Tim Harford's Blog, page 7

Predictions aren’t always about the future

The Bodleian Library’s exhibition Oracles, Omens and Answers offers a rather different perspective on prognostication than the FT’s usual position. Instead of economists and political pollsters, the exhibition discusses predictions made using the stars, or children’s games, or, most strikingly, large Cameroonian spiders.

That last one works like this. The spider is presented with a stone, a stick and some cards made of leaves, and a spider diviner then interprets the way the spider moves the cards around. Anthropologist and curator David Zeitlyn says that in parts of Cameroon, the results of spider divinations are admissible in court. For all my scepticism about economic forecasts, I would still be inclined to pay more attention to an economist than a spider. That said, the spider has one clear advantage over many human forecasters: unlike the humans, it is genuinely disinterested.

Consider one of the most famous forecasters in history, John Dee, mathematician and conjuror to Queen Elizabeth I. Dee’s forecasts were a risk. In 1555, at a time when Elizabeth was heir to the throne but Queen Mary seemed to be pregnant — a state of affairs that could possibly result in a new heir, or in Mary’s death — he cast an apparently favourable horoscope for Elizabeth. This act would win favour if Elizabeth rose to the throne, but bordered on treason if she did not.

Dee was arrested by Queen Mary’s loyalists and accused of “calculating”. He survived the experience and when Elizabeth became Queen, Dee was one of her favourites. She gave him the honour of choosing the most auspicious coronation day, and was delighted with his assurances that she would unite Catholics and Protestants as the Last World Empress.

It is an instructive reminder, if an extreme one, that forecasts are not always attempts to see into the future. Predictions can be made for very different reasons, perhaps the most common of which is to make the forecaster look good. Accuracy might help, of course, but accuracy is hard work and rewarded late, if at all. It is much easier to make a forecast seem entertaining or clever.

Twenty-first-century astrology sometimes carries the disclaimer that it is “for entertainment only”, but other forms of prognostication could also use that health warning. Many analysts’ notes, opinion polls and, of course, newspaper columns may be insightful, but they are not necessarily good-faith efforts to see the future. Instead, they are eye-catching and fun, a snackable way to package what might otherwise be unappetising analysis.

Worse, some forecasts are deliberately designed to manipulate. Dee was transparently telling Elizabeth what she wanted to hear in the hope of winning her favour, but forecasts can be more subtle in their influence. One example is the pre-election opinion poll. Experiments conducted by economists including Zacharias Maniadis found that when people are shown biased opinion polls, they systematically favour the candidate who is being flattered. That makes sense. None of us has the time to study every detail of a candidate’s positions and so it is reasonable to give some weight to what others think. That assumes, alas, that we know what others think. And if opinion polls influence our vote, why should we expect them to remain above politics?

Financial markets offer more opportunities to the self-interested forecaster. In illiquid markets, a common scam is “pump and dump” — buy penny shares, make enthusiastic forecasts (often outright lies), wait for people to believe the hype, then sell the penny shares at a profit. A mirror image of this is “short and distort”, shorting a company’s stock, spreading false rumours to bring down the price, then closing the lucrative short.

Then again, what if the rumours are true? A couple of decades ago, the economist Owen Lamont assembled data about corporations that had taken actions against short sellers. Such actions range from issuing pugnacious complaints about disinformation, suing short sellers for libel, switching to stock exchanges with more restrictions on short selling, or appealing to regulators to investigate the short sellers. (Loyal readers will recall that in 2019, an epic FT investigation into fraud at Wirecard prompted the German regulator to ban short selling in Wirecard.)

Lamont found that companies that went to war with short sellers subsequently underperformed the market by a painful 2 per cent per month. In other words, the short sellers had been right all along. Other academic research finds that while corporate frauds can be exposed by journalists, regulators or internal whistleblowers, short sellers also play a role in a substantial minority of cases. Short sellers are rarely popular but they do have one thing going for them, namely a strong financial incentive to detect and then reveal problems.

One might say the same about John Dee. He almost literally bet his life that his horoscope was right. Although modern forecasts often claim to be based on rational analysis, they often lack this quality.

