(Photo: Neven Mrgan)

In our podcast “Waiter, There’s a Physicist in My Soup!,” we talked to  Pablos Holman at Intellectual Ventures about food printers (we’ve also blogged about organ printers and meat printers). Now NASA is funding an Austin, Tex., company that is working on a pizza printer. From CNET:

Systems and Materials Research recently received a $125,000 grant from NASA to make a pizza. OK, it’s a little more complicated than that. Contractor already created a proof-of-concept printer that can print chocolate onto a cookie. His next goal is to print out dough and cook it while printing out sauce and toppings.

Contractor isn’t just planning to use cartridges full of red sauce, but rather the building blocks of food products. Cartridges full of powders and oils could be combined to make different foods. These cartridges would have extremely long shelf lives, making them appropriate for feeding astronauts during long-distance space travel.

“The way we are working on it is, all the carbs, proteins and macro and micro nutrients are in powder form. We take moisture out, and in that form it will last maybe 30 years,” Contractor told news site Quartz in an article posted Tuesday.

(HT: Jeff Mosenkis)

• “A study of women in the United States found that homeowners were no happier than renters, on average. And even if you’re currently living in a cramped basement suite, you may find that moving to a nicer home has surprisingly little impact on your overall happiness. Researchers followed thousands of people in Germany who moved to a new home because there was something they didn’t like about their old home. In the five years after relocating, the residents reported a significant increase in satisfaction with their housing, but their overall satisfaction with their lives didn’t budge.”
• “[D]ozens of studies show that people get more happiness from buying experiences than from buying material things. Experiential purchases — such as trips, concerts and special meals — are more deeply connected to our sense of self, making us who we are. And while it’s anyone’s guess where the American housing market is headed, the value of experiences tends to grow over time, becoming rosier in the rearview mirror of memory.”

(Photo: Drathus)

Digital rights management, or DRM, is a set of technologies used to control piracy. An example is the “Fairplay” system that Apple used until recently on most songs sold in its iTunes store. Fairplay was a set of digital locks that blocked certain uses – for example, a song could be played only on up to five authorized computers. As you might imagine, DRM has been controversial, at least among some people who want to make uses of content they’ve purchased – like making a back-up copy, or copying small portions of a work for fair use purposes. Music DRM once involved the installation – without users’ knowledge — of a particularly malicious bit of software that modified, and sometimes broke, the operating systems of customers’ computers.  That strategy imploded amidst government investigations, class-action lawsuits, and a storm of terrible publicity. In contrast, e-book DRM has been nowhere near as controversial, or ineffective. Still, the fact remains that many DRM-haters exist.

Given this, the question is occasionally raised whether DRM prevents enough piracy to make it worthwhile for a content distributor to annoy some of its customers.  The dominant view is that without DRM, e-books are liable to be distributed for free over file sharing networks and this will lead in turn to reduced author and publisher profits and falling production of books. But some suggest that DRM makes little difference, and publishers would do well to get rid of it. Those who can afford to buy books, songs, films, etc., don’t pirate them. Those who pirate aren’t otherwise going to buy.

So which view is right? We now have an interesting bit of evidence on that point. It comes from Tor Books, a science fiction and fantasy publisher based in Britain, but with a substantial U.S. presence.  Tor announced in April 2012, just over a year ago, that it was removing DRM from its e-books.  This was a big deal in the world of DRM-haters. Now, one year later, Tor has announced that the experiment had largely been successful – that is, Tor sees little evidence of increased piracy of their e-books following the removal of DRM — and that the publisher will be keeping its e-books DRM-free. The significance of this experiment is a little unclear—sci-fi readers, Internet geeks, and DRM-haters are three groups that overlap more than a little—but nonetheless, it is an interesting move for a fairly large publisher. In Tor’s words: 

For our particular readership, we felt it was an essential and fair move. The genre community is close-knit, with a huge on-line presence, and with publishers, authors and fans having closer communication than perhaps some other areas of publishing do. Having been in direct contact with our readers, we were aware of how frustrated many of them were by DRM. Our authors had also expressed concerns at the restrictions imposed by the copyright coding applied to their ebooks. When both authors and readers are talking from the same page, it makes sense for the publishers to sit up, listen and take note—and we did!

Take note of something Tor has said here – the sci-fi genre community is “close-knit”, at least relative to the broader community of book readers. This is important, because a relatively small community with members that communicate with one another is more likely to follow anti-piracy norms  – that is, informal rules against piracy — than is a bigger, more diffuse community. So if Tor gives its readers freedom, but asks them to respect authors’ interests, its readers are more likely to obey – at least if Tor and its authors remain in readers’ good graces.

When we made the announcement there was an immediate reaction from the media. The Guardian explained how ‘Tor rips up the rulebook on digital rights management’ and the BBC featured a long article with arguments from both sides, drawing links with the music industry’s experience of the transition and highlighting that “the key difference with the music business is that the book trade can see what mistakes the record labels made and avoid them.”

