Tim Harford The Undercover Economist

MarginaliaMarginalia

If it doesn’t fit anywhere else, it’s here.

Marginalia

Some podcasts you should hear

Forgive me not linking, because different people will access their podcasts in different ways, but here are a few feeds I suggest you check out:

Radio 4’s Seriously feed contains two documentaries a week, with a marvellous range of techniques. The US storytelling style is wonderful, but there’s more variety in the Seriously stable, and while it sometimes misfires or is ponderous, when it works it’s glorious. Three recent episodes worth checking out: The Edge of Life (about suicide and suicide prevention), Who’s Looking At You (quite brilliant about the effects of universal surveillance) and The Trainspotter’s Guide To Dracula, featuring Miles Jupp.

99% Invisible needs no plug from me but they’re awesome. An ear-catching recent episode discussed the universal basic income not as a piece of economic policy but as a design decision – and 99PI has got me exploring all kind of interesting topics, from barbed wire to Frank Lloyd Wright’s affordable homes.

Jon Ronson’s The Butterfly Effect is clever, curious and surprisingly moving. Series One is about the porn industry, but Ronson talks to all kinds of people and takes the story in a variety of unexpected directions. Bravo.

Just catching on is the After On podcast; free-flowing extended chats with fascinating people such as Ev Williams of Twitter, Blogger and Medium, or Chris Anderson of TED. Well worth a listen.

And finally, Radio 4’s Analysis is back and I particularly enjoyed the episode on the way the Houses of Parliament are falling apart. No, it’s not a metaphor. Except it is obviously partly a metaphor…

And finally finally, Jessica Abel’s book Out On The Wire (UK) (US) spills the beans about how great radio and podcasts are made.

Oh, and finally finally finally, you should of course listen to every episode ever made of Fifty Things That Made The Modern Economyall 52 of them. Details about the book here.

Free email updates

(You can unsubscribe at any time)

9th of November, 2017MarginaliaComments off
Marginalia

The best books about failure

I wrote Adapt: Why Success Always Starts With Failure (UK) (US) several years ago, but I’ve not stopped thinking and talking about the idea. So often we’re told to “learn from our mistakes” or “fail forward”, but the truth is that this advice isn’t easy to take: failure is painful and denial is common.
Here are a few of my favourite books on the topic:

I encountered Little Bets (UK) (US) by Peter Sims just as Adapt was coming out, and loved it. Peter had come to similar conclusions but had a totally different range of examples (from Chris Rock to Frank Gehry, if I recall correctly) and a winning, informal style.

Kathryn Schulz’s Being Wrong (UK) (US) is beautifully written (Schulz later won a Pulitzer prize) and a fascinating discussion of the history and psychology of wrongness.

To go deeper into the psychology of wrongness, try Mistakes Were Made (But Not By Me) (UK) (US) by two academics, Carol Tavris and Eliot Aronson. (Aronson was a research assistant on one of the most famous studies of wrongness, Festinger’s When Prophecy Fails.) The book is highly accessible and full of interesting testaments to the power of denial.

And for a more recent synthesis, try Matthew Syed’s Black Box Thinking (UK) (US), which focuses in particular on the importance of examining and learning from our errors (as with an aeroplane black box).

Happy failing!

My new book is “Fifty Inventions That Shaped The Modern Economy”. Grab yourself a copy in the US or in the UK (slightly different title) or through your local bookshop.

Free email updates

(You can unsubscribe at any time)

31st of October, 2017MarginaliaResourcesComments off
Marginalia

Was Luca Pacioli overrated?

One of my favourite chapters in Fifty Things That Made The Modern Economy (UK) (US) is on double-entry bookkeeping. You can read a briefer adaptation of the chapter on the BBC website. Luca Pacioli, Renaissance mathematician admired by the likes of Leonardo da Vinci, is one of the stars of my story. I have read in various places that Pacioli invented double-entry bookkeeping (I won’t embarrass the authors by naming names) but this isn’t true, as I write:

Pacioli is often called the father of double-entry bookkeeping, but he didn’t invent it.

Why, then, give Pacioli a starring role? Because of his grand treatise:

Summa de Arithmetica, Geometria, Proportioni et Proportionalita was an enormous survey of everything that was known about mathematics – 615 large and densely typeset pages. Amidst this colossal textbook, Pacioli included 27 pages that are regarded by many as the most influential work in the history of capitalism. It was the first description of double-entry bookkeeping to be set out clearly, in detail and with plenty of examples…. His book enjoyed a long print run of 2,000 copies, and was widely translated, copied, and plagiarised across Europe.

Pacioli, then, did not invent double-entry bookkeeping but we can trace its influence to his work. Or can we?

