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The sweatshop dilemma

Every now and then, we remember that there are poor people in the world, and sweatshops become news. Jonah Peretti — the click-accumulating mastermind behind The Huffington Post and BuzzFeed — got his start in viral journalism 15 years ago by baiting Nike with a chain of witty emails requesting that his personalisable Nike trainers be emblazoned with the word SWEATSHOP.

Peretti having moved on to grander projects, the stage storyteller Mike Daisey picked up the baton, delivering a riveting monologue, “The Agony and Ecstasy of Steve Jobs”. It was about Daisey’s heroic unmasking of appalling working conditions in the Chinese factories that make iPads. It made compelling radio when This American Life aired it in 2012. It was even more compelling when This American Life retracted the episode shortly afterwards. Ira Glass, the show’s host, wrote: “Daisey lied to me.”

Economics, of course, offers a less click-worthy perspective. We shouldn’t be surprised if people making sneakers and iPads are paid badly to do tough, hazardous work, because they live in countries where such work is everywhere. And since people are moving away from grinding and precarious rural poverty to work in these grim factories, perhaps they see them as an improvement? The pithiest account of this view comes from the great 20th-century Cambridge economist Joan Robinson: “The misery of being exploited by capitalists is nothing compared to the misery of not being exploited at all.”

But while sweatshops are probably better than nothing, that doesn’t mean that nothing is better than sweatshops. Is there a plausible alternative to low-wage exploitation? Towards the end of her life, Robinson was attracted by Maoism. It’s not an approach that has fared well.

Other alternatives might. One idea is to promote better labour standards. That might help badly paid workers, or it might harm them by encouraging companies to avoid the reputational risk of producing in the poorest countries. Another possibility is to encourage small-scale entrepreneurial enterprises. They’re emotionally appealing — but are they merely a distracting Etsy-fication of the serious process of industrial development?

Researchers recently published a fascinating study that sheds new light on the sweatshop debate. Chris Blattman, a political scientist at the University of Chicago, and Stefan Dercon, the chief economist of the UK’s Department for International Development, decided to run an unusual experiment in Ethiopia after teaming up with five different employers.

Ethiopia is an example of early-stage industrialisation: still one of the poorest places in the world, it’s been liberalising its economy and growing very quickly for the past decade. International investors from Europe to Bangladesh are eyeing up Ethiopia as a possible base for low-wage manufacturing. But what are these tough jobs like for the workers who do them?

Here’s where the experiment comes in. Faced with a long queue of job applicants, all apparently equally qualified, an employer would normally choose arbitrarily. But guided by Blattman and Dercon, the Ethiopian employers randomly assigned applicants (typically young women) into one of three groups: those given a job offer, those turned down for a job, and a third category that we’ll discuss in a moment.

This randomisation allows for an unbiased comparison of people who got jobs and people who did not. What Blattman and Dercon found surprised them. Despite the fact that there were long queues for these factory jobs, people didn’t stick with them for long. By the end of the year, two-thirds of people offered a job had not just quit that particular job, but quit working in the industrial sector entirely.

“In terms of earnings, industrial jobs are not worse than the alternatives,” says Stefan Dercon. “We just thought they would be better.” The sweatshop jobs offer a mix of benefits and costs: steady work but low rates of pay, even by the standards of Ethiopian companies, and often hazardous conditions — for example, cotton fibres in the air frequently cause breathing problems. Young people often use them as a fallback — a good option to have if you’re low on funds, but not the sort of job you’d want to stick with. And the companies themselves seem content to cope with the turnover. This pattern — treating workers as interchangeable cogs in an industrial machine, to be replaced as they quit — was common 100 years ago in the UK and the US and seems to be a standard feature of this stage of industrialisation.

Could we do better? Perhaps. Remember the third group in the experiment? These were people who applied for a job and were told instead that they’d won a little lottery — $300 with no strings attached, plus five days of entrepreneurship training. The lottery winners, on average, managed to start a business or otherwise get themselves into a position where they were earning substantially more than people who’d been offered factory jobs. Industrialisation will always be a mainstay of a country’s economic development — but it’s worth remembering that with finance and advice, people can prosper in other ways too.

Overall, the experiment suggests that there’s something in the “sweatshop” criticism: these are hazardous, poorly paid jobs that people tend not to stick with for long. But there’s also something in the economists’ instinct that workers can take these apparently exploitative jobs and turn them to their advantage. In short, it’s complicated. Who knew?

Written for and first published in the Financial Times.

My new book “Messy” is now out and available online in the US and UK or in good bookshops everywhere.

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New book events!

Plenty of events coming up – come along!

London – Wednesday November 2 at 1pm, RSA Main Auditorium

Washington DC – Saturday November 12 at 11am, “NPR Weekend In Washington

Washington DC – Monday November 14 at 7pm, Politics and Prose

New York – Tuesday / Wednesday November 15/16 – event (hopefully) to be confirmed

Bristol – Friday November 18 at 6.30pm, Bristol Festival of Ideas

Warwick University – Tuesday November 29 at 6.15pm, Warwick Policy Lab

London – Wednesday November 30 at 8.30am, Institute of Directors

London – Tuesday December 6 at 7pm, Intelligence Squared

London – Wednesday December 14 early evening, University of Greenwich

24th of October, 2016SpeechesComments off

There’s magic in mess: Why you should embrace a disorderly desk


In 1726, during a long voyage from London to Philadelphia, a young printer hatched the idea of using a notebook to systematically chart his efforts to become a better man. He set out 13 virtues — including industry, justice, tranquillity and temperance — and his plan was to focus on each in turn in an endless quest for self-improvement, recording failures with a black spot in his journal. The virtue journal worked, and the black marks became scarcer and scarcer.

