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Its potential is much more exciting than that. In others, not so much. And that a Queen song, played backwards, can improve your mind-reading skills. In most countries, houses get more valuable over time. In Japan, a new buyer will often bulldoze the home. Part 2 The consequences of our low marriage rate — and if the old model is less attractive, how about a new one? Part 1 The myths of modern marriage. Most people blame lack of time for being out of shape. But look, I agree.
I worry that economics is going the way of sociology and anthropology in the sense that we are losing focus on important questions and on fundamental truths of being able to provide guidance--that we're getting caught up in a lot of self-referential pursuits of complicated models.
Certainly that was a complaint that was very fairly lodged against macroeconomics after the Financial Crisis. But I think it's increasingly becoming true in microeconomics, as well. And, I think that in my own view, less and less of what academics are doing has a policy relevance that should and is going to influence how real decisions get made. In part, I think it's because it's too easy. I'm a little bit younger than you, not much, but when I came into the profession 30 years ago, it was at the cusp of new data sets, new techniques like natural experiments; and it was a little bit hard to go and get data, a pile of data, and try to make some reasonable causal inferences from it.
And so, there were academic rewards doing it because it was a scarce talent. It was hard. Now that talent is not scarce. Now there's a cookie cutter recipe for taking a data, looking at a law change or some other natural experiment, and getting a result.
So, there's no academic reward to it, so people move on to do things where there is an academic reward, like building a complicated structure, a model that has dynamic optimization in it. And so, there's not a lot of effort that's devoted to doing simple things that are useful parameter estimation, because it won't get you a good job.
I get it. It's incentives. I don't fault anyone for not doing it. When I write those papers myself, I can't get them published. So I write them sometimes just for the pure joy of knowing. But, for people who need to be published, all the incentives are pushing in a direction that I think is making economics less and less relevant. Russ Roberts: So, that's a good segue. I don't want to be too harsh a psychiatrist or therapist for you, but to some extent, there's a self-reflection there about the nature of your own work in terms of the scope of it.
You did some unbelievably clever and provocative takes on small issues: Are sumo wrestlers cheaters? It's fascinating. It's fun to think about. It's not at the heart of the good society or the good life. And yet, in recent years, you've had some change your heart. We're going to talk about your podcast in a minute called "People I Mostly Admire. And, you're trying to look at big pictures and find relatively simple solutions. I want to talk about a couple of those, because they're so interesting.
Let's start with monitoring criminals. Steven Levitt: Sure. So, no; so I think you're right. My approach to academics was purely self-interested.
I did stuff I thought was fun; and I really was incredibly lucky that the discipline accepted me and published my papers in top journals and I got accolades, but it's also true. So, what happened over time is academics stopped being fun. It stopped being fun for me, in part because I think that the discipline kind of passed me by.
It's a different discipline now and it values different things and what it values, I don't value. But, the other thing that was disturbing a little bit to me was that of all the success that we had with Freakonomics and popularization and all the success I had within regular academic channels, I honestly think it's fair to say that I have not directly affected, in a positive way, any public policy anywhere.
I mean, the closest we came is Dubner and I did something on drunk walking. And, we just showed that drunk walking was, like, per mile, something like 10 times more dangerous than drunk driving. And that led a town in Alaska to debate whether they should pass a law, making it a misdemeanor to walk drunk in that town. Which failed. So, it didn't even get passed. But that was the closest I think I can ever say to coming to actually having a law put into place.
So, I just reflected on that. And, look: I'm not against just having fun and the consumption value of economics. And, obviously, I've taught a lot of students and maybe had some benefit there. But, as I've gotten older, for me now again, it's just more fun to think about how to affect the real world and could we not have some impact? So, I started the center, RISC, and kind of the bottom line of RISC is: I looked at the incentives being faced by a lot of different folks around social issues--whether it's the government, whether it's academics, whether it's non-profits.
And I think all of those three groups all had the wrong incentives. And also corporations have the wrong incentive, too--like, private, for-profit places. I don't want to go into exact details of why I think they have wrong incentives.
