Tim Harford's Blog, page 11

What can we learn from fraud and folly?

The Ig Nobel Prize ceremony, for work that “makes you laugh, then makes you think”, came and went this year, with a clutch of worthy winners. I must report, more in sorrow than in anger, that no Ig Nobel Prize in economics was awarded. This is a great shame. The Ig Nobel Prizes have occasionally been known to dabble in juvenile humour, but, at their best, they illuminate important ideas that the Nobel Prizes themselves cannot reach.

Since the position of economics Ig Nobel laureate 2024 is currently vacant, then, I would like to nominate a candidate: the economist and author Dan Davies. Davies is a wide-ranging thinker, but there is a common thread in his work: he is a connoisseur of fraud and failure. (He has already given readers of this column the unforgettable story of the time 440 luckless squirrels were hurled into an industrial shredder at Schiphol airport.)

In his book Lying for Money, Davies put forward a striking proposition, which is that the best glimpses of the economy’s hidden workings come when something has gone amiss. “Just as neurologists study the consequences of head injuries,” he wrote, “we can learn about the economy by looking at currency forgers and pyramid schemes.” And shredded squirrels, of course. Or, indeed, any situation when things don’t function as they should.

This observation feels worthy of an Ig Nobel, especially if backed up by some examples. So what lessons might we learn from economic frauds, follies and failures? 

The first is that physical reality matters. Consumers, commentators and financial traders all tend to see an indirect representation of the economy, rather than the underlying truth. We don’t see slaughterhouses or food manufacturing facilities, we see the Ocado homepage. We don’t see a working parent’s despair on being sacked, we see the latest unemployment numbers. It is easy to conflate the graphs and accounting statements with the physical reality they represent, and sometimes that conflation can be exploited.

As Davies explains, this was a lesson American Express learnt the hard way in 1963. At the time, an Amex subsidiary was making enviable returns by acting as a guarantor for companies who wanted to borrow money and use commodities as collateral. In particular, a gentleman named Tino DeAngelis ran a soya oil business, and wanted to borrow money using the soya oil as collateral. Amex earned a profit by verifying that DeAngelis’s soya oil did exist and was safely stored in Amex’s own tanks.

Unfortunately for Amex, its subsidiary was “verifying” something false. The storage tanks with “American Express Field Warehousing” written on them were designed and controlled by DeAngelis. They were, in fact, full of seawater, with a little soya oil floating on the top and some false chambers designed to fool inspectors. Despite an anonymous tip-off, Amex failed for several years to properly investigate the tanks it nominally owned. When the fraud was discovered, it nearly wiped Amex out. Reality matters; always look beneath the surface of the soya oil.

A second lesson is beware “cheesecake bets”. In the musical Guys and Dolls, Nathan Detroit offers to bet with Sky Masterson that Mindy’s restaurant sells more strudel than cheesecake. A wise man would ask why Nathan is offering Sky the bet. (Nathan, of course, already knows the answer.) Cheesecake bets come in many guises, and they are common in finance. The point is that if a clever Wall Street type in a sharp suit would like to sell you a financial product, it is worth asking yourself whether you would really like to buy it.

On this matter, Davies directs me to a thought experiment proposed by the finance writer Paul Wilmott: imagine that a stage magician asks you to name a card. You name the Ace of Hearts. The magician then pulls a card from the deck without looking. What is the probability that it is the Ace of Hearts? The best answer I can think of is “whatever the magician wants it to be”.

In many deals in finance, if you aren’t the magician, you’re on the wrong end of the conjuring trick. And no matter how many degrees in mathematics you have, the chance that card is the Ace of Hearts is definitely not 1 in 52.

A third lesson is that you learn a lot when you examine points of friction or failure. Many years ago, a team led by the Peruvian economist Hernando de Soto went through every formal procedure required to legally establish a small clothing workshop — just a couple of sewing machines — in Lima. The process took 289 days.

De Soto’s exercise in frustration has been hugely influential: he highlighted the fact that in many poor countries, simple tasks such as setting up a business, legally employing a worker or registering title to a property, can take months or years and cost prohibitive sums. The result is corruption, and an informal sector that pays no taxes and struggles to grow, borrow money or get insurance. Thanks to the shift in perspective which de Soto catalysed, many countries have streamlined business regulations. The key insight came from focusing on the details about what was going wrong.

So I would be all in favour of an Ig Nobel for Dan Davies for highlighting the economics of fraud and failure. The starting point for economic analysis is often an economic Garden of Eden, a perfectly competitive market, filled with rational actors. We might learn more if instead we paid attention to the serpent and watched how he operates.

Written for and first published in the Financial Times on 8 November 2024.

Loyal readers might enjoy the book that started it all, The Undercover Economist.

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Cautionary Tales – Captain Coward and the Blame Game

Off the coast of an Italian island, an enormous cruise ship – seventeen floors high, three soccer pitches long – is tilting noticeably to one side. The local mayor is horrified: there are thousands of people on board the Costa Concordia, and it’s only a matter of time before the ship capsizes altogether. How did a routine trip go so terribly wrong? And why is the captain nowhere to be found?

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Further reading

Scapegoats: Transferring Blame by Tom Douglas contains a historical overview of the human practice of scapegoating. Available in Italian, La notte della Concordia is Mario Pellegrini’s book about his experiences, co-authored with Sabrina Grementieri.

A timeline and details of the accident can be found in the report of Italy’s Ministry of Infrastructure and Transport Marine Casualties Investigative Body, with useful additional perspectives in an in-depth report by Captain Michael Lloyd and a doctoral thesis by Craig Laverick, now a professor of maritime law.

Bryan Burrough and Josephine McKenna wrote the long-form article Another Night to Remember in Vanity Fair, a few months after the accident. We also drew from reporting in outlets including  The Guardian, Der Spiegel, Seattle Times, Yachting and Boating World and Lloyds List.

