Tim Harford The Undercover Economist

Cautionary Tales

My podcast, telling true stories about mistakes and what we should learn from them.

Resources

Cautionary Tales Ep 5 – Buried by the Wall Street crash

Two of the greatest economists who ever lived, Irving Fisher and John Maynard Keynes, thought they could predict the future and make a killing on the stock market. Both of them failed to see the Wall Street crash, the greatest financial disaster of the age – and arguably, of any age. Yet having made the same forecasting error, Fisher and Keynes went on to meet very different fates. What does it take to see into the future? And when you fail, what does it take to bounce back from ruin?

Featuring: Alan Cumming, Russell Tovey, Mircea Monroe, Rufus Wright, Ed Gaughan, and Melanie Gutteridge.

Producers: Ryan Dilley and Marilyn Rust. Sound design/mix/musical composition: Pascal Wyse. Fact checking: Joseph Fridman. Editor: Julia Barton. Recording: Wardour Studios, London. GSI Studios, New York. PR: Christine Ragasa.

Thanks to the team at Pushkin Industries, Heather Fain, Mia Lobel, Carly Migliori, Jacob Weisberg, and of course, the mighty Malcolm Gladwell.

[Apple] [Spotify] [Stitcher]

 

Further reading

 

Walter Friedman’s The Fortune Tellers is a key source on Fisher. It’s a history of all economic forecasting in the US. I loved it.

Sylvia Nasar’s excellent Grand Pursuit has much more on both Keynes and Fisher.

There are several fine journalist accounts of Keynes’s participation in the Degas auction. Try the BBC, the Wall Street Journal, or History Today.

On Keynes, the central source on his investment performances is David Chambers and Elroy Dimson. 2013. “Retrospectives: John Maynard Keynes, Investment Innovator.” Journal of Economic Perspectives27 (3): 213-28.DOI: 10.1257/jep.27.3.213. There’s more biographical detail in the more informal Keynes’s Way To Wealth by John Wasik.

Philip Tetlock’s original study is detailed in his subtle, scholarly and ground-breaking Expert Political JudgmentHis more recent book with Dan Gardner, Superforecasting is more journalistic and covers his recent discoveries. Both books are very good, but quite different in style.

The case of Dorothy Martin and the UFO cult is told first hand by Festinger and his colleagues in When Prophecy FailsThere’s further discussion in Mistakes Were Made (But Not By Me)an excellent guide to all the ways in which we can fail to notice we’re wrong, by Carol Tavris and Elliot Aronson.

 

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Resources

Cautionary Tales Ep 4 – The Deadly Airship Race

A British Lord wanted to build the best airship in the world – and so he had two rival design teams battle it out to win the juicy government contract. Competition is supposed to bring the best out of people, but run in the wrong way it can cause people (and the things they make) to fall apart in the most horrifying ways.

Featuring: Alan Cumming, Russell Tovey, Rufus Wright, Melanie Gutteridge, Enzo Cilenti and Ed Gaughan.

Producers: Ryan Dilley and Marilyn Rust. Sound design/mix/musical composition: Pascal Wyse. Fact checking: Joseph Fridman. Editor: Julia Barton. Recording: Wardour Studios, London. GSI Studios, New York. PR: Christine Ragasa.

Thanks to the team at Pushkin Industries, Heather Fain, Mia Lobel, Carly Migliori, Jacob Weisberg, and of course, the mighty Malcolm Gladwell.

[Apple] [Spotify] [Stitcher]

 

Further reading

Two recent and comprehensive books are Bill Hammack’s Fatal Flight (about the R101) and John Anderson’s Airship on a Shoestring

An excellent – but one-sided – account of the airship race is Nevil Shute Norway’s Slide Rulewhile the case for Lord Thomson’s defence is put in Peter Masefield’s To Ride The Storm.  Alfred Roubaille’s description of the crash is from Nigel Blundell’s The World’s Greatest Mistakes.

The BBC made a documentary about R101, including eye-witness accounts. So did the History Channel.