Sometimes, of course, the manipulator becomes manipulated. Dee eventually fell under the spell of another so-called conjuror, Edward Kelly, who was infamous for his power to consult with spirits, notes the Bodleian exhibition. Quite so. Kelly informed Dee that an angel had instructed them to share everything, including their wives. The wives do not appear to have been consulted on the matter, and Dee did not detect what appears to have been an obvious conflict of interest. Instead, he obeyed the “angel”. He might have done better to consult a spider.

Written for and first published in the Financial Times on 4 April 2025.

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

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Cautionary Tales – Buried by the Wall Street Crash (Classic)

Two of the greatest economists who ever lived, Irving Fisher and John Maynard Keynes, thought they could predict the future and make a killing on the stock market. Both of them failed to see the Wall Street crash, the greatest financial disaster of the age – and arguably, of any age. Yet having made the same forecasting error, Fisher and Keynes went on to meet very different fates. What does it take to see into the future? And when you fail, what does it take to bounce back from ruin?

Featuring: Alan Cumming, Russell Tovey, Mircea Monroe, Rufus Wright, Ed Gaughan, and Melanie Gutteridge.

Producers: Ryan Dilley and Marilyn Rust. Sound design/mix/musical composition: Pascal Wyse. Fact checking: Joseph Fridman. Editor: Julia Barton. Recording: Wardour Studios, London. GSI Studios, New York.

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Further reading

Walter Friedman’s The Fortune Tellers is a key source on Fisher. It’s a history of all economic forecasting in the US. I loved it.

Sylvia Nasar’s excellent Grand Pursuit has much more on both Keynes and Fisher.

There are several fine journalistic accounts of Keynes’s participation in the Degas auction. Try the BBC, the Wall Street Journal, or History Today.

On Keynes, the central source on his investment performances is David Chambers and Elroy Dimson. 2013. “Retrospectives: John Maynard Keynes, Investment Innovator.” Journal of Economic Perspectives, 27 (3): 213-28.DOI: 10.1257/jep.27.3.213. There’s more biographical detail in the more informal Keynes’s Way To Wealth by John Wasik.

Philip Tetlock’s original study is detailed in his subtle, scholarly and ground-breaking Expert Political Judgment. His more recent book with Dan Gardner, Superforecasting is more journalistic and covers his recent discoveries. Both books are very good, but quite different in style.

The case of Dorothy Martin and the UFO cult is told first hand by Festinger and his colleagues in When Prophecy Fails. There’s further discussion in Mistakes Were Made (But Not By Me), an excellent guide to all the ways in which we can fail to notice we’re wrong, by Carol Tavris and Elliot Aronson.

Elon Musk is wrong about GDP

Of all the dubious claims uttered recently by Elon Musk, I have yet to see a more interesting one than his tweet asserting that “a more accurate measure of GDP would exclude government spending. Otherwise, you can scale GDP artificially high by spending money on things that don’t make people’s lives better.”

Whether or not he is serious, the idea is worth a closer look, because it explicitly expresses one instructive misunderstanding and heavily implies a second. The explicit misunderstanding is that an accurate measure of GDP — gross domestic product — would include all and only the things that make people’s lives better. It wouldn’t. The implicit one is that GDP needs to be accurate because governments try to maximise it. They don’t. (Look around.)

I was surprised to learn from Diane Coyle’s new book, The Measure of Progress, that when GDP measures were first being hammered out, the Musk view nearly triumphed. Government spending was included in GDP only after a vigorous debate. Part of the reason for its inclusion was crude politics: the second world war was raging and governments didn’t want their military spending to be ignored.

The more solid justification for including government spending in GDP was theoretical: the economist John Maynard Keynes had formulated a theory of macroeconomics based on aggregate demand, including government demand. A measure of GDP that pretended government did not exist would be useless for trying to understand and stabilise the economy.

GDP is the value of all goods and services produced in an economy. That definition raises an immediate question: value according to whom? The answer is — sort of — value according to the market. If you grow wheat, its value is defined as whatever you sold it for, less whatever it cost you to grow. But what if the good or service is not sold in a market transaction? If it is still valuable, then, in principle, it should still be included in GDP. In practice, it may not be.

For example, if you pay someone to cook, clean and look after your children, these market transactions are included in GDP. If you do your own laundry and look after your own children, the same activity is overlooked. (A famous critique of GDP, “When a man marries his housekeeper, GDP falls”, somehow manages to package a feminist insight as chauvinism.) 