If you’re going to get rid of DRM, you might as well enjoy some good press. And Tor has. 

But the most heartening reaction for us was from the readers and authors who were thrilled that we’d listened and actually done something about a key issue that was so close to their hearts. They almost broke Twitter and Facebook with their enthusiastic responses. Gary Gibson, author of The Thousand Emperors tweeted: “Best news I’ve heard all day.” Jay Kristoff, author of Stormdancer, called it “a visionary and dramatic step . . . a victory for consumers, and a red-letter day in the history of publishing.”

China Miéville called the decision “a game changer” and long-time anti-DRM author and blogger Cory Doctorow praised the decision on both the Guardian Technology Blog and boing boing, the blog he co-edits: “I think that this might be the watershed for e-book DRM, the turning point that marks the moment at which all e-books end up DRM-free. It’s a good day.”

And Charles Stross, author of the Merchant Princes series, recently said “I’m happy to see that Tor have gone DRM-free with their e-book editions. DRM doesn’t impede pirates, but it subjects honest customers to a monopoly tightly controlled by the owners of the DRM software, reducing readers’ freedom and hampering competition.”

We had readers contact us directly explaining how “DRM is anti-customer” and how pleased they were by this “forward thinking step.”

The move has been a hugely positive one for us, it’s helped establish Tor and Tor UK as an imprint that listens to its readers and authors when they approach us with a mutual concern—and for that we’ve gained an amazing amount of support and loyalty from the community. And a year on we’re still pleased that we took this step with the imprint and continue to publish all of Tor UK’s titles DRM-free.

Well, whether DRM impedes pirates or not is precisely the relevant question. Tor says they haven’t noticed any increase in piracy of their e-books following the removal of DRM. They are, however, cagey about how they know this.  Probably it’s a combination of their sales projections being met, and also not seeing increased traffic in their books on notorious filesharing sites.  As a rough-and-ready measure of piracy, that’s probably pretty good, although by no means definitive. The bottom line is that a lot more data is needed.  Tor hasn’t experienced an apparent increase in piracy – would the same be true for a general-interest publisher? For a children’s book publisher? For a college textbook publisher? And what about other forms of media that are currently subject to DRM? Tor’s experience is a useful first step. Are there any other companies out there who currently use DRM but are willing to remove it and see what happens?

(Photo: Alex Starr)

Writing at Slate, Ray Fisman reviews the latest research on the efficacy of charter schools.  The study focuses on students at six Boston schools that had previously demonstrated an ability to improve students’ test scores on the Massachusetts Comprehensive Assessment System.  This time, however, the researchers wanted to evaluate whether the schools really improved student outcomes or just mastered the art of “teaching to the test.” Here’s the breakdown:

The study examines the college readiness of Boston public school students who applied to attend the six charter schools between 2002 and 2008, with projected graduation dates of 2006–2013. In just about every dimension that affects post-secondary education, students who got high lottery numbers (and hence were much more likely to enroll in a charter school) outperformed those assigned lower lottery numbers. Getting into a charter school doubled the likelihood of enrolling in Advanced Placement classes (the effects are much bigger for math and science than for English) and also doubled the chances that a student will score high enough on standardized tests to be eligible for state-financed college scholarships. While charter school students aren’t more likely to take the SAT, the ones who do perform better, mainly due to higher math scores.

The upshot of this improvement in college readiness is that, upon graduation, while charter and public school students are just as likely to go on to post-secondary education, charter students enroll at four-year colleges at much higher rates. A four-year college degree has historically meant a better job with a higher salary, making a spot in one of Boston’s charter schools a ticket to a better life for many students. (We’ll presumably know in a few years whether things actually turn out that way in the longer run for the cohort the researchers are following.)

Across the past year, though, there was hope that the NBA was returning to the Emerald City.  Sure the team was the Kings, a team that has lost at least 65 percent of their regular season games in each of the past five seasons. But if the Kings came to Seattle, other NBA teams would have to come as well (hey, the Kings-SuperSonics have to play someone).  And since the prospective owners (a group led by Chris Hansen) of the “Seattle Kings-Supersonics” offered a purchase price equivalent to an enterprise value of $625 million – more than anyone else (and more than anyone has ever offered for an NBA team) – it seemed likely that in a market economy (where the highest bidder tends to get the product) that the NBA was coming back to Seattle.

Unfortunately, Seattle learned this past week that the NBA doesn’t quite follow the rules of a market economy.  For Seattle to get the Kings, the other 29 owners had to approve the deal.  And when the dust settled, a majority of those owners thought an inferior bid from another group that wanted to keep the team in Sacramento was preferred.  Consequently, Seattle has been frustrated again.