But just, say, non-profits. What's clear to me, having talked to many people in charge of and working in nonprofits, is that not only do they want to make the world a better place, they want to be liked along the way.
So, the big philanthropists are deeply concerned about their image and their perception. They are, more often than not, philanthropists because they want to be popular, and they want to be justified. So, look, I thought, 'I don't care if people like me. So, how about we try to carve out a different space,' which is: we're going to try to find problems.
The problems that haven't been solved, the big social problems, haven't been solved either because they're too hard or because they're not that hard, but the answers are really unpopular--so nobody with any common sense would actually go out and try to do it. So, I think the electronic monitoring one is a really good one. So, I've studied crime academically for 30 years. And, I know a lot about crime.
I've thought about crime. And I am convinced that there's a very simple technological approach, which could have the biggest impact of any crime policy of the last 50 or years, which is simply to use GPS [Global Positioning System] technology--and other technologies going forward, but the easy one is GPS--on people who are under the jurisdiction of the criminal justice system.
Super-simple idea. The idea is that if someone is being monitored in this way--so you know where they are at all times--we can cross-reference their locations with existing databases on, say, where shots are fired or where crimes have been committed. And, it creates a tremendous deterrent effect to committing crimes. And, what we've seen empirically is that, if you put people on these bracelets that have GPS, they do virtually no crime.
Russ Roberts: All right, Steve. Steve, who's going to wear these? Make that clearer. Who's going to wear these? Me and you? Steven Levitt: So, I'm personally not totally against that, but, like, but that's not the plan. The plan would be, for instance, that people who are in prison right now would be offered a deal: 'If you want to be let out of prison two years early in return for wearing a bracelet, say, for four years, we'll let you out of prison two years early.
If you commit crime, we're going to put those two years of your sentence that are deferred, we'll put it back on. So, this would be completely voluntary, in that sense--that anyone would have the option of either doing their full sentence or being released early.
Another--a place where we're using it right now is actually on people on pretrial release. So, these are people in Cook County who would likely to be in the Cook County Jail awaiting trial, but they're remanded to house arrest and given these bracelets. So, in some sense, that group is a little different because it's not really--I mean, they have a choice. Everyone who is wearing this bracelet has a choice of being in Cook County Jail, if they would want to be.
Many of them might be out on bracelets without GPS technology, absent the technology. So, for them, there might be a third option that will no longer be available to them because this technology exists. But to go back to the basic idea, it's really important, is that the reason we lock people up, by and large, is because we fear the crimes they will do if they're not locked up. If you really knew that people weren't going to commit crimes, you could hold some of them in prison, you know, as some kind of retribution for the mistakes they've made or whatnot.
But by and large, we would have a much smaller prison population if we didn't fear that the people who are in prison are recidivists and habitual offenders. So, the whole thing becomes a virtual--I'm sorry--a virtuous circle in which, if you put technology on folks that make them not do crimes, then you don't have to lock so many people up.
Steven Levitt: This is an idea that would save money--it's good for everybody. It really is good for everybody. It's good for government, saving money. It's good for society because crime has gone down. It's good for the people who are not locked up. I think it's--for most of the people who are committing a lot of crimes, crime does not pay. It's a bad set of choices.
And the commitment device of knowing that if I commit a crime, I'm actually going to get locked up again actually works for the benefit even of the people who otherwise would be committing crimes. But, look: I'm sure in this minute version of it, I've done a terrible job of explaining it, which is actually useful for our purposes because almost everyone listening right now is probably saying, 'This is an awful idea. You say whatever, but for a hundred different reasons, it's an awful idea.
The simple fact is that if we can pull this off--and right now we're doing it in Cook County and we're having awesome results in Cook County--that people are going to eventually realize that, as poorly as I have explained it, this is a really powerful idea.
And this is a good thing for society. And, it's not Big Brother in a bad way. It's using technology in a really effective way that's good for everybody.
But, no nonprofit would ever have touched this idea. And, it's--the only reason we're kind of making any headway is that the Cook County Sheriff, a guy named Tom Dart, is brilliant and thoughtful and willing to take chances that other people won't.
