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The Why Axis: Hidden Motives and The Undiscovered Economics of Everyday Life Kindle Edition
Two of Forbes magazine’s “world’s most powerful economists” provide the breakthrough ideas to challenge the assumptions of human decision-making.
Can economics be passionate? Can it centre on people and what really matters to them? And can it help us understand why they do what they do in everyday life? Two revolutionary economists believe it can.
In The Why Axis, Uri Gneezy and John List lead us on a journey to discover the economics underlying human motivation and how to structure the incentives that can get people to move mountains.
Finding the right incentive can be like looking for a needle in a haystack, but Gneezy and List have pioneered an innovative approach to zeroing in on those needles. Like other economists, they gather data and build models, but then they go much, much further, embedding themselves in our messy world—the factories, schools, communities and offices where people live, work and play. Their goal: to discover solutions to the big, difficult problems, such as the gap between rich and poor, the violence plaguing inner city schools, why people really discriminate, and whether women are really less competitive than men.
Their revelatory and startling discoveries about how incentives really work are both groundbreaking and immensely practical. This research will change the way we both think about and take action on big and little problems. Anyone working in business, politics, education or philanthropy can use the approach Gneezy and List describe in The Why Axis to reach a deeper, more nuanced understanding of human behaviour and a better grasp of what motivates people and why.
"It is hard to imagine any story of innovation in our thinking about economics that does not involve Uri and John, especially their exploration of the sensitive, hidden aspects of economics." -DAN ARIELY, author of Predictably Irrational and professor of psychology and economics, Duke University
"A real home run of a book that shows how real people make real decisions in the real world. A breakthrough in both economic theory and practice." -DARON ACEMOLGLU, co-author of Why Nations Fail, Killian Professor of Economics, MIT
"John List's work in field experiments is revolutionary." - GARY BECKER, winner of the Nobel laureate in economics
"Uri Gneezy is a pioneer whose work tears down the wall between the lab and the field." -ALVIN E. ROTH, Nobel laureate in economics
"John List and Uri Gneezy have done pioneering work in economics on big, complex problems such as discrimination, whether gender differences are innate or the result of social pressures, and how to close the gap between inner-city students and those who live in wealthy areas. Anyone interested in finding solutions to these and other major problems will find their book a rich resource." - TYLER COWEN, George Mason University, MarginalRevolution.com
"John List and Uri Gneezy are among the foremost behavioral economists in the world. This book about their groundbreaking research is a true pleasure to read.” -DANIEL GILBERT, Edgar Pierce Professor of Psychology, Harvard University, author of the international bestseller Stumbling on Happiness--This text refers to an alternate kindle_edition edition.
About the Author
John A. List grew up in a working-class family in Wisconsin -- where his father drove trucks for a living -- and learned economics in hobby markets. Dr. List is the Homer J. Livingston Professor of Economics at the University of Chicago. He has been a research associate at the National Bureau of Economics (NBER) for more than a decade and served as senior economist on the President's Council of Economic Advisors for environmental and resource economics. --This text refers to an out of print or unavailable edition of this title.
- ASIN : B00C0UK3PU
- Publisher : HarperCollins Publishers (Oct. 15 2013)
- Language : English
- File size : 1475 KB
- Text-to-Speech : Enabled
- Screen Reader : Supported
- Enhanced typesetting : Enabled
- X-Ray : Enabled
- Word Wise : Enabled
- Print length : 288 pages
- Best Sellers Rank: #544,642 in Kindle Store (See Top 100 in Kindle Store)
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The main argument: Until quite recently, the field of economics was dominated mainly by theory-making. Specifically, economists applied their intellects to the human world, and developed abstract models to explain (and predict) the unfolding of economic events. At the heart of all this theory-making stood homo economicus—a narrowly self-interested individual who responded to incentives and disincentives in a perfectly rational way.
In the past half century, though, various economists have added new wrinkles to the field’s repertoire. To begin with, pioneering economists such as Amos Tversky and Daniel Kahneman introduced controlled lab experiments (among other things) into the fold. And these experiments succeeded in adding nuance to our understanding of economic-man (he’s not quite as one dimensional and rational as he was once taken to be), as well as texture and complexity to our understanding of economic phenomenon.