Why did the owners prefer to keep the Kings in Sacramento?  Well, it is a bit difficult to figure out the owners’ motivation.  It is possible that the owners really prefer franchise stability.  And given that preference, it seems obvious the owners would want the Kings in Sacramento. 

Of course, just a few years ago the owners allowed the Seattle SuperSonics to depart for Oklahoma City.  And the New Jersey Nets just moved to Brooklyn.  So franchise relocations are not exactly uncommon in the recent history of the NBA.

And that brings us to a more cynical view (and economists love to be cynical!).

Here is how Ira Boudway of Bloomberg BusinessWeek described the owners’ motivation.

More than anything else, the Sacramento saga is about public funding for arenas. The NBA, like the NFL and MLB, wants to reward cities that help pay and punish those that don’t. Seattle lost its team in 2008 because it refused. When Sacramento Mayor Kevin Johnson came up with a promise to secure $258 million in public funds for a new arena, the league felt bound to keep up its end of the deal. “You’ve got to match the offer, have a building, and get a good ownership group that can make it happen, and it happened,” Commissioner David Stern said at the press conference yesterday. The Kings, of course, already have a building. Stern meant a new building, replete with lots of luxury boxes subsidized by taxpayers.

So the NBA, according to Boudway, chose the Sacramento offer because it wishes to continue the flow of public funds to the NBA. As Robert Baade and Victor Matheson note, in the past 20 years we have seen more than $3 billion of public money spent on NBA arenas. Consequently, Hansen’s offer might have been crippled by the fact Seattle’s arena did not require any public funding that wasn’t generated directly by the new arena (and the fact that Seattle lost its team back in 2008 because it did not provide public funding for a new arena).

It is really not possible to know if the NBA owners are keeping the Kings in Sacramento because of how Sacramento funding its arena. What we do know is that for Seattle to get a team in the future, the owners in the NBA are going to have to bless such a move. And that is because the NBA is really a command economy.

There is, though, a different approach (as I once discussed in this forum in 2011).   Consider how Cardiff City and Kingston upon Hull have acquired an English Premier League (the top division in English soccer) team for the 2014 season.  Each city had a team in the Football League Championship league (the second division in English soccer).  And when these teams finished first and second in 2013, Cardiff City and Hull City were promoted to the English Premier League (the winner between Watford and Crystal Palace on May 27^th will yield a third promoted team).

To make room for these teams, Wigan, Reading, and Queen Park Rangers will be relegated from the Premier League. This is what losers get in the English Premier League.  Losers don’t get draft picks or revenue sharing.  Losers in the English Premier League are punished, as losers in any competitive market system tend to be treated. 

The mobility in this system is quite interesting.  Stefan Szymanski, co-author of Soccernomics (both the book and the blog),  graciously provided data on what teams were in the top four divisions of English soccer since 1960 (as noted, the names of these divisions has changed over time).  What follows are all the teams who have played at least one season in each of these divisions in the past 53 years. 

*- these are the current names of these divisions.  Over time, the divisions in English soccer have had different names.

The top team on the list – the Wolverhampton Wanders, with 25 seasons in the top division – spent 2013 in the Football League Championship division.  But a poor performance means this team will be playing in League One in 2014.  A similar fate awaits Bristol City (like the Wolverhampton Wanders, Bristol City has also played in each of the top four divisions).

Such a demotion, though, is not a death sentence.  In fact, the above table makes it clear that whereever a team is currently, better performance (or worse performance) can change a team’s league in the future.

It is important to emphasize that all this movement doesn’t require any appeasement of the existing owners in the league.   Teams rise and fall based on their performance on the field of play.  The wishes of the other owners are simply not relevant.

The system of promotion and relegation is seen throughout European sports.  And that means that in European sports, success is rewarded and failure is punished.  Again, much like you would expect in a market system. 

In contrast, the U.S. system rewards failure.  Despite being losers on the court, the Kings sold for a record amount and the team has been rewarded with high draft pick in the 2013 NBA draft.  In addition, the NBA is a command economy where the owners decided which cities get to have teams.  And how much people are willing to spend on a team is not necessarily the deciding factor.

If Phil Jackson is a good judge of owners (and Jackson, with 11 NBA titles, might know something), Hansen has a good chance of being a successful NBA owner.  But despite having the money and desire to purchase an NBA team, Hansen is not going to be allowed to compete in this market.   And that is because the NBA is only about competition on the court (and they don’t have much of that – but that is a story for another day). 

CORRECTION: An earlier version of this post incorrectly stated that Seattle’s arena had 100% private financing. Seattle’s arena proposal stated that taxes generated by the proposed arena would be used for the project.

Our latest podcast is called “Can You Be Too Smart for Your Own Good? And Other FREAK-quently Asked Questions.” (You can download/subscribe at iTunes, get the RSS feed, or listen via the media player above. You can also read the transcript; it includes credits for the music you’ll hear in the episode.) 