Another example: education could be bought as a product, or it could be provided free at the taxpayer’s expense. How should we value a purely state-funded education system? We could estimate its market value. Or assume that the value of teaching is whatever the teachers happen to be paid. Or we could take Musk’s suggestion and declare that if the schools are paid for by the taxpayer, it would be “more accurate” to assume that they have no value at all. Simple, but silly.

Musk is not the only person to have said silly things about GDP. Senator Robert Kennedy gave a famous speech in 1968 in which he lamented that GNP (a close cousin of GDP) “counts air pollution and cigarette advertising . . . special locks for our doors and jails for the people who break them.” Yet, he added, it does not include “the health of children . . . the beauty of our poetry or the strength of our marriages, the intelligence of our public debate or the integrity of our public officials.” 

US GDP has vastly increased since 1968, whether or not the same is true for the intelligence of America’s public debate and the integrity of its public officials. But to see why the speech was silly, imagine pulling together a brains trust and asking them, “how can we help our children to be healthier, our marriages to be stronger, and our poetry to be more beautiful?” I can think of many possible answers to these questions. None of them is “redefine GDP”. 

GDP measures the productive output of the economy, and sometimes it does not measure it well. Coyle’s book points out that alongside the long-standing difficulty in capturing the value of unpaid work and of government services, our statistical infrastructure also struggles to measure financial services, quality improvements and services that are bundled together with physical goods. There is plenty of room here for improvement, but the goal of that improvement should be to do a better job of measuring economic output. 

What, then, about the planet? What about life, liberty and the pursuit of happiness? What about all that beautiful poetry? If these things matter then they need to be supported by good policies, informed by good statistics. But when you start to think seriously about what those statistics might be, you realise that they have very little to do with GDP. If we actually wanted to measure things that “make people’s lives better”, it’s pointless to try to modify GDP. That’s just a category error, like trying to get a measure of your life expectancy by starting with the market value of your car and making a few adjustments from there. 

To measure the quality of people’s lives, ask them. Curious readers can take a look at the recently published World Happiness Report for one example of such an effort. Similarly, saving the planet does not require the redefinition of some grand goal. It requires a myriad of well-crafted policies, each informed by carefully collected data. 

The real problem with GDP is not that it includes government spending, or omits household chores, or that it fails to measure the quality of poetry. It is that it tempts us to view all human progress as an amorphous score, which we can start maximising just as soon as we fix whatever we think is wrong with how that score is calculated. That’s a mirage. Musk is said to love winning computer games. Human flourishing is not a computer game.

Written for and first published in the Financial Times on 28 March 2025.

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

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How to cure ‘premature enumeration’

John von Neumann — the man who created game theory, advanced many branches of mathematics and physics, and did more than anyone to design the modern computer — was someone who attracted a certain amount of mythology.

One story about von Neumann has a colleague setting him a fun puzzle. In this puzzle, two trains, 20 miles apart, chug slowly towards each other down a single track. A fly starts at the front of one train and zips off towards the other, then instantly turns around and zips back again. Back and forth goes the fly, until the trains smash into each other, squashing it between them.

The fly travels at 15mph, and each train puffs along at 10mph. How far does the fly travel before being squashed?

“15 miles,” says von Neumann, instantly.

“Oh, you spotted the trick,” says the colleague, disheartened.

“What trick? I just summed the converging infinite series,” von Neumann replies.

Von Neumann’s biographer Ananyo Bhattacharya — author of The Man from the Future — suspects this tale of blazingly quick calculation is both apocryphal and overblown, since for a mathematician such as von Neumann summing the converging infinite series is less of a feat than we might imagine. But there is a simpler way: notice that the trains will crash after an hour, and the fly is travelling at 15mph.

I almost hope the story is true, because if it is, it suggests that even the great von Neumann engaged in the curious practice of “mindless maths” — plunging into a calculation when calculation is beside the point.

For an example, consider this question: how much dirt is there in an empty hole, 3ft by 3ft by 3ft? If you answered “27 cubic feet”, congratulations: that’s the correct figure for the capacity of the hole. Unfortunately, it’s the wrong answer; the hole is empty.

Here’s another example, from business school researchers Asher Lawson, Richard Larrick and Jack Soll: “Joey went to the store and bought a pack of chips. A bottle of water costs $3, a pack of chips costs $1 and a pack of gum costs $2. How much did he spend in total?”