And so, we've been able to get these bracelets on people, more than anywhere else in the country. And the results are really good. But we had these bracelets available, so that the Sheriff's office did an amazing job of doing so many things. But one of them was having the option to use these bracelets to get people out of jail.
And it turned out, already, to pay an enormous social difference. That's kind of the gist of what we're doing. We're trying to take hard problems and to take a kind of Chicago-y hard nose look, whatever it takes--thoughtful approach--to solving them and not worry about short-term repercussions and criticisms and really be thinking about in the long run, is this going to give us an important answer we need? Russ Roberts: Well, when you describe it, I find it kind of creepy, too. However, it's a classic example, I think, of many policy suggestions, where people go, 'I don't like that.
The alternative is the U. But, I think the general point about policy improvements--it's so hard for people to--you know, one of my favorite examples of this would be the drug war. You know, I think drugs should be legal--of all kinds, not just recreational drugs, but pharmaceutical drugs. I think it should be up to personal people's choices, and I think we should treat people like grownups.
We shouldn't subsidize them either, by the way. That's another little side-note. And we could allow third-party non-profits to pay for them when we think people can't afford them for pharmaceuticals. There are a lot of things to add to the story. But, just take the basic claim when I say, 'Oh, we should end the drug war.
But how about the last 40 years of people being killed in the street and the corruption of the police Department? Gosh, doesn't that count for something in the calculus? It should. So, you know, I think people often use Nirvana. Harold Demsetz talked about this, the Nirvana Fallacy. It's like, 'Oh, I have in mind a world where the people running the program are angels, not human beings. That's my policy solution. So, you know, you can be pragmatic; you can stand on principle and say, 'As a First Amendment person, I don't like this, some aspect of this,' or 'I do think there's a surveillance worry here that it could spread and lead to technology that might be dangerous for tyranny.
But, if you're just going to talk about whether it works, don't just tell me everything that's bad about it and ignore the other things that are bad about the status quo.
End of rant. Steven Levitt: Absolutely. I mean--yeah. So, the criticism--So, a lot of the more left-leaning NGOs [Non-Governmental Organizations] that I've approached about this become apoplectic and they say, 'This is such an invasion of privacy.
Compared to prison, this is like freedom. Steven Levitt: Yeah, it is, yeah. And, but it doesn't hold; it's--it's exactly your point about this Nirvana. But, one thing that I believe, without a lot of evidence, and there are two pieces of it. One thing I know for sure is that ideas are not enough to win the day. So, if, as an academic, I go to a group and say, 'Hey, this would be a great idea to do,' I have been doing that for 30 years.
And many of the ideas may have been terrible; but I think some of them have been okay; and none of them get adopted. And so, really, what I hope that my RISC center can do is to take this intermediate stage that entrepreneurs do all the time, which is to go from an idea to a proof of concept. So, we can go--we'll do this in Cook County and we'll put this on 3, people eventually and we'll show that, actually, they don't commit very much crime at all and it helps them show up--we have ways to contact them, so we can see if they're not going to their trial appointment, their trial dates.
And we can remind them and tell them to do it. We can do lots of things; and we show that it actually saved a bunch of money and that they were happy. I mean, and that's the kind of thing that we're hoping we can do. Because, it's not my goal to build a company or nonprofit that is producing, you know, a million ankle bracelets to try to deal with the prison [inaudible ]. But, my hope is that by doing this, it'll become easy, turnkey: that the New York City or New York State will say, 'Hey, this worked in Cook County, it's easy to adopt.
We've got open source software we've developed now that we can give to anyone who wants to use use this technology. So, that's what we're trying to do. And, what's interesting is this is a great case where it is totally obvious. There's no big idea here. It's, like, completely clear. Like, if you really think about it, how is it--you know--how is it that our criminal justice system, which has jurisdiction over the lives of a million people out on the streets, doesn't know where they are when cell phone technology is out there?