In this episode Steve Levitt and Stephen Dubner field questions from podcast listeners and blog readers. (You can listen to earlier FAQ episodes here, here, here, here and here.) In this installment, they talk about circadian rhythms (no, not cicada rhythms) and whether modern life is killing us; the incentives for curing cancer; if you can be too smart for your own good — which leads to a discussion of marriage markets and autism; whether legalizing gay marriage would affect the economy; and why people can be trusted to pay for bagels but not for music.

Once again, thanks for all of the great questions. As Levitt has said before, he really loves doing these FAQs, because …

LEVITT: The questions we get are so strange that you never could have made them up. 

Keep ‘em coming!

DUBNER: Hey Levitt, of all the things that are in your power to do at this very moment in time, what would be your very most favorite thing to do?

LEVITT: If I could be doing anything right now, what would I be doing?

DUBNER: Yeah.

LEVITT: Probably playing golf.

DUBNER: Alright if, let’s say, you can’t play golf what comes next?

LEVITT: Probably sleeping.

DUBNER: If you can’t be playing golf or sleeping what’s third?

LEVITT: Probably being here talking to you.

ANNOUNCER: From WNYC and APM, American Public Media: This is Freakonomics Radio, the podcast that explores the hidden side of everything. Here’s your host, Stephen Dubner.

[MUSIC: Aaron Saloman, “Hip Check”]

DUBNER: Every now and then, Steve Levitt and I ask you, our listeners and readers, to send us your questions. Then we try to answer them on this podcast. We call it FREAK-quently Asked Questions.

DUBNER: I like this question, it will be interesting to know if we can be of any help from David Rossetti. He says, “Is modern life, more specifically, the fact that we no longer follow our circadian rhythm killing us? There are all kinds of rises in diseases, cancer, autoimmune et cetera in developed countries that do not exist in numbers anywhere close to what they have elsewhere in the world. And no one really knows what’s going on. So could simply going to bed when it gets dark and waking up when it gets light reduce billions of dollars in healthcare costs, increase productivity, reduce addictions to alcohol and drugs and depression, et cetera. Levitt, circadian rhythms having to do with rise in diseases, and more broadly then tied to cost and productivity. You know anything about that?

LEVITT: We’re probably not the right people to answer David’s exact question, which is more of a medical question about is there a link between staying up all night and dying of things like cancer. And I do want to challenge his first premise, which is that cancer and heart disease and all those things are way higher in the developed world than in other places. In part it’s because in the developed world we’ve done such a good job of getting rid of the other things that kill you that you’ve got to die of something. So that’s the sorts of things that now kill us are the diseases of senescence, or old age, heart disease, cancer, things like that. But I think being realistic, and not knowing any of the facts, but just guessing, I cannot imagine that working the night shift in terms of life expectancy could take more than a year off your life, I mean maybe two years, but it would be amazing to me if the kinds of things that we’re talking about could matter that much. And my guess is actually that accidents, accidental death is the greatest thing that gets elevated when you work the night shift because you’re just so darn tired all the time that you end up getting into car crashes and falling down the stairs and things like that.

DUBNER: So if you’re saying maybe a year less of life expectancy, compare that for a minute to let’s say an unhealthy habit, whether it’s very poor diet, or let’s say smoking. You think that working the night shift continuously throughout your adult life would have less of a physiological detriment than the others?

LEVITT: That just my, that’s my conjecture. I don’t really know. But whatever it is, what I want to compare it to is the gains that we’ve had in the modern world that in some ways necessitate a bunch of people staying up all night to make it possible for the rest of us to have a great life. And the gains we’ve had in life expectancy over the last hundred years are probably, I don’t know, 35 or 40 years increased from maybe 50 years.

DUBNER: Just about…Yeah, well just about doubled in the U.S. for a U.S.-born male. It about doubled in the last…So rough 38 to 76. But again a lot of that is also hidden in childbirth, death in childbirth, which you know, is still higher in the U.S. than in some countries, but almost went away. And once you get rid of those deaths, it used to be that once you got to middle age you did have a relatively good chance of living longer.

LEVITT: Yeah, absolutely. So I just think that it’s part of modern life that we get tremendous consumption value from being able to be able to, you know, go drive late to Taco Bell and get whatever we want to eat. And if we get sick, the hospitals are open, and that the capital in the factories can be used productively by doing three shifts instead of two. So it’s not perfect. Look, all of us would rather be sleeping when it’s dark and be waking up to the sun and the roosters and stuff like that. But I think that it’s a cost of modernity. And you know, maybe the answer is how do you lower that cost, what can science and technology do to reduce the costs of that kind of thing. And one thing that I think we know is that it’s very difficult to be switching from daytime to nighttime to daytime to nighttime, which is what sometimes they do in police departments and in hospitals. I believe there’s a body of evidence that says you just kind of get used to the night shift if you do the night shift for years and years and years, in a way that moving back and forth is very hard.