In their survey, a quarter of respondents answered $6. These people presumably saw the numbers and the word “total” and were too busy calculating an answer to read the question.

“The presence of numbers in a problem tempts people to perform mathematical operations,” write Lawson and his colleagues, “even when the correct answer requires no math.”

Mindless maths is an example of what the psychologists Abraham and Edith Luchins called the Einstellung effect. This German word for “setting” or “attitude” may be best translated here as “set-up”. The Luchinses gave experimental participants a series of problems to solve in which a particular approach always delivered a solution. After that set-up, they were given further problems with much simpler solutions, but cranked through the well-established method instead, missing those easy shortcuts. Metaphorically speaking, they kept reaching for their trusty hammer even when the situation called for a screwdriver.

One lesson, then, is to stop and think. It is no surprise that people who tend to fall for trick puzzles also tend to fall for disinformation. The good news is that spotting fake news doesn’t require vast expertise; the habit of slowing down and calming down usually suffices.

But this is not just a question of spotting fake news. Mindless maths is closely related to what I have termed “premature enumeration”. This sad affliction often affects people who feel comfortable with numbers, and has them leaping to calculate and analyse a numerical claim they see in the news before they have asked some basic questions.

Such questions include “What’s the source of this claim?” and “What definition are they using?”

Sources matter. Some surveys are vast and expensive scientific endeavours; others are clickbait designed to sell ice cream. Some claims are made by independent analysts, others by partisans.

Definitions matter too. Whether you’re pondering a statistic about gun violence or binge drinking, teen mental health or extreme weather events, there is no equation you can solve, no graph you can plot, that will compensate for misunderstanding how these categories have been defined and measured.

So, again: stop and think. Students sitting exams the world over are advised to take their time and read the question properly, and that is sound advice. But even those of us whose last exam was decades ago would do well to reflect for a moment on the claims or the questions in front of us. It is difficult to reach the correct destination without first establishing the starting point.

As for von Neumann and the fly, I’m with Bhattacharya. Von Neumann wouldn’t have fallen for it: part of his brilliance was his unerring eye for the simplest solution to any problem.

In the early 1950s, scientists at the Rand think-tank approached von Neumann for his advice on how to design a cutting-edge computer to tackle a formidable piece of mathematical analysis. Von Neumann asked for more details about the problem, and was treated to a two-hour presentation of every intricacy, with his colleagues scribbling on blackboards and pulling out tables and charts.

Having listened to everything with his head in his hands, von Neumann stared blankly for a while. He looked like “his mind had slipped his face out of gear”, recalled one witness.

Then von Neumann spoke. “Gentlemen, you do not need the computer. I have the answer.”

Written for and first published in the Financial Times on 21 March 2025.

The paperback of “The Next 50 Things That Made The Modern Economy” is now out in the UK.

“Endlessly insightful and full of surprises — exactly what you would expect from Tim Harford.”- Bill Bryson

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Cautionary Tales – “I love being the person who doesn’t know anything”

20 years ago, a book called Freakonomics became an instant bestseller and worldwide sensation. Tim Harford got his hands on the first copy that Steve Levitt ever signed… and promptly sold it on eBay. In this Cautionary Conversation, the pair are reunited to discuss the Freakonomics phenomenon, why Levitt left the hostile world of academia, and how simple changes could revolutionise everything from education to organ donation.

Steve Levitt’s podcast, People I Mostly Admire, is available wherever you get your podcasts. 

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The Tao of Bad Buildings

The most interesting architecture story of recent months is neither Adrien Brody’s Oscar for playing an architect, nor Donald Trump’s executive order “Promoting Beautiful Federal Civic Architecture”. It was the revelation, late last year, that the first building to win the prestigious Stirling Prize is now scheduled to be demolished.

The building, the University of Salford’s Centenary Building, was only completed in 1995 and for nearly a decade it has been largely vacant. The plans to knock it down have frustrated those who argue that it is greener to repurpose a building than to replace it. Former Riba president Jack Pringle has suggested that all Stirling Prize winners should be “listed”, introducing more regulatory barriers to changing or replacing them. But if architects did a better job of making beautiful, practical and adaptable buildings, would such protections really be needed?