The games I’ll be playing this Christmas

There are at least two kinds of games, the religious scholar James Carse explained: “One could be called finite; the other infinite. A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play.”

Carse’s aphoristic 1986 book, Finite and Infinite Games, is not really about games. It’s a book about life and the way that you can aim for narrow, selfish and, ultimately, empty domination — or you can play collaboratively and open-endedly, for the joy of being alive. (For those of us who were watching Saturday-morning cartoons in 1986 instead of reading philosophy books, think of it like this: the real treasure is the friends we make along the way.)

Finite and Infinite Games acquired a cult following, but I didn’t pick it up hoping for advice about a life well lived. I was hoping to learn something about games, a subject on which James Carse has less to say than I expected. No matter. Christmas is coming, often a time for grim and interminable sessions of Monopoly, so on the topic of games, perhaps I should offer some distinctions of my own.

Start with the difference between a formal and an informal game — say, a timed game of football on a marked pitch with a referee, versus a kickabout in the park, with jumpers for goalposts. The formal game seems superior, but in his book Free to Learn, psychologist Peter Gray highlights the hidden strengths of an informal one. In an informal game between children, everyone must be kept happy. If enough players stop wanting to play, the game will end. To keep the game going, players must compromise, empathise and accommodate younger, weaker or less skilful playmates. If different children arrive and leave, people must switch sides to adjust, evening up the numbers and the skill levels: the tribalism of “them and us” is alien to informal play.

No such luck in a formal game, where those who are having a miserable time on the losing team are obliged to keep going until the final whistle blows. (“There is no finite game unless the players freely choose to play it,” wrote Carse, demonstrating no recollection of school games lessons.) There is nothing intrinsically wrong with a formal game for children or for adults, but we learn many life skills in the informal ones.

A second distinction that matters is that between a closed and an open game. Most card games and board games are closed: the rules of poker, chess or Monopoly specify exactly what moves are legal at any stage of the game. These rules can vary a great deal; poker offers a vast collection of rewarding variants, and Monopoly is often played according to house rules. But whatever variant you choose, the rules are intended to leave no space for ambiguity.

A word to the wise about house rules in Monopoly. The most common ones inject more cash into the game, while omitting the rule that if you land on a property and don’t buy it, it is immediately sold at auction. These house rules slow the game down terribly, making a slow game even slower. Try the official rules this Christmas. Better still, play Catan, which is the building-and-trading game that Monopoly dreams of being. Catan was one of the first breakout successes of the modern “eurogame” style of board games, which emphasise fast-paced play, interesting decisions, an elegant balance of skill and luck, and are often finished in well under an hour.

Some closed games, such as go, produce strategic depth from a short list of rules. Others, such as the Kriegsspiel war-games favoured by the Prussian officer class in the 19th century, become fussy and bogged down with special cases. It was the hidebound artificiality of Kriegsspiel that provoked a rebellion in Prussian strategists and the development of an open game as an alternative. Free Kriegsspiel, proposed by the Prussian General Verdy in 1876, has no rules at all, just two opposing players and a referee. A battlefield scenario is dreamt up, the players tell the referee the tactics they plan to use — anything from an artillery bombardment to a disinformation campaign — and the referee uses common sense and experience to arbitrate. The central insight of Free Kriegsspiel is that a referee can liberate a game instead of being an enforcer of strict rules.

Almost a century after Verdy proposed Free Kriegsspiel, his idea evolved into another open game: role-playing games, which also rely on a referee to adjudicate. Such games can be rules-light or rules-heavy, but they allow more freedom of action than any rules could cover. With players assuming the roles of fictional protagonists, these games add improvised drama to their war-gaming roots and have as much variety as fiction. They can be serious or cartoonish, last an hour or stretch for ever like a soap opera, and they play with highbrow and lowbrow ideas, just as a novel might.

I’ve written before about my love of games, but I am particularly fond of open, informal games. For a shy person such as myself, they provide enough structure to support my efforts at social interaction, without confining that social interaction to something impossibly narrow. I don’t think it’s a coincidence that my oldest, firmest friends are the ones with whom I played open games. Nor is it a surprise that many of us still play those game games together 30 or even 40 years after we started.

Not that I’m telling you to play a role-playing game such as Vaesen or Blades in the Dark this Christmas. That’s what I’ll be doing, but open games are not for everyone. If a closed game is like solving a crossword puzzle, an open game is like writing a poem — and writing a poem is an intimidating prospect. But I’d encourage you to play something. If you do it right, even Monopoly can be fun.

Written for and first published in the Financial Times on 15 December 2023.

My first children’s book, The Truth Detective is now available (not US or Canada yet – sorry).

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My epic, 40-year Dungeons & Dragons odyssey

Editor’s note: This story is presented in a choose-your-own-path style. If you happen to have a D20 on hand, feel free to roll for your choices.

In 1984, when I was 11 years old, a friend told me about something new, something exciting. He urged me to try it. He struggled to explain exactly what it was he was talking about, and I didn’t really understand what had so fired his enthusiasm. But that enthusiasm was unmistakable, so I tried it. And I loved it.

The exciting thing wasn’t a band or a drug. It was a new kind of game. It would go on to consume most of my spare income and most of my spare time for the rest of my teenage years. Even today, barely a day goes past without my finding, in some small manner, a way to indulge this old passion.

Yet things might have turned out very differently. I would probably never have heard of the game if it hadn’t been thrust into the spotlight by a surreal drama in 1979. That drama began, as many do, with a phone call.

Roll an 18 or higher. Or to find out more about the phone call, continue to GENIUS. Roll a 17 or lower. Or to read more about my own experiences, continue to ADDICTED.