Professor Jacob Soll, author of The Reckoning (UK) (US) writes to suggest that I dig deeper. For one thing, was a 2000-copy print run really so impressive? Accounting caught on in England and Holland, but was Pacioli the source? Prof. Soll writes in an email:

The accounting section was extracted and transcribed, but often changed and not attributed to him.  It is more likely than Jan Ympyn’s book was the actual version that fell into the hands of Englishmen and Germans who went to Holland to literally learn complex capitalism. When industrial capitalism rears its head in Britain around 1706, the British manuals are the ones that are the basis of the revolution.  Did they come from Pacioli?  Possibly, a little?  By that time there were so many Dutch manuals and the great accounting teachers were Dutch and then low Churchmen…  It was only later, as historians tried to date these things, that Pacioli is named the father of the tradition.

Richard Dafforne’s English-language guide to accounting, from 1636, credits the Dutch as his influence.
Moving on from Pacioli to the foundation of management accounting techniques, another loyal reader, Greg Finch, writes:

I hadn’t previously been aware that Josiah Wedgwood used his accounts as a basis for improving his business. However, now I become one of those correspondents who -perhaps irritatingly- disputes one of your points. Doubtless many did follow what they saw Wedgwood doing but I don’t believe management accounting started with him. In Northumberland merchants turned lead miners/processors were using unit cost analysis drawn from their accounts to decide on where to locate smelting mills and to seek cheap sources of ore at least as early as 1680, and had already put in place quantitative ‘KPIs’ they expected managers to report on regularly. I don’t claim this was where it started either -though I am finding Newcastle and the north-east was an interesting hotbed of developing business practice at the time…

My sources included Jane Gleeson-White’s Double Entry (UK) (US), the BBC’s ten-part Brief History of Double-Entry Bookkeeping (which alas is not currently available), and William Goetzmann’s Money Changes Everything (UK) (US). Professor Soll points me towards an authoritative source that I had missed, B. S. Yamey’s Scientific Bookkeeping and the rise of Capitalism.  One of the joys of this project is that I keep on learning.

24th of October, 2017MarginaliaComments off
Marginalia

Why Thaler’s Nobel is a well-deserved nudge for behavioural economics

Richard Thaler has won the Nobel memorial prize in economics, an award that had been anticipated for some time. Mr Thaler is a behavioural economist, one of the group of economists who applies insights from psychology, or perhaps plain common sense, into the idealised world of economic modelling.

One trivial behavioural insight that Mr Thaler is fond of mentioning concerns a large bowl of cashew nuts he once served to dinner guests over drinks. Observing his guests hoovering up the contents of the bowl, he removed it to the kitchen so as not to spoil everyone’s appetite. The guests could in principle have stopped of their own accord; nevertheless they were pleased to see temptation removed.

Early in his career, he started making a list of “Dumb Stuff People Do” on the blackboard in his office. The cashew nut example was on the list, and it is a classic piece of Thaler thinking: obvious, trivial, fun and yet completely beyond the scope of traditional economics to model. Mr Thaler’s insight is that such trivia might lead to important analytical and policy insights.

Thomas Schelling, Nobel laureate in 2005, was also a master of these deceptively simple observations of human nature. And Daniel Kahneman — a psychologist, mentor for Mr Thaler, and winner of the prize in 2002 — had with Amos Tversky laid the foundations for behavioural economics.

Mr Thaler advanced the field in two important ways. He campaigned for behavioural economics to be taken seriously within the economics profession. He also brought it into the policy environment with his book Nudge (co-authored with Cass Sunstein) and his support for behavioural policy units in the White House and 10 Downing Street.

Within the profession, Mr Thaler found a pulpit in the Journal of Economic Perspectives, an academic journal supplied to all members of the American Economic Association. His Anomalies column was witty and sharply reasoned, highlighting strange features of the economic and financial world that standard economic theory could not explain, and rigorously debunking unconvincing attempts at rationalisation.

His evangelism for behavioural economics has been successful, at least in microeconomics: it is commonplace to see economic models incorporate psychological realism, and Mr Thaler himself was president of the American Economic Association in 2015.

In the policy world, Mr Thaler’s most famous idea was to use behavioural insights in pensions policy — for example, by enrolling people in a pension scheme by default, while giving them the choice to opt out. The stakes here are much higher than with cashew nuts: default enrolment has, according to the UK pensions regulator, increased participation in private-sector pension schemes from 42 per cent to 73 per cent between 2012 and 2016.

