and others who have been psychologists, who started to create this mix that we now consider usually as Behavioral Economics. Once I began studying economics papers, I used to be typically slightly shocked at how little the people that economists describe of their fashions represented any of the people that I knew.

And, that is now a really acquainted argument–that Homo economicus was a sort of, you already know, cardboard determine. Now, a really helpful determine.

However, I do assume that it is easy, once you’re within the realm of macroeconomics or high-level finance–because the problems you are coping with are sophisticated, troublesome, the numbers are massive, the info units are massive, you’ve got bought a whole lot of leverage–I do assume it is easy to sort of neglect about who’s on the opposite finish of issues. And who’s on the opposite finish of issues are particular person people–employees, customers, residents, and many others.

I imply, this goes again to why I really like Adam Smith. You understand, I do not learn Adam Smith to know, you already know, what’s one of the simplest ways to optimize the availability chain for that pin manufacturing facility in Kirkcaldy, Scotland. I learn Adam Smith because–the identical method, I believe, that I really like your e-book on Adam Smith, too–because he is excited about: Whenever you’re going through a change of this magnitude–in that case a interval of the Industrial Revolution, the place the way in which we made issues was altering drastically and, due to this fact, import-export was altering drastically–when we make these huge societal modifications, how does that have an effect on folks? How does that have an effect on the person who goes to work in that pin manufacturing facility? Now that that person–let’s say it is the husband in a family–has that job, what does that do to the remainder of his household? Is it extra earnings? Is he going to have extra children, fewer children? Are they going to get extra training, much less training?

These are amazingly fascinating inquiries to me. Economists occur to be fairly good at addressing–and typically answering–those questions. And, we’re in a time now the place there are extra questions like that than at any time in my life. And so, I believe there is no shortage of additional questions for economists to ask.

Stephen Dubner: Or in Japan, it might have been 20 generations in Japan. Yeah.

Stephen Dubner: Yeah. I recognize your saying that. I do see it that method.

Once I give up taking part in music–which I believed was going to be my life and profession forever–and so it was slightly little bit of a shock when, rapidly, it wasn’t. I would executed it for about 5 years.

So, I used to be in my mid-20s by the point I quit–and there have been three issues that I believed I might wish to be. Properly, sort of 4. One was a author, which I would at all times been. So, that was sort of at all times my essential aim. However, the others have been a monetary advisor–I actually appreciated the thought of serving to folks work out how you can handle cash for themselves and their households as a result of this has been an curiosity of mine for a very long time. I grew up with little or no cash in an space with little or no high-end employment: like, no high-end employment the place I grew up as a child within the nation. The most effective jobs–the richest guys on the town have been one physician and one plumber.

After which, the subsequent jobs that everyone inspired you to go after have been construction–highway construction–because it was a state job, good wage. And the finest job was to be the flag particular person on the freeway highway crew since you did not really should do any digging. That was the employment mannequin, okay?

So, I had a giant adjustment, as an instance, to determine how you can make your method on this planet and how you can construct a profession, and so forth. By the point I give up taking part in music, I would been by way of faculty. What I used to be excited about have been monetary advisor, like I discussed; psychologist–which, once more, I might have beloved. I really like psychology. I really like studying psychology. However then I noticed I am a lot too–I do not wish to assist folks clear up their issues all day. I am too egocentric. I wished to unravel my personal issues, and so forth.

After which, the opposite factor I actually wished to be was some sort of trainer.

And, after I went to grad college then, I went to–I bought an MFA [Master of Fine Arts] in fiction writing at Columbia College. I might have executed nonfiction, however their nonfiction program on the time was very small. Now it is a lot, a lot, a lot larger. And, I additionally bought to train at Columbia, a course–a great course. It was primarily freshman comp. It was referred to as Logic and Rhetoric, and it had been designed by a terrific Shakespeare scholar. And, I beloved instructing it.

And, I noticed I wasn’t going to be an excellent trainer both, as a result of I used to be slightly bit too egocentric about my very own writing. I might a lot relatively do my very own writing than fear about different college students’ writing, and so forth.

However, I’ve at all times had the need, at the very least, to be a great man, to be a great particular person, to contribute, and so forth. And so, regardless that it might sound loopy in 2025, each time we’re, to consider journalism as a form of–I am not making an attempt to carry myself up as any sort of standard-bearer right here, however I do imagine that the position of the journalist is not only to consolation the and afflict the comfortable–which is one mantra from The New York Occasions–and I get it. It is also to clarify the way in which the world works. It isn’t for me to inform you how I believe it ought to work, but it surely’s actually simply to explain it. As a result of it may be sophisticated.

