“Economics is life, and life is economics.”
— John List
John A. List (@Econ_4_Everyone) is the Kenneth C. Griffin Distinguished Service Professor in Economics at the University of Chicago. His new book is The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale.
His research has led to collaborative work with several different firms, including Lyft, Uber, United Airlines, Virgin Airlines, Humana, Sears, Kmart, Facebook, Google, General Motors, Tinder, Citadel, Walmart, and several nonprofits. For decades, his field experimental research has focused on issues related to the inner workings of markets; the effects of various incentives schemes on market equilibria and allocations; how behavioral economics can augment the standard economic model; early childhood education and interventions; and, most recently, on the gender earnings gap in the gig economy (using evidence from rideshare drivers).
His research includes more than 200 peer-reviewed journal articles and several published books, including the best seller he coauthored with Uri Gneezy, The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life.
List was elected a member of the American Academy of Arts and Sciences in 2011 and a fellow of the Econometric Society in 2015. He received the 2010 Kenneth Galbraith Award, the 2008 Arrow Prize for Senior Economists for his research in behavioral economics in the field, and was the 2012 Yrjö Jahnsson Lecture Prize recipient. He is a current editor of the Journal of Political Economy.
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SCROLL BELOW FOR LINKS AND SHOW NOTES…
Want to hear an episode with Freakonimics co-author Stephen Dubner? Lend an ear to our conversation, in which we discussed the amount of influence a sitting president actually has over the economy, how to grow a podcast, why cats wiggle their butts before they pounce, the potential of technology (like VR) to enhance education, and much more.
SELECTED LINKS FROM THE EPISODE
- Connect with John List:
The Voltage Effect Website | Personal Website
- The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale by John A. List | Amazon
- Clawback | Investopedia
- Loss Aversion | Investopedia
- Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner | Amazon
- Freakonomics Blog
- University of Central Florida
- Income Effect vs. Price Effect: What’s the Difference? | Investopedia
- #DeleteUber: How Social Media Turned on Uber | The Guardian
- Uber Is Finally Adding Tipping | Vox
- Uber’s Economics Team Is Its Secret Weapon | Quartz
- Nearly Two-Thirds of Uber Customers Don’t Tip Their Drivers, Study Says | The Verge
- How Much to Tip Your Uber Driver: An Ultimate Guide | Glamour
- How John List Revolutionized Economics by Studying People in the Real World | University of Chicago News
- Toward an Understanding of the Economics of Apologies: Evidence from a Large-Scale Natural Field Experiment | NBER
- Super Pumped | Showtime
- Super Pumped: The Battle for Uber by Mike Isaac | Amazon
- American Economic Association
- Uber Has a ‘God View’ Tool and Was Allegedly Using It to Spy on Celebs | Cosmopolitan
- The Behavioralist Meets the Market: Measuring Social Preferences and Reputation Effects in Actual Transactions | NBER
- Hobbes’ Moral and Political Philosophy | Stanford Encyclopedia of Philosophy
- John List: Taking Economic Theory to the Field | The Decision Lab
- Enhancing Critical Thinking Skill Formation: Getting Fast Thinkers to Slow Down by John A. List | The Journal of Economic Education
- Examples and Observations of a Confirmation Bias | Verywell Mind
- Game Theory | Stanford Encyclopedia of Philosophy
- A Beautiful Mind | Prime Video
- Nash Equilibrium | Investopedia
- Palmer House Hilton
- Heads Scene | Rosencrantz & Guildenstern Are Dead
- World Series of Poker | Wikipedia
- Guide to Alice Springs | Tourism Australia
- Bringing Down the House: The Inside Story of Six M.I.T. Students Who Took Vegas for Millions by Ben Mezrich | Amazon
- 21 | Prime Video
- Parental Incentives and Early Childhood Achievement: A Field Experiment in Chicago Heights | NBER
- Science Has Been in a “Replication Crisis” for a Decade. Have We Learned Anything? | Vox
- Lyft Just Launched a Way to Ride with Only Eco-Friendly Cars | Bustle
- Externality | Investopedia
- Anna Karenina by Leo Tolstoy | Amazon
- How Good Is the Polio Vaccine? | The Atlantic
- COVID-19 Vaccine Hesitancy: 12 Things You Need to Know | Johns Hopkins Medicine