GENIUS

William Dear was a celebrity private detective — dashing, moustachioed, sporting a vast gold ring, a star with his own private plane. He dealt in a world of thrills and terrors. The call he received in August 1979 would start one of his most infamous cases. It was from an acquaintance whose nephew, Dallas, had disappeared while taking a course at Michigan State University. The young man, said the boy’s uncle, wasn’t the type of teenager to simply run away. “In fact, he’s considered to be a genius.”

Dallas — full name James Dallas Egbert the Third — was a prodigy who had entered college at the age of 14. He was 16 now and a sophomore. He’d been missing for eight days. Could William Dear help?

He could. Dear put together a team of investigators, including an expert pilot and a sniper, he later recounted in his 1984 memoir, The Dungeon Master. To look into the disappearance, the group brought telephoto lenses, bugging devices, tracking systems and spy cameras. They had to be ready for anything.

As Dear’s team asked questions around campus, it quickly emerged that Dallas was depressed, isolated and questioning his sexuality. He had a drug habit and was clearly at risk of self-harm. The most plausible explanation for Dallas’s disappearance was that he had either run away or died by suicide.

After briefly musing that perhaps “the gays” might have something to do with Dallas’s disappearance, Dear sensed that perhaps something more uncanny might be going on. He wondered if Dallas had disappeared because of a game.

Dallas’s friends told Dear and his investigators about this game. Apparently, it was played by hundreds of students in the tunnels beneath the campus. Michigan’s upper-Midwestern winters are bitterly cold, so the campus is undergirded by a network of heated subterranean tunnels. The game played there was mysterious, intellectual — “you can’t play if you’re a dumb-ass”, one student told the investigators — and Dallas loved it. It was called Dungeons & Dragons.

But what was this strange game, Dear asked himself, encountering the same confusion that I felt five years later, when a friend tried to describe it to me. And could it be the reason for Dallas’s sudden disappearance?

Roll a 14 or lower. Or to find out more about Dear’s investigations, continue to PUZZLEMENT. Roll a 15 or higher. Or to follow my own experiences with the game, continue to ADDICTED.

PUZZLEMENT

William Dear decided that his investigations would be well served by whipping up a frenzy of media interest. This mysterious new game seemed like a great hook for the newspapers. Dear told journalists that he suspected Dallas’s disappearance was something to do with Dungeons & Dragons, played down in the campus tunnels. They lapped it up.

The New York Times, for example, told readers that Dallas might “have become lost in the tunnels, which carry heat to campus buildings, while playing an elaborate version of a bizarre intellectual game called Dungeons and Dragons”.

But when it came to describing the game, coverage was often as vague as Dallas’s friends’ description. Beyond it being “intellectual” and “bizarre”, specifics were few. Dungeons & Dragons was a blank canvas, on to which parents, reporters and celebrity detectives could project any anxiety.

In that vacuum, rumours grew. Apparently, players sometimes wore costumes. Apparently, a “dungeon master” led quests around the tunnels, in the scalding heat and the darkness and the stench. Apparently, players would sometimes have to put their hand into crevices, and they might find a rotting calf’s liver in there or spoiled spaghetti, standing in for orc brains. Or they might find a treasure.

Apparently, there were more than a hundred “dungeons” in the campus area. If you don’t know what that means, don’t worry. Dear didn’t either. But since he was an investigator, he was going to investigate. He called a hobby store, got the contact details of one of these so-called dungeon masters and offered him $50 to drop everything, come to his hotel room with a friend, and initiate Dear in the game’s mysteries. Sixty bucks if it was good. Back in 1979, that was a lot of money.

“I didn’t know what to expect from my dungeon master,” Dear wrote in his book. “Would he show up in a Merlin costume, with a funny pointed cap . . .? Would he be dressed as some authority figure . . . [like] a god?” When the young man knocked on the door, he and his friend were both wearing jeans, sweaters and sneakers. And rather than leading Dear into the tunnels to grope for old liver, he pulled out a pencil and paper, some books and some dice. They all sat down. The adventure was about to begin.

Roll a 17 or lower. Or to read about my own experiences with Dungeons & Dragons, continue to ADDICTED. Roll an 18 or higher. Or to find out where this strange game came from, continue to BRAUNSTEIN.

ADDICTED

The activity which so enthused my friend was a game called Tunnels & Trolls (T&T), an early Dungeons & Dragons (D&D) imitator. T&T was simpler and less serious and had the advantage that it could be played solo through choose-your-own-path books, a little like this article. I quickly grabbed every solo game book I could find.

Both D&D and T&T are role-playing games, a social pastime which defies easy explanation. In a role-playing game, or RPG, you take the part of a character who may well be quite unlike you, in a world very different from your own. You sit at a table with friends who are playing as their own fictional characters. You interact with each other and with the situations dreamt up for you by the person “running” the game, variously called the dungeon master, the referee or the game master.

The game master describes the setting, plays all the minor characters and arbitrates any rules questions. The players are usually playing together, facing challenges set for them by the game master, but the game master is not playing against the players. If role-playing games were dinner parties, the game master would be the host. If they were treasure hunts, the game master would hide the prize and write the clues. If they were amateur dramatic performances, the game master would be the producer, director and scriptwriter. Role-playing games contain elements of all of those things and much more.

I quickly introduced all my friends to the game, and it became a constant presence in my life. When I wasn’t playing games with them, I’d be playing solo, reading books about gaming, or drawing my own maps and designing my own settings. Much like Dallas Egbert, I was hooked.

Roll a 14 or lower. Or to explore the origins of role-playing games, read BRAUNSTEIN. Roll a 15 or higher. Or to read about William Dear’s first game of D&D, read FANTASY.

BRAUNSTEIN

The time, 1969. The place, St Paul, Minnesota. A young physics graduate named David Wesely was a founder of the Twin Cities Military Miniatures Group — a war-gaming club, in which players re-enacted historical battles on a realistic miniature battlefield littered with miniature figurines.

