Think like a freak

steven levitt and sephen dubner

Chapter 1

Penalty kicks are never expected to go right down the pipe. Goalies are trained to move left or right

Chapter 2

Why not make something up if you're not going to be punished

Chapter 3

Problem redefinition 

Parents are the problem with the education system, not teacher skill

Chapter 4

The problem is in the roots

We throw away 40% of the food we buy 

Most who commit violent gun crimes are unaffected by the strictness of gun laws

Protestant reformation 

• 1517, German priest Martin Luther levied a list of ninety-five grievances against the Roman Catholic Church. 

  • sale of indulgences—Church raising cash by forgiving the sins of big-ticket donors. (One senses that today Luther would rail against the tax treatment enjoyed by hedge funds and private-equity firms.)

H pylori and how when a company becomes too powerful it doesn't want health? Lobbying power to protect its company, not the health of its members

Chapter 5

The lottery

• We spend $6b a year on lottery tickets

• 40% of low income adults consider the lottery their best chance to ever acquire large money, and low earners spend a larger % of income on lottery.

• Some companies used prize-linked savings (no-lose lottery):  you deposit $100 in a bank account. Let’s say the going interest rate is 1 percent. In a PLS account, you agree to surrender a small chunk of that interest, perhaps .25 percent, which then gets pooled with all the other small chunks from fellow PLS depositors. What happens to that pool of money? It is periodically paid out in a lump sum to some randomly chosen winner—just like the lottery!

  • PLS fever isn’t sweeping the nation because PLS is a lottery and most states only allow one entity to run a lottery: the state (monopoly)

  • Fed law prohibits banks from operating lotteries [can you really blame politicians for wanting to keep the exclusive rights to that $60b in annual lottery revenue. State always wins

Declared and revealed preferences - we’ll say one thing and do another, or more precisely, we’ll say what we think other people want to hear, and then in private, do what we want. 

Fecal Matter Transplant - 

• Thomas Borody: australian gastroenterologist, first to do it.

  • Has been used to treat patients with multiple sclerosis, parkinson’s and autism. 

  • Fecal microbiota transplantation.

  • Just how many microbes do each of us host? By one estimate, the human body contains ten times as many microbial cells as human cells, which puts the number easily in the trillions and perhaps in the quadrillions. This “microbial cloud,” as the biologist Jonathan Eisen calls it, is so vast that some scientists consider it the largest organ in the human body. And within it may lie the root of much human health . . . or illness.

Chapter 6

Herd mentality incentive - Look around the world and you’ll find overwhelming evidence of the herd mentality at work. It influences virtually every aspect of our behavior—what we buy, where we eat, how we vote.

You may not like this idea; none of us wants to admit that we are pack animals. But in a complicated world, running with the herd can make sense. Who has time to think through every decision and all the facts behind it? If everybody around you thinks that conserving energy is a good idea—well, maybe it is. So if you are the person designing an incentive scheme, you can use this knowledge to herd people into doing the right thing—even if they’re doing it for the wrong reasons.

Catching terrorists

• They tended to make a large initial deposit and then steadily withdraw cash over time, with no steady replenishment.

• Their banking didn’t reflect normal living expenses like rent, utilities, insurance, and so on.

• Some of them routinely sent or received foreign wire transfers, but the amount inevitably fell below the reporting limit.

  • What they found out was that they almost never purchased life insurance, because why would they need it. They created an algorithm and gave it to the bank and government and let them catch about 20 terrorists. Then they wrote about it in their sequel to freakanomics. Then guess what happened. Some people started buying these few quid starter policies like crazy, thinking it would help hide their presence. Thing was, the only ones buying them were terrorists lol

Chapter 7

Game theory 

• For hiring, offering a longer, more grueling application process to deter those who would probably quit anyway. 

• David lee roth and his m&ms 

Zappos - full on customer service - offers a fun culture and autonomy

• When being hired, zappos will offer new hires a chance to quit, saying that they will receive one month’s pay and reimbursement for training if they wish to leave. The employee gets to decide if they like the company or the pay more. One months pay is worth a lot less than the cost of turnover.

• A call-center job isn’t that desirable, so they up the incentive without upping the financial incentive. It offered more fun and more power. 

  • Meetings are held in a bar. Customer reps are encouraged to talk to a customer for as long as they want, without a script, and they are authorized to settle problems without calling in a supervisor and can even “fire” a customer who makes trouble. It gives  the CSR power.

SmRt incentives 

1. Figure out what people really care about, not what they say they care about.

2. Incentivize them on the dimensions that are valuable to them but cheap for you to provide.

3. Pay attention to how people respond; if their response surprises or frustrates you, learn from it and try something different.

4. Whenever possible, create incentives that switch the frame from adversarial to cooperative (herd mentality) lets all do this together. Once and done. 

5. Never, ever think that people will do something just because it is the “right” thing to do.

6. Know that some people will do everything they can to game the system, finding ways to win that you never could have imagined. If only to keep yourself sane, try to applaud their ingenuity rather than curse their greed.

Chapter 8

• Self-driving cars: 

  • Nearly every major automaker in the world, as well as Google, has successfully tested cars that use an onboard computer, GPS, cameras, radar, laser scanners, and actuators to do everything a human driver can do—\

  • 90 percent of the world’s 1.2 million traffic deaths each year—yes, 1.2 million deaths, every year!—are the result of driver error, the driverless car may be one of the biggest lifesavers in recent history.

  • Unlike humans, a driverless car won’t drive drowsy or drunk, or while texting or applying mascara; it won’t change lanes while putting ketchup on french fries or turn around to smack its kids in the backseat.

  • Google has already driven its fleet of autonomous cars more than 500,000 miles on real roads throughout the United States without causing an accident

  • Elderly and handicapped people wouldn’t have to drive themselves to the doctor (or, if they prefer, to the beach).

  • parents wouldn’t have to worry about their reckless teenagers getting behind the wheel. 

  • People could drink without hesitation when they go out at night—good news for restaurants, bars, and the alcohol industry

  • Since a driverless car can flow through traffic more efficiently, road congestion and pollution would likely fall

  • And if driverless cars could be summoned to pick us up or drop us off, we’d no longer need to park at our destination, freeing up millions of acres of prime real estate. In many U.S. cities, 30 to 40 percent of the downtown surface area is devoted to parking.

  • The Problem: 3% of the workforce, 3.6 million people, provide for their families by driving people around. Where will those jobs go?

How to persuade people who don’t want to be persuaded

1. Dont pretend your argument is perfect - 

2. Acknowledge the strength of your opponent's argument - we are blind to our own blindness

3. Keep the insults to yourself - negative information affects the brain more than positive info, and we’re fragile creatures. 

4. Why you should tell stories - There are of course a million variations in how a given story can be told: the ratio of narrative to data; the pace and flow and tone; the point of the narrative arc at which you “cut into” the story, as the great writer-doctor Anton Chekhov noted.

Chapter 9

The Upside of Quitting

Challenger - Morton Thiokel built the rocket motors, and the senior man Allen McDonald said the weather being what it would [18 degrees instead of the 52 degrees the o-rings (keep gases from escaping the rocket’s thrusters) had been tested at] was not safe. 

Premortem - Many institutions already conduct a postmortem on failed projects, hoping to learn exactly what killed the patient. A premortem tries to find out what might go wrong before it’s too late. You gather up everyone connected with a project and have them imagine that it launched and failed miserably. Now they each write down the exact reasons for its failure. Klein has found the premortem can help flush out the flaws or doubts in a project that no one had been willing to speak aloud.

This suggests one way to make a premortem even more useful: offer anonymity.