More recently, economists such as Uri Gneezy and John A. List have stepped in and showed that controlled field experiments also have a place in economics. For Gneezy and List, the world is their laboratory: the two go about slyly manipulating the natural environment in a controlled way (often fiddling with incentives and disincentives of all types) to see how we humans respond to the tweaks. Gneezy and List have been practicing this approach for upwards of 20 years now, and in this time they have helped shed light on everything from how to decrease crime rates; to how to improve school success; to how to encourage more charitable giving; to how to promote healthy living and decrease obesity; to how to set prices on products (so as to maximize profits); to how to understand (and limit) discrimination (to name but a few lines of research of theirs). And in their new book The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life the two catch us up on their experiments and their results (while also touching on the experiments of other like-minded practitioners).
Take education, to begin with. Gneezy and List have gained a fair bit of attention recently for showing how monetary incentives can be used to help improve grades and graduation rates (particularly with at-risk students)—and even curb school violence; and here we are apprized of the ins and outs of the experiments that were used in this research. What is less well-known is that the authors have also recently become involved in a massive longitudinal study that is designed to test the effectiveness of different approaches to pre-kindergarten education. Though still in its infancy, the study has already yielded some very interesting results; and given that the researchers intend to follow their experimental subjects throughout their lives, the study should help shed a great deal of light on just what approach to early childhood education is most effective.
When it comes to charitable giving, Gneezy and List’s experiments have worked wonders in showing just how to encourage as much charity as possible—and have challenged many of the industry’s long-held beliefs in the process. The authors cover everything from how much seed-money is needed for a project to maximize donations; to how to approach follow-up requests made to established donors; to how to leverage raffles, lotteries and tontines for best success.
On the topic of business, Gneezy and List remind us how a failure to use an experimental approach can lead to business disaster (as illustrated by Netflix’ 2011 decision to modify its business model without experimental research—a decision that drove hordes of customers away, sent the company’s stock plummeting, and nearly sank the business outright). The lesson: business tweaks (including changes in pricing) should be tested in a controlled way in a small market (say a given city) before being adopted across the board (an approach that has been utilized to great effect by such companies as Intuit and Humana).
When it comes to discrimination, Gneezy and List have been able to use their experiments to reveal that much of the discrimination that happens nowadays is motivated less by hatred (or animus) as it is by plain old self-interest. Though perhaps not as threatening as outright hatred, discrimination practiced out of self-interest (known as economic discrimination) is problematic in its own right, and Gneezy and List also explore what strategies are best to curb it (this work is more important now than ever, as the internet [combined with data-driven analysis] has made economic discrimination very easy to practice--and hide).
The book is a very fun and interesting read, and Gneezy and List clearly have a knack for telling about their research in a highly entertaining way. The only issue I had with the book is that the authors occasionally exaggerate and over-state just what we can conclude from their experiments. Still, there is much of interest to be learned here, and the book is well-worth the read (just make sure you take it with a grain of salt). A full executive summary of the book is available at newbooksinbrief dot com; a podcast discussion of the book will be available soon.
Paying students for marks gives them an incentive to study. Does it also crowd out intrinsic incentives for the same, crippling students by making them unable to study when they are not immediately paid for it? If a gay couple tries to buy a car, does the dealership discriminate against them because they are inherently hostile to gays, or because they believe they can increase their profits by doing so? Should charities allow people to opt out of receiving mailings, and if so, will that increase or decrease donations?
If you are a teachers’ union, activist, or charity, you likely have strong opinions on the answer. What you may not have is any actual knowledge. Gneezy and List, two great experimental economists, argue that fundamental questions such as the best ways to educate, fight discrimination, and run businesses lie at the heart of experimentation.
To understand discrimination, they tried having gay couples purchase cars while signalling they planned to check other dealerships, and found that discrimination disappeared; to understand charitable giving, they experiment with several different approaches, finding that having a pretty girl ask for donations and offering a lottery prize for donating are equally effective in increasing donations, but that the lottery has long term effects while the pretty girl does not. Giving people the opportunity to opt out of mailings is most effective of all, however, increasing initial donations, leaving long-term donations unchanged, and saving money on mailings.
The Why Axis is another in a stream of books by economists popularizing their work. As with many such, it is reasonably well written, and stocked full of anecdotes, stories, and examples. In addition, Gneezy and List argue passionately for a more experimental way of looking at the world. Whether we are considering a new job, a new product, or a new policy, trying it out on a small scale provides information essential to avoiding blunders. In that spirit, pick up a paper or two of theirs to see if you find them interesting, and if so, the book might well be worth it.
Top reviews from other countries
It's a really short book on interesting topics in experimental economics from people who actually did those experiments. Fun, but not great, especially if you're an economist. Would recommend as light summer reading for non-economists.