And so, actually all I do is attempt to search out individuals who know lots, interview them; however then, within the presentation of the present, within the writing of the script, sure, then I am sort of moving into the marginally professorial position, or perhaps the TA [Teaching Assistant] or the grad scholar who’s instructing the category as a result of the professor shouldn’t be round.

Stephen Dubner: I believe the distinction between good journalism and dangerous journalism may be very easy. One is storytelling with out information. And, the issue with that’s it will possibly take the anomaly and make it appear normal–which information does all–that is actually the definition of stories. So, these of us who eat information and complain, like, ‘Oh my gosh, it is so sensationalistic. If it bleeds, it leads.’ Blah, blah, blah. This has been the grievance for the reason that starting of stories. Canine bites man. Who cares? Man bites canine. Web page A1.

So, I get that. The issue is, storytelling must have–and I realized this from through the years. I imply, Gary Becker, you talked about earlier. The discrimination work he did was superb. However a whole lot of the work Gary Becker did, after I was studying it earlier–just actually studying economics–within the story, you have to embrace time. Time is admittedly vital. If a degree of one thing modifications from x to 10x, I have to know if that was in a yr or 100 years. That is very, very significant. I have to know the magnitude of the change. I have to know the way consultant or how anomalous it’s. I have to know what have been the incentives which will have modified to supply a special sort of habits. Was this habits modified due to vibes within the society? Was it a change due to a brand new tax legislation? Was it modified as a result of a bunch of individuals from one place moved to a different place they usually introduced with them completely different cultural norms, and so forth?

So, sure, storytelling is nice; however it is bought to have some rigor, and–and that is what we tried to do with Freakonomics–you’ve bought to point out your homework. If I wish to inform you a narrative, and I would like you to imagine it is true, I would like to present you proof. Easy as that.

Stephen Dubner: It’s, however I prefer it.

Stephen Dubner: Possibly this implies I am ruder than you, however I really like that query lots, and I do not even discover it inappropriate.

Stephen Dubner: Yeah, I believe it is an excellent query.

I ask extra layperson variations of that to lots of people, like, ‘What’s your finest proof?’ I often begin by asking, ‘Whenever you first began excited about this drawback or query, or no matter it’s, what did you wish to know?’ Okay, that is the place I like to begin.

Then I say, ‘Properly, the place do you go for the info for that?’ As a result of presumably, if it is a good query, there have been different individuals who considered it, perhaps, however could not discover the info. So, the place’s the info from, and the way good are the info, and so on–how dependable are they? After which, I prefer to ask them, ‘What have been you anticipating to search out once you first began to work with the info? What shocked you? What’s your diploma of confidence in your final discovering?’ After which, I learn–Richard Feynman is admittedly somebody I like a terrific deal. He requested great questions, typically extraordinarily annoying to the folks that have been being requested the questions. And he had another issues that made him–I discover him outstanding; different folks discovered him annoying for different causes, together with the truth that he did not wish to settle for anyone else’s logic for a way they bought to a discovering. He wished to do it himself.

It jogs my memory slightly bit of–if you are a golfer, Ben Hogan and others like to speak about how you bought to dig your swing out of the filth. It’s essential discover your swing. You possibly can take heed to folks, and there is likely to be some common truths, however each physique is slightly bit completely different, each thoughts is slightly bit completely different, and so forth.

And Feynman was like that. When he wished to just accept one thing as fact, he needed to work it out for himself. So, he would typically problem folks. However, Feynman would ask a whole lot of questions that I actually like. One among my favorites is, ‘In a given system,’–whether, if we’re speaking about physics, it is one sort of system, but when we’re speaking about economics, it is another–‘In a given system, inform me one thing that’s significantly scarce and one thing that’s significantly ample.’ And you then get into why.

And so, that is the place it is easy to make enjoyable of economics as only a social science, and I do really feel it is completely different from the opposite social sciences–especially once you see all the rubbish and fraud that is been related to particularly a whole lot of psychology over the previous bunch of years. And, that is very painful for the great guys in that realm–the good folks in that realm, I ought to say. And, for me, too, as a result of I’ve identified a whole lot of these folks, and we have executed some episodes on the educational fraud, and it’s totally, very, very troubling as a result of I’ve actually revered and appeared as much as a whole lot of lecturers through the years, and a few of them turned out to be a lot lower than honorable.

However, I do really feel that the scientific technique, even as practiced within the social sciences, is a phenomenally good technique. It’s a must to actually strive arduous with the apply. It’s a must to be very, very particular. It’s a must to be very intentional. It’s a must to be very persistent. After which, you need to discover folks which might be reliable and ask them arduous questions. And, should you do not assume they’re reliable, neglect it.

