E. W. Marland, founder of the Conoco Oil Company, and a Governor of Oklahoma, once wrote, "Who knows why people do what they do? I spent money like water on my town and my people, and they thrived and prospered." So during the Great Depression, at least Ponca City, Oklahoma had a thriving economy. But if you aren't an oil billionaire, how do you make life better, for at least some people? Better yet, how do you figure out what is keeping them from thriving, and induce them to better themselves?
Those questions came to me from time to time as I read Think Like a Freak: The Authors of Freakonomics Offer to Retrain Your Brain, by Steven D. Levitt and Stephen J. Dubner. As they make clear in all their "Freak" books, Economics is not really about money. It is about incentive. Economics seeks to answer, in all ways possible, Marland's question, of why people do what they do.
We all respond to our given environment by adjusting our behavior to maximize our own advantage. Thus, in earlier books by these authors we learn why most drug dealers have to live with their Moms, and why it makes sense for the highest-ranking Sumo wrestlers to occasionally throw a match against a lesser opponent. We find the possible link between the Roe vs Wade decision of 1973 and the dramatic drop in crime rates that began a decade or two later. In this book we learn of a toddler who, offered M&M's as a bribe for more consistent toileting "performance", quickly attained exemplary bladder control, using it to extract maximum candy for minimum excretion; and why advertising executives dared not perform a simple experiment to determine which advertisements were more effective…or whether any of them had any effect at all!
If you're paying attention as you read—and why wouldn't you?—you'll gather new ways to think about many things. For example, the first sentence in the prior paragraph is the word "advantage." We might react to that sentence with, "What is the 'advantage' of self-destructive behavior? Not just taking drugs (the incredible 'high' is incentive enough for an addict), but things like cutting, or like pulling out, not just a hair or two but nearly all of it?"
That last behavior, sometimes called Trichotillomania, afflicted a woman my wife and I knew when we lived in California. She was so embarrassed by her baldness that she always wore a scarf, yet whenever she wasn't paying attention, she'd pull out a few hairs at a time, over and over, clearing a square inch or two in a matter of minutes. She didn't dare to read for pleasure, lest she get lost in the story and find herself with a lap full of pulled hair half an hour later. Unfortunately, we moved away and never learned if she found any clue to this absent-minded impulse or a way to change it. But you can be sure it was fulfilling some kind of internal need. Humans do nothing that doesn't fulfill a need. Call it Freak Rule 1.
Cutters are usually more transparent. A cutter may be extra-sensitive to begin with, but is typically a shy person in a situation of learned helplessness, where nobody "in authority", no parent nor teacher nor minister nor school counselor, and also no friend, pays attention to any kind of request for attention or understanding, overt or otherwise. Such a person feels that nothing can possibly make things better. While cutting causes a little pain, it also brings an odd kind of relief, "At least there's something I can do that has an effect." If the way typically impervious parents react to finding blood on their child's clothes is to go into full panic mode and "get help", it sets up a feedback mechanism: "This kind of attention is better than none at all." It can spiral into unintended suicide.
But more prosaically, why didn't the ad executives dare to suggest an experiment such as stopping all ads in, say, 20% of their market regions? All they could think of was some board member retorting, "What?? Do you propose cutting company revenue by 20%????" Worse, if they were to get backing for the experiment, and revenues were unaffected, then what? You got it: The same board member, now shrieking, "What?? We've been spending millions on you jerks and it makes no difference at all????" NO, No no, the devil you know is ever so much better than the devil you don't know! They may not have been happy with the status quo, but could think of no better alternative.
A Freak is not just an economist. An Economist is ideally data-driven; a Freak is data-obsessed. And, late in the book we learn the most valuable Freakish lesson. Know when to quit. Yup. Got a good thing going? Do you expect it to run on autopilot, like, forever? Even if you watch it like a hawk, can you deal with everything that comes along? When times change, do you?
I retired from DuPont Co. several years ago. It's be nice if their pension lasts longer than I do. What are the chances that it won't? Actually, large enough to worry me a little. The company brass is under attack by Nathan Peltz, for one, and I have little confidence that the kind of people he wants on the board of directors will fully fund the pension fund. But even more to the point, the company is 213 years old. In a year, perhaps less, it may be no more. My brother texted me yesterday, "I hope you have a lot of DuPont stock…" This was just after the news broke that DuPont and Dow are talking "merger". The stock's recent price has been about $66.50. Yesterday it jumped to $74 and has stayed in that neighborhood. That's an 11% hop, which ain't bad if I want to cash in on some profit taking.