Robert Louis Stevenson, the author of Treasure Island, was a war-gamer. So was HG Wells. War games can be used for serious military training. Kriegsspiel was developed by the Prussian Army in the 19th century to teach battlefield tactics to officers.

Wesely, who was in the US army reserves, was interested in these types of training exercises, during which making decisions over a tabletop battlefield might prepare a young officer for the real thing over in Vietnam. Rather than a restricted set of moves, as in chess, these training exercises were open-ended and unpredictable, just like war itself. Anything unexpected could be handled by the judgment of a referee.

In a war game set in 1806 in the fictional Prussian town of Braunstein, Wesely took this open-endedness to the next level. As with a normal war game, he put players in charge of Napoleon’s French army and the Prussian resistance. But then he assigned them rather more unusual roles.

One player, for example, was given the role of the chancellor of Braunstein’s university. What could he do? Well, he could attempt almost anything. He didn’t command any troops, but he could rally the students and urge them to join the resistance. Or he could challenge another player to a duel, perhaps over the affections of a lady. The outcome of attempting any manoeuvre was determined by the roll of a dice.

In response, the referee — Wesely — had to improvise. The experimental game was a chaotic series of whispered conferences between Wesely and the players. It took ages, and the French and the Prussians never even fired a shot. Not so much a war game as a phoney-war game. Wesely worried that it had been a flop, but the players loved it.

One of those players was Dave Arneson, who seized Wesely’s idea with both hands. In a follow-up game, set in a banana republic, Arneson started as a student revolutionary, but managed to convince the other players he was working for the CIA. He ran rings around them, not by rolling dice or pushing pieces around the map, but by acting the part and bluffing his way to success.

What Wesely and Arneson and the group had invented was a strange combination of a classical war game, a military training exercise and an improvised acting class. It came to be known as a role-playing game. Arneson joined forces with another war-gamer, Gary Gygax — a prolific writer and game designer — and, in 1974, the two of them published the first commercial role-playing game, Dungeons & Dragons.

D&D was set in a Tolkien-tinged world of wizards, monsters and labyrinths. Its war-gaming roots explain the frequent use of battle maps, miniatures and tactical skirmishes. But with each player assuming the role of a fictional character, RPGs could easily become improvised dramas.

Variants immediately sprang up to explore the possibilities suggested by the new form. Call of Cthulhu was a horror game in which, if you ran it right, the players themselves would be frightened, while the fictional characters they played would often be driven mad by cosmic terrors. Traveller was a gritty sci-fi game of intergalactic trade. Soon there were games based on comics, books and movies: Star Wars: The Roleplaying Game, Middle-earth Role Playing, Judge Dredd: The Role-Playing Game. It was a new form of creativity, full of fresh ideas and fumbling experiments. And it was also, to the uninitiated, utterly baffling.

Roll a 12 or lower. Or to witness William Dear’s first encounter with D&D, continue to FANTASY. Roll a 13 or higher. Or to marvel at what Wesely, Arneson and Gygax unleashed, turn to AMUSED.

FANTASY

Sat at a hotel-room table, William Dear’s first gaming experience looked mundane. They weren’t in a deserted steam tunnel. There weren’t even any pointy hats. Dear, pretending to be a wizard named “Tor”, described what “Tor” was doing, while the dungeon master described the consequences.

In Dear’s imagination, Tor and his companion “Dan” got into various scrapes around a medieval town, scrambling through escape tunnels, bargaining with a powerful sorcerer, being taken prisoner by orcs and, finally, triumphing, thanks to a combination of bluff and cunning. The dungeon master simply described what they saw and, with the aid of a few dice rolls, determined whether their schemes succeeded or failed.

Dice, pencils, playing “let’s pretend” — it was all very tame. But Dear had a lot of fun. In fact, he worried that this game of the imagination might just be too much fun. Maybe, for a troubled mind, it could be dangerous. “Dallas might actually have begun to live the game, not just to play it,” wrote Dear in his memoir of the case. “Dungeons & Dragons could have absorbed him so much that his mind had slipped through the fragile barrier between reality and fantasy.”

Roll a 17 or lower. Or to discover the response to this idea, read the section titled PANIC. Roll an 18 or higher. Or to find out more about the creativity involved in role-playing, continue to AMUSED.

PANIC

Had Dallas vanished because he had started to believe that he really was a dragon-slaying wizard? The only thing more preposterous than William Dear’s theory was that everyone seemed to believe it. The idea became bigger than the story of Dallas’s disappearance, and the ensuing panic lasted much longer than the fleeting question of what actually happened to the boy.

Newspapers such as the San Francisco Examiner tried to get their heads around what the game actually was and how people played it. Words such as “cult” were often used to describe it.

Given this void of understanding, perhaps it shouldn’t be surprising that America fell into a moral panic, with evangelical groups seizing on the game’s use of monsters, spells and evil spirits to blame it for suicides and murders. Police chiefs warned parents about the game.

There are several reasons why Dungeons & Dragons may have provoked such fears. Dungeons & Dragons was and remains difficult to describe, and some versions of the game feature demons and cultists and witches, albeit as antagonists. Yet for many people, the unease must have been prompted by the context in which they first heard of the game. Dungeons & Dragons? Isn’t that the game that poor kid was playing when he disappeared?

There is no such thing as bad publicity, though. In specialist hobby stores, copies swiftly sold out. Random House signed a deal to distribute the game to booksellers across the country. According to the oral history podcast When We Were Wizards, the excitement over Dallas’s disappearance turned Dungeons & Dragons into “a cultural phenomenon”. (Other histories of the game, including Jon Peterson’s Playing at the World (2012) and David Ewalt’s Of Dice and Men (2013), also note the importance of the Dallas case.)