Benjamin Franklin kept up this practice for his entire life. What a life it was: Franklin invented bifocals and a clean-burning stove; he proved that lightning was a form of electricity and then tamed it with the lightning conductor; he charted the Gulf Stream. He organised a lending library, a fire brigade and a college. He was America’s first postmaster-general, its ambassador to France, even the president of Pennsylvania.

And yet the great man had a weakness — or so he thought. His third virtue was Order. “Let all your things have their places; let each part of your business have its time,” he wrote. While all the other virtues were mastered, one by one, Franklin never quite managed to get his desk or his diary tidy.

“My scheme of Order gave me the most trouble,” he reflected six decades later. “My faults in it vexed me so much, and I made so little progress in amendment, and had such frequent relapses, that I was almost ready to give up the attempt.” Observers agreed. One described how callers on Franklin “were amazed to behold papers of the greatest importance scattered in the most careless way over the table and floor”.

Franklin was a messy fellow his entire life, despite 60 years of trying to reform himself, and remained convinced that if only he could learn to tidy up, he would become a more successful and productive person. But any outsider can see that it is absurd to think such a rich life could have been yet further enriched by assiduous use of a filing cabinet. Franklin was deluding himself. But his error is commonplace; we’re all tidy-minded people, admiring ourselves when we keep a clean desk and uneasy when we do not. Tidiness can be useful but it’s not always a virtue. Even though Franklin never let himself admit it, there can be a kind of magic in mess.

Why is it so difficult to keep things tidy? A clue comes in Franklin’s motto, “Let all your things have their places … ” That seems to make sense. Humans tend to have an excellent spatial memory. The trouble is that modern office life presents us with a continuous stream of disparate documents arriving not only by post but via email and social media. What are the “places”, both physical and digital, for this torrent of miscellanea?

Categorising documents of any kind is harder than it seems. The writer and philosopher Jorge Luis Borges once told of a fabled Chinese encyclopaedia, the “Celestial Emporium of Benevolent Knowledge”, which organised animals into categories such as: a) belonging to the emperor, c) tame, d) sucking pigs, f) fabulous, h) included in the present classification, and m) having just broken the water pitcher.

Borges’s joke has a point: categories are difficult. Distinctions that seem practically useful — who owns what, who did what, what might make a tasty supper — are utterly unusable when taken as a whole. The problem is harder still when we must file many incoming emails an hour, building folder structures that need to make sense months or years down the line. Borgesian email folders might include: a) coming from the boss, b) tedious, c) containing appointments, d) sent to the entire company, e) urgent, f) sexually explicit, g) complaints, h) personal, i) pertaining to the year-end review, and j) about to exceed the memory allocation on the server.

Regrettably, many of these emails fit into more than one category and while each grouping itself is perfectly meaningful, they do not fit together. Some emails clearly fit into a pattern, but many do not. One may be the start of a major project or the start of nothing at all, and it will rarely be clear which is which at the moment that email arrives in your inbox. Giving documents — whether physical or digital — a proper place, as Franklin’s motto recommends, requires clairvoyance. Failing that, we muddle through the miscellany, hurriedly imposing some kind of practical organising principle on what is a rapid and fundamentally messy flow of information.

When it comes to actual paper, there’s always the following beautiful approach. Invented in the early 1990s by Yukio Noguchi, an emeritus professor at Hitotsubashi University in Tokyo and author of books such as Super Organised Method, Noguchi doesn’t try to categorise anything. Instead, he places each incoming document in a large envelope. He writes the envelope’s contents neatly on its edge, and lines them up on a bookshelf, their contents visible like the spines of books. Now the moment of genius: each time he uses an envelope, Noguchi places it back on the left of the shelf. Over time, recently used documents will shuffle themselves towards the left, and never-used documents will accumulate on the right. Archiving is easy: every now and again, Noguchi removes the documents on the right. To find any document in this system, he simply asks himself how recently he has seen it. It is a filing system that all but organises itself.

But wait a moment. Eric Abrahamson and David Freedman, authors of A Perfect Mess, offer the following suggestion: “Turn the row of envelopes so that the envelopes are stacked vertically instead of horizontally, place the stack on your desktop, and get rid of the envelopes.” Those instructions transform the shelf described in Super Organised Method into an old-fashioned pile of papers on a messy desk. Every time a document arrives or is consulted, it goes back on the top of the pile. Unused documents gradually settle at the bottom. Less elegant, perhaps, but basically the same system.

Computer scientists may recognise something rather familiar about this arrangement: it mirrors the way that computers handle their memory systems. Computers use memory “caches”, which are small but swift to access. A critical issue is which data should be prioritised and put in the fastest cache. This cache management problem is analogous to asking which paper you should keep on your desk, which should be in your desk drawer, and which should be in offsite storage in New Jersey. Getting the decision right makes computers a lot faster — and it can make you faster too.

