Think Like a Freak

by Steven D. Levitt

it. Furthermore, one advantage the kicker has on a penalty kick is mystery: the keeper doesn’t know where he will aim. If kickers did the same thing every time, their success rate would plummet; if they started going center more often, keepers would adapt. There is a third and important reason why more kickers don’t aim center, especially in a high-stakes setting like the World Cup. But no soccer player in his right mind would ever admit it: the fear of shame. Imagine again you are the player about to take that penalty kick. At this most turbulent moment, what is your true incentive? The answer might seem obvious: you want to score the goal to win the game for your team. If that’s the case, the statistics plainly show you should kick the ball dead center. But is winning the game your truest incentive? Picture yourself standing over the ball. You have just mentally committed to aiming for the center. But wait a minute—what if the goalkeeper doesn’t dive? What

Incentives are the cornerstone of modern life. And understanding them—or, often, deciphering them—is the key to understanding a problem, and how it might be solved. Knowing what to measure, and how to measure it, can make a complicated world less so. There is nothing like the sheer power of numbers to scrub away layers of confusion and contradiction, especially with emotional, hot-button topics.

But under a setup like the U.K.’s, health care is virtually the only part of the economy where individuals can go out and get nearly any service they need and pay close to zero, whether the actual cost of the procedure is $100 or $100,000. What’s wrong with that? When people don’t pay the true cost of something, they tend to consume it inefficiently. Think of the last time you sat down at an all-you-can-eat restaurant. How likely were you to eat a bit more than normal? The same thing happens if health care is distributed in a similar fashion: people consume more of it than if they were charged the sticker price.

All right, so what we “know” can plainly be sculpted by political or religious views. The world is also thick with “entrepreneurs of error,” as the economist Edward Glaeser calls them, political and religious and business leaders who “supply beliefs when it will increase their own financial or political returns.”

When asked to name the attributes of someone who is particularly bad at predicting, Tetlock needed just one word. “Dogmatism,” he says. That is, an unshakable belief they know something to be true even when they don’t. Tetlock and other scholars who have tracked prominent pundits find that they tend to be “massively overconfident,” in Tetlock’s words, even when their predictions prove stone-cold wrong. That is a lethal combination—cocky plus wrong—especially when a more prudent option exists: simply admit that the future is far less knowable than you think.

Has all this study led Lester to some grand unified theory of suicide? Hardly. So far he has one compelling notion. It’s what might be called the “no one left to blame” theory of suicide. While one might expect that suicide is highest among people whose lives are the hardest, research by Lester and others suggests the opposite: suicide is more common among people with a higher quality of life. “If you’re unhappy and you have something to blame your unhappiness on—if it’s the government, or the economy, or something—then that kind of immunizes you against committing suicide,” he says. “It’s when you have no external cause to blame for your unhappiness that suicide becomes more likely. I’ve used this idea to explain why African-Americans have lower suicide rates, why blind people whose sight is restored often become suicidal, and why adolescent suicide rates often rise as their quality of life gets better.”

We asked how they knew this. They whipped out some beautiful, full-color PowerPoint charts that tracked the relationship between TV ads and product sales. Sure enough, there was a mighty sales spike every time their TV ads ran. Valuable feedback, right? Umm . . . let’s make sure. How often, we asked, did those ads air? The executives explained that because TV ads are so much more expensive than print ads, they were concentrated on just three days: Black Friday, Christmas, and Father’s Day. In other words, the company spent millions of dollars to entice people to go shopping at precisely the same time that millions of people were about to go shopping anyway.

He set his sights on the Super Bowl of competitive eating, as the sport is known: the Nathan’s Famous Fourth of July International Hot Dog Eating Contest. For some four decades it has been held at Coney Island in New York City—the New York Times and others have written the contest goes back to 1916, but its promoters admit they concocted that history—and

promoters admit they concocted that history

In recent experiments, scientists have found that even elite athletes can be tricked into improvement by essentially lying to them. In one experiment, cyclists were told to pedal a stationary bike at top speed for the equivalent of 4,000 meters. Later they repeated the task while watching an avatar of themselves pedaling in the earlier time trial. What the cyclists didn’t know was that the researchers had turned up the speed on the avatar. And yet the cyclists were able to keep up with their avatars, surpassing what they thought had been their top speed. “It is the brain, not the heart or lungs, that is the critical organ,” said the esteemed neurologist Roger Bannister, best known as the first human to run the mile in less than four minutes.

what if the fun part of playing the lottery could somehow be harnessed to help people save money? That is the idea behind a prize-linked savings (PLS) account. Here’s how it works. Rather than spend $100 on lottery tickets, you deposit $100 in a bank account. Let’s say the going interest rate is 1 percent. In a PLS account, you agree to surrender a small chunk of that interest, perhaps .25 percent, which then gets pooled with all the other small chunks from fellow PLS depositors. What happens to that pool of money? It is periodically paid out in a lump sum to some randomly chosen winner—just like the lottery!

Backfiring bounties are, sadly, not as rare as one might hope. This phenomenon is sometimes called “the cobra effect.” As the story goes, a British overlord in colonial India thought there were far too many cobras in Delhi. So he offered a cash bounty for every cobra skin. The incentive worked well—so well, in fact, that it gave rise to a new industry: cobra farming. Indians began to breed, raise, and slaughter the snakes to take advantage of the bounty. Eventually the bounty was rescinded—whereupon the cobra farmers did the logical thing and set their snakes free, as toxic and unwanted as today’s HFC-23.

This seems odd, doesn’t it? People with higher science and math scores are presumably better educated, and we all know that education creates enlightened, moderate people, not extremists—don’t we? Not necessarily. Terrorists, for example, tend to be significantly better educated than their non-terrorist peers. As the CCP researchers discovered, so do climate-change extremists.