And, so, it's obvious to do. But, it's one of those things where it just, you know, it just hasn't happened. There's been, you know, 20 years for it to happen, and there's just no thrust even pushing there. Russ Roberts: I love the startup mindset. I love the recognition that packaging matters, marketing matters. It's not irrelevant. You know, I think of so many academics who have told me about their great idea and I'm thinking, 'You can't even explain it to me , and I'm an economist.
And, you think you're going to get some bureaucrat or senator to get behind it? And that's one of the reasons I think Milton Friedman was such an incredible policy entrepreneur. He was a great explainer--first of all, he was a great teacher. But, more than that, he figured out policy interventions. The volunteer army would be an example; a voucher for schools.
They were flawed; they were imperfect; we might prefer something else to them. But the reason they got any traction at all was that he could explain it, and then you could explain it to your neighbor and say, 'What do you think? Steven Levitt: Mm-hmm. I can't--maybe you have an understanding: you've talked to a lot more economists in an interviewing kind of way than I have--but what has shocked me is, all the economists I've talked to now are very articulate in talking about many things.
The one exception is their own research. When they talk about their own research, it makes no sense.
And, I know their research. So, I try to then rephrase it in a much more straightforward way. And, then they usually argue, 'No, no, that's not quite right, because it leaves out this one tiny element. Have you found that as you've interviewed? Steven Levitt: The thing that economists are worst at talking about is their own actual research.
Russ Roberts: I wouldn't say that that way, because I don't delve deeply into the research, the nuts and bolts. So, it's maybe not the right question for me. But it reminds me of something, that I think there's a deep insight there, which is the following.
If you read something in the paper about something you know about--you have a hobby; not economics, not research, but you have a hobby--and you read an article in the paper about it and you realize, 'Oh my gosh, this gets so many things wrong about how we believe, how we act in this hobby, or how we actually do the thing that we're talking about. Oh, it's awful. And that's why he finds questions--he's the coach of the New England Patriots, for those at home who don't know him.
He's not very tolerant of ignorant questions. And, I think probably all questions are pretty ignorant to him. He kind of has a such a deeper understanding. So, the idea of him reading an article about what the Patriots ought to do this week is just--is ludicrous. So, when you and I read an article in the newspaper about something we know, we always go, like, 'Wow, boy, they really got this [wrong?
And, then somebody occasionally has the realization that, 'Wait a minute, that might be true of everything they write. And, so what I'm thinking of, though, is when an academic talks about their own work, they're writing--it's like the way they would critique a newspaper summary of their Nobel Prize.
It's like, 'Oh no, you're missing all the subtlety, the depth. Oh, you've got to add this caveat. It's why in general academics are not good communicators, because they believe in caveats. That's the essence of the, often what we do in so-called science. We have to say, 'But,' and, 'Remember this.
So, if you leave that out in your summary of their work, they're going, 'No, no, no, that's not what I meant. Because it's so much richer and deeper than that. And, I think that phenomenon--they know too much about their own work. It's not that they're bad communicators necessarily, because I think, as you said, they could be good communicators about someone else's work.
But, about their own work, it's kind of like saying, 'How would you rank your oldest child on a scale of 1 to 10? There's too much--let me write out a page essay about what's special about my child.
Because there's a lot of nuance there. Russ Roberts: Let's close and talk about your podcast. It's called "People I Mostly Admire. So, how do you mean it? Do you mean it both ways? Steven Levitt: I mean both of those, actually. Because, I am interviewing people I do mostly--mostly I'm interviewing people I admire, and there are people that I mostly admire that I'm interviewing. It's kind of different than what--so, you've done an amazing public service by bringing so many economists into the forefront, giving people an audience.
Russ Roberts: I'm just so stunned by your observation it looked like I was frozen. No, keep going. I'm trying to keep a straight face here. I appreciate the kind words. Go ahead. So, you've done a real public service by giving so many economists a chance to talk, and I'm actually trying to do something slightly different, which is: I'm [?