Stephen Dubner: Yeah. I’ve so little persistence for individuals who say issues like that, particularly as a result of, when you have ever been concerned in making or doing something and you know the way it’s made or executed, and somebody says, ‘Properly, no, that isn’t the way in which it’s made or executed.’ It is a little little bit of the issue of what social media helps with is, what would you name it? The unempirical denial. Proper?

Stephen Dubner: It is vitally straightforward to do.

Stephen Dubner: There you go. There you go.

So, the bagel man–let us see–his title is Paul Feldman. Though I believe once we first wrote about him, if I recall accurately, he didn’t wish to be recognized at first, however finally we did.

My chronology is slightly bit off right here. I believe he first wrote to Levitt after I had written this journal article about Levitt in The New York Occasions Journal. I believe that’s how he first made contact. And, he stated to Levitt, ‘I’m an economist.’ I believe he used to work in agricultural economics, perhaps on the Division of Agriculture in D.C. [Washington, D.C.] He was within the D.C. space. I do’nt keep in mind the main points now. Anyway, lengthy story brief, he had both perhaps semi-retired and began this door-to-door bagel and donut supply service for places of work within the D.C. space. And, he had a whole lot of information.

So, Levitt was . Levitt informed me about it. I used to be . I went all the way down to D.C. and met Paul in, I assume it was in his storage, perhaps suburban Maryland or Virginia. This was 21 or 22 years in the past, so I would not have the main points on the high of my head, however I keep in mind assembly him at perhaps 4 within the morning in his storage along with his car. Then I believe we drove to an everyday retail bagel store, and he picked up his order for the day, figuring out what he would want.

And, he had a system the place he would go to perhaps between 10 and 20 places of work per day, and he had completely different ones on completely different days, and he would go away them a set quantity that he had calculated based mostly on what he thought the demand could be.

And, it was an honor-box system. That was actually the important thing. That was what made it slightly bit fascinating, is you would then decide how, quote, “honorable” folks have been, and so forth. So, there have been years and years of knowledge.

Stephen Dubner: Easy as that. Yeah.

Stephen Dubner: That’s it. That is it. And, he–

Stephen Dubner: Yeah, cannot work; regardless that hundreds of thousands of individuals from previous centuries would inform you, in fact it will possibly work as a result of that’s the method it used to work in a whole lot of locations. I keep in mind somebody–it was both perhaps Thaler or Tom Gilovich, any individual who taught or teaches at Cornell–talked a few well-known farm stand at Cornell in Ithaca. So, in fact we all know that this can work.

However, yeah, he would say–let’s say I’m going to a selected workplace. This occurs to be a protection contractor, or a advertising and marketing agency, or the American Diabetes Affiliation. I understand how many individuals have entry to this espresso lounge on the third ground, and I’m going to say: 50 bagels for them each Tuesday, no matter. After which, when he would come again, if each bagel was a greenback, he’s hoping to have $46 and 4 bagels, or some model thereof.

So, from that, the final discovering was that individuals are fairly honorable. There have been quite a few findings inside that. You will have higher reminiscence of this than I do, however I believe smaller corporations most likely have been slightly bit higher-paying than others.

The one controversial discovering from that was that, in {one of the} few places of work the place he left bagels in various kinds of floors–an government ground and a lower-down floor–the government pay price was decrease. From which some folks might need concluded that, ‘You see? The folks on the high, they cheat. They’re dishonest.’ One other rationalization might be: In case you are an government, you might be sort of accustomed to stuff being put out for you. And so, the thought that there’s a bagel in your ground, you aren’t actually excited about, ‘There may be an honor field; and, a greenback,’ and so forth. So, these are deeply inconclusive channels by which to make a giant deal out of.

However, we made a little deal out of it by writing concerning the truth that–and then there have been different affiliate associations or associations with–we checked out funds after holidays. We appeared to see a reasonably large spike after 11th of September, if I recall, which might appear to indicate–

Stephen Dubner: enchancment. Enchancment, yeah, which would appear to point that individuals felt a renewed sense of honor, responsibility, honesty, no matter, and so forth.

However, anyway, that was meant to be an extraordinarily slender little story of the way in which that incentives can and do work. And, I might say the chief incentive there being: if you would like one thing good like this man is offering, then you have to be honorable about it.

Now, the unwritten rule was that if the cost price dropped below–I have no idea, no matter it was, 80%, 70%–no extra bagels for you. He would cease delivering to you. So, it was not as if it was a wide-open, endless belief system. It was slightly commerce system wherein an economist used what you would possibly name social belief as an incentive to make his enterprise work. [More to come, 1:05:35]