Posted on by

John List — A Master Economist on Strategic Quitting, How to Practice Theory of Mind, Learnings from Uber, Optimizations to Boost Donations, The Primitives of Decision-Making, and How Field Experiments Reveal Hidden Realities (#566)

10 Comments
Topics: CategoriesThe Tim Ferriss Show
Illustration via 99designs

“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.

Please enjoy!

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. You can watch the interview on YouTube here.

Brought to you by Athletic Greens all-in-one nutritional supplement, Four Sigmatic mushroom coffee, and Allform premium, modular furniture. More on all three below.

The transcript of this episode can be found here. Transcripts of all episodes can be found here.

Listen onApple Podcasts
Listen onSpotify
Listen onOvercast
#566: John List — A Master Economist on Strategic Quitting, How to Practice Theory of Mind, Learnings from Uber, Optimizations to Boost Donations, The Primitives of Decision-Making, and How Field Experiments Reveal Hidden Realities

This episode is brought to you by Four Sigmatic and their delicious mushroom coffee, featuring lion’s mane and chaga. It tastes like coffee, but it has less than half the caffeine of what you would find in a regular cup of coffee. I do not get any jitters, acid reflux, or any type of stomach burn. It’s organic and keto friendly, plus every single batch is third-party lab tested.

You can try it right now by going to FourSigmatic.com/Tim and using the code TIM. You will receive up to 39% off on the lion’s mane coffee bundle. Simply visit FourSigmatic.com/Tim. If you are in the experimental mindset, I do not think you’ll be disappointed. 

This episode is brought to you by Allform! If you’ve been listening to the podcast for a while, you’ve probably heard me talk about Helix Sleep mattresses, which I’ve been using since 2017. They also launched a company called Allform that makes premium, customizable sofas and chairs shipped right to your door—at a fraction of the cost of traditional stores. You can pick your fabric (and they’re all spill, stain, and scratch resistant), the sofa color, the color of the legs, and the sofa size and shape to make sure it’s perfect for you and your home.

Allform arrives in just 3–7 days, and you can assemble it yourself in a few minutes—no tools needed. To find your perfect sofa and receive 20% off all orders, check out Allform.com/Tim.

This episode is brought to you by Athletic Greens. I get asked all the time, “If you could use only one supplement, what would it be?” My answer is usually AG1 by Athletic Greens, my all-in-one nutritional insurance. I recommended it in The 4-Hour Body in 2010 and did not get paid to do so. I do my best with nutrient-dense meals, of course, but AG further covers my bases with vitamins, minerals, and whole-food-sourced micronutrients that support gut health and the immune system. 

Right now, Athletic Greens is offering you their Vitamin D Liquid Formula free with your first subscription purchase—a vital nutrient for a strong immune system and strong bones. Visit AthleticGreens.com/Tim to claim this special offer today and receive the free Vitamin D Liquid Formula (and 5 free travel packs) with your first subscription purchase! That’s up to a one-year supply of Vitamin D as added value when you try their delicious and comprehensive all-in-one daily greens product.

What was your favorite quote or lesson from this episode? Please let me know in the comments.

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.

#199: Stephen Dubner — The Art of Storytelling and Facing Malcolm Gladwell in a Fist Fight
  • Connect with John List:

The Voltage Effect Website | Personal Website

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

The Tim Ferriss Show is one of the most popular podcasts in the world with more than 900 million downloads. It has been selected for "Best of Apple Podcasts" three times, it is often the #1 interview podcast across all of Apple Podcasts, and it's been ranked #1 out of 400,000+ podcasts on many occasions. To listen to any of the past episodes for free, check out this page.

Leave a Reply

Comment Rules: Remember what Fonzie was like? Cool. That’s how we’re gonna be — cool. Critical is fine, but if you’re rude, we’ll delete your stuff. Please do not put your URL in the comment text and please use your PERSONAL name or initials and not your business name, as the latter comes off like spam. Have fun and thanks for adding to the conversation! (Thanks to Brian Oberkirch for the inspiration.)

10 Replies to “John List — A Master Economist on Strategic Quitting, How to Practice Theory of Mind, Learnings from Uber, Optimizations to Boost Donations, The Primitives of Decision-Making, and How Field Experiments Reveal Hidden Realities (#566)”

  1. 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.

    Reply

    1. The idea of preying on underpaid teachers’ fear of losing out financially is such a shit take. Top 5 worst guests ever.

      Reply

      1. 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.

  3. 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!

    Reply

  4. 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?

    Reply

  5. 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!

    Reply

  6. 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!

    Reply

  7. 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!

    Reply

    1. 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.

      Reply