- Why Your Ridesharing Driver May Force You to Cancel and Pay a Fee | The Points Guy
- University of Wyoming
- Fractals: Hunting the Hidden Dimension | Prime Video
- How Mandelbrot’s Fractals Changed the World | BBC News
- The Behavioural Insights Team
- The $100 Million Nudge: Increasing Tax Compliance of Businesses and the Self-Employed using a Natural Field Experiment | NBER
- What a Well-Known Researcher Discovered When He Asked People to Flip a Coin on Important Life Decisions | The Washington Post
- Beijing 2022 Olympics
- Ode to the Sea: Workplace Organizations and Norms of Cooperation | NBER
- Do Women Avoid Salary Negotiations? Evidence from a Large Scale Natural Field Experiment | Harvard Gender Action Portal
- StubHub
- Chris Dixon and Naval Ravikant — The Wonders of Web3, How to Pick the Right Hill to Climb, Finding the Right Amount of Crypto Regulation, Friends with Benefits, and the Untapped Potential of NFTs | The Tim Ferriss Show #542
- Cryptocurrency Finds Itself in the Sights of Robust Regulation | Reuters
- Financial Crisis of 2007–2008 | Wikipedia
- The Wealth of Nations by Adam Smith | Amazon
- The Theory of Moral Sentiments by Adam Smith | Amazon
- Facing a Bumpy History | Smithsonian Magazine
- Moneyball: The Art of Winning an Unfair Game by Michael Lewis | Amazon
- White Sox Are More of a Moneyball Team than You Might Think | The Sports Bank
- Prospect Theory | Investopedia
SHOW NOTES
- What is a clawback incentive, and how has John found it useful as a father of eight children? What other incentives have proven to be effective social tools in the real world? [07:44]
- The side effects of modifying or removing incentives, how incentive durability is measured, and why getting human beings to take on short-term inconveniences for long-term but far-off rewards can be troublesome. [15:23]
- John details his extensive work researching the science of charitable giving and tipping (particularly with ridesharing) and what he’s discovered over time. [22:33]
- Why the ability to publish his work in academic journals was the deciding factor in John’s acceptance of a job at Uber over Amazon, and what research had to say about the efficacy of tipping ranges in user interfaces. [35:07]
- What data says about customer service and the power of apologies, and the consequences of allowing such data to be published in academic journals instead of hidden away in some proprietary lockbox. [44:04]
- What John learned about human nature by measuring social preferences and reputation effects in actual transactions as an economist — and during his time as a baseball card dealer. [51:52]
- John’s thoughts on critical thinking hierarchy, theory of mind, and what the bar scene in A Beautiful Mind got wrong about the Nash equilibrium. [57:54]
- How does someone develop theory of mind as an applicable skill? [1:03:09]
- How John came to win a poker tournament in Australia while killing time before a conference. [1:07:34]
- What prompted John to write The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale? [1:10:26]
- John addresses the replication and credibility crises in science, and their real-world consequences. [1:15:38]
- “Scaling is not a silver bullet problem. Rather, it is an Anna Karenina problem.” How to check the vital signs that determine if an idea is scalable, with Jonas Salk’s success in conquering polio by way of vaccination serving as an example. [1:19:36]
- Untended side effects of failing to understand spillovers while scaling — like when the introduction of tipping to the ridesharing dynamic presents drivers with a new set of problems, or when drivers exploit technical loopholes to ditch responsibility for rudely cancelling a customer’s pickup from afar. [1:28:09]
- Why did John have such a slow start entering the job market after getting his PhD? What was holding him back? [1:36:34]
- Is there any application for fractal mathematics to economics? [1:41:26]
- Scalable incentives, marginal thinking, optimal quitting, and building culture. [1:45:46]
- Why is StubHub one of John’s favorite apps? [2:07:46]
- Thoughts on blockchain as a rich source of data for behavioral economists. [2:09:10]
- How should a modern, uninitiated audience approach Adam Smith’s The Wealth of Nations? [2:12:05]
- Parting thoughts. [2:16:30]
MORE JOHN LIST QUOTES FROM THE INTERVIEW
“Economics is life, and life is economics.”
