Economic Rockstar

Connecting Brilliant Minds in Economics and Finance

110: Beatrice Cherrier on the Economics of ‘The Wire’ and the Beginning of Economics at MIT

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110: Beatrice Cherrier on the Economics of ‘The Wire’ and the Beginning of Economics at MIT

Beatrice Cherrier is an assistant professor at the University of Caen, France.

Professor Cherrier’s research includes the history of postwar economics and how economists’ individual visions combine in collective “styles” of doing economics.

Her current research project is aimed at understanding the rise of applied economics from the mid-1960s onwards.

Beatrice is affiliated with CREM, the Centre for Research in Economics and Management, where she researches alongside social choice theorists.

She teaches in a urban studies department, and is experimenting on her students to figure out how to get non-economists interested in the “dismal” science.

Professor Cherrier blogs on her personal website beatricecherrier.wordpress.com as well as for the Institute for New Economic Thinking.

These students have to understand economics, but not in the way of how to use it. You have to understand why they get that course and how they approach social science. For example urban study students work on the field all of the time, so introducing them to economics with a load of statistics is not the right way. They just won’t get it. They want tools to go into the field and to make sense of social behaviour. The solution is to bring the field into the classroom. The Wire is a great way to analyse these social behaviours, particularly in the city – Professor Beatrice Cherrier.

Economics:

In this episode, Beatrice discusses and mentions: Supply and demand, game theory, cooperation, prisoners dilemma, rationality, experimental economics, sunspots, monetary policy, animal spirits and bibliometric analysis.

Economists:

In this episode, Beatrice discusses and mentions: Kevin Hoover, Berger, Robert Solow, Paul Samuelson, John Maynard Keynes, John Hicks, Edward Prescott, Hanson, F. A. Hayek, Angus Deaton, Arthur Charpentier, Vernon Smith, Paul Krugman, Brad DeLong, Paul Romer, Franco Modigliani and Herbert Simon.

In this episode you will learn:

  • how to teach economics to non-economic students.
  • how to model the drug market using ‘The Wire‘ as a social analysis.
  • using The Wire as a tool to teach economics.
  • where is the rationality in gang warfare.
  • the benefits of using pop culture to teach economics.
  • the beginning of economics at MIT.
  • whether Samuelson and Solow ‘invented’ the economics we know today through their mathematics?
  • on the computerisation of economics using big data.
  • the evolution of economics.
  • the history of experimental economics.
  • and much much more.

Writing Tips:

  • “Writing has never been my strength. It’s the part of my job I don’t like.”
  • Do it. To force yourself to do it you have to do it publicly.
  • Write in a smaller format to try to put your ideas together and be convincing.
  • Blog.
  • Do not write for a public audience but rather write in public. If you put this stuff that you’re thinking online, you have to be better at organising your ideas even if you don’t like that.
  • “My tip is really for people who don’t like writing. Write on a blog because you can write small, it’s not consequential. Maybe people will read you and give you tips and you’re going to improve yourself.”

Links:

Recommended Books:

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067: Leigh Caldwell on Cognitive Economics and the Mathematics of Behavioral Economics

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067: Leigh Caldwell on Cognitive Economics and the Mathematics of Behavioral Economics

leigh caldwellLeigh Caldwell is a behavioural economist based in London.

Leigh, together with Elina Halonen, runs the Irrational Agency, which takes the latest scientific discoveries in psychology and behavioural economics, blends it with their hands-on experience of marketing and business, and turns them into powerful, incisive market research techniques.

In 2012, Leigh condensed his experience in pricing and the marketing of several of his businesses into a new book The Psychology of Price: How to use price to increase demand, profit and customer satisfaction.

Leigh is co-founder of the London Behavioural Economics Network, writes for the Pricing Revolution and the Knowing and Making blogs, and regularly features as an economics commentator on BBC News, Radio 4, Research Magazine and other media.

My own background is all about intellectual challenge. I went to university early as a teenager. I studied maths and physics. I was always into pushing myself intellectually and finding the next challenge to take on – Leigh Caldwell

Economists: 

In this interview, Leigh mentions: Elina Halonen, Dan Ariely and George Lowenstein.