About the same time as the Centenary Building was receiving its plaudits from the architectural establishment, the iconoclastic thinker Stewart Brand published a book and presented a BBC television series, both titled How Buildings Learn. Brand was unsparingly critical of much contemporary architecture, but his work was much more than a grumble about carbuncles. Instead, he made a striking and powerful argument: all buildings are predictions, and all predictions are wrong.

Sometimes the errors are obvious and blameworthy. Flat roofs often leak, large windows trap the sun’s heat, hard surfaces reflect noise. No matter how pretty your award-winning library looks on Instagram, such failings will make it unloved if not unusable.

But often the predictions are wrong because they could never have been right. Inventions from air conditioning to the car, the shopping mall to the internet, have reshaped what we can do with buildings and what we need from them. Nobody can reasonably blame the Victorian architect of a quayside warehouse for not anticipating the rise of the shipping container, nor the designer of a fine Georgian townhouse for failing to foresee the coming of the safety elevator. For Brand, then, the mark of a good building is that it gracefully adapts in the face of change.

Building on the work of the architect Frank Duffy, Brand outlined six different layers of a building, from the site to the structure (which can last decades) to the skin and services (cladding and wiring may be changed every decade or so) to the space plan (which may change every few years) and the “stuff” (furniture and appliances in frequent motion). Buildings adapt well when the slow layers such as the structure do not prevent changes to faster layers.

So what sort of buildings age gracefully? Brand outlines three approaches.

First, the “High Road”: build something so staggeringly beautiful that the world will contort itself to preserve it, such as Rouen Cathedral, Chatsworth House or the Parthenon. More practical, however, is the “Low Road”, relying on simple and unpretentious shapes and structures. Old warehouses and terraces endure because they are easy to amend or extend.

Absolutely to be avoided is the third way, which Brand disdains as “Magazine Architecture” — clever exteriors that look good in photographs but are impractical and inflexible for those unfortunate enough to have to inhabit them. A geodesic dome looks amazing, until you want to soundproof it, insulate it, extend it or even put up a set of shelves.

All buildings are predictions, then. But useful as that perspective might be, why stop there? Many other things are also predictions. A marriage is a prediction. So is a new business. So is an institution such as the UK parliament or Nato. And since all predictions are wrong, marriages, businesses and institutions also have to change, whether gracefully or not.

Insert your own metaphor here: strong foundations, expensive renovations, endless leaks. One can push the analogy too far. But Brand’s idea remains insightful. Our lives are shaped by relationships and organisations that must keep adapting to changing circumstances.

Airport bookshops are full of books about corporate adaptability. What is a start-up if not a Low-Road institution, simple, spare and ready to pivot? Marriages and institutions, in contrast, lean heavily on the High-Road idea that nothing will, should or can change. Or perhaps they are more like Magazine Architecture, designed to be photogenic but rotten under the surface.

In fact, marriages often adapt just fine. Step beyond the wedding vows and the impractical dress, and a good marriage is a Low-Road structure after all: unpretentious, unflashy and practical. It is built of timeworn elements, to be adjusted as needed. It is not made for show.

Institutional change is not so easy. Many institutions are High Road at best, and Magazine Architecture at worst. Much of their dignity and their power comes from their pretence at permanence. Nato needs to be flexible, sure — but isn’t the whole point of Nato a certain unyielding constancy? One might say the same for the US constitution.

These institutions have committed themselves to the High Road: grand, noble and often expensive. But they also need to serve a practical function, which means they must adapt. If not, we can all see that the wrecking crews grow ever bolder.

Written for and first published in the Financial Times on 14 March 2025.

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

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Cautionary Tales – Derek Bentley Must Hang

This episode is released exclusively on Pushkin+. Episodes are released on the main feed each Friday.

An amateurish burglary in 1950s London ends in murder. One of the men involved is a 19-year-old named Derek Bentley. Bentley has the understanding of a child – and he wasn’t the killer. But the British justice system seems determined to deliver the death penalty. The fate of capital punishment lies in the balance, and so too does the fate of Derek Bentley. 

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Further reading

On Derek Bentley:

“Bentley: The Hangman’s Account.” By Albert Pierrepoint. The Guardian. 31 July 1998.

https://www.derekbentley.com/pierrepoint/wnJUL98.html

“Efforts to save Bentley Fail” The Guardian. 28 Jan 1953.

Regina v. Derek William BENTLEY (Deceased) [1998] EWCA Crim 2516. 30 July 1998.

