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People Aren’t Dumb, the World Is Hard

freakonomics.com

151–160 of 453 posts

Re: People Aren’t Dumb, the World Is Hard

#151

We’re dumb in comparison to the systems we’ve created. Increasingly, the disparity between what our technology is capable of and our own limitations as animals will become a pressing issue. One thing that always bothers me is how we have this myth of personal responsibility that supposes an individual is equipped to defend their own interests against a multinational corporation on their own. “Well I just don’t get wh…

"One thing that always bothers me is how we have this myth of personal responsibility that supposes an individual is equipped to defend their own interests against a multinational corporation on their own." 1. Our wiring isn't perfect, but who is better equipped to defend a person's interests than the individual themself? Serious question. 2. I don't think the "power" and coerciveness of multinational corporations is…

"1. Our wiring isn't perfect, but who is better equipped to defend a person's interests than the individual themself? Serious question."

Someone who actually knows something about the topic in question? It is highly in the interests of any person to have both a plentiful and safe food supply, and safe, breathable air and safe, drinkable water. Pesticides constantly straddle this line; how much pollution is acceptable for food production, but still leaving the air and water safe? Do you honestly expect any random person to be able to make the correct choice in that situation? No. That's why we have experts in that field which study the effects of these chemicals, and the impact they have on the environment, and come to the conclusion of what's safe or not.

Another similar issue: One's actions do not exist in a vacuum. There's a recent story of some farmers spraying a certain herbicide to protect their crops from pigweed. However, not every farmer in the area is using it, or the herbicide resistant crops. The thing about spraying is that it goes in the air, and tends not to recognize property lines. The herbicide kills the crops on the neighboring farms. So while the original farmer who sprayed acted in their individual interest, they most definitely did not act in the interest of society in general, and clearly not in the interest of their neighbors.

"I don't think the "power" and coerciveness of multinational corporations is anywhere near that of government, which people bashing corporations usually want to make larger and more powerful."

No, we just want government to actually act in people's interests.

"As Diedre McCloskey says, what happens if you are morally opposed to some new fighter jet or corporate subsidy, and unilaterally decide to pay fewer taxes because of it? The answer is you go jail."

Yes, you broke the law, and so you must face the consequences. And unless you're Al Capone, you're not going to jail. Please stop parroting this ridiculous argument.

"What happens if you choose Samsung or an Iphone? "

What happens if you stop paying the balance on your Samsung phone because you switched?

"Further, in time, many corporations correctly view these irrationalities as market opportunities and actively work on helping consumers combat them."

I have huge doubts that many of them do this, and I have huge doubts that they are effective in this.

Re: People Aren’t Dumb, the World Is Hard

#152
post #135

This is probably the greatest argument for big government. If we were to eliminate the supervision of the establishment over the safety and security of everyday life, it would be very time consuming to handle every single aspect of it. There is always the issue of an overreaching government, and that's where the left/right party split comes in. Each party either creates more regulation and protection or take some awa…

No, this is one of the greatest arguments for small government or no government. People are more rational when the cost to them of being irrational is larger. Voting for good policies is a public good. When a voter is one among three hundred millions of citizens, only 1/300,000,000 (on average) of the benefits of the vote befall the individual voter. This gigantic externality means that the democratic market will sev…

> Voting for good policies is a public good. When a voter is one among three hundred millions of citizens, only 1/300,000,000 (on average) of the benefits of the vote befall the individual voter.

Typically, voting results are highly skewed towards 50/50, say in most elections in democratic regimes with fair elections. This was the case for Brexit or the popular vote in the US 2016 election for instance.

For an election whose expected result is close to 50/50, each voter is highly influential; intuitively, if all but one voter are decided and produce a 50/50 draw, the last undecided voter has complete power. Since a lot of fair elections are approximately 50/50, undecided voters have far better influence than 1/300,000,000 for a population of 300,000,000.

In an approximately 50/50 election with few undecided voters, it is quite cheap to swing the results by bombarding the few undecided voters with ads.

Mathematicians use this concept coined "influence" of a variable, or "influence function" to analyze properties of random boolean functions in percolation for instance.

Re: People Aren’t Dumb, the World Is Hard

#153

An interesting bit from the article was that he talks about 'sunk cost' with the defining example of ordering a dessert when you're nearly full and feeling compelled to finish it. > There was an economist once early in my career who said to me, “You know, if you’re right, what am I supposed to do? What I know how to do is solve optimization problems.” A career economist not wanting to change their ways because they h…

My understanding with Kodak is that they invented digital tech far earlier than expected (pre 80s) and hushed it to avoid cannibalizing their existing film business.

I suspect Blockbuster behaved similarly. It's hard to kill the golden goose.

Still examples of the sunk cost fallacy, for sure, but it feels like "lack of realization" is perhaps the wrong attribution.

Re: People Aren’t Dumb, the World Is Hard

#154
post #140

Earlier quoted context omitted.

This is what happens when engineers receive very little formal liberal arts education. Cringe.