[MUSIC: Erik Janson, “One More Time” (from Morning in Paradise)]

DUBNER: Alright, let me ask you this, here’s a question that came in…actually kind of two versions of the same question, one from Steve Adema, Adema, and one from Miguel Sandoval. The one asks, “Is there a hidden cost to intelligence, I feel a lot of people assume wrongly(?) there’s a tradeoff between intellectual and social ability.” And the other fellow asks,  “Can you be too smart for your own good? I’ve heard this used often, however, I tend to disagree that you can be too smart for your own good.” Levitt, you’re a relatively smart guy, have there been instances in your life where you’ve been too smart for your own good, and do you know anything about this more generally?

LEVITT: I can’t say I ever remember being too smart for my own good. I’ve seen other people. And I’ll tell you the biggest thing that happens in academics is that really smart people become convinced that they can trick, not just a single other person, but they can trick everyone at once. I’ve seen it a number of times where the smarter you are, the more you think you can get away with and it ends up being your undoing. The people who are really, really smart actually can run circles around people. But it’s the people who are one notch below the very smartest who I’ve seen get into a lot of trouble by thinking they’re too smart.

DUBNER: What about the related problem of domain transfer, people thinking that because they’re very good or very smart in one arena they kind of develop an attitude of confidence that you know, people talk about this with doctors sometimes, called the God complex. You think that if you can figure something out like the human body you can figure out just about anything. Do you see that?

LEVITT: Oh yeah, that’s what we’re doing right now. Isn’t that what our FAQs are? You and I are good at one thing. You’re good at writing. I’m good at taking a pile of data and making sense of it. And we sit here and talk like we’re good at answering questions about whether we’re smart. I mean, it’s exactly what we’re doing right now. And it’s something that you and I rail against all the time. And we have some fun with it just because we know we’re among friends on the podcast, but the people listening understand that we’re just kind of screwing around when we answer these questions, we’re not really giving the truth. Now, if you go back to that first question about the tradeoff, yeah the social tradeoff. I think there are at least two really good reasons to believe that people who are intelligent will not possess particularly good social skills. And one of those is if I take just the example of math ability, there’s a lot of evidence that autism is a sort of extreme form of “mathiness,” thinking like a mathematician or lke a scientist, and that interferes with the way that you think about people and interact with people. And so I think there are some genetic reasons why being smart in a math way might get in the way of being good with people. I think we’ve all seen some of that. I think the other thing is just what you invest in, right? So when you’re a kid if you’re smart, you invest in the things that smart kids invest in: doing well in school, impressing people, trying to get into college. And if you’re not smart, you make a lot of investment in being social and being the cheerleader type or the homecoming king, and those investments are really important.

DUBNER: That’s interesting. That’s a good point. Let me ask you this though about…I’m curious hearing you talk, I think about gender. So I think two things about gender and smartness. So one is, you know, why is the autism spectrum so much more, why are there so many more males in it than females. I have a friend, Mehmet Oz, Dr. Oz, who I’ve known for a long time, before he was famous, and he’s always been brilliant and kind of great. And he was telling me not long ago that with boys, he puts it the way only a scientist would, there’s a lot less quality control with boys, he said. Right? So for girls who are going to be carrying the next generation, their wiring needs to be kind of further along than boys who can survive in a different way. But it makes me think when you’re talking about the relation between smartness and either success or social ability, you’re answering from the perspective of a male. What about for women? Do you think women are penalized more for being smart or smarter than their peers than men are, and if so, on what dimensions?

LEVITT: Certainly in the marriage market, in the dating market, smart women don’t get rewarded in any way like smart men get rewarded. I think we wrote a little bit about it in Freakonomics, didn’t we, about the dating? And smart men who had a lot of education did quite well, but women who had a lot of education did poorly.

DUBNER: It was hard to tease out the education for women and the income, because both of them were turnoffs for the other men, right?

LEVITT: If you go back to the 1960s and you look at the marriage rate of highly educated women, it was really low. It was shockingly low. That they were…Of all the people in society least likely to be married, it was women who went and got Ph.D.’s. So I think women really do pay the price for, at least historically have paid the price for being too smart and too successful. Although I think that’s…Certainly the data suggests that that’s changing. And that’s my feeling as well that there’s a lot more room for smart women in society today than there was.

DUBNER: Is it that there’s more room for smart women in society or is it the matching markets are better? There are better, easier ways for smart women to find the men that they want to find than there used to be.