The game briefly appears in ET, which was released in 1982 and, in the same year, in Mazes and Monsters, a TV movie inspired by the media frenzy over Dallas’s disappearance. In the latter, a young Tom Hanks plays a teenager who completely loses his grip on reality while playing a RPG — the fate that Dear imagined had befallen Dallas. The film is often thought to have been based on Dallas’s disappearance. In truth, it was based on Dear’s speculation, a very different thing.

Dallas’s disappearance turned out to have nothing to do with Dungeons & Dragons. But it had everything to do with the game’s subsequent popularity. Without Dallas Egbert — and William Dear — I suspect that I would never have heard of role-playing games.

Roll a 16 or higher. Or to ponder D&D’s role in human creativity, turn to the section AMUSED. Roll a 15 or lower. Or to find out where gaming is today, read the section STRANGER.

AMUSED

The year after I first heard about role-playing games, the cultural critic Neil Postman published an influential book, titled Amusing Ourselves To Death (1985). Postman lamented the effect of television on the intellectual, cultural and political life of the United States. Adapting an idea from his teacher Marshall McLuhan, Postman argued that “the medium is the metaphor” — that any communications medium from the spoken word to the written word to primetime TV subtly influenced the kind of ideas that could be communicated. Politics in a TV age, for example, favoured good looks and simple stories, hence the rise to power of a former cowboy actor, Ronald Reagan.

It’s easy to read Postman as a prophet of inevitable cultural decline, with each new medium stupider than the last. But decline is not inevitable. Consider how TV drama has been changed by the availability of subscription services and on-demand streaming.

TV producers used to have to assume that people would miss episodes, and so would produce simple episodic comedies and soap operas.

Now, writers and directors can reasonably expect that people will catch up on any episodes they missed, and so they offer us longer, more complex stories and character arcs. This isn’t the result of some sudden cultural hunger for more sophisticated storytelling, but of a change in the medium itself.

Not every new medium is an improvement, though. If Postman had foreseen reality TV and social media, two formats that thrive on manufactured outrage, he would not have been surprised by the way they enabled the rise of Donald Trump.

Movies invite us to value beauty and classic story arcs. Streaming TV drama valorises complex plots and character development. And reality TV thrives on attention-seeking and treachery. What then is the underlying metaphor of a role-playing game?

More than anything else, these games demand imagination. They’re almost always collaborative. And they’re active rather than passive.

If you sit back and watch, nothing happens.

You need to participate in, not just observe, the creativity of others.

An imaginative, collaborative and actively creative pastime doesn’t sound so bad to me. After all, we’re constantly being told of the importance of creativity — the “creative class”, the “creative economy”, or simply the need for every child to be creative in school. And yet when we actually see some creativity, we can’t quite comprehend what we’re looking at.

Roll a 6 or higher. Or to find out where gaming is today, read the section titled STRANGER. Roll a 5 or lower. Or to find out what happened to Dallas Egbert and William Dear, continue to FICTION.

STRANGER

Dungeons & Dragons has been celebrating its 50th anniversary this year and is mainstream these days. It featured in the hit Netflix series Stranger Things. One of the best-selling and most critically acclaimed video games of the past decade, 2023’s Baldur’s Gate 3, is not only based on D&D rules, but it shows players every dice roll. And last year, D&D finally got the movie it deserves, Honor Among Thieves. Starring A-listers such as Chris Pine, Michelle Rodriguez and Hugh Grant, it made more than $200mn at the box office. Live-streamed games by groups such as Critical Role are hugely popular, and the list of celebrities who are reported to play the game is too long to summarise. Of course, you might well have played a game yourself.

Given where D&D came from and the fact that feature-creep has bloated the core rules to 1,000 pages or so — remember, “you can’t play if you’re a dumb-ass” — this is an astonishing state of affairs. We can thank geek culture and the fact that Wesely’s original Braunstein concept is creatively fertile and marvellously fun. And I can’t help feeling we should also offer grudging thanks to William Dear’s gifts for hyperbolic speculation.

Beyond the flagship product, the fringes of the role-playing hobby can rarely have been more vibrant. Modern games are diverse, stripped-down, even literary.

Blades in the Dark offers fast-moving heists. Masks has the players taking the roles of teenage superheroes, trying to grow into their powers and thwart evil, without earning the wrath of their parents or the school principal. Ribbon Drive invites each player to create a mixtape, and the group uses the music to inspire an improvised narrative about a road trip. There are MicroRPGs, which set out the premise and the rules in as little as one page. And there is a rich tradition of dusting off and replaying classic games from the 1970s and 1980s.

It is commonplace for players to adapt old games to new settings, to invent imaginary worlds and to write new rules systems from scratch. The hacker culture so celebrated in software is alive and well in pen-and-paper role-playing games. For example, during lockdown, I developed a new set of rules and a fantasy setting inspired by Ursula K Le Guin’s A Wizard of Earthsea novel, and ran it for my friends over Discord. (We role players didn’t have to resort to Zoom pub quizzes to stay in touch with our friends.) That might seem a daunting undertaking, but nobody batted an eyelid. Such creativity is the norm in this hobby.

As lockdown restrictions started to ease, I began running a game for my son and his classmates — then 10 years old, now 13. The reaction from the parents to such activities isn’t suspicion, but gratitude. I’m helping the children spend their time on something creative, collaborative and far away from glowing screens. Occasionally, I reflect that they are the same age that I was when I fell in love with the hobby and wonder if they, like I, will find that gaming sustains friendships over decades.

Games are as important a creative outlet to me as writing my books. More importantly, while not everyone is lucky enough to be able to publish a book, anyone can be creative in shaping their own game. As scapegoats for social evils go, the wholesome, imaginative and sociable pastime of D&D a particularly unlikely one.

Roll any number. Or to find out what happened to Dallas Egbert and William Dear, continue to FICTION.

FICTION

The case ended, as it began, with a phone call. When William Dear picked up the ringing phone in the small hours of September 13 1979, it was Dallas Egbert on the line. Dear’s media circus had succeeded in attracting the boy’s attention.