Rational economic man does not care — or even notice — whether a pension is opt-in or opt-out. He simply calculates (instantly) whether it pays to participate and chooses accordingly. Mr Thaler’s insight is not only that people are not perfectly rational (that much is obvious, even to the most traditional of economists) but that apparently small departures from rationality can have outsized impacts.

Mr Thaler’s catch-all advice: whether you’re a business or a government, if you want people to do something, make it easy. This year’s choice of Nobel Prize winner is an easy one to like.

Written for and first published in the Financial Times on 9 October 2017.

My new book is “Fifty Inventions That Shaped The Modern Economy”. Grab yourself a copy in the US or in the UK (slightly different title) or through your local bookshop.

Free email updates

(You can unsubscribe at any time)

Marginalia

Behavioural economics books to enjoy

Congratulations to Richard Thaler, who has been awarded the Nobel memorial prize in economics “for his contributions to behavioural economics”. Thaler is a worthy winner. In addition to his academic contributions, alongside the likes of Daniel Kahneman and Robert Shiller, he has been the leading evangelist in the profession for behavioural realism in economics.

Thaler’s influence on policymakers has been unparalleled, in part thanks to his book Nudge (UK) (US) with Cass Sunstein. I wrote a quick appreciation of Thaler for the FT (subscription req.) and this much longer piece a couple of years ago asking what lay in store for behavioural economics.

Here are a few of my favourite behavioural economics books:

Daniel Kahneman Thinking Fast and Slow (UK) (US) – now the bible of behavioural economics, full of fascinating experiments and examples.

Michael Lewis The Undoing Project (UK) (US) – a touching biography of Kahneman and Tversky. Skip the first chapter, but the rest is beautiful storytelling and insightful.

Cass Sunstein and Reid Hastie Wiser (UK) (US) – the best book I know about group decision-making and how to overcoming polarisation and groupthink.

For inside stories of behavioural economics try Thaler’s Misbehaving (UK) (US) and David Halpern’s Inside the Nudge Unit (UK) (US).

And for behavioural science to brighten your day, there’s Think Small (UK) (US) by Halpern’s colleagues Owain Service and Rory Gallagher, or How To Have A Good Day (UK) (US) by Caroline Webb.

Enjoy! And if you’d like a reminder that the old rational choice school of thought has some intriguing insights to contribute, may I (ahem) recommend my second book The Logic of Life (UK) (US).

 
My new book is “Fifty Inventions That Shaped The Modern Economy”. Grab yourself a copy in the US or in the UK (slightly different title) or through your local bookshop.

Free email updates

(You can unsubscribe at any time)

9th of October, 2017MarginaliaResourcesComments off
Marginalia

Messy – paperback publication day US

messy-us-cover

The paperback of Messy is out in the US! You can order from Amazon here or find out more about the book and other places to buy here – or if you have a good local bookshop then please support it by picking up the book there.

I had a lot of fun – and no small amount of heartache – writing the book. Tyler Cowen says it is my “best and deepest”; Brian Eno comments, “It’s a very very good book, full of wise counterintuitions and clever insights”; while The Economist comments that it “masterfully weaves together anecdote and academic work.”

To get a flavour of what the book is all about, there’s my TED talk here – or you can check out my Messy inspired reading list, too.

4th of October, 2017MarginaliaComments off
Marginalia

Books about how to see into the future

Walter Friedman has a fascinating history of economic forecasting in the early 20th century: Fortune Tellers (UK) (US). Well researched, full of interesting detail, and some of these guys (Irving Fisher, Roger Babson) were remarkable characters. For an insight into Fisher’s rival as an economist and investor, John Wasik’s Keynes’s Way To Wealth (UK) (US) is a fun light read.

Paul Goodwin’s Forewarned (UK) (US) is a broad survey of different forecasting approaches. I learned a few interesting things – but also felt Goodwin never quite reached a conclusion.

Philip Tetlock, with Dan Gardner wrote Superforecasting (UK) (US). Tetlock is one of the most interesting social scientists alive, and this research project into who does and does not make good forecasts is fascinating. (You might also look up Tetlock’s brilliant earlier, nerdier Expert Political Judgement and Gardner’s earlier polemic Future Babble, books which led to this collaboration.)

People who are interested in an alternative approach, scenario planning, might check out this offering from two of my former colleagues in Shell’s scenario planning team, Rafael Ramirez and Angela Wilkinson: Strategic Reframing (UK) (US). I haven’t yet read the book but I have no doubt about the qualifications of its authors, and the scenario method is a clever approach to an almost impossible future-gazing task.

Finally, this BBC Radio program about economic forecasting is good fun.