Economics:

In this interview, Leigh mentions: Behavioral economics, experimental economics, lab experiments, demand curve, equilibrium, utility, mathematics, rationality, nudge, choice architecture, cognitive economics, reference pricing model, anchoring, hyperbolic discounting, heuristics, neuroeconomics, Nudge Unit, organ donation, tax collection, productivity, GDP and unemployment.

In this episode you will learn:

  • why Leigh help co-found the London Behavioural Economics Network (LBEN).
  • the importance of academics and practitioners working together to further the discipline of economics.
  • why finding the sweet-spot between controlled experiments and realism is difficult yet important.
  • what cognitive economics is and how different it is the behavioral economics.
  • whether big data could influence an individuals consumption behaviors.
  • about the need to use the mathematics of computer science in behavioral economics.
  • why we shouldn’t use the current maths of economics to explain human behavior.
  • why a lack of mathematics is holding back the discipline of behavioral economics.
  • why mathematics is essential for theorising and modelling economics, especially behavioural economics.
  • about the paradox of self-awareness in cognitive economics when faced with choices.
  • how a consumers relationship with a material object is a unique experience and how putting a price on the good can ruin this experience.
  • why charging a higher price for your product or service would generate higher profits in a perceived perfectly competitive market.
  • whether the 99p or 99 cent pricing strategy works.
  • about the reference pricing model and why charging $39 for a product is better than charging $34 for the same product.
  • about the importance of setting prices when considering how numbers are spoken, i.e. numbers with more syllables are received to be more expensive than those with fewer syllables. 
  • how Leigh uses the findings in academic papers to make money for his business.
  • how Leigh uses economic conferences to network, to find out about the latest research and to discover the new academic societies that have been established.
  • about Leigh’s goal for 2016 to start a Cognitive Economics Society.
  • about the advice Leigh would give the UK government to apply cognitive and behavioral economics to deal with some aspects of social life.
  • how the UK government changed people’s behaviour about paying their taxes on time.
  • about the productivity challenge the UK government is facing today and what can be done about it.
  • about the current research Leigh is undertaking regarding where our preferences come from.

Conferences:

Books:

  • The Psychology of Price: How to use price to increase demand, profit and customer satisfaction by Leigh Caldwell.
  • Predictably Irrational by Dan Ariely.
  • Basic Instinct by Pete Luhn
  • Nudge by Richard Thaler
  • Thinking, Fast and Slow by Kahneman and Tversky

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043: Herbert Gintis on Game Theory and the Multidisciplinary Approach to Understanding Human Behavior

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043: Herbert Gintis on Game Theory and the Multidisciplinary Approach to Understanding Human Behavior

Herbert Gintis is Emeritus Professor of Economics at University of Massachusetts and visiting Professor at Central European University.Herbert Gintis

He is known for his theoretical contributions to sociobiology, especially altruism, cooperation, epistemic game theory and gene-culture co-evolution.

Herbert has a B.A and M.A in Mathematics but switched his PhD program at Harvard from mathematics to economics.

Professor Gintis was part of a group of economists who developed their ideas on a new economics which encompassed issues of alienation of labor, racism, sexism, and imperialism.

Herbert has worked extensively with economist Samuel Bowles, writing their landmark book, Schooling in Capitalist America.

One of Herbert’s latest books The Bounds of Reason emphasises the unification of economic theory with sociobiology and other behavioral sciences which, in the words of Nobel Prize-winning economist, Vernon L. Smith, “is firmly in the revolutionary tradition of David Hume (Convention) and Adam Smith (Sympathy)”.

