Think Like a Freak

by Steven D. Levitt

Sometimes in life, going straight up the middle is the boldest move of all.

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.

The conventional wisdom is often wrong. And a blithe acceptance of it can lead to sloppy, wasteful...

Correlation does not equal...

When people don’t pay the true cost of something, they tend to consume it inefficiently.

It has long been said that the three hardest words to say in the English language are I love you. We heartily disagree! For most people, it is much harder to say I don’t know. That’s a shame, for until you can admit what you don’t yet know, it’s virtually impossible to learn what you need to.

“Everyone’s entitled to their own opinion but not to their own facts.”)

ultracrepidarianism, or “the habit of giving opinions and advice on matters outside of one’s knowledge or competence.”

If the consequences of pretending to know can be so damaging, why do people keep doing it? That’s easy: in most cases, the cost of saying “I don’t know” is higher than the cost of being wrong—at least for the individual.

Every time we pretend to know something, we are doing the same: protecting our own reputation rather than promoting the collective good.

The key to learning is feedback. It is nearly impossible to learn anything without it.

“the entire awards program was really just an advertising scheme.”

All of us face barriers—physical, financial, temporal—every day. Some are unquestionably real. But others are plainly artificial—expectations about how well a given system can function, or how much change is too much, or what kinds of behaviors are acceptable. The next time you encounter such a barrier, imposed by people who lack your imagination and drive and creativity, think hard about ignoring it. Solving a problem is hard enough; it gets that much harder if you’ve decided beforehand it can’t be done.

Mark Twain once wrote: “[T]he best way to increase wolves in America, rabbits in Australia, and snakes in India is to pay a bounty on their scalps. Then every patriot goes to raising them.”

You’ve been at it for a while now, whatever the “it” is—a job, an academic pursuit, a business start-up, a relationship, a charitable endeavor, a military career, a sport. Maybe it’s a dream project you’ve been working on for so long you can’t even remember what got you all dreamy in the first place. In your most honest moments, it’s easy to see that things aren’t working out. So why haven’t you quit? At least three forces bias us against quitting. The first is a lifetime of being told by Churchill wannabes that quitting is a sign of failure. The second is the notion of sunk costs. This is pretty much what it sounds like: the time or money or sweat equity you’ve already spent on a project. It is tempting to believe that once you’re invested heavily in something, it is counterproductive to quit. This is known as the sunk-cost fallacy or, as the biologist Richard Dawkins called it, the Concorde fallacy, after the supersonic airplane. Its two patrons, the British and French governments, suspected the Concorde was not economically viable but had spent too many billions to stop. In simpler times, this was known as throwing good money after bad—but money is hardly the only resource that people toss into the sunk-cost trap. Think about all the time, brainpower, and social or political capital you continued to spend on some commitment only because you didn’t like the idea of quitting. The third force that keeps people from quitting is a tendency to focus on concrete costs and pay ...

When failure is demonized, people will try to avoid it at all costs—even when it represents nothing more than a temporary setback.