I'm trying to talk to a very broad group of people--people who are innovative, who are rule breakers, who are trying to do the right thing, who maybe have quirks about them--and in my own weird way, reflecting my own weirdness of how I think about the world, to try to have fun, smart conversations. But, I honestly put the word 'mostly' in because I wanted to be able to interview everyone, including the people who I think might be horrendous.
I haven't interviewed anyone so far who is horrendous. But, partly we call it that because, look, the whole thing is a little bit tongue-in-cheek. My whole ethos is about having fun and whatnot. And, the idea--someone suggested, 'Why don't we call it People I Admire? But, it's fun. You have a lot of experience interviewing. I was surprised at how hard interviewing is compared to being interviewed. That, being interviewed--whatever, blah, blah, blah, whatever I say, it's stupid, whatever, no one will remember.
But, there's something I find--I feel a real obligation as an interviewer. I feel a real weight as an interviewer. So, it's good to do new things as you get older. And, for me, the deep research--this psychological concept of flow where you've worked really hard at something and you become completely immersed in it--I don't have that very much in what I do.
Interestingly, the preparation for my interviews is very much a flow state for me. I become extremely focused in a way that I haven't, and I study what people have done in the past in a way that I don't usually. And, it's somehow the intensity to it I found to be a really surprising--I hadn't expected it, but it's been--you know, flow is both good and bad. Flow is kind of enjoyable; in the other sense, flow is very intense and tiring. So, that's what we're doing. It's an experiment.
Russ Roberts: Well, I appreciate the kind words. I have given a platform to a lot of economists; but like you, I feel like I find our profession a lot less interesting than I did five years ago.
So, I'm interviewing many fewer economists. You are my exception in many ways. You're as about traditional an economist as one could get, but you've also gone in a nontraditional direction and for a while.
So, I appreciate the compliment, and I also appreciate the recognition that it can be a hard job, and the prep is fascinating. Because what I try to do--I don't know if you try to do this, but I try to think about a narrative arc for the conversation.
There's a tension between letting the conversation go where it might go and be spontaneous, which people like, enjoy--it's fun. But, I also have this sort of--not sort of--I have this educational agenda. I want your ideas to get out in the world, and I want to react to them and let listeners hear that conversation and learn from it. And, so I have an arc before I get started of where it's going to go.
It doesn't always go there, but at any moment I'm constantly trying to decide whether I should pull it back. And, listeners to this conversation could hear me say that, 'Oh, we'll get to that later. I'm not literally going to just ask question after question because I need it to stay a certain--there's a certain flow in this back and forth if it goes well, which is really special.
And, there are moments when you feel it. It's common belief that markets don't work perfectly. What's less commonly understood is that despite this, they often work well enough. Since in most of the cases studied by economists, markets are working, obviously cases of market non-failure are going to be more prevalent than cases of market failure.
That's a common misconception. Economists are pretty unanimous on issues like rent control, for example. The consensus among healthcare economists is for a healthcare system which doesn't exist in most developed countries one with government intervention, but a different kind than the one typically envisioned.
Disagreements are interesting because they can get very public and brutal academia being what it is , but no media outlet is ever going to carry the boring story, "AEA members agree: tariffs are generally bad. Like children in a sandbox building impossible skyscrapers in their mind, these little fantasies of being king show a healthy imagination. Nothing wrong with that.
But they also direct our gaze to the vast, black, silent, void between the world we stand on and the world in the economists mind. Every year, thousands of people in the U. Bapu talks The U. How did that happen?
The answer may come down to two little letters: V. Is venture capital Dan Who determines what is "good and bad".
The most interesting parts of economics I find are about market failures. Ain't it grand? Grant: That's a common misconception. Reminds me of the joke that ends: "First, assume we have a can opener.
Can we also have some centaurs in our world, please, oh king? The Shrink Next Door. Wondery Bloomberg. You Might Also Like. No Stupid Questions.
People I Mostly Admire. Planet Money. Hidden Brain. Hidden Brain Media. Freakonomics, M. Sudhir Breaks the Internet. More by Stitcher. With Rob Lowe. The Dream. LeVar Burton Reads.
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