The academic studies:

Dan Ariely, Uri Gneezy, George Loewenstein, Nina Mazar, “Large Stakes and Big Mistakes” The Review of Economic Studies, Volume 76, Issue 2, April 2009, Pages 451–469, https://doi.org/10.1111/j.1467-937X.2009.00534.x

Robert Drago and Gerald T Garvey “Incentives for Helping on the Job: Theory and Evidence”
Journal of Labor Economics, 1998, vol. 16, issue 1, 1-25 http://dx.doi.org/10.1086/209880 

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Resources

Cautionary Tales Ep 3 – LaLa Land: Galileo’s Warning

Galileo tried to teach us that when we add more and more layers to a system intended to avert disaster, those layers of complexity may eventually be what causes the catastrophe. His basic lesson has been ignored in nuclear power plants, financial markets and at the Oscars…all resulting in chaos.

Featuring: Archie Panjabi, Mircea Monroe, Enzo Cilenti, Ed Gaughan and Rufus Wright

Producers: Ryan Dilley and Marilyn Rust. Sound design/mix/musical composition: Pascal Wyse. Fact checking: Joseph Fridman. Editor: Julia Barton. Recording: Wardour Studios, London. GSI Studios, New York. PR: Christine Ragasa.

Thanks to the team at Pushkin Industries, Heather Fain, Mia Lobel, Carly Migliori, Jacob Weisberg, and of course, the mighty Malcolm Gladwell.

[Apple] [Spotify] [Stitcher]

 

Further reading

Among many, many journalistic accounts of the LaLa Land / Moonlight mix-up, try the Hollywood Reporter’s oral history and the BBC’s Truth Behind Envelopgate.

Benjamin Bannister on typography at the Oscars.

Galileo’s Dialogues Concerning Two New Sciences.

Charles Perrow’s Normal Accidents introduces the idea of complex, tightly-coupled systems and has good accounts both of the Three Mile Island and the Fermi reactor accidents. Just after we’d recorded the episode, I heard the sad news that Charles had died on November 12th. He’ll be missed.

The official report of the commission investigating Three Mile Island, chaired by John Kemeny.

Meltdown by Chris Clearfield and Andras Tilcik first drew the link between Perrow’s work and the La La Land fiasco.

Dowell and Hendershott’s classic article about backfiring safety systems is No Good Deed Goes Unpunished: Case Studies of Incidents and Potential Incidents Caused by Protective Systems.

Don Norman’s The Design of Everyday Things discusses confusing instrumentation.

My previous article What Banks Should Learn From A Nuclear Reactor uses Charles Perrow’s ideas to draw parallels between banking and nuclear accidents.

Andrew Ross Sorkin’s Too Big Too Fail has the scoop on what happened when Bob Willumstad met Tim Geithner.

The new three-envelope system was described in Vanity Fair.

 

 

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Cautionary Tales Ep 2 – The Rogue Dressed as a Captain

One crisp Berlin morning, in 1906, a small group of soldiers were led on an extraordinary heist by a man they believed to be a captain. So how did an ageing nobody in a fake uniform trick them into taking part in the crime of the century? Some say we humans will obey orders from anyone who dresses the part… but the real reason why we fall for tricksters time and again is far more interesting. Fraudsters and charlatans reel us in slowly by using psychology against us.

Featuring: Alan Cumming, Russell Tovey, Rufus Wright, Melanie Gutteridge and Ed Gaughan.

Producers: Ryan Dilley and Marilyn Rust. Sound design/mix/musical composition: Pascal Wyse. Fact checking: Joseph Fridman. Editor: Julia Barton. Recording: Wardour Studios, London. GSI Studios, New York. PR: Christine Ragasa.

Thanks to the team at Pushkin Industries, Heather Fain, Mia Lobel, Carly Migliori, Jacob Weisberg, and of course, the mighty Malcolm Gladwell.

[Apple] [Spotify] [Stitcher]

 

Further reading

The best English-language account I could find of the Kopenick story is by Benjamin Carter Hett. “The ‘Captain of Köpenick’ and the Transformation of German Criminal Justice, 1891-1914,” Central European History 36 (1), 2003.

I first read about the story in Nigel Blundell’s The World’s Greatest Mistakes. Other accounts are at Strange History  and The Rags of TimeKoepenickia offers various contemporary German newspaper accounts. There are many small differences in the accounts but the overall story remains just as remarkable.