LEVITT: Well, it’s certainly true that places like Silicon Valley where it used to be that men who would be, say, computer programmers would marry women they met in college. I think now they’re more likely to marry other women who are computer programmers. So to the extent that men and women are more and more doing the same jobs, I think that that does help very much successful women to meet the kind of men who are equally successful. But that’s also according to some people, including a student of mine, Hays Golden, is one of the reasons why autism is going up. Because the men who are good at math are now much more likely to have babies with the women who are good at math, and that seems to be triggering an increase in autism.

[MUSIC: Niels Nielsen, “We Are Youth” (from Cmon Vultures Part: 1)]

DUBNER: Coming up on Freakonomics Radio: since fighting cancer is big business, what’s the incentive to find a cure?  

LEVITT: So I would say the incentive for a cancer cure is not really a market incentive, it’s a being a hero kind of incentive.

[UNDERWRITING]

ANNOUNCER: From WNYC and APM, American Public Media: This is Freakonomics Radio. Here’s your host, Stephen Dubner.

[MUSIC: Clay Ross, “Sixth City Waltz” (from Entre Nous)]

DUBNER: Here’s a question from someone names Dallas, “Would making marriage legal for the LGBT community improve the economy? Is so, how much?”

LEVITT: Well…

DUBNER: Pass?

LEVITT: No, let’s see…I would say, I don’t think that would have a big impact on the economy for a couple of reasons. First, I think that when you talk about marriage versus not marriage, if all you’re talking about is just everyone has the same relationship you just change the title of the relationship, then maybe you’re talking about having some big weddings, but that to me feels like Keynesian economics, and the idea that if there’s more demand for things that will make the economy better. But I think the modern view of the world, or at least my modern view of the world is that for the economy to be better, you need to be better at making things, right, so that the supply side of the economy, productivity is everything. If we can make workers more productive then we end up being richer. But consumption…Is…You know, if people just consume more stuff, I’m very much of the view that things like stimulus, government stimulus and what not, just aren’t very successful because what you need to do is figure out how to make everybody more productive and produce…

DUBNER: Okay, but let’s talk about let’s say a couple that’s not married that wants to be married and is not able to versus a couple that wants to be married and is able to legally and some of the economic changes that might take places around that. Let’s say healthcare consumption or at least paying for healthcare, how much they’re actually paying. Let’s say taxation, a married couple’s actually going to pay more than two individuals not. Can you imagine any way around those avenues in which it has any kind of real impact, or is it still not much of an issue in your view?

LEVITT: Yeah, it sounds to me a lot like a bunch of transfers. You know, I don’t think that people are going to…They’ll have to make different choices, maybe distort their choices less if they’re married. Let’s take the healthcare market. Now maybe it’s true that because of spousal coverage, people will make a different set of choices, but that seems to me like a crazy way to think about the problem. We have a terrible healthcare system in which employment and healthcare should not be linked. We should fix that problem first and not try to back door it through…

DUBNER: Right, but until we fix, until we fix that problem, at least having it linked to one person in a couple’s employment rather than two, is that an improvement or dis-improvement?

LEVITT: I think that’s a triviality. On issues like this, whether it’s this or abortion, or capital punishment, I mean these are issues that economically are just not very important. I mean it just doesn’t…Capital punishment isn’t very important to crime. And abortion in dollars and cents is not important at all. But they stand for something much, much greater. They represent, you know, what America means, or ideology, or personal rights, or whatever. And the relative importance of the issues of liberty and fairness and things are, have got to be a hundred times bigger than the direct economic impact, so I think it’s just confusing the issue to even talk about economics when these are, these are moral issues not economic issues. That would be my good answer to that question. So skip all that other junk I said.

[MUSIC: Clay Ross, “Sixth City Waltz” (from Entre Nous)]

DUBNER: Levitt, this is interesting, a question from Damon Beaven, or Beaven. “What would be the economic impact of a cheap, readily available cure for cancer?” Here’s the basic scenario he writes, “Imagine that somehow we find a cure for cancer that involves something cheap and simple like drinking a spinach smoothie with every meal for five days. We have entire industries and charities that are geared toward finding cancer cures and treatments. What would be the economic impact of those industries and charities were suddenly out of the business overnight? One reason I ask is because I often argue that there’s no clear market incentive to find a cure for cancer. Treatments are expensive and there are repeat customers.  It’s a nice profit model. A cure would slowly eliminate the customer base for treatment. So other than altruism, where is the incentive for a cancer cure?”