My experience with liberal arts education is that it teaches you how to talk and what to say, but not how to think.

That's the anti-college talking point that republicans like to preach to the uneducated masses. It's absolutely designed to devalue what is actually being taught in higher education, allow for the easy dismissal of soft sciences. And once you can dismiss soft sciences, you can certainly dismiss the hard sciences with guilt by association.

I earned my CS degree from a liberal arts college and took my share of liberal arts classes. But the name doesn't directly infer a political slant - there isn't an indoctrination that the right would like to say happens. Certainly some departments will have slants to them (women's studies, african american studies, etc.) but that doesn't mean that the scientific method gets forgotten at the door. Research still gets done and still gets reviewed. Certainly moreso than what happens on Fox News.

Re: People Aren’t Dumb, the World Is Hard

#155
post #73

Earlier quoted context omitted.

Politicians and civil servants are subject to behavioral concerns too. Who will watch the watchmen?

it doesn't have to be an endless hierarchy of people looking over one another. For example, we could watch the people that watch us.

Yes, that's basically democracy in a nutshell.

Re: People Aren’t Dumb, the World Is Hard

#156
post #135

This is probably the greatest argument for big government. If we were to eliminate the supervision of the establishment over the safety and security of everyday life, it would be very time consuming to handle every single aspect of it. There is always the issue of an overreaching government, and that's where the left/right party split comes in. Each party either creates more regulation and protection or take some awa…

No, this is one of the greatest arguments for small government or no government. People are more rational when the cost to them of being irrational is larger. Voting for good policies is a public good. When a voter is one among three hundred millions of citizens, only 1/300,000,000 (on average) of the benefits of the vote befall the individual voter. This gigantic externality means that the democratic market will sev…

> People are more rational when the cost to them of being irrational is larger.

This isn't strictly true, and I'd love to see you provide extensive data on such a exceptional claim.

There is a lot of evidence showing that harsher punitive measures often have little to no impact on crime and wrongdoing.

Re: People Aren’t Dumb, the World Is Hard

#157
post #56
post #43

Earlier quoted context omitted.

And many of our problems are collective action problems: where it makes sense for individuals to defect on their own, and they can only raise the standard for the group if they act together. At different scales this means unionization and professional organizations, government regulation, and international regulation, to prevent whole countries from defecting - this is in large part what the EU is about, and a signif…

As I see it, the corruption challenge of collective action is because it is so often not carefully, purposefully structured. Government is constructed with the express purpose of checking power. I read a bit I liked a while back about early feminism, in which members rejected wholesale the idea of power structures & authority, and established no authority. The author relates, however, that the power vacuum was natura…

>I read a bit I liked a while back about early feminism...

Link (and second recommendation) for the curious:

https://en.wikipedia.org/wiki/The_Tyranny_of_Structurelessne...

Re: People Aren’t Dumb, the World Is Hard

#158

This is probably the greatest argument for big government. If we were to eliminate the supervision of the establishment over the safety and security of everyday life, it would be very time consuming to handle every single aspect of it. There is always the issue of an overreaching government, and that's where the left/right party split comes in. Each party either creates more regulation and protection or take some awa…

My preferred solution for governance problems is basically to have smaller governing units (nations/states/districts). this gives people better representation and is pretty effective in managing the 'tyranny of the majority'. considering the environment in US today the majority is essentially 51%. Now if one considers how bi-polar favorite policies for each side has become, it (mandate) is nowhere near enough to justify forcing their views on the other 49%.

The subtle mechanism behind most problems in public policy today is collapsing of decision tree into just one yes or no answer (red/blue) that IMO is killing the nuanced policy development (or more accurately used by politicians to do whatever half-aed measures they can come up with). having smaller units also help with even more meta-manipulations like gerrymandering so prevalent in US. if we want to hold congress accountable for their constituents this is pretty much the only sustainable path to it. Until this happens IMHO most good policies will continue to be lost in poor/unimaginative implementation.

ref: https://mises.org/wire/us-should-have-10000-members-congress

Re: People Aren’t Dumb, the World Is Hard

#159

Having worked front line technical support, I have to disagree. People are indeed dumb, many choose to stay that way.

It’s as if a person working in geriatric care claimed thet people are old. I rarely call or contact the support, the though of being treated as a dumb person make me solve the problem myself of abandon the service/product instead.

Re: People Aren’t Dumb, the World Is Hard

#160

This is probably the greatest argument for big government. If we were to eliminate the supervision of the establishment over the safety and security of everyday life, it would be very time consuming to handle every single aspect of it. There is always the issue of an overreaching government, and that's where the left/right party split comes in. Each party either creates more regulation and protection or take some awa…

I don't think economists agree with the concept of Big Government. Here's an entertaining back and forth between Thaler and Gene Fama about the efficient market theory [1]: > Q: So policy makers should use bubbles as a way to step in? > Thaler: Yes, but very gently. It’s not like I think policy makers know what’s going to happen, but if they see what looks disturbing, they can lean against the wind a little bit. That…

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