Free email updates

(You can unsubscribe at any time)

28th of September, 2017MarginaliaResourcesComments off
Marginalia

Hunting for the 51st thing – suggestions for further reading or listening

Loyal listeners and readers will know that Fifty Things That Made the Modern Economy  is turning into Fifty-One Things, at least in radio form. We have a short-list of six candidates to be made into a special final episode. Please vote here before noon GMT on Friday 6 October 2017.

But the loyal-of-loyal listeners might want some suggestions for further reading and/or listening.

If you’d like to know more about an early episode in the history of credit cards, try 99% Invisible’s episode The Fresno Drop.

Steven Johnson’s excellent technological history How We Got To Now (US) (UK) focuses on just six key inventions rather than fifty – and glass is one of them.

GPS, meanwhile, gets a book all of its own: Greg Milner’s PinPoint (US) (UK).

To understand the role of irrigation in China, try Philip Ball’s The Water Kingdom (US) (UK) – or if you want a quick hit on irrigation in Bali, there’s this.

For the pencil, there’s only one place to go: Leonard Read’s classic, I, Pencil.

And spreadsheet enthusiasts can enjoy Planet Money’s special episode, imaginatively titled Spreadsheets! 

And if you’d like to pick up a copy of  my own book, it has received some lovely reviews. It’s out now in the UK and in the US (with the title Fifty Inventions That Shaped the Modern Economy).  Do feel free to order copies for all your friends…

Free email updates

(You can unsubscribe at any time)

25th of September, 2017MarginaliaComments off
Marginalia

Ideas about the past, present and future of the economy

Books

Book of the week is James C Scott’s Against The Grain (UK) (US) – an examination of the origins of civilisation. Scott – best known for the magnificent Seeing Like A State (US) (UK) – is on fascinating form. There’s a fine long review by John Lanchester in the New Yorker.

I’ve been enjoying Ed Thorp’s A Man For All Markets (UK) (US).  Thorp is a quite brilliant thinker about both gambling and investment – he also built a wearable computer with Claude Shannon to predict the fall of the ball on a roulette table. So far this is a fascinating autobiography. Thought-provoking foreword by Nassim Taleb, too, who emphasises the simple practicality of Thorp’s approach.

Then there’s Paul Goodwin’s Forewarned (UK) (US) – which at first glance seems to be a great survey of what works and what doesn’t in the forecasting game. (It’s next on my list to read.)

 

Bro-casts

I’m going to admit to listening to The Art of Manliness and The Tim Ferriss Show, at least on occasion, because there are occasional gems. Check out this fascinating interview about the professor who taught Homer’s Odyssey to a class including his on octogenarian father – and what both the text and the class taught him about the relationship between fathers and sons. And here’s Mr Money Moustache on Ferriss’s podcast.

And not-at-all Bro-ish, but I loved this recent episode of The Why Factor about why we ask “so what do you do?” of strangers – and whether we can do better than that question. Wonderful radio.

 

The Search For the Fifty First Thing

If you’ve been enjoying the book / series of Fifty Things That Made the Modern Economy you can vote for one more special episode here (until noon GMT 6 October 2017) – the shortlist of six is worth a look!

Free email updates

(You can unsubscribe at any time)

18th of September, 2017MarginaliaComments off
Marginalia

Your chance to vote for the 51st thing that made the modern economy

It’s been such fun working on the radio series and book Fifty Things That Made the Modern Economy – but one of the frustrations was all the fascinating ideas, inventions and stories that I couldn’t squeeze into the book. Well, now there are six more on the table – and I’d love you to vote as to which of them will be the subject of one final episode.

The options are: credit cards, glass, the global positioning system, irrigation, the pencil, and spreadsheets. I chose this short-list of six from hundreds of suggestions that came in from BBC listeners.

So – please vote here before noon GMT on Friday 6 October. Or you could hold your fire until next weekend (23 September) at which point we’ll have a special podcast covering the six shortlisted ideas.

And if you’d like to pick up a copy of the book, it has received some lovely reviews. It’s out now in the UK and in the US (with the title Fifty Inventions That Shaped the Modern Economy).  Do feel free to order copies for all your friends…

Free email updates

(You can unsubscribe at any time)

16th of September, 2017MarginaliaComments off
Previous Next

Elsewhere

  • 1 Twitter
  • 3 RSS
  • 5 Podcasts
  • 6 Facebook

Books

  • Fifty Inventions That Shaped the Modern Economy
  • Messy
  • The Undercover Economist Strikes Back
  • Adapt
  • Dear Undercover Economist
  • The Logic of Life
  • The Undercover Economist

Search by Keyword

Free Email Updates

Enter your email address to receive notifications of new articles by email (you can unsubscribe at any time).

Join 177,198 other subscribers

Do NOT follow this link or you will be banned from the site!