Fifty years ago, computer scientist Laszlo Belady proved that one of the fastest and most effective simple algorithms is to wait until the cache is full, then start ejecting the data that haven’t been used recently. This rule is called “Least Recently Used” or LRU — and it works because in computing, as in life, the fact that you’ve recently needed to use something is a good indication that you will need it again soon.

As Brian Christian and Tom Griffiths observe in their recent book Algorithms to Live By, while a computer might use LRU to manage a memory cache, Noguchi’s Super Organised Method uses the same rule to manage paper: recently used stuff on the left, stuff that you haven’t looked at for ages on the right. A pile of documents also implements LRU: recently touched stuff on the top, everything else sinks to the bottom.

This isn’t to say that a pile of paper is always the very best organisational system. That depends on what is being filed, and whether several people have to make sense of the same filing system or not. But the pile of papers is not random. It has its own pragmatic structure based simply on the fact that whatever you’re using tends to stay visible and accessible. Obsolete stuff sinks out of sight. Your desk may look messy to other people but you know that, thanks to the LRU rule, it’s really an efficient self-organising rapid-access cache.

If all this sounds to you like self-justifying blather from untidy colleagues, you might just be a “filer” rather than a “piler”. The distinction between the two was first made in the 1980s by Thomas Malone, a management professor at the Massachusetts Institute of Technology. Filers like to establish a formal organisational structure for their paper documents. Pilers, by contrast, let pieces of paper build up around their desks or, as we have now learnt to say, implement an LRU-cache.

To most of us, it may seem obvious that piling is dysfunctional while filing is the act of a serious professional. Yet when researchers from the office design company Herman Miller looked at high-performing office workers, they found that they tended to be pilers. They let documents accumulate on their desks, used their physical presence as a reminder to do work, and relied on subtle cues — physical alignment, dog-ears, or a stray Post-it note — to orient themselves.

In 2001, Steve Whittaker and Julia Hirschberg, researchers at AT&T Labs, studied filers and pilers in a real office environment, and discovered why the messy approach works better than it seemingly has any right to. They tracked the behaviour of the filers and pilers over time. Who accumulated the biggest volume of documents? Whose archives worked best? And who struggled most when an office relocation forced everyone to throw paperwork away?

One might expect that disciplined filers would have produced small, useful filing systems. But Whittaker and Hirschberg found, instead, that they were sagging under the weight of bloated, useless archives. The problem was a bad case of premature filing. Paperwork would arrive, and then the filer would have to decide what to do with it. It couldn’t be left on the desk — that would be untidy. So it had to be filed somewhere. But most documents have no long-term value, so in an effort to keep their desks clear, the filers were using filing cabinets as highly structured waste-paper baskets. Useful material was hemmed in by well-organised dross.

“You can’t know your own information future,” says Whittaker, who is now a professor of psychology at University of California Santa Cruz, and co-author of The Science of Managing Our Digital Stuff. People would create folder structures that made sense at the time but that would simply be baffling to their own creators months or years later. Organisational categories multiplied. One person told Whittaker and Hirschberg: “I had so much stuff filed. I didn’t know where everything was, and I’d found that I had created second files for something in what seemed like a logical place, but not the only logical place … I ended up having the same thing in two places or I had the same business unit stuff in five different places.”

As for the office move, it was torture for the filers. They had too much material and had invested too much time in organising it. One commented that it was “gruesome … you’re casting off your first-born”. Whittaker reminds me that these people were not discarding their children. They weren’t even discarding family photographs and keepsakes. They were throwing away office memos and dog-eared corporate reports. “It’s very visceral,” Whittaker says. “People’s identity is wrapped up in their jobs, and in the information professions your identity is wrapped up with your information.” And yet the happy-go-lucky pilers, in their messy way, coped far better. They used their desks as temporary caches for documents. The good stuff would remain close at hand, easy to use and to throw away when finished. Occasionally, the pilers would grab a pile, riffle through it and throw most of it away. And when they did file material, they did so in archives that were small, practical and actively used.

Whittaker points out that the filers struggled because the categories they created turned out not to work well as times changed. This suggests that tidiness can work, but only when documents or emails arrive with an obvious structure. My own desk is messy but my financial records are neat — not because they’re more important but because the record-keeping required for accountancy is predictable.

One might object that whatever researchers have concluded about paper documents is obsolete, as most documents are now digital. Surely the obvious point of stress is now the email inbox? But Whittaker’s interest in premature filing actually started in 1996 with an early study of email overload. “The thing we observed was failed folders,” he says. “Tiny email folders with one or two items.”

It turns out that the fundamental problem with email is the same as the problem with paper on the desk: people try to clear their inbox by sorting the email into folders but end up prematurely filing in folder structures that turn out not to work well. In 2011, Whittaker and colleagues published a research paper with the title “Am I Wasting My Time Organizing Email?”. The answer is: yes, you are. People who use the search function find their email more quickly than those who click through carefully constructed systems of folders. The folder system feels better organised but, unless the information arrives with a predictable structure, creating folders is laborious and worse than useless.

So we know that carefully filing paper documents is often counterproductive. Email should be dumped in a few broad folders — or one big archive — rather than a careful folder hierarchy. What then should we do with our calendars? There are two broad approaches. One — analogous to the “filer” approach — is to organise one’s time tightly, scheduling each task in advance and using the calendar as a to-do list. As Benjamin Franklin expressed it: “Let each part of your business have its time.” The alternative avoids the calendar as much as possible, noting only fixed appointments. Intuitively, both approaches have something going for them, so which works best?

Fortunately we don’t need to guess, because three psychologists, Daniel Kirschenbaum, Laura Humphrey and Sheldon Malett, have already run the experiment. Thirty-five years ago, Kirschenbaum and his colleagues recruited a group of undergraduates for a short course designed to improve their study skills. The students were randomly assigned one of three possible pieces of coaching. There was a control group, which was given simple time-management advice such as, “Take breaks of five to 10 minutes after every ½-1½ hour study session.” The other two groups got those tips but they were also given much more specific advice as to how to use their calendars. The “monthly plan” group were instructed to set goals and organise study activities across the space of a month; in contrast, the “daily plan” group were told to micromanage their time, planning activities and setting goals within the span of a single day.

The researchers assumed that the planners who set quantifiable daily goals would do better than those with vaguer monthly plans. In fact, the daily planners started brightly but quickly became hopelessly demotivated, with their study effort collapsing to eight hours a week — even worse than the 10 hours for those with no plan at all. But the students on the monthly plans maintained a consistent study habit of 25 hours a week throughout the course. The students’ grades, unsurprisingly, reflected their work effort.

The problem is that the daily plans get derailed. Life is unpredictable. A missed alarm, a broken washing machine, a dental appointment, a friend calling by for a coffee — or even the simple everyday fact that everything takes longer than you expect — all these obstacles proved crushing for people who had used their calendar as a to-do list.

Like the document pilers, the monthly planners adopted a loose, imperfect and changeable system that happens to work just fine in a loose, imperfect and changeable world. The daily planners, like the filers, imposed a tight, tidy-minded system that shattered on contact with a messy world.

Some people manage to take this lesson to extremes. Marc Andreessen — billionaire entrepreneur and venture capitalist — decided a decade ago to stop writing anything in his calendar. If something was worth doing, he figured, it was worth doing immediately. “I’ve been trying this tactic as an experiment,” he wrote in 2007. “And I am so much happier, I can’t even tell you.”

Arnold Schwarzenegger has adopted much the same approach. He insisted on keeping his diary clear when he was a film star. He even tried the same policy when governor of California. “Appointments are always a no-no. Planning ahead is a no-no,” he told The New York Times. Politicians, lobbyists and activists had to treat him like a popular walk-up restaurant: they showed up and hoped to get a slot. Of course, this was in part a pure status play. But it was more than that. Schwarzenegger knew that an overstuffed diary allows no room to adapt to circumstances.

Naturally, Schwarzenegger and Andreessen can make the world wait to meet them. You and I can’t. But we probably could take a few steps in the same direction, making fewer firm commitments to others and to ourselves, leaving us the flexibility to respond to what life throws at us. A plan that is too finely woven will soon lie in tatters. Daily plans are tidy but life is messy.

The truth is that getting organised is often a matter of soothing our anxieties — or the anxieties of tidy-minded colleagues. It can simply be an artful way of feeling busy while doing nothing terribly useful. Productivity guru Merlin Mann, host of a podcast called Back To Work, has a telling metaphor. Imagine making sandwiches in a deli, says Mann. In comes the first sandwich order. You’re about to reach for the mayonnaise and a couple of slices of sourdough. But then more orders start coming in.

Mann knows all too well how we tend to react. Instead of making the first sandwich, we start to ponder organisational systems. Separate the vegetarian and the meat? Should toasted sandwiches take priority?

There are two problems here. First, there is no perfect way to organise a fast-moving sandwich queue. Second, the time we spend trying to get organised is time we don’t spend getting things done. Just make the first sandwich. If we just got more things done, decisively, we might find we had less need to get organised.

Of course, sometimes we need a careful checklist (if, say, we’re building a house) or a sophisticated reference system (if we’re maintaining a library, for example). But most office workers are neither construction managers nor librarians. Yet we share Benjamin Franklin’s mistaken belief that if only we were more neatly organised, then we would live more productive and more admirable lives. Franklin was too busy inventing bifocals and catching lightning to get around to tidying up his life. If he had been working in a deli, you can bet he wouldn’t have been organising sandwich orders. He would have been making sandwiches.
Image by Benjamin Swanson. This article was first published in the Financial Times magazine and is inspired by ideas from my new book, “Messy“. (US) (UK)

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20th of October, 2016HighlightsComments off
Undercover Economist

The Ig Nobel prizes in Economics – in praise of ridiculous research

Congratulations are in order to Oliver Hart and Bengt Holmstrom, winners on 10 October of the Nobel Memorial Prize in Economics. Even though economics is not a full-fledged Nobel Prize, it has been earned by some splendid social scientists over the years — including a number of people who are not economists at all, from Herbert Simon and John Nash to Daniel Kahneman and Elinor Ostrom.

Yet this week I would rather discuss a different prize: the Ig Nobel prize for economics. The Ig Nobels are an enormously silly affair: they have been awarded for a study of dinosaur gaits that involved attaching weighted sticks to chickens (the biology prize), for studying stinky feet (medicine) and for figuring out why shower curtains tend to billow inwards when you’re taking a shower (physics).

But one of the Ig Nobel’s charms is that this ridiculous research might actually tell us something about the world. David Dunning and Justin Kruger received an Ig Nobel prize in psychology for their discovery that incompetent people rarely realise they are incompetent; the Dunning-Kruger effect is now widely cited. Dorian Raymer and Douglas Smith won an Ig Nobel in physics for their discovery that hair and string have a tendency to become tangled — potentially an important line of research in understanding the structure of DNA. Most famously, Andre Geim’s Ig Nobel in physics for levitating a live frog was promptly followed by a proper Nobel Prize in the same subject for the discovery of graphene.

A whimsical curiosity about the world is something to be encouraged. No wonder that the credo of the Ig Nobel prizes is that they should make you laugh, then make you think. In 2001, the Ig Nobel committee did just that, awarding the economics prize to Joel Slemrod and Wojciech Kopczuk, who demonstrated that people will try to postpone their own deaths to avoid inheritance tax. This highlights an important point about the power of incentives — and the pattern has since been discovered elsewhere.

Alas, most economics Ig Nobel prizes provoke little more than harsh laughter. They’ve been awarded to Nick Leeson and Barings Bank, Iceland’s Kaupthing Bank, AIG, Lehman Brothers, and so on. The first economics prize was awarded to Michael Milken, one of the inventors of the junk bond. He was in prison at the time.

Fair game. Still, surely there is something in economics that is ludicrous on the surface yet thought-provoking underneath? (The entire discipline, you say? Very droll.)

Where is the award for Dean Karlan and Chris Udry? These two bold Yale professors wanted to figure out whether lack of access to crop insurance was damaging Ghana’s agricultural productivity, so they set up an insurance company, sold insurance to Ghanaian farmers, and accidentally got themselves on the hook for half a million dollars if it didn’t rain in Ghana. (Happy ending: it rained. Also, crop insurance is very helpful.)

Psychologists Bernhard Borges, Dan Goldstein, Andreas Ortmann and Gerd Gigerenzer found they could construct a market-beating portfolio of stocks by stopping people on street corners, showing them a list of company names, and asking which they recognised. Surely an Ig Nobel in finance?

Another psychologist, Dan Ariely, already shared an Ig Nobel prize for medicine in 2008 for demonstrating that expensive placebos work better than cheap placebos. But in recent research with Emir Kamenica and Drazen Prelec, described in Ariely’s forthcoming book Payoff, Ariely paid people to build robots out of Lego. The researchers’ aim: to examine the nature of the modern workplace by dismantling the Lego in front of their subjects’ eyes, to see if they could dishearten them. (They could.) An Ig Nobel in management beckons.

Richard Thaler deserves an Ig Nobel in economics for his long-running column Anomalies, in which he asked his fellow economists a series of questions that seem straightforward but are enormously difficult for economics to answer. Why do investment banks pay high wages even to the receptionists? Why do people overpay in auctions? Why are people often nice to each other? If the Ig Nobel committee wants to repeat the Andre Geim trick, it should hurry up: Thaler may well win the economics Nobel before his Ig Nobel can be awarded.

But my preferred candidate for an Ig Nobel prize in economics is Thomas Thwaites. A few years ago Thwaites set himself the simple-seeming task of replicating from scratch a cheap Argos toaster (retail price: £3.99). He smelted iron in a microwave, tried to produce plastic from potato starch, and generally made a colossal mess. His toaster cost £1,187.54, resembled a disastrously iced birthday cake and melted when plugged into the mains. (“A partial success,” says Thwaites.)

Thwaites’s toaster project thus tells us more about the brilliance and dizzying complexity of the interconnected global economy than any textbook could. He is a shoo-in for the economics Ig Nobel. Perplexingly, however, the Ig Nobel committee awarded him this year’s prize for biology instead after he attempted to live life dressed as a goat. How silly.

Written for and first published in the Financial Times.

My new book “Messy” is now out. If you like my writing, why not buy a copy? (US) (UK)

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Publication day… again!

My UK publishers, Little Brown, have decided to release “Messy” a little earlier than planned – by popular demand, they tell me. If you were one of the people who pre-ordered a copy and helped to trigger that decision, thank you!

Official publication date is this Thursday, but I’m told the books should be arriving in bookshops from Monday. You can also order online – I’d expect the books to start shipping almost immediately.

Meanwhile a couple of other bits of Messy news. The New York Times published a lovely review that made me excited about my own book! The reviewer, Maria Konnikova, really understood what I was trying to say, which doesn’t always happen.

“Harford’s argument goes beyond aesthetics, resurfacing over and over in his engrossing narrative, from music (Brian Eno’s oblique strategies defying all convention, which resulted in David Bowie’s album “Heroes”) to tweeting (the non-prescriptivist response of the British telecom company O2 to a power outage). During World War II, Gen. Erwin Rommel’s messy autonomy allowed him to succeed against great odds: Even when the British had broken Germany’s codes, they couldn’t predict his actions. They had no idea that he would disobey direct orders; neither, of course, did his superiors. “Life cannot be controlled. Life itself is messy,” Harford writes. When we try to be rigid in response, the result is a messy failure.”

Another review appeared in The Economist:

“Mr Harford’s book strays well beyond mess of the physical sort (though he devotes a whole section to railing against oppressive tidy-desk policies, which he argues disempower workers and make them unproductive). Most of the book is about other types of mess: randomness, experimentation and human autonomy… “Messy” masterfully weaves together anecdote and academic work.”

And an extract from Messy about the perils of automationappeared in the Guardian.

I also wrote a feature article in praise of messy desks in the Financial Times.

I’ll stop now. Column to appear right here on Wednesday as usual.

17th of October, 2016MarginaliaComments off

A Messy Reader

While I was writing Messy I started to find inspiration in the strangest places, many of which have been rather wonderfully explored by others. For your interest – or perhaps because you’ve read “Messy” and want to go deeper – here are a few suggestions for further reading and listening.


On Music

Kind of Blue by Ashley Kahn (US) (UK) – and of course you should listen to the album. (US) (UK).

Starman by Paul Trynka (US) (UK) – ideally accompanied by a dose of “Heroes” (US) (UK) and Music for Airports (US) (UK).

Listen to this documentary about Keith Jarrett’s concert in Cologne, and then listen to The Koln Concert (US) (UK) and marvel.


On Creative Prodigies

The Man Who Loved Only Numbers (US) (UK) is a fascinating book about Paul Erdos, while Ed Yong wrote a great feature about Erez Lieberman Aiden.


On Architecture

Warren Berger’s Lost in Space is the perfect source on Chiat Day’s open plan experiment, but since Messy went to press Planet Money did a great episode on the subject too.

On Building 20, watch Stewart Brand’s remarkable series How Buildings Learn, read the book (US) (UK) and also check out Jonah Lehrer’s New Yorker article.


On Martin Luther King

Taylor Branch’s Parting the Waters (US) (UK) was the biography that stuck with me, and I found out about the Rev Dr King’s improvisations from James C Scott’s Two Cheers for Anarchism (US) (UK).


On battlefield improvisers

Brad Stone’s The Everything Store (US) (UK) is now definitive on Amazon’s early years; David Fraser’s Knight’s Cross (US) (UK) was a key source on Erwin Rommel, and I fell in love with Virginia Cowles’s The Phantom Major (US) (UK).


On the paradox of automation

William Langewiesche and Jeff Wise both wrote compelling accounts of the tragedy of Flight 447 – perhaps even more striking in radio form courtesy of 99% Invisible.


On dating, parenting and the art of conversation

Start with Kevin Poulsen’s account of how a maths genius hacked OK Cupid, move on to Hanna Rosin’s Overprotected Kid, but most of all read Brian Christian’s masterful book The Most Human Human (US) (UK).


On the microbiome

Emily Eakin has written two terrific pieces for the New Yorker.


On mess in general 

A Perfect Mess (UK) by Eric Abrahamson and David Freedman is a lovely, playful book – particularly on the subject of decluttering and messy desks. For a bigger picture on the upside of mess, read two of the greatest works of the twentieth century, The Death and Life of Great American Cities (US) (UK) by Jane Jacobs and Seeing Like A State (US) (UK) by James C Scott.


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8th of October, 2016MarginaliaComments off
Undercover Economist

Big decision ahead? Just roll the dice

In the infamous novel The Dice Man, the narrator Luke Rhinehart decides to hand his life over to randomness. The biggest of decisions will be made by dice. In one episode, he leads a mass escape from a secure mental hospital. In another, he tucks his young son into bed and then — after consulting the dice — leaves his wife and family for ever.

It’s an unsettling book, and Rhinehart is an anti-hero whose horrifying behaviour leads to ruin. Yet, most of us could do with a little more randomness in our lives. The roll of a die or the toss of a coin can actually help us make better decisions.

There are two quite different reasons for this. The first is that by pre-committing to follow a random instruction, we can end up making decisions that we should have been making all along. The status quo has a strange hold over us. Stuck in a job that we dislike, or with a romantic partner who is anything but romantic, all too often we stick with the devil we know.

Deciding that “if the coin comes up heads, I’ll leave my boyfriend” may be the only way that some of us have to break through the inertia and make tough decisions. A 50 per cent chance of dumping the oaf is better than no chance at all.

But what evidence do I have that we tend to be trapped by the status quo? In fact, the evidence is better than anyone could reasonably wish for, because a few years ago the idiosyncratic economist Steven Levitt launched a website, FreakonomicsExperiments.com, that was part publicity stunt and part data-gathering exercise. Levitt invited people who were agonising over a life decision to log in to the website, fill in some questions, and then abdicate responsibility to the flip of a digital coin. As the months went past, Levitt followed up, asking people whether they had obeyed the coin or ignored it, and how they were now feeling about the decision. Some of those decisions were weighty indeed: people had been pondering whether to propose, resign, have a baby, seek a divorce, adopt a child or start a business.

It’s an odd experiment, but what makes it powerful is that the coin toss randomly allocated people into two groups, one pushed towards action (the coin came up heads) and one pushed towards restraint. People did indeed tend to obey the coin — not always, but often enough — and those in the “heads” group tended to be happier several months on. When we’re genuinely undecided about whether to change the status quo, that probably tells us a change to the status quo is long overdue.

This isn’t to say that everyone pondering a drastic change in life should leap into action, hiring that divorce lawyer, storming into the boss’s office or searching for a sperm donor. But Levitt’s research suggests that if we’re genuinely undecided about a new direction, we should probably just get on with it. If the coin helps, fine. (In retrospect, if Levitt had used a biased coin, he would have made hundreds of people happier.)

Randomness, then, can prod us into taking actions that we fear. But it can also divert us into taking actions that we might not have imagined at all. A simple example of this emerged in 2014, when some London Underground staff launched a two-day strike that closed about two-thirds of Tube stations.

After the strike, the economists Ferdinand Rauch, Shaun Larcom and Tim Willems looked at data from London’s electronic farecard system, identifying individuals who took the same route morning after morning. [pdf] Most of these regular commuters had to find a different route to work during the strike. But what was surprising was that one in 20 of them stuck to their new routes after the strike was over. Even commuters, whom we would imagine had honed their daily journey to perfection, can find a better route when a random shock forces them to do so. Computer algorithms often use the same basic trick when searching for solutions to complex problems: stirring in a judicious dose of randomness prevents the search from getting stuck down a dead end.

Many creative types understand this principle very well. Perhaps the most famous example is the Oblique Strategies, a set of cards assembled by artist Peter Schmidt and musician Brian Eno. The cards are full of gnomic instructions — “Change Instrument Roles” or “Twist the Spine” — and Eno deployed them while working with David Bowie on his celebrated Low, “Heroes” and Lodger albums. Great guitarists such as Adrian Belew or Carlos Alomar would find themselves having to play the drums or hopping randomly between chords that Eno was indicating on a blackboard. They did not enjoy the experience: Alomar later compared it to being slapped in the face. But the results were superb.

One can have too much of a good thing, of course, and throw the dice too often. George Cockcroft, author of The Dice Man, experimented with a dice-driven life himself for a while but did the sensible thing and settled down once he found a life he loved. And Eno himself told me that he only used the Oblique Strategies cards when he got stuck.

And did he get stuck often?

“Oh, all the time.”

Written for and first published in the Financial Times.

My new book “Messy” was published yesterday in the US. If you like my writing, why not buy a copy? (Or pre-order the UK edition, which is out very soon). (US) (UK)

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Publication Day!

messy-us-coverAfter five years of gestation, my new book, Messy, is finally out in the US.

I grappled with the way Martin Luther King’s speechmaking style evolved from careful preparation to impromptu genius. I tried to tease out the connections between the brilliant panzer commander Erwin Rommel, Amazon boss Jeff Bezos, and the primary campaign of Donald Trump. I interviewed Stewart Brand about the world’s most creative messy building – and Brian Eno about the way David Bowie would reject perfection in favour of something flawed and interesting every time.

I loved writing this book.

If you’re interested in reading it, you can order it here from Amazon – or find other bookseller links and information here. (You can also pre-order UK copies.) And when you get your hands on a copy then please consider reviewing the book on sites such as Amazon or Goodreads. It does help.

Thanks! Normal service resumed tomorrow with a column about why our lives need a little more randomness.

4th of October, 2016MarginaliaComments off
Undercover Economist

Why central bankers shouldn’t have skin in the game

Pensions campaigner Ros Altmann recently launched an eye-catching attack on the Bank of England for paying generous pensions to its own staff while undermining everyone else’s retirement plan.

 It’s an easy claim to make, and it may well stick. Are central bankers not the Marie Antoinettes of the modern world, recklessly imposing penury on the people while ensuring they are protected from their own ruinous actions?

I don’t see it myself. To start with the most obvious point, it’s far from clear that the Bank really is destroying pensions. It is true that low interest rates make future obligations loom larger in today’s company accounts. This creates a problem for any pension scheme. But, on the other side of the equation, low interest rates have boosted the value of shares, bonds and property and thus the value of most pension schemes. Would pension schemes really be better off had the Bank of England stiffened interest rates in 2008 and tried to engineer a rerun of the Great Depression?

This takes us to a very strange place indeed. Currently, members of the Monetary Policy Committee (MPC) set interest rates without having a strong personal incentive to follow any particular policy. I would have thought that was a desirable state of affairs, but perhaps not. An alternative — presumably the alternative that critics would prefer — is that whenever the MPC cuts interest rates, its members know that they will feel the financial consequences personally.

But we can’t stop by linking senior Bank of England pensions to interest rates. If we are to pay the MPC by results, we must do so in a way that reflects the broader consequences of their actions. Consider unemployment. The MPC is not officially responsible for supporting the job market, but the US Federal Reserve is. And everyone knows the MPC considers the state of the wider economy when setting rates. As the Bank’s chief economist Andy Haldane recently commented: “I sympathise with savers but jobs must come first.”

That is what he says now, but what would Haldane do under the new incentive scheme? He and his colleagues may ignore the labour market unless they have some skin in the game. Perhaps we should draw inspiration from the Roman practice of decimation, where some soldiers in a mutinous cohort would be executed according to the drawing of lots. Execution is harsh, but one could easily make the 100 most senior Bank staff participate in an unemployment lottery. If the unemployment rate is 5 per cent, then five of them — chosen at random — must be punished. If the unemployment rate is 10 per cent, then 10 senior Bank staff will taste the consequences. An appropriate punishment? They shall be condemned to carry out their duties, unpaid, from a queue in the job centre.

Once one starts to spell out exactly how Bank of England staff should be rewarded for each policy triumph or penalised for each misstep, it becomes clear that the whole idea is nonsense. Central bankers will not do a better job if given direct financial incentives to pursue certain policies, and it is quite likely that they will do a worse job. Yes, incentives matter — but they often matter for all the wrong reasons.

The Wells Fargo scandal is a recent example: the bank put pressure on its employees to cross-sell financial products to customers. In response to the pressure, some staff simply opened accounts or set up credit cards for customers without their knowledge. The whole thing is depressingly unsurprising.

The basic principle for any incentive scheme is this: can you measure everything that matters? If you can’t, then high-powered financial incentives will simply produce short-sightedness, narrow-mindedness or outright fraud. If a job is complex, multifaceted and involves subtle trade-offs, the best approach is to hire good people, pay them the going rate and tell them to do the job to the best of their ability.

It would be nice to think that independent central banks could get on with a difficult job without being dragged into politics — but of course that is impossible. Ros Altmann isn’t the first person to try to take a debate about central bank policy into the personal realm. Donald Trump recently announced that Federal Reserve chair Janet Yellen should be ashamed of herself; in the previous US presidential campaign, Governor Rick Perry accused her predecessor Ben Bernanke of treason. Senior Brexit campaigners made similar attacks on Mark Carney.

Central bankers no doubt find such personal attacks vexatious — but they should take comfort in them. When Paul Volcker ran the US Federal Reserve, his policies so enraged building contractors that they mailed pieces of two-by-four to his office; farmers blockaded the Federal Reserve with their tractors. Yet Volcker is now the most respected Fed chairman in history. Effective central bankers inevitably annoy a lot of people; that is why the job is too important to be entrusted to politicians.

Written for and first published in the Financial Times.

It helps any new book to pick up some advance orders, so if you like my writing please consider pre-ordering my new book, “Messy“. (US) (UK) More to follow soon…

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Undercover Economist

How insurers keep the money-pump flowing

One of the strangest financial scandals of recent years has been the selling of payment protection insurance. PPI is a curious form of insurance that meets loan repayment obligations for people who become ill or jobless.

 Now, there is an honourable tradition of insurance being bundled with a loan. The practice is discussed in the Code of Hammurabi, which is nearly 4,000 years old. This ancient Babylonian law code includes 282 clauses on “bottomry”, which functioned as payment protection insurance for maritime merchants. Hammurabi specifies that a merchant who borrows money to fund a ship’s voyage is not obliged to repay the loan if the ship sinks.

That was a sensible enough arrangement but there are two objections to PPI in its modern form. One is that such policies were often sold to people under false pretences, including those who would never have been eligible for repayment. For this reason, British banks have had to repay tens of billions of pounds in compensation.

To see why, let’s step back and ask ourselves what insurance is for. Classical economics has an answer: people are risk-averse, which means that they will pay good money to reduce the variability of outcomes they face. If home insurance guards against the loss of a million pounds when my house burns down, I’m happy to buy the insurance even though the insurance company expects to make a profit from it.

But this risk aversion emerges from the fact that money is worth more to poor people than to rich people. Gaining a million pounds would make me rich but losing a million pounds would make me poor. I should not gamble a million pounds on the toss of a coin, because the million pounds I might lose is more precious to me than the million pounds I might gain.

As so often with classical economics, this is an excellent description of how we should behave. It is not such an excellent description of how we actually do behave. Risk aversion can only explain why we insure large risks. It cannot explain why we insure small ones. This is because risk aversion turns on the idea that an extra pound is worth more if you are poor than if you are rich. But having to replace a phone is not going to make the difference between poverty and wealth.

In one of my favourite economics articles, written in 2001, the behavioural economists Richard Thaler and Matthew Rabin point out that anyone who rejects a 50/50 gamble to win £10.10 or lose £10 — apparently a reasonable enough taste for caution — cannot possibly be doing so because of risk aversion. (The degree of risk aversion necessary would mean that the same individual wouldn’t risk £1,000 on the toss of a coin for all the money in the world.) Risk aversion simply cannot explain why anyone would turn down that fractionally favourable gamble. And it cannot explain why anyone would insure a mobile phone.

A better explanation is that we tend to view risks in isolation. Rather than telling ourselves “a lost mobile phone would lower my lifetime wealth by 0.005 per cent”, we tell ourselves “it would be so annoying to have to pay for a new mobile phone”. Isolating and obsessing about risks in this way is arbitrary and illogical. But that does not mean we don’t do it.

At this stage, I would like to introduce you to the idea of a money pump. A money pump is a person whose irrationalities can be systematically exploited for financial gain. The simplest money pump is a person who prefers an apple to a doughnut, prefers a doughnut to a chocolate bar, and prefers a chocolate bar to an apple. Just offer them an apple in exchange for their doughnut plus a penny. They will accept. Then offer them a chocolate bar for their apple plus a penny. Then offer them a doughnut for their chocolate bar plus a penny. They end up with their original doughnut and are three pence poorer. Repeat for ever.

Money-pump arguments are sometimes deployed to object that people cannot be irrational, otherwise they would be bankrupted by money pumping. But economists are increasingly coming to realise that, instead, we should be looking for money pumping in action.

Given our anxiety about small risks, what would the money pumping look like? It would be an insurance policy focused on the narrowest possible slice of risk. It would be sold alongside another product or service, often at the last moment. It would be marketed by creating anxiety and then offering the product to make the anxiety go away. In short, it would look like the collision damage waiver, the extended warranty, and PPI. These bespoke slices of insurance are among the largest money-pumping projects in the modern economy. No wonder the banks abandoned their principles to join in.

Written for and first published in the Financial Times.

It helps any new book to pick up some advance orders, so if you like my writing please consider pre-ordering my new book, “Messy“. (US) (UK) More to follow soon…

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Tim Harford is an author, columnist for the Financial Times and presenter of Radio 4's "More or Less".
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