But in case you didn't notice, there is no DuPont Chemical Co. any more. They spun off the rest of the "hot" chemical products (those made the old way, using strong agents like acids) into Chemours earlier this year, and are fully invested now in a mix of agricultural and bio-engineered products, talking of "plants as plants", meaning to make stuff by putting the genes for the "stuff" into a plant and just harvesting it. I envision a future "DuPont/Dow Bioproducts Corp." (or Dow/DuPont...). Give it 5-10 years, and both the Dow and DuPont names are likely to vanish in favor of some acronym like DDB. Who remembers that AT&T used to be called American Telephone and Telegraph? The acronym remains, decades after the telegraph vanished from everywhere but the local museum.
So, things change. You can't predict the future, so you adapt when the future throws you curve balls. I have a term for what happens next: Psychological Hysteresis. Hysteresis, as an engineering term, is the tendency of a magnetic material to resist being re-magnetized in a different direction. As the applied magnetic field increases, the induced field lags behind, until at some threshold, it suddenly switches, and almost totally matches it. As you may imagine, there is some energy released when this happens. Now imagine a magnet in a continually reversing field. If the field peaks out strong enough, this switching pulse will occur at both ends of every cycle. Metals used for power transformers in AC power circuits are chosen to have very high switching thresholds, and the smallest possible lag, and the transformer is designed so that the threshold is not approached in normal operation. Otherwise, the transformer core will heat up rapidly, and can explode. As it is, power transformers run rather warm anyway, from the unavoidable level of hysteresis (lagging) even below the threshold. Psychologically, we find that we have a similar resistance to change, but if the stress is too great, we "break". Even when we don't, changing takes energy, emotional and physical energy. Continual change also makes the psyche "run hot".
Now, here you are, livin' your life, doin' pretty good. Things change. You don't, at least not right away. What has worked well for you for a long time, doesn't work as well. Do you:
A) Try harder?Maybe it is best to think like a Freak and
C) Call your best friend "who's always so together"?
D) All of the above?
E) Experiment.If you try a little harder, does it help? If not, think about what might help. Do a little test. One that won't be catastrophic if it fails. And if it does fail? Do you have the guts to quit on that one, think some more, and try something yet different? Thomas Edison once said he and his lab helpers tried more than 1,000 substances before they found one that worked in his first practical light bulb. Someone asked, "How can you endure such a string of failures?" He said, "Failure? Not at all. I learned of 1,000 things that aren't good for making light bulbs!"
Here's an example a lot closer to home. The infertility business makes a lot of doctors rich. Desperate couples, mainly the unfortunate women, undergo many difficult, painful, and expensive "procedures" that the doctor recommends to determine the cause of infertility. One test is almost never done at the behest of an infertility clinic: Thyroid hormone levels, a set of 3 or 4 blood tests that involves no more than a needle stick and costs $100 or $200. More than 1/3 of infertile women have a low thyroid hormone level. Taking a daily hormone supplement that costs a few cents daily will result in fertility for nearly all of those women. For the other 2/3? Very many of them would benefit from getting a suite of endocrine hormone level blood tests in addition to thyroid. Treating endocrine imbalance is also not too costly. Then the greater effort could be focused on the smaller number who need more dramatic intervention to get pregnant.
In my wife's case, her thyroid problem was discovered almost by accident, and the hormone supplement led to pregnancy within a few months. But she was already 42. We have a healthy son, thank God, who is now 27. But it was too late to have any more children. That inexpensive blood test could've been done when she was 30 or 32…
If I wanted to do a truly Freaky analysis of infertility "treatment" in America, I'd gather lots of data on which tests are done and in what order. Whattaya bet the ones that bring the most bucks to the doctors are being done first?
All kinds of situations are amenable to Freaky analysis. I once heard of a law that was passed in a few European countries. The usual suite of environmental legislation is well known to be rather ineffective. The new law did not fill a 2,000 page tome. It simply stated, "An enterprise that takes fresh water from any natural source must emit any and all wastewater from all its processes at a point upstream of all its water inlets." It is a slightly nicer way of saying, you'd better clean up your wastewater, because you're going to be drinking it. Now, I can think of a way to get around this. If the outfall is pretty far upstream, even raw waste could get diluted, so that a smaller waste-amelioration plant next to the inlets might make that water usable for the company's processes. There's probably some optimum, where a little "treatment" of effluent, and further "treatment" of influx, would be the cheapest. So now that practice would have to be outlawed. I can imagine pitched battles in government courts over how much "influent treatment" is justifiable and how much is "effluent cleanup avoidance". And so it goes.