— John List
“With a little bit of data, and just an economics 101 understanding, you can really go a long way to change the world and make it a better place—from the White Sox to the White House.”
— John List
“Scaling is not a silver bullet problem. Rather, it is an Anna Karenina problem.”
— John List
“Very few people will not screw each other. There are very few nice people out there.”
— John List
“We’re going to change the world by understanding the science of using science.”
— John List
“To use the world as your lab is a great opportunity to make the world a better place.”
— John List
Listen to the episode on Apple Podcasts, Spotify, Overcast, Podcast Addict, Pocket Casts, Stitcher, Castbox, Google Podcasts, Amazon Music, or on your favorite podcast platform.
PEOPLE MENTIONED
- Steven D. Levitt
- Thomas L. Keon
- Travis Kalanick
- Jeff Bezos
- Jeff Holden
- Brian Koppelman
- David Levien
- Matt Damon
- Angus Deaton
- Logan Green
- John Zimmer
- Thomas Hobbes
- Hank Aaron
- Barry L. Bonds
- Ken Griffey, Jr.
- John Forbes Nash, Jr.
- Ron Howard
- Phil Hellmuth
- Phil Ivey
- Michael Jordan
- Roland G. Fryer, Jr.
- Leo Tolstoy
- Jonas Salk
- Andrew Grove
- Benoit Mandelbrot
- Steve Stricker
- Jerry Kelly
- Vince Lombardi
- Benny the Bull
- Adam Smith
- Bryce Harper
- Vernon Smith
- Gary Stanley Becker
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I wonder how much of an impact “clawback incentives” have on the goals/KPIs.
Presumably the clawback structure might also incentivice the employer to choose more reasonably achievable goals because he wants the employee to not fail and get resentful about returned bonuses.
Maybe leads to more work in proximal zone of development.
The idea of preying on underpaid teachers’ fear of losing out financially is such a shit take. Top 5 worst guests ever.
List raised a million dollars from donations for bonuses for the teachers. He doesn’t determine their pay. He is giving this money to them above and beyond their pay. What are you doing for teachers beyond sitting around hoping for the best.
All credibility lost with talk of “climate change.”
Fascinating discussion, Tim-i loved this episode! I wondered to myself if the explanation of clawback incentive before the apology discussion was coincidental or whether this was in fact implemented in relation to the apology gesture of $5 for bad service at Uber I.e. does the driver pay the apology payment from their personal takings? Would you know? I see this might drive the right behaviour-clever stuff!! Big fan of the show- keep up the great work!
Currently reading Hold On to Your Kids by Gordon Neufeld and Gabor Mate. The thought of using claw backs on kids or to incentivize pre-school teachers makes my stomach roll. I wonder what they would think?
I have been using clawback with my kids without even knowing it was a thing!
I put 5 1 dollar bills on the dashboard. Once we get where are going you get all the money on the dashboard. Each time you ask “Are we there yet? (or any variation) I remove $1. They get $5 every time, and I avoid the parents least favorite question of all time!
I devoured this episode! So many great nuggets. I’m hungry to learn more about how to execute clawback incentives in the workplace. After a quick search online I’m still not finding great content. Most of the content out there is about using clawback incentives as a way to penalize instead of incentivize. If you do a second episode with John please dig in some more!
Wow, he really represents everything that is wrong with academia and “behavioral economics”. He and people like him are using their power to exploit workers and enforce governmental authoritarianism, and he actually feels proud of it? I guess the big bucks from corporations help, let alone the euphoria that comes with manipulation. “Higher” education has never sunk lower!
List raised a million dollars from donations for bonuses for the teachers. He doesn’t determine their pay. He is giving this money to them above and beyond their pay. What are you doing for teachers beyond sitting around hoping for the best.