Tim Harford The Undercover Economist

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My recommendations for top podcasts, tweets, videos and anything else that makes economics fun.

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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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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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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…

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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Books about seeing into the past and the future

What I’ve been reading…

Steven Johnson’s FarsightedI’m a Steven Johnson fan and enjoyed this book a lot – sufficiently to read it in an afternoon in the library, then head to my local bookshoop and pay full retail. Given the number of books I get sent on spec, that’s a sincere compliment. This book is about taking the long view and thinking about non-obvious effects. Among the topics – diversity and groupthink (Steven may have taken some inspiration from Messy, Wiser and The Difference), prediction (with the now-obligatory mention of the excellent Superforecasting) and some really good stuff on wargaming and scenarios. Some good stories, well written – less surprising than, for example, Johnson’s Wonderland but I still learned a lot and enjoyed it.

Ian Mortimer’s Time Traveller’s Guide to Medieval England – a very clever way to bring history alive. Lots of insights and many things I didn’t know, even though I (like many gamer geeks) have an interest in the middle ages.

Michael Lewis, The Big ShortRe-reading this to refresh my memory about some CDO-related chicanery. He’s SO GOOD. Such lively writing and a lot of serious explanation smuggled in there too.

Andrew Hunter Murray The Last DayI got an early edition of this; you’ll have to pre-order it now and thank me in February. Terrific debut novel – a dystopian near-future account of a world which has literally stopped turning, leaving most of it either uninhabitably cold or uninhabitably hot. This manages to evoke Brexit and climate change and Syria without actually being about any of them. A great thriller – and the low-rent police-state (1984 on a tight budget) is grimly convincing.

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28th of October, 2019MarginaliaResourcesComments off
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The magic of picture books

Perhaps it’s the holiday feeling, but I’ve been looking at books with lots of pictures recently.

First, Randall Munroe’s marvelous How To. It’s in much the same style as What If? and just as funny and informative. I loved it, then my twelve year old daughter stole it and she loved it, then my eight year old son stole it and he loved it. I suspect we’re all getting something different from the book, which explores such questions as: If you wanted to fill a swimming pool with bottled water, could you open the bottles with atomic weapons? (There is actually a study of this question…) If you wanted to ski down a hill with no snow, would it work to drag a snow-machine along with you? How feasible is it to boil a river dry with a big array of kettles? Needless to say, strongly recommended.

Very different, from the equally talented cartoonish Zach Weinersmith and always-interesting economist Bryan Caplan, is Open Borders – which is a polemic essay, illustrated by Weinersmith, arguing for dramatically more liberal rules on immigration. I’m much more sympathetic to this idea than most people, so perhaps not best placed to find the holes in the argument, but it’s well worth a read: Caplan makes a strong case, founded on the idea that immigration is good for the global economy while respecting the basic liberty of every person in the world. Of course, there are many possible objections both to the argument, and to the policy, and Caplan works through all the obvious ones, arguing against them – sometimes from first principles and sometimes by appealing to data. And it’s all pictures – which does make it quick and fun to read.

And different again: I finally, three decades late, decided I should read Sandman by Neil Gaiman. Two volumes in and I’m loving it. The first volume is occasionally shlocky, awkward or exploitative to modern sensibilities – but only occasionally. Gaiman, one feels, is still finding his feet. Still, most of it is spellbinding. And volume 2 is even better. If you haven’t read it, you should.

One more thing. My father and I are going on an all day walk to raise money for Rennie Grove Hospice Care. I’m not going to pretend it will be a sinew-shredding challenge, although I hope to pick up a blister or too. But it’s a very good cause and we’d be most grateful for any support you can give. My mother died of cancer in 1996 and our whole family hugely valued the hospice care she received during her long and difficult illness.

Thank you in advance.

 

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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1st of September, 2019MarginaliaResourcesComments off
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Range, misinformation and the fine line between stupid and clever

Over the past couple of week’s I’ve been enjoying David Epstein’s Range – about the value of being a generalist. As I may have mentioned it’s in sympathy with my latest TED talk, which cites Epstein. I had the pleasure of seeing Epstein dig up a lot of interesting new research that supports some of what I argued in Messy – about the virtues of moving between fields, switching contexts and improvising. (It felt a bit like an out-of-sample check of my expectations.) Epstein skillfully blends stories with argument and evidence, and he makes it look easy (it isn’t).

Also impressed by The Misinformation Age by Cailin O’Connor and James Owen Weatherall (he also wrote the very nice Physics of Wall Street). O’Connor and Weatherall cover the territory very well – again, some nice stories, many of which I hadn’t heard – and they use a lot of network analysis to show how true and false ideas can spread or be propagated by various devious pieces of propaganda. Fairly nerdy but easy and fun to read.

 

Next on the pile, The Intelligence Trap: Why Smart People Make Dumb Mistakes by David Robson. This comes recommended to me but I have not yet cracked the spine. Looks v. interesting, though.

(While I’m here, I should mention that I just bought a new Moto G7 Play phone for £130 and I’m delighted with it. Seems to be a heck of a lot of phone for not a lot of money.)