Experimentation is all in knowing how far to go and when to quit. Got a good conclusion? Is it well defensible? Good enough. Find another system to study.
One Freak's rule is that we all remember bad stuff longer and more vividly than good stuff. Forget all the fables about nostalgia and the "good old days". For every "good old day" there was an enemy or two who done you wrong. It took a concerted effort for me to take myself to the Fiftieth anniversary party at my high school. I made a plan, because I'd actually gotten along much better with the teachers than with most of the students (these days it is called terminal Nerdism). I went to the event that some of the teachers would attend. Two of my favorites did attend, but one was too demented to hold a conversation. The other, only six or seven years older than I, was a delight to re-connect with, and was very gratified that his teaching had borne fruit, at least in me (and I am sure in many others. He was very good). And you know what? The enemy or two that I remembered with the most dread didn't show. Things often work out that way! But think of this as the "it all averages out" principle. Not all the good was as good as you remember, and not all the bad was all that bad. And over time, things average out. But a Freak knows that nearly everyone around is driven more by fears than by anticipation, and learns to adjust for that.
It is a basic law of human nature. You get the behavior that you reward. A Freak will figure out, by experiment if needed, what different people actually consider to be a "reward." Then you'll know how to get the behavior you want. And even if you're not so much into actually setting policy and changing behaviors, thinking like a Freak can be quite entertaining. I mean, it would be very hard to change the system of Sumo rankings, but it is sure fun to figure out each wrestler's "thrown match" ratio.
And sometimes you can approach something with suspicion and be happily surprised. We seem to fear dying in a plane crash much more than dying in a car crash. That is in spite of the fact that 30,000+ Americans (and many more elsewhere, about a million) die in car crashes every single year. But the total number who have died in plane crashes, worldwide, since 1918 (end of WWI) is about 125,000, or four years of American auto crashes. But the Freak's mind is churning, "How about we check those death rates by the mile, or the hour?" Here are some facts I've been able to dig up on short notice:
- 1,088 airplane deaths in 2014 worldwide, and an average of around 1,000 yearly since 2000.
- 1,300,000 auto accident deaths in 2013 worldwide.
- In 2006, 2 billion air passengers made 28 million flights.
- Air travel grows 5% yearly.
- 3 trillion miles driven on all roads yearly (3.15 trillion in 2014).
We have to boil these down to some useful averages, however rough:
- Relatively few roads permit high speed driving. Most of those 3 trillion miles were at speeds averaging 30 mph.
- Most commercial travel is by jets averaging more than 500 mph.
- I have no figures for the average flight length, so I'll analyze for 1,000 and 5,000 miles. The real amount is almost certainly somewhere between.
- 3 trillion mi. ÷ 30 mph = 100 billion hours of driving.
- 100 billion hrs ÷ 1,300,000 deaths = 77,000 hours per auto death.
- 3 trillion mi. ÷ 1,300,000 deaths = 2.3 million miles per auto death.
- 1,000 mi. × 28 million flights = 28 billion miles flying. (for high estimates)
- 5,000 mi. × 28 million flights = 140 billion miles flying. (for low estimates)
- 28 or 140 billion mi. ÷ 500 mph = 56 or 280 million hours flying.
- 28 billion mi. ÷ 1,000 deaths = 28 million miles per airplane death. High estimate.
- 56 million hrs ÷ 1,000 deaths = 56,000 hours per airplane death. High estimate.
- 140 billion mi. ÷ 1,000 deaths = 140 million miles per airplane death. Low estimate.
- 280 million hrs ÷ 1,000 deaths = 280,000 hours per airplane death. Low estimate.
We can now turn these figures upside down, and conclude:
- Per billion miles of driving, 435 people die.
- Per million hours of driving, about 13 people die.
- Per billion miles of flying, between 7 and 35 people die. This is much lower than for driving.
- Per million hours of flying, between 4 and 18 people die. A figure surprisingly close to that for driving.
What do we conclude? Since "between 4 and 18" probably means something like 8 or 9, it is almost certainly safer to fly than to drive, even calculating on an hourly basis rather than miles covered. But not by as much as we might have thought at first! I trust you can do your own analysis for U.S. domestic flying (zero flying deaths for about five years except two in 2013).
Trust the data. Oh, by the way. This book is required reading for anyone with pretensions of actually thinking.