LEVITT: So I would say the incentive for a cancer cure is not really a market incentive, it’s a being a hero kind of incentive. That there are so many doctors out there, researchers, medical researchers who if they could be the one who was forever remembered as the one who prevented cancer, who got rid of cancer, they would do anything to do that. So I think there are really strong incentives out there. And they aren’t exactly market incentives, although I think that person would be quite rich anyway. But incentives that are even more powerful than markets. But on the flip side this is a really important point in economics that many people don’t understand, it is always better to be able to get something for nothing than to have to put real resources into doing it. So any time that we can find a way to get rid of a problem for nothing, we want to do it. So we right now invest enormous resources in trying to fight cancer. But if we didn’t have to spend those resources fighting cancer, we would spend them on something else that people liked. And the world would be a much better place. A good example of this is labor. Let’s say that instead of it taking eight hours for a person to produce, you know, 100 wallets, or whatever their job is, let’s say they could do that in four hours, they could produce 100 wallets, well then they just bought four free hours of leisure. That would be a great thing. The less labor you need, the less capital you need to make something the better. So there’s this crazy Keynesian argument about oh you need people to be busy, you need demand and whatnot, okay but it absolutely, for certain, no doubt about it, if you can suddenly make things for free that used to cost you money, the world is a much better place. Because you just reallocate all the resources you were, “wasting” on solving cancer before, and put them to do something else.

DUBNER: It also makes me think of on a smaller scale, but not insignificant, what happened in this country and elsewhere with polio, right, which is that at one point, even though polio was never that mass of a disease, it was crippling for those who had it, if it didn’t kill them it crippled them, and most of the money was put into treatment. And then there came…And for a long time there was not much thinking about the idea of a vaccine, it wasn’t really the main line of thought. But then it came to be, and then the vaccine mentality took and a vaccine, two vaccines were actually created. So Damon’s question is a little bit like saying, you know, the incentives of the people who make the iron lung are so strong that they will prevent anybody else from actually pursuing a vaccine. But as we’ve seen over and over again, those aren’t the same people and they pursue different paths.

LEVITT: Yeah, I think that’s right. If you compare that more to something more like car seats, I think it is true that right now, the people who make car seats are the same kind of people who might push for other ways to keep kids safe in cars. And there I think there are more obstacles. It’s just the world of medicine the particular pharma companies who make a particular cancer drug have zero control over the thousands of medical researchers who are scattered across the globe trying to solve these problems. So I think you’re exactly right, that there’s no cartel which is blocking the production of a cancer vaccine, it’s just a really hard problem that people are trying to make headway on and not yet succeeding.

[MUSIC: Two Dark Birds, “Run For Daylight” (from Songs for the New)]

DUBNER: Levitt, here’s a question from Marie. She writes, “Since people are genuinely fair and pay for bagels on the honor system…” Okay that’s referring to our bagel study in Freakonomics, we can explain that a little bit more. “…why does this not apply to song downloads? Or do most people pay for music? I do, but my students don’t if they can get it for free from their friends or online. Is the payment on the honor system only for smaller businesses where people feel a personal attachment?”

LEVITT: I think that’s a great point. I think that on these issues of honor it’s very predictable the kinds of factors which make people be honest. One is scrutiny. If you know you’re being watched you’re much more likely to be honest. I think if you believe that the recipient of the money is deserving you very much tend to be honest. And I also think that if you are in settings which in general evoke honesty, like it happens to be inside of a church or a hospital, I think again you’re more likely to be honest. Okay, so how do we compare from the bagels, which have a lot of these features of scrutiny, and the bagel man was a sort of sympathetic character who didn’t have a lot of money, to big business and the downloading of songs. And I think here it’s my impression that there’s an amazing generational break where people who grew up having to pay for music when they were young, people of our generation, Dubner, understand the idea that you should pay for music and it doesn’t seem strange. Whereas, I do think with young people the natural instinct is the internet is a place for free things and that they deserve to get their music for free.

DUBNER: So let me just explain for people the bagel business a little bit. So this was a guy a former economist in the D.C. area who distributed bagels and in some places donuts. The American Diabetes Association office for some reason consumed like half of his donuts, and everybody else mostly wanted bagels. But he would deliver them and put a box out for money. And he would post the price and he would then come back later to collect the money. And it worked. It was an honor system scheme that worked. But I think the key difference is…So a ton of people…So there are all these pay what you wish schemes and honor system schemes that have floated up in the last many years. And I think there are a couple huge differences between them and the bagel story that people don’t get. One is it wasn’t a pay-what-you-wish, the bagel thing. There were prices posted. A bagel costs whatever, a buck, and with cream cheese a buck and a half. So what’s interesting to me about this is not only do a lot of people pay something, but they pay exactly the right price in part because it seems, and we’ve written about this a good bit, that you can really herd people into doing what you want them to do simply by telling them that everybody else is doing it and by kind of setting the parameters. Right Levitt? It seems that people are much more willing than they might think to kind of go along with the herd.

LEVITT: Yeah, that’s absolutely true. But this is also a case of technology where you and I don’t actually know how to steal music.

DUBNER: Well, I do.

LEVITT: Do you know how to steal music?

DUBNER: I do.

LEVITT: Oh, I don’t know how to steal music.