“Efforts to save Bentley Fail” The Guardian. 28 Jan 1953.

PEELERS PROGRESS Policing Waltham Abbey since 1840 By Bryn Elliott. 2001.

“Let him Have it!” By David Morgan. Inside Croydon. 26 March 2023.

“1953: Derek Bentley hanged for murder.” BBC News.

“A Close up of the notice board, its glass front smashed” Associated Press Photo. 28 Jan 1953.

“Derek Bentley Hanged.” Australian Associated Press. 28 January 1953.

On Crime and Capital Punishment:

Firearms (Amendment) Bill. House of Commons. 11 June 1997.

“Long-Term Historical Trends in Violent Crime” by Manuel Eisner. Crime and Justice. University of Cambridge. 2003

“The Secret Executioner“. By Marcel Berlins. The Guardian. 31 March 2006

The Abolition of the Death Penalty in the United Kingdom. By Julian Knowles QC. 2015

On Lord Goddard:

Crimes of Violence. Hansard. House of Lords. 23 March 1950.

“The Last of the Tiger” Time. 1 September 1958.

“Bentley Judge Attacked” BBC News. 30 July 1998.

“A Chief Justice got away with murder” by Marcel Berlins. The Independent. 2 August 1998.

Cautionary Tales – The Old Man and the Wrecking Crew

When Britain entered its first Covid-19 lockdown in March 2020, many found comfort in evoking the British wartime spirit. A timely hero emerged – Captain Tom Moore, a WWII veteran who walked up and down his garden to raise money for frontline nurses. But when the fundraising switched to a new charity, did anyone think to check where was the money was going? 

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Further reading

This episode relied on the Charity Commission’s report into the Captain Tom Foundation. You can watch Piers Morgan’s interview with the Ingram-Moores on his YouTube channel.

We also drew on contemporary reporting in a range of news outlets, including the BBC, Radio Times, Independent, Guardian, Daily Mail, Civil Society, and an interview with Hannah Ingram-Moore by David James Smith in The Times.

For more on warm glow theory, see James Andreoni’s paper Impure Altruism and Donations to Public Goods: A Theory of Warm-Glow Giving, and Dean Karlan and Daniel Wood’s paper The Effect of Effectiveness. For more on the use of metaphors in relation to pandemics, see Not Soldiers but Fire-fighters, a paper by Elena Semino in the journal Health Communication.

Life lessons from Donald “Shoup Dogg” Shoup

The death in February of an octogenarian named Donald Shoup did not make many headlines, but it did prompt a flood of admiring social media conversations among the “Shoupistas”, a small but fervent fan club of the man they called Shoup Dogg. Shoup was a tweed-wearing, extravagantly bearded economist. What had such a man done to inspire this fervent fandom? That’s easy to say and harder to explain. Donald Shoup revolutionised the way urban planners thought about parking. How he did it should be an example to economists everywhere.

Shoup’s argument was straight out of Econ 101: parking spaces in the US were oversupplied because of planning regulations, but the best spaces were also underpriced because of crowd-pleasing politics. As a result, cities were covered in asphalt, good developments were strangled by their own mandatory parking lots, yet the most sought-after kerbside spaces were in such short supply that drivers would occasionally end up brawling over them. Somehow the US was drowning in parking and yet nobody could ever find a good space.

The price tag for this policy failure was invisible, but enormous. As Henry Grabar wrote in Paved Paradise: How Parking Explains The World (2023): “you paid for it in the rent, in the check at the restaurant . . . buried in your local tax bill. You paid for parking with every breath of dirty air, in the flood damage from the rain that ran off the fields of asphalt . . . But you almost never paid for it when you parked your car.”

The world is full of economics professors with good ideas but rarely do they inspire a near cult-like devotion. What made Shoup different? First, he was entertaining. He would point to the Monopoly board, explaining that in the real world it would be papered over with “free parking” spaces. He would often begin talks by noting, “In an audience this large, some of you were probably conceived in a parked car.”