The true story was nothing like the hype. Dallas had been depressed, attempted suicide and then run away. Dear’s book attempts to portray a tense rescue, which on closer reading is simply two grown men knocking on the door of a rented room, to find a tearful teenage boy ready to go home. Some newspapers noted that Dallas had been found alive and well, but by then the circus had moved on.

Dear flourished, penning works such as OJ Is Innocent And I Can Prove It and appearing in the Fox Network documentary, Alien Autopsy: Fact or Fiction? He died in July.

James Dallas Egbert, sadly, did not recover from his depression and took his life a year later. The isolated young man has been largely forgotten, along with the truth about what happened to him. His mother later told The New York Times, “It was never all that exciting. He just got on a bus and went as far as his money would take him.” Yet when Dear told the story, it was an unforgettable tale about the fragile barrier between reality and fantasy.

My favourite campaigns

A “campaign” is a series of adventures featuring the same cast of characters. Here are the campaigns that have stayed with me over four decades of gaming.

Legend II (1992-1999) Within days of arriving at university, I was at the game society, touting for players for my new game. It was set in “Legend”, a myth-infused alternative to the Middle Ages which game designer Dave Morris devised in the 1980s. It ran for eight years and led to life-long friendships, as well as a romantic relationship with another player for me. Morris even made a guest appearance, which, to me, felt like I’d set up a band and Paul McCartney had dropped in to play a few gigs.

Iron Men (1998-2018) Once I finally left academia and made the move to London, I started a new game. The Iron Men, a group of larger-than-life mercenaries was also set in Legend, and Dave Morris was now a regular player. For years after the main game ended, we’d get together in December and play in a series of increasingly preposterous, yet somehow numinous, Christmas-themed adventures.

Ribbon Drive (2014) My gaming ex-girlfriend died too young. One evening not long after, some of her close friends and fellow gamers got together. We drank too much and played Ribbon Drive, a directionless game about an aimless road trip, fuelled by mixtapes, memories, sentiment and gin.

Conclave (2020) When the world went into lockdown, we gamers had an alternative to the Zoom pub quiz. We moved our tabletop games online. My contribution was Conclave, a game in which a council of wizards is summoned to deal with a crisis, only to find that they have been lured into a trap by the sinister Lord Pale. The game owed a great debt to Ursula K Le Guin’s Earthsea. I loved it.

Wild Beyond The Witchlight (2021-2024) Witchlight, an off-the-shelf publication, is a chaotic pick-and-mix of ideas. But for me, it was a passing of the torch. I ran the game for my son and his school friends, and within a few months they were running their own adventures.

The Branded King (2022-present) The wheel turns full circle. This epic is being run by a school friend who restarted gaming after Covid-19 struck. The game is fast-paced and vivid, but the real magic is that several of the players met at school in the 1980s and find nothing odd about playing together in our fifties.

Written for and first published in the Financial Times on 2 November 2024.

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‘Known unknowns’, or how to plug the gaps in public research

In 1979, Archie Cochrane published an essay chastising (not for the first time) his fellow doctors. “It is surely a great criticism of our profession,” he wrote, “that we have not organised a critical summary, by speciality or subspeciality, adapted periodically, of all relevant randomised controlled trials.”

The idea of “organising a critical summary” reeks of manila folders and unimaginative paper-shuffling — unworthy of a man like Cochrane, who was a heroic figure in the field of medicine. And yet, as so often, Cochrane had struck at the heart of the matter.

The basic building block of evidence in medicine is the randomised trial, as Cochrane understood as well as anybody. But some randomised trials may be flawed. Others may have disappeared from the academic record, perhaps unpublished because they did not find the positive results their funders were hoping for. Even if all the trials of a particular treatment are rigorous and reported, the most robust evidence comes from combining them. When properly synthesised, several inconclusive trials may collectively produce a conclusive result. Yet to turn those basic building blocks into more than a pile of epistemological rubble, producing a robustly structured edifice of knowledge, takes work.

Is that work taken seriously enough? I wonder. In 1993, Sir Iain Chalmers, a health services researcher, founded Cochrane, an international non-profit best known for the Cochrane Library of systematic reviews in medicine. Named in honour of Archie, Cochrane has magnificently responded to his challenge: the Cochrane Library now lists more than 9,000 systematic reviews. 

But in other fields, such as education, policing or economic development, the picture is less rosy. Education is arguably of comparable importance to health for any government, and the UK government is typical in spending about half as much on education as on health. One might expect, then, that governments would spend about twice as much on health research as on education research. Instead, the disparity is glaring. As David Halpern and Deelan Maru point out in their recent Global Evidence Report, the UK government spends 18 times as much on research into health than it does on research into education — or, to put it another way, education research is underfunded by a factor of 10. 

If anything, that paints too optimistic a picture of research into social policy, because other countries spend even less. And, says Will Moy, CEO of the Campbell Collaboration, education research is probably the best of the rest when it comes to research funding. The Campbell Collaboration, which aims to do for social policy what Cochrane does for medicine, boasts just 231 systematic reviews — a fair reflection of the fact that social policy research enjoys a fraction of the money and attention lavished on medicine.

There is more going on here than a lack of spending on primary research into criminal justice, education and other areas of social policy. While money is sometimes available for project-by-project evaluations, there seems to be a reluctance to support the basic infrastructure of a database of systematic reviews, or to fund the frequent updates that turn a systematic review into the appealingly named “living evidence review”. 

As an example, consider the International Initiative for Impact Evaluation (3ie), widely admired for its Development Evidence Portal. The Portal is very much in the spirit of Archie Cochrane’s organised critical summary of all relevant trials — but it struggles for steady funding. Marie Gaarder, the executive director of 3ie, ruefully notes that the entire portal can be run for a year at a cost of less than a typical impact evaluation — but “public goods tend by their nature to be underfunded”. 