DUBNER: I could teach you.

LEVITT: Ok.

DUBNER: I think the other thing about the bagel story that people miss and they try to apply it to other instances is that he, Paul Feldman, the bagel guy, had some real leverage which was this: if the payment rate from the whole group in a given office fell below a certain amount, he would stop bringing them bagels. And that’s what all these other schemes almost never have. Well they may have it, and it may be a bright line, but you don’t know when you’re getting to it. So if you know that this thing that you want and that’s being offered at a price that you have to contribute a certain amount toward will no longer be delivered to you, a nice warm bagel to your office, then that’s not really as altruistic as people seem to think. And so therefore it doesn’t surprise me that when there’s no leverage exerted that people would steal as much as they can get away with.

[MUSIC: Ruby Velle & The Soulphonics, “My Dear” (from It’s About Time)]

DUBNER: Alright, thank you very much.

LEVITT: Alright, sorry that was terrible.

DUBNER: No that was fine.

LEVITT: It was one of my worst performances in ages.

DUBNER: No there were really good spots. Do you still have 10 minutes or no?

LEVITT: You know, I should probably go in a couple actually.

DUBNER: Alright, I think we’re good. Good job, Levitt.

LEVITT: OK…Great.

[CREDITS]

Denmark, Finland, Japan, Australia, Iceland, Uruguay and Botswana, meanwhile, are all pretty safe bets.

(Photo: Steve Jurvetson)

From the (Saskatoon) Star-Phoenix:

When Jason Childs and his colleagues went about devising a new course in economics at the University of Regina, they wanted to find a focus that didn’t involve the overused and fictitious widget.

What they arrived at was a product that was historic and central to people’s lives – and something most undergraduate students are familiar with: beer.

Childs, an associate professor of economics, said the Economics of Beer course had 80 seats, and they were filled in about two weeks. The course began in early May and finishes near the end of June.

“Basically, it’s an exploration of some economics concepts, in particular microeconomic concepts, and the brewing industry,” he said. “Beer is a really neat example because it allows you to talk about just about every fundamental concept in economics.”

Childs is also interested in the economics of happiness:

Not surprisingly, the economics of beer and happiness are related. For example, in most pubs, people are happy because beer is a good way to celebrate, he said. Childs’ economic view on happiness is that it isn’t tied to wealth but rather to income, because the latter allows you to acquire items that make you happy.

“It’s having that flow – always getting the next thing is what really seems to lead to happiness,” he said.

“Having stuff isn’t happy, getting stuff is – and that’s an important message … It’s the act of acquisition that I honestly believe makes us happy.”

(HT: Mike Meier)

The thing they can’t figure out, however, is what to call the book!  If only my sister Linda – the greatest namer of things the world has ever known — were still around, she would figure out a great title for sure.  In her absence, they’ve asked if I could mobilize the collective genius of you, the Freakonomics blog readers.

Okay, so here is the deal.  Below, I’ve provided some information on the book and links to some materials that might prove useful to you in coming up with a name.  You have two days to generate great titles for the book, which you can submit as comments on this blog post.

The authors will choose their three favorite blog-generated titles.  Those three possible titles, along with the current working title (Our Hidden Motives: The Undiscovered Economics of Everyday Life) will then be subjected to a popularity contest on the blog.  The most popular title will be the winner, unless the publisher hates it.

The creator of the winning title will get $1,000, will be thanked in the book’s acknowledgments, and will have a great cocktail-party story to tell until the end of time.  But to win the prize, you have to beat the working title.

Here is some background information to help you out.

Webpages for Uri Gneezy and John List.

Here is the preface I wrote for the book.

Here is an excerpt from the book that looks at gender differences.

And, finally, the publisher’s description of the book:

Uri Gneezy and John List are trailblazers in one of the greatest innovations in economics of the last fifty years: the use of randomized field experiments to determine whether a relationship between two variables is truly causal or merely correlation. If the relationship is causal we learn something important about the way the world really works 

In their new book Uri and John provide their breakthrough ideas for taking on big, complicated problems, using colorful stories from their travels and experiments around the world as they examine the sensitive hidden aspects of economics. They lead us on a journey to discover the economics underlying human motivation and how to structure the incentives that can get people to move mountains.

But finding the right incentives can be like looking for a needle in a haystack. Like other economists they gather data, and build models but go much, much further, embedding themselves in our messy world – the factories, schools, communities, offices where people live, work and play.

Their goal: to discover solutions to big difficult problems such as how to close the gap between rich and poor students, stop the violence plaguing inner city schools, discover the real reasons people discriminate, see whether women are really less competitive than men and correctly price products and services.

The results of their field experiments will change the way we think about and take action on big and little problems and force us to rely no longer on assumptions , but upon evidence of what really works.

This is economics, not as the dismal science, but the passionate science. Economics as if people matter.