The definitive account of Stanley Milgram’s experiments is Gina Perry’s Behind the Shock Machine and Alex Haslam was interviewed by Radiolab in a great episode about the same topic.

An overview of the evidence on tall presidents is Gert Stulp, Abraham P. Buunk, Simon Verhulst, Thomas V. Pollet, “Tall claims? Sense and nonsense about the importance of height of US presidentsThe Leadership Quarterly  Volume 24, Issue 1, 2013.

The study of gubernatorial elections is Daniel J Benjamin & Jesse M Shapiro, 2009. “Thin-Slice Forecasts of Gubernatorial ElectionsThe Review of Economics and Statistics, MIT Press, vol. 91(3), pages 523-536, 02.

Daniel Hamermesh’s Beauty Pays looks at the overall evidence that appearances matter – including in politics.

 

 

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Highlights

Cautionary Tales Ep 1 – DANGER: Rocks Ahead!

 

Torrey Canyon was one of the biggest and best ships in the world – nevertheless its captain and crew needlessly steered it towards a deadly reef known as The Seven Stones. This risky manoeuvre seems like utter madness, but the thinking behind it is something we are all prone to do when we fixate on a goal and a plan to get us there.

Featuring: Enzo Cilenti, Ed Gaughan, Rufus Wright and Melanie Gutteridge.

Producers: Ryan Dilley and Marilyn Rust. Sound design/mix/musical composition: Pascal Wyse. Fact checking: Joseph Fridman. Editor: Julia Barton. Recording: Wardour Studios, London. GSI Studios, New York. PR: Christine Ragasa.

Thanks to the team at Pushkin Industries, Heather Fain, Mia Lobel, Carly Migliori, Jacob Weisberg, and of course, the mighty Malcolm Gladwell.

[Apple] [Spotify] [Stitcher]

 

Further reading

Two authoritative books were written about Torrey Canyon shortly after the events described in the podcast, and I’ve relied on both of them.

One is Oil and Water by Edward Cowan, and the other is The Black Tide by Richard Petrow. Both excellent, both long out of print.

For a more contemporary discussion of plan continuation bias I strongly recommend Meltdown by Chris Clearfield and Andras Tilcik.

This book also contains a good description of Marlys Christianson’s study of plan continuation bias in emergency rooms, “More and less effective updating” in Administrative Science Quarterly 2018.

The study of landings at Hartsfield-Jackson airport is Chris A. West’s “The Barn Door Effect“.

The dark tale of Sir Cloudesley Shovell is told in Dava Sobel’s hugely enjoyable book Longitudealthough I am sceptical Sir Cloudesley actually survived long enough for anyone to murder him.

 

 

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Marginalia

Cautionary Tales…

Exciting news – I have a new podcast series ready to burst out upon an unsuspecting world. It’s called Cautionary Tales – true stories of catastrophe and fiasco, sparkling with top acting talent, with the aim of making you wiser with every word. I’m writing and presenting the series and will be adding a soupcon of social science to the narrative. [Apple] [Spotify] [Stitcher]

While you wait for the first episodes to drop on November 15th, I thought I’d share a few of my favourite books about making mistakes.

I received Nigel Blundell’s The World’s Greatest Mistakes as a Christmas gift when I was a child – a strange and compelling array of catastrophes, from famous air crashes and military blunders to amusing vignettes such as the bride who accidentally married the best man. The stories seemed well researched (although no list of references) and were briskly told. That book is long out of print, but I suspect that Blundell’s new book A Century of Man-Made Disasters will have similar qualities.

Levy and Salvadori’s modern classic Why Buildings Fall Down is a skilfully illustrated and fascinating way to learn about structural engineering by studying what happens when it all goes wrong.

For books about human error you could take a look at my list of my favourite behavioural economics books but try also Kathryn Schulz’s beautiful meditation on error, Being Wrongand Tavris and Aronson’s excellent Mistakes Were Made (But Not By Me) James Reason’s more technical quasi-textbook Human Error.  

And for the all-important intersection of the maths-comedy-error Venn diagram, Matt Parker’s delightful Humble Pi

 

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