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.

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

Correlation does not equal causality.

A growing body of research suggests that even the smartest people tend to seek out evidence that confirms what they already think, rather than new information that would give them a more robust view of reality.

But running with the herd means we are quick to embrace the status quo, slow to change our minds, and happy to delegate our thinking.

When was the last time you sat for an hour of pure, unadulterated thinking? If you’re like most people, it’s been a while.

“Few people think more than two or three times a year,” Shaw reportedly said. “I have made an international reputation for myself by thinking once or twice a week.”

One thing we’ve learned is that when people, especially politicians, start making decisions based on a reading of their moral compass, facts tend to be among the first casualties.

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

Kids who try to bluff their way through a simple quiz like this are right on track for careers in business and politics, where almost no one ever admits to not knowing anything.

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.

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.”

Questions like these can’t be answered merely by assembling a cluster of facts; they require judgment, intuition, and a guess as to how things will ultimately play out. Furthermore, these are multidimensional cause-and-effect questions, which means their outcomes are both distant and nuanced. With complex issues, it can be ridiculously hard to pin a particular cause on a given effect.

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.

But when it comes to solving problems, one of the best ways to start is by putting away your moral compass.

A moral compass can convince you that all the answers are obvious (even when they’re not); that there is a bright line between right and wrong (when often there isn’t); and, worst, that you are certain you already know everything you need to know about a subject so you stop trying to learn more.

As of this writing, the U.S. homicide rate is lower than it’s been in fifty years. The rate of traffic fatalities is at a historic low, having fallen by two-thirds since the 1970s. The overall suicide rate, meanwhile, has barely budged—and worse yet, suicide among 15- to 24-year-olds has tripled over the past several decades.

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.

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

The first is about problem solving generally. Kobayashi redefined the problem he was trying to solve. What question were his competitors asking? It was essentially: How do I eat more hot dogs? Kobayashi asked a different question: How do I make hot dogs easier to eat?

Thinking like a Freak means you should work terribly hard to identify and attack the root cause of problems.

In recent years, doctors have found fecal transplants to be effective in wiping out intestinal infections that antibiotics could not.

Here’s another cardinal rule of thinking like a child: don’t be afraid of the obvious.

a pure high-nutrition diet can cost as much as ten times more than a pure junk-food diet.

And then there’s the tale of an economist on holiday in Las Vegas. He found himself one night in a bar standing beside a gorgeous woman. “Would you be willing to sleep with me for $1 million?” he asked her. She looked him over. There wasn’t much to see—but still, $1 million! She agreed to go back to his room. “All right then, ” he said. “Would you be willing to sleep with me for $100?” “A hundred dollars!” she shot back. “What do you think I am, a prostitute?” “We’ve already established that. Now we’re just negotiating the price.”

too many philanthropists engage in what Peter Buffett, a son of the über-billionaire Warren Buffett, calls “conscience laundering”—doing charity to make themselves feel better rather than fighting to figure out the best ways to alleviate suffering.

Which means the UN wound up paying polluters millions upon millions of dollars to . . . create additional pollution.

Backfiring bounties are, sadly, not as rare as one might hope. This phenomenon is sometimes called “the cobra effect.”

As 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.”

1. No individual or government will ever be as smart as all the people out there scheming to beat an incentive plan.

2. It’s easy to envision how you’d change the behavior of people who think just like you do, but the people whose behavior you’re trying to change often don’t think like you—and, therefore, don’t respond as you might expect.

3. There is a tendency to assume that the way people behave today is how they’ll always behave. But the very nature of an incentive suggests that when a rule changes, behavior does too—although not necessarily, as we’ve seen, in the expected direction.

1. Figure out what people really care about, not what they say they care about. 2. Incentivize them on the dimensions that are valuable to them but cheap for you to provide. 3. Pay attention to how people respond; if their response surprises or frustrates you, learn from it and try something different. 4. Whenever possible, create incentives that switch the frame from adversarial to cooperative. 5. Never, ever think that people will do something just because it is the “right” thing to do. 6. Know that some people will do everything they can to game the system, finding ways to win that you never could have imagined. If only to keep yourself sane, try to applaud their ingenuity rather than curse their greed.

First, understand how hard persuasion will be—and why.

W]e can be blind to the obvious, and we are also blind to our blindness.”

Kareem Abdul-Jabbar once put it, “It’s easier to jump out of a plane—hopefully with a parachute—than it is to change your mind about an opinion.”

It’s not me; it’s you.

Don’t pretend your argument is perfect.

if you want your argument to be truly persuasive, it’s a good idea to acknowledge not only the known flaws but the potential for unintended consequences.

Keep the insults to yourself.

A spate of recent research shows that negative information “weighs more heavily on the brain,” as one research team put it. A second team makes an even starker claim: in the human psyche, “bad is stronger than good.”

Why you should tell stories.

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