On the bright side, the UK’s Economic and Social Research Council recently teamed up with the Wellcome Trust to announce more than £50mn of funding for evidence synthesis. That makes sense, as a modest amount of funding could go a long way towards building an “evidence bank” on which policymakers could draw.

Systematic reviews have one obvious appeal. It makes sense to assemble and organise all the relevant evidence in one place. But there are two other advantages that may be less apparent.

The first is that a good systematic review can bridge the gap between the academic and the policymaker. The natural unit of analysis for a researcher is a particular intervention: “Does neighbourhood policing reduce crime?”. For a policymaker, the natural unit of analysis is the problem: “How do I reduce crime?”. By bringing together relevant research in the right way, systematic reviews can help to answer policymakers’ questions.

And the second advantage? Evidence synthesis highlights what Donald Rumsfeld infamously called “known unknowns”. There is no surer way to identify gaps in research than to put together a systematic review — at which point funders can commission research to plug those gaps, rather than yet another study of a familiar topic. Since the 1990s, medical research councils have been demanding systematic reviews as a precondition for funding new studies. The lesson should be more widely learnt. 

This advantage was eloquently expressed by one of the 20th century’s great policy evaluators, Eleanor Chelimsky. In 1994, she explained, “I hoped that synthesis could dramatise, for our legislative users, not only what was, in fact, known, but also what was not known.” Dramatising our ignorance is one of the most valuable things an evidence review can do. There is more to this than manila folders. 

Written for and first published in the Financial Times on 1 November 2024.

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Where to find me these days

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Cautionary Questions – RoboPod and the Perpetual Money Machine

Thanks for your questions – fielded this time with the able assistance of Jacob Goldstein, the author of Money: The True Story of a Made Up Thing.

How to give a good speech

There are many ways to give a terrible speech. The chief executive who pulls out a sheaf of densely written text and robotically reads it aloud. The management consultant whose every word competes with a jargon-filled tangle of meaningless diagrams and bullet points. The best man who manages to embarrass the bride and outrage her mother with his scurrilous tales.

The strange thing is that we all know this. We’ve all sat in audiences watching speakers commit these familiar crimes against rhetoric. We all know that there are much better ways to give a talk. So why do we keep doing it so badly?

The answer is: we’re afraid. Jerry Seinfeld joked that people would rather be in the casket at a funeral than giving the eulogy, and while it’s a myth that people are more afraid of public speaking than they are of death, fear of public speaking is very common. It’s this ubiquitous anxiety about speaking in public that — ironically — leads so many people to speak so badly.

The chief executive is worried that an ad-libbed line will end their career. The management consultant is afraid of losing the thread or running out of things to say. The best man is terrified that people won’t laugh at his jokes. The unspoken question that frames the speech preparation isn’t “what do I want to say?” but “how do I get out of this in one piece?”. Being asked to give a 20-minute speech is viewed by many people as an ordeal to be survived, and the central task is to safely fill 20 minutes with words, neither running out of material nor forgetting your lines. If this is how people see the challenge, no wonder their instinct is to get the scriptwriter in, or to fire up the PowerPoint clip-art and start searching for inspirational quotations; or, in the case of the panicky best man, to think of the most inappropriate story they can.

The art of good public speaking is often to say less, giving each idea time to breathe, and time to be absorbed by the audience. But the anxiety of the speaker pushes in the other direction, more facts, more notes, more words, all in the service of ensuring they don’t dry up on stage. It’s true that speaking in public is difficult, even risky. But the best way to view it is as an opportunity to define yourself and your ideas. If you are being handed a microphone and placed at the centre of an audience’s attention for 20 minutes, you’re much more likely to flourish if you aim to seize that opportunity. Everyone is watching; you’re there for a reason. So . . . what is it that you really want to say?

If you’re the best man at a wedding, there shouldn’t be much doubt: “My friend can be a real idiot sometimes, but I love him and we all wish the couple every happiness together”.

For other talks, the point may be less obvious. But there has to be one. Many executive speeches are excruciating because the CEO is determined to avoid saying anything of interest, while management consultancy is cursed by the need to give presentations regardless of whether there are any ideas to present. No less an authority than Eminem put his finger on the problem, rapping “Nowadays, everybody wanna talk like they got something to say/ But nothing comes out when they move their lips/ Just a bunch of gibberish.”

People who talk when they’ve nothing to say are an annoyance, but then there are those who do have something important to say, yet duck their opportunity to say it. That is less of an annoyance than a tragedy.

I was recently leading a seminar about public speaking, when one woman asked me how she should deal with speaking to reluctant audiences. She worked in health and safety, she explained, and people only attended talks about health and safety because they were compulsory. She seemed self-effacing and glum.

“Do you think health and safety is important?” I asked her. Yes, she did. “Do you think that if people understood your ideas better, it might prevent an awful accident?” Yes. Well, I suggested, perhaps that might be a starting point.

She might build her talk around the message, “The simplest-seeming details could save your life.” But not necessarily. Another good talk about health and safety could emphasise that when you pay attention to safety, you raise your game more generally: “health and safety doesn’t just save lives, it saves money.”

Or maybe there’s a different angle altogether. I’m not a health and safety expert, after all. But most people, I would hope, have at least one interesting thing they might want to share with the world. If you have one, start there.

In his book TED Talks, Chris Anderson (the head of TED, the conference that has become synonymous with compelling public speaking) emphasises the “throughline” — the thread that should connect everything in the speech, every story, every joke, every slide and every rousing call to action.

The throughline is the most important idea in public speaking. A good speaker mixes things up, varying tone and pace and subject-matter — but the one thing they should never mix up is their audience. That means linking everything, from tear-jerking anecdotes to statistical analysis, to the throughline. More fundamentally, it means knowing what the throughline is.