Second, he didn’t just rely on a theoretical argument. Shoup assembled an encyclopedic array of details about irrational regulations, their consequences and their costs. He was interested, for example, in the problem of drivers cruising around looking for a convenient kerbside space. Together with some graduate students, he investigated the problem first hand, by looking for parking spots and noting how long it took to find them. Shoup reckoned that in a small Los Angeles neighbourhood — just 15 blocks — drivers collectively drove an extra million miles a year in their hunt for a good spot. “Shoup concluded that nearly one-third of all the cars in parking-scarce neighbourhoods were looking for a place to park,” writes Grabar.

At the same time, new buildings were hemmed in by mandatory, and often absurdly generous, parking requirements. An apartment parking lot would be vacant during the day, while the office and retail would be empty at night. Regulatory parking minimums did not allow for sensible ideas such as the idea that an apartment building might share parking with a neighbouring mall — still less for the radical idea that building developers might have an incentive to balance the attractions of parking with the costs of providing it.

Architects would sketch new buildings that would enhance neighbourhoods by providing vital amenities or high-quality affordable housing. Those designs would be rejected by municipal authorities because they did not meet parking regulations, and the project would be suffocated by its own uneconomical parking.

Shoup also produced the delightful (and depressing) calculation that, given that each new parking space cost thousands of dollars to provide, and given that there were at least three spaces per vehicle, the value of all the parking spaces in the US exceeded the value of all the cars.

Third, Shoup suggested solutions. Some of these were technical, and rather obvious: abolish regulatory parking minimums, introduce parking meters and set the prices sufficiently high that people don’t have to waste time looking for a space — although they may instead walk, cycle, switch to public transport or drive at a less busy time.

But the game-changing idea was to propose that parking revenue from kerbside meters should be invested in local improvements to the streetscape such as litter collection, tree-planting or pleasantly paved sidewalks. This, says M Nolan Gray, one of Shoup’s many acolytes, was his “greatest contribution”. Locals stopped opposing parking meters, and started demanding them.

Gray says, “Shoup built up the next generation”. The number of fervent followers he acquired speaks volumes about how generous he was with his time and advice. As a result, Donald Shoup quietly changed the world. His ideas have been hugely influential. Other economists could do far worse than follow his example.

There is one more lesson we could learn from the life of Donald Shoup. He wasn’t interested in the grand debates. He took a problem that seemed boring and trivial, and showed that it was neither. It was precisely because the problem was so neglected and so far from the white-hot polarisation of national politics that he was able to make so much progress.

“I’m a bottom-feeder,” Shoup Dogg would say, “but there’s a lot of food down there.”

Written for and first published in the Financial Times on 7 March 2025.

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

I’ve set up a storefront on Bookshop in the United States and the United Kingdom. Links to Bookshop and Amazon may generate referral fees.

Cautionary Tales – Houdini: The phone call from the coffin (Part 3)

Fearing for his life, Harry Houdini leaves secret codes with his loved ones that he promises to use in any post-mortem messaging. In 1926, Houdini’s death shocks the world, but the news that follows is even more astounding. A report of the impossible: contact has been made.

This is the final part in a three-part series. 

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Further reading

Our three episodes on Houdini rely on books including The Secret Life of Houdini: The Making of America’s First Superhero, by William Kalush and Larry Sloman; The Life and Afterlife of Harry Houdini, by Joe Posnanski; Houdini & Conan Doyle: The Great Magician and the Inventor of Sherlock Holmes, by Christopher Sandford; Final Seance: The Strange Friendship Between Houdini and Conan Doyle, by Massimo Polidoro; and the enthusiastically titled Houdini!!!: The Career of Ehrich Weiss – American Self-Liberator, Europe’s Eclipsing Sensation, World’s Handcuff King & Prison Breaker – Nothing on Earth Can Hold Houdini a Prisoner!!!, by Kenneth Silverman.

Houdini’s book A Magician Among the Spirits is available on Project Gutenberg. Helpful additional details came from the Wild About Houdini website. 

Newspaper columns written by Rose Mackenberg are collated in the book Houdini’s “Girl Detective”: The Real-Life Ghost-Busting Adventures of Rose Mackenberg, with an introduction by Tony Wolf. See also Rose’s obituary in the New York Times. 

The transcripts of the Congressional hearings are available online. The research referenced in the second episode is From beyond the grave: the legal regulation of mediumship by Steve Greenfield, Guy Osborn and Stephanie Roberts, published by Cambridge University Press.

Milbourne Christopher’s book Mediums, Mystics, and the Occult contains a helpful account of Arthur Ford’s career.