In the episode you will learn:

  • about the importance of trans-disciplinary research and the importance of collaboration with other disciplines.
  • why economics is not the only social science that explains human behavior.
  • how biology, economics and sociology explain the behaviour of humans in different ways and which discipline is correct?
  • about the Ultimatum Game and how it shows the cooperative and non-cooperative behaviour of humans.
  • about the morality of humans and how we reciprocate kindness with kindness and unkindness with unkindness.
  • why reciprocity makes humans so successful as a species.
  • why some species have a symbiotic relationship with other species which is not the same as reciprocity.
  • how we can fit all the human feelings together to form a multi-disciplinary approach to understanding human behavior.
  • why we always need a system to punish free-riders and non-cooperators.
  • how the future structure of the University can be seen at Arizona State University today.
  • why we need a new generation of thinkers and research centres who are trans-disciplinary.
  • what projects Professor Herbert Gintis is working on right now.
  • why morality controls politics and your vote will not make a difference.
  • how Herbert gets things done in terms of writing books and journal articles.
  • why Herbert did not like The Black Swan by Nassim Nicholas Taleb.
  • about Herbert’s disagreement with Nassim Nicholas Taleb.
  • why Herbert believes that macroeconomics is wrong and is in agreement with Taleb on that issue.
  • the goal of economic policy is not to predict but to put in place economic and social policies that prevent really bad outcomes.

Influencers:

Kenneth Arrow, John Maynard Keynes, Adam Smith and Albert Einstein.

Economics:

In this interview, Herbert mentions and discusses: Marx, rationality, game theory, rational actor model, experimental economics, prisoners dilemma, the ultimatum game, labor market, reciprocity and morality.

Economists:

In this interview, Herbert mentions and discusses: Vernon Smith, Samuel Bowles, Ernst Fehr, Kenneth Arrow and Nassim Nicholas Taleb.

On Math Being the Core Link to Multi-Disciplinary Knowledge:

“It’s really hard in the Behavioral Sciences to get too close to any one thinker because they’re all tainted by disciplinarianism. We need a new generation of thinkers who really think in all of these disciplines at the same time. As long as you can do the math. If you can’t do the math, you can’t do economics or you can’t do biology. If you can do the math, and you know statistics, there’s no reason why you shouldn’t know all of the fields. We need a generation of people who do that. The reason it’s possible now is the internet. Now, there’s no reason for disciplinary isolation. I think the next generation of behavioral scientists is going to much more broad”.

Arizona State: The Next Generation University… Today

Arizona State University is organised trans-disciplinarily. They don’t have traditional disciplines. They have subject areas depending on who asks questions and subject areas there from all sorts of disciplines. Herbert Gintis believes that’s what the future is going to be like, where you abandon the disciplines and add new research centres based on asking questions like climate change, cooperation, epidemiology, warfare, political structure, etc. And then you just hire people who can do that and talk to each other. It is exciting. It will happen. But it will take a long time because the whole organisation of the university is in terms of disciplines.

All of the real advances in the Behavioral Sciences fall in between the disciplines. It requires you do it all at the same time. it’s likely that at the forefront of change in the Behavioral Sciences will be funding organisations, governmental organisations like the NFF in the United States and the ESF in Europe. 

Quotes by Professor Gintis in Episode 043 of the Economic Rockstar Podcast:

Disciplines are almost like a feudal fiefdom. So it’s very hard to do trans-disciplinary research but that’s where all the real action is these days. Not only in behavioral science but in natural science – Herbert Gintis.

As far as I’m concerned, all of life is game theory. It’s the interaction of strategic interaction of individuals of all discipline species and types and races. So game theory comes first – Herbert Gintis.

Human success is not based on selfishness. It’s based on our ability to cooperate – Herbert Gintis.

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“The real enemy of understanding humans is the notion that we’re all selfish. It’s just not true – Herbert Gintis

To do creative work, you have to have time. Once you have time, you get a lot of work done – Herbert Gintis.

“What I like to do most in the world is to read and write. That’s what I do” – Herbert Gintis.

“I did not like The Black Swan at all. It made fun of science. It made fun of statistics. It capitalised on a unique event, the financial crisis of 2008, and he used it to say economics is a bunch of crap. I think that’s just a bad mistake and I had some run-ins with him on the web. He thinks that science is about prediction. Now prediction is important but that’s not what science is about. It’s about expectation” – Herbert Gintis.

Projects Herbert Gintis is Working on Right Now:

Non-consequential behaviour in politics: 

“People participate politically even when they don’t make any difference. In all English-speaking countries, no election with more then 40,000 voters has ever been won by one vote. Meaning that no individual has ever made a difference in a political booth. Political structures are moral structures and they don’t necessarily reflect particular self-interest concerns” – Herbert Gintis.

Resources:

  • Herbert created his own word processor and uses LaTex for mathematical equations.
  • The Web.
  • Evernote
  • Scrivener

Recommended Books:

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032: Joe Gladstone on the ‘Pay What You Want’ Pricing Model and Using Big Data to Understand You Better

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032: Joe Gladstone on the ‘Pay What You Want’ Pricing Model and Using Big Data to Understand You Better

Joe Gladstone is an academic researcher and consultant based at the University of Cambridge, where heJoe Gladstone applies insights from behavioral economics and psychological research to better understand consumer behaviour.

Joe partners with some of the world’s largest corporations, such as Twitter, Bupa and Visa, as well as government departments, to tackle challenges that deal with behaviour change.

Joe’s views on consumer behaviour have been featured in the BBC, Forbes, The Huffington Post and other media outlets.

Joe is founder of BE-events and BE-Recruit.  He received his Masters from Oxford University and his Phd from Cambridge University, and has been awarded a range of competitive grants and prizes.

Find Out:

  • about the link between the discipline of psychology and economics.
  • why Joe decided to do postgraduate research in behavioral economics.
  • how advances in technology, especially in social media, can help behavioral scientists understand human behaviour better.
  • why you do not know how much you spend on coffee.
  • how Joe has identified the relationship between psychology and money.
  • how Joe has used the ‘My Personality’ app to predict your personality from what you like.
  • how companies can use ‘Big Data’ to target messages directly to you.
  • why people are willing to pay for services that they could otherwise get for free.
  • if TIDAL will disrupt the online music industry by taking control of their own music.
  • if Spotify risks losing out to TIDAL.
  • how important is the price of zero?
  • how the ‘Pay What You Want’ pricing model defies classical economic theory.
  • why people pay even if they are given the option to take the product for free.
  • how Radiohead made more in sales when offering their album on a ‘Pay What You Want’ basis.
  • if the ‘Pay What You Want’ model is sustainable for a business in the long run?
  • how Jon Bon Jovi has successfully implemented the ‘Pay What You Want’ model in his Soul Kitchen restaurant in New Jersey.
  • how sitting with strangers to eat in Soul Kitchen can ‘nudge’ diners to pay more than what they were initially willing to pay.
  • about Joe’s passion for financial literacy and financial empowerment.
  • if you can become immune to nudging by having a deeper understanding of it.
  • if knowledge prevents you from being nudged.
  • about behavioral economics events that could be going on in your area with BE-events.org.
  • how Joe maximises his time by outsourcing his work on oDesk.
  • how to get girls in less-developed and poor countries to go to school.
  • how Joe built up a name for himself on LinkedIn by connecting with the main people in the banking sector and offering his services on a no cost basis.
  • what the five personality traits known as OCEAN stands for.

Economists Joe Would Love to Collaborate With:

Professor Dean Karlan of Yale University and Professor John List of University of Chicago.

Economists:

In this interview, Joe mentions: 

Daniel Kahneman, Amos Tversky, Cass Sunstein, Dean Karlan (Poverty Action), David Hagmann, George Loewenstein, Craig Fox (The Behavioral Science and Policy Association), John List and The Behavioural Insights Team in the UK.

Economics:

In this interview, Joe mentions and discusses:

Behavioral economics, experimental economics, factor analysis, microeconomics, poverty, banking, micro-finance, decision making, nudge, nudging, pricing, demand, supply, randomised control trials, field experiments and multi-variate testing.

The ‘Pay What You Want’ pricing model is a great example of where the Classical economic theory doesn’t do a great job of explaining real world behavior – Joe Gladstone.

Resources:

Books:

Papers:

Where to find Joe:

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