It isn’t easy to speak compellingly in front of an audience, but our fear of the occasion does us more harm than good. It’s best not to prepare in a defensive crouch. Instead, start with having something to say. Then say it.

Written for and first published in the Financial Times on 25 October 2024.

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Beard taxes and other lessons for Rachel Reeves

When Ernest Borgnine auditioned for the title role of Marty, he knew this could be his big break. Typecast as a bit-part thug, Borgnine was nearly 40, losing his hair and putting on weight. Marty offered him the chance to play a movie lead: lovelorn butcher Marty Piletti.

As he read his audition lines, protesting to Piletti’s mother that “I’m just a fat, little man. A fat ugly man!”, he imagined he was speaking to his own Italian-American mother. He looked up at the director and scriptwriter. They were both crying. Borgnine had won the kind of role he’d always dreamt of. It was his passport to stardom.

Just one problem: Marty was never intended to be finished. Borgnine’s autobiography claims that he came to realise that the entire project was designed to be half-filmed, drained of resources to cross-subsidise other films, then shelved, all as a strategy to reduce executive producer Burt Lancaster’s tax bills.

It’s hard to be sure whether Borgnine accurately described the nature of this, but what is clear is that the world of tax is stranger than we imagine. Rebellion, Rascals, and Revenue — a history of tax by Michael Keen and Joel Slemrod — is full of wonders. Consider Peter the Great’s beard tax, imposed in 1698 with the strange but feasible aim not of raising revenue but of getting Russian nobles to shave. (Those who paid the tax were given a medallion with a picture of a beard on it.)

Or bachelor taxes, popular in many places both as a way of encouraging procreation and of squeezing single men with — one presumes — money to spare. Yet, what if a man could not find a wife? Surely the taxman would not add insult to injury by taxing his failure to find love? Exemptions were introduced for those who had tried but failed to woo a wife. As a result, a new profession arose in Argentina around 1900: the “lady rejecter” who would, for a modest consideration, make a signed declaration that a certain gentleman had proposed marriage to her and that she had declined the offer. Tax — and the avoidance thereof — moves in mysterious ways.

Rachel Reeves might want to bear such cautionary tales in mind as she ponders her options for the first UK Budget ever to be presented by a female chancellor of the exchequer. As so often seems to be the case when women take over a man’s job, the situation is unenviable. By British standards, the tax burden is high, but it is clearly inadequate to fund the public services and benefits that the public expect.

There is room to raise tax revenue — many successful countries have higher tax burdens — but unfortunately the chancellor has ruled out most of the sensible ways to do that. So what to do?

Reeves could find something new to tax: perhaps dogs (occasionally dangerous) or cats (dangerous to birds) or cows and sheep (methane emitters). She could make like Cleopatra and raise taxes on beer.

A more sensible rule of thumb is to broaden the tax base, ideally lowering the tax rate at the same time. Sadly, the most economically efficient approaches are likely to be politically suicidal. For example, Reeves might broaden the VAT base, charging value added tax on pretty much everything, much as they do in Denmark. Roughly half of what UK residents buy does not incur VAT, with the tenuous justification that this is a pro-poor policy. Nonsense. A decent welfare state in a dynamic high-wage economy is a pro-poor policy — not a tax break on half the nation’s spending.

Despite high taxes overall, the income-based taxes paid by ordinary workers (national insurance and income tax) have been falling fairly steadily for four decades in the UK. The country’s tax base has become narrower, with ever more focus on squeezing the rich. There may be limits to how high spending can really go without asking average earners to pay a bit more.

So for her next trick, Reeves could lower — or at least freeze — the threshold for the income tax allowance. High tax-free allowances are expensive and far less progressive than they might appear: the poorer the household, the less they gain from a tax-free allowance.

To the extent that Labour will wish to try to tax the rich, the policy (again) should be to keep things as simple as possible: reduce the threshold at which the top rate of income tax is paid, and nudge up that rate.

None of this sounds like fun — I certainly do not enjoy paying taxes — and Reeves has ruled out doing any such thing. But a government that is serious about raising revenue while also raising growth would be well advised to avoid trying to be too clever. Broad-based taxes at reasonable rates can raise a lot of revenue without distorting the economy too much. Punitive taxes — typically on narrow tax bases, and riddled with loopholes — bring us into the world of professional lady rejecters, beard medallions and movies greenlit as a tax-dodge.

According to Borgnine, the US tax authorities clamped down on the half-finished-movie scam, and insisted that Marty couldn’t be written off until it had been finished and screened. When Lancaster saw the completed movie, he fell in love with it and promoted it energetically. Borgnine scooped the Oscar for best actor.

If, however, Reeves continues the British obsession with narrow and distortionary taxes, she has no right to expect such a Hollywood ending.

Written for and first published in the Financial Times on 18 October 2024.

Loyal readers might enjoy the book that started it all, The Undercover Economist.

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Cautionary Tales – Darwin’s Grandpa and the Art of Sex Appeal

Charles Darwin was stumped by peacocks. According to his theory of evolution, some creatures were better equipped to survive in their particular environment than others. It explained a lot – but it didn’t explain the peacock’s brightly coloured tail feathers, which were extravagant and cumbersome. Surely such plumage made it harder for peacocks to survive?

It so happens that the life of Darwin’s own grandfather offered clues to the puzzle of the peacock’s tail – if only he’d known to look there…

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Further reading

Two excellent biographies of Josiah Wedgwood are The Radical Potter by Tristram Hunt, and Brian Dolan’s Josiah Wedgwood: Entrepreneur to the Enlightenment.

Desmond King-Hele’s biography of Erasmus Darwin is called Erasmus Darwin: A Life of Unequalled Achievement.

Darwin and the Making of Sexual Selection by Evelleen Richards is a comprehensive account of the genesis and  impact of Charles Darwin’s theory. The Mating Mind by Geoffrey Miller further explores links between Darwin’s theory and ideas related to conspicuous consumption.