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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24th of May, 2019ResourcesComments off
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The art of time well spent

I’ve been reading James Wallman’s Time And How To Spend It – which, intriguingly, he described to me as “How to Kondo Time”, which I don’t think it is. I’ve learned a few things worth knowing, though.

Wallman recommends seven rules for spending your time wisely:

  • Story
  • Transformation
  • Outside & Offline
  • Relationships
  • Intensity
  • Extraordinary
  • Status & Significance

(They spell “stories”. Nice, eh?) Actually the first chapter – “story” – was the most surprising to me. Wallman reminds us of classic story arcs (particularly Vonnegut’s “Man in a hole”) and suggests that we think about our time in that way. Does your plan for the next hour, day, month look like it would make for a good story? Would you encounter challenges and meet allies and experience personal transformation? It’s an intriguing approach to trying to spend your time in a more satisfying way – or, sometimes, to reframe the time you’ve already spent.

Much of the rest of the book is more straightforward: there is no harm in being reminded that most of us could do more to cultivate relationships, and that going for a walk is better for your mental health than hunching over a screen – obvious, yes, but true and worth repeating.

 

An alternative – or, perhaps, a complement – is Cal Newport’s Digital Minimalism, which really is “how to Kondo time”. I’ve written before about Newport’s book, which I found bracingly direct, challenging and practical. Newport’s basic theme: we fell into our habits of using phones, social media, email, web-browsing etc without making conscious decisions about what our priorities were. His practical challenge is to think about your priorities – for instance, a need to be connected to friends – and then weigh up how best to achieve those priorities. Is it really through Facebook? If so, how exactly? And if not, what alternative do you have planned?

It’s really a very powerful book. Strongly recommended.

 

You might also pick up a copy of Robert Twigger’s Micromastery, a charming little book, and an original one. Twigger argues that you should try new things (learn to cook, learn to swim, to play the guitar, to haggle) but in particular that you should find some small sub-set of the relevant skill and focus on that. You then get a skill worth having in its own right (eg learning to cook an omelette) while also gaining motivation to make progress on the broader task. Clever little idea. (NB Twigger wrote Angry White Pyjamas, which is an absolutely perfect book about what happens when a poet bumming around in Japan decides to spend a year on the toughest martial arts course in Japan.)

 

 

My book “Fifty Things That Made the Modern Economy” (UK) / “Fifty Inventions That Shaped The Modern Economy” (US) is out now in paperback – feel free to order online or through your local bookshop.

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21st of May, 2019MarginaliaResourcesComments off
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How to be more creative

I was on the TED Radio Hour this week; they were kind enough to give me both the first and the last word on the subject of kickstarting creativity.

If you’d like to read more on the subject I would – of course – recommend my book, Messy, which gave me the research base for both of the TED talks and the interviews around them.

But what else?

Perhaps David Epstein’s new book, Range, which sings the praises of broadening your horizons. I’m a couple of chapters in and enjoying it very much: good stories, well-researched. Epstein, an experienced and thoughtful sports writer, points out that what works in sport is actually not a very good guide to what works in life, because in life the rules are unclear, feedback can be patchy, and in general we need the widest possible base of experience. Recommended.

A very different book is A Mind At Play by Soni and Goodman – the first biography of Claude Shannon, one of the pioneers of modern computer science and the creator of information theory. Shannon’s an interesting subject in part because he’s still underappreciated outside his own field, and in part because his creative arc was complex and frustrating. He seems to spend an awful lot of time goofing around and wasting his talent. Was it wasted time? Or was it fundamental to the process? I’m not sure myself. I’ll write more about this sometime.

And I must recommend (again) Twyla Tharp’s The Creative Habit, a wonderful practical guide to creativity for anyone in any field at any stage of their career.

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13th of May, 2019MarginaliaResourcesComments off
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What I’ve been reading

Mark Bostridge, Florence Nightingale – a thorough biography of a remarkable woman, less well-known for her work as a statistician, data-visualisation pioneer and public health campaigner than she should be. One of the founders of evidence-based medicine, she is nevertheless more celebrated for being “the lady with the lamp”. Draw your own conclusions. Good book.

James Reason, Human Error – Reason’s work on industrial accidents is fantastic. This book reviews very ways in which human cognition fails us, with much more emphasis on (for example) potentially-lethal slips and bouts of absent-mindedness than the behavioural economists’ focus on biases and heuristics. More technical than I remember. Next up is The Human Contribution which has more stories and is a little more upbeat.

Jordan Frith A Billion Little Pieces – a sociologist writes about radio-frequency identification tags (RFID). I learned a lot, although would have preferred more reflection on the economic impacts of the technology.

On my pile are Safi Bahcall’s Loonshots, a book about long-shot innovation, a topic that has interested me for years. Also David Epstein’s Range – about the value of being a generalist. Much in sympathy with my latest TED talk, which in fact cites Epstein. Looking forward to reading both books.

 

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8th of May, 2019MarginaliaResourcesComments off
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