Skip to content

Stephen Dubner, co-authour of Freakonomics, is a pillock.

23 February, 2011

Rant alert.

As someone who regularly has to explain that they’re studying economics, you regularly get reminded of the existence of best-selling popular economics book Freakonomics. You get used to people confessing a shaky knowledge of economics (I don’t blame them) or even of what economics is supposed to mean (many economics students also struggle with this question, until a ready-made answer is drilled into them effectively enough that they can stop being troubled by the question).

Anyway, the obligatory confession is often followed by a hopeful mention of a book they have read: Freakonomics [1]. Although this is invariably done with the best of intentions, I equally invariably find myself wondering why I don’t pose as an anthropology student or something. The same incomprehension would take place, but at least people wouldn’t associate me with pillockonomists like Stephen Dubner, who clog up the telly with their asinine analysis and recommendations.

The present rant about Dubner was provoked by his appearance on Channel 4’s 10 O’Clock Live, a daring show that does a half-decent job of mixing comedy with some speaking of truth to power (even if the live studio audience is incredibly irritating and David Mitchell has a propensity to choke and fail to recall the key word “sanctions” when Alasdair Campbell praises our occupation of Iraq for recucing the Iraqi child mortality rate — see episode 2). A show like 10 O’Clock Live desperately needs economists who will point out, for example, that sovereign states are not budget-constrained in the way that people in the audience are. Or in the way that the presenters are, for that matter — Mitchell keeps coming out with stuff like (discussing governments backtracking on policy and the effectiveness or otherwise of protest) “what if you have a situation where thousands of people are protesting against high taxes…and thousands of other people protesting against cuts…and then the government backtracks and has to cut taxes AND increase public services and then we all go bankrupt!” He’s never heard that a country such as the UK, which issues its own currency and does not peg its exchange rate, can never go bankrupt. Which is unfortunate, since his scathing critiques of government policy tend to stop short when this fallacy of the governmental budget constraint rears its ugly head.

Instead of helpful economics mythbusting, we get Stephen Dubner propagating the deranged worldview of the neoclassical economics profession, in which all the world’s ills (and goods, for that matter) are to be explained with reference to the personal incentives of the individuals involved. Hence he expresses amazement that anybody at all bothers to vote, since they gain nothing from doing so. Dubner, with a straight face, suggests that voters should be entered into a lottery with a prize fund of £5 million. (“Voting on a scratchcard,” quips a mildly incredulous Jimmy Carr). In the USA, Dubner explains, elections don’t even take place on public holidays (not that they do over here either, Steve), so people have to take time off from their jobs in order to vote, which means you end up with “the wrong sort of people” voting.

Yep, those were his words. Perhaps it would be better, Steve, if people’s votes were weighted according to their hourly wage, so that “the right sort of people” decided elections? Perhaps this is a quirk of live TV — that these kind of associations between $ earned per hour and civic worth, normally hidden just below the surface of the rhetoric of economists such as Dubner, surface in special moments such as these.

Dubner’s approach is basically the same “New Political Economy” approach that infects most of neoclassical economists’ theorising about politics. [2] Politics, like everything else, is to be analysed in terms of the incentives of the individual actors involved. In other words, the methods of neoclassical economics are to be applied in every field. So the ills of politics are to be explained exclusively by the fact that politicians seek re-election above all else.

Dubner’s proposal is to design “better” incentive structures for politicians, so that they receive a fat check after a long period if their policies are measured as successful over that long period. This strategy of designing incentive structures is exactly the sort of thing that failed so spectacularly in the NHS and education system under New Labour. As shown by Adam Curtis in “The Trap”, it led to the wheels being taken off hospital trollies so they could be re-designated as beds, corridors being re-designated as wards, and “hello-nurses” going around just saying hello to patients so that they could be ticked off as being “seen”, all so that targets could be met, carrots won and sticks avoided. The method of incentives-structuring also led to an increase in teachers helping their children to cheat on tests,  because these teachers were so heavily incentivised and measured on the basis of test-results — something that Dubner should know all about, since teacher fraud occupied a whole chapter in Freakonomics. What he and his ilk never seem to realise is that policies based on the neoclassical worldview end up incentivising the very corruption that they seek to alleviate, since the agents they are attempting to control tend to find ways of “gaming the system” much more quickly than their incentivisers notice the loopholes. They would do well to familiarise themselves with the SNAFU principle.

Imagine for a moment the colossal damage that could be done by politicians gaming the system imagined and advocated by Dubner. We have enough of that sort of thing already (Tony Blair walking straight from government to the payroll of J.P. Morgan is only one of the most prominent and historically recent examples, there are many others), without the possibility of a fat check to be won down the line if certain statistical targets can be met, by hook or by crook. Hey, it’s not as if employment and inflation statistics aren’t already calculated differently depending on the political purpose…

Notes.

[1] Freakonomics, incidentally, was also recommended to my undergraduate cohort as light
“bedtime reading” at the beginning of our first year.]

[2] This is not to be confused with the “Classical Political Economy” approach, which treats politics
and the economy as an inseparable whole, and starts with social institutions rather than atomised
individuals.

Advertisements
3 Comments
  1. 25 February, 2011 3:29 pm

    I should probably comment on this a little bit….

    \begin{rant}

    I watched that on tele and was shouting at Dubner. He’s not an economist. As much as he might think that Levitt’s economist roots may have rubbed on him. He’s just simply a journalist.

    Now, the bullshit he was spouting on voting is straight from the Public Choice literature. Which again, is the result of mathematical fetishism.

    In terms of politicians, it is quite a crock of shit that they need incentive correction. They already game the system that exists. Surely if anything I would much rather see them barred from joining the private sector for at least a decade since they leave power. I should probably clarify before I get crucified (oh poor political classes unable to work) They should be banned from working for the following: PR firms, Lobbying groups, etc. This is due to the inherent power which an ex-politician still wields. (i.e. Blair, etc)

    Indeed, much of the core of politics is, in fact, gaming the system. That is what we could say the value of having a politician on the payroll means. “Whilst in office they created loopholes, or saw how to best game the system, thus now they are private individuals these should help us lobby better, plus they have political clout within their party to further benefit us in legislative terms” one could imagine a lobbyist saying to themselves.

    \end{rant}

  2. michaeljhamilton permalink*
    26 February, 2011 4:37 pm

    Ah! I’d forgotten that one of the Freaky Steves was a journalist, not an economist. Yet 10 O’Clock Live announces him as an economist! A man with no formal training in economics whatsoever. Which raises the question: where did he imbibe his faith in neoclassical dogma? As you rightly point out, the man speaks like a fully qualified and paid-up Public Choice economist. Did he just get all this from Levitt?

    From wikipedia:
    ‘Steven David “Steve” Levitt (born May 29, 1967) … is currently the William B. Ogden Distinguished Service Professor of Economics at the University of Chicago, director of the Becker Center on Chicago Price Theory at the University of Chicago Booth School of Business, and co-editor of the Journal of Political Economy published by the University of Chicago Press.’

    A centre at Chicago named after Gary Becker (famous for analysing any and all facets of social life, including marriage, in terms of personal incentives). Explains a lot. Freakonomics turns out to be a highly effective piece of Chicago propaganda.

Trackbacks

  1. More on incentives, debunking Freakonomics bullshit « Economics Braindump

Comments are closed.

%d bloggers like this: