Intro. [Recording date: June 29, 2022.]
Today is June 29th, 2022. And, we're going to do something a little different today. Mike Munger of Duke University is going to interview me about my new book. That book is Wild Problems: A Guide To the Decisions That Define Us. This is Mike's 42nd appearance on EconTalk. He was last here in April of 2022 talking about antitrust. Mike, welcome back.
Michael Munger: It's a great pleasure. Thanks very much. Although it is daunting to sit in the interviewer's chair.
Russ Roberts: Yeah. Well, I appreciate you taking the risk and taking on the assignment. You last did this about my previous book, on my book on Adam Smith, if I remember correctly.
Michael Munger: And, it was an interesting process because it also I think is probably a little bit odd for you to--it was hard to get you to answer some questions. I'm hoping you'll be willing to play the author a little more this time.
Russ Roberts: Okay. I'll do my best.
Michael Munger: So, we're starting out with that admonition. The book that you have that's coming out is called Wild Problems. And, you make the kind of weak claim that someone who reads this will do a better job at maybe not solving, but at approaching certain kinds of problems if they read your book.
But then you also make a stronger claim that this is the only way to approach some problems. And, that in fact, you would make a mistake if you used traditional decision--you would be actually, literally, worse off, in some cases, maybe even worse off than flipping a coin if you use traditional cost/benefit kinds of approaches.
So, what are wild problems, and can you justify this claim that this is better than nothing?
Russ Roberts: Well, I think I'll start out with the definition. And by the end of it, I'll have forgotten that really unpleasant thought you just added. So, you'll remind me.
What the book is about is what I call the decisions in life where data are not helpful. Examples include whether to marry, who to marry, whether to have children, how many, whether to change careers, where to go to school, where to live, and so on. And, we live in an era, a time, when apps, algorithms, big data is supposed to solve all our problems. And, my argument is that in these kind of situations, certainly those types of approaches are not helpful. That's Number One.
And, Number Two: What we might think of as traditional decision-making techniques that you alluded to--cost/benefit analysis and so on--are fundamentally misleading. And so, that's the claim at the heart of the book. And then the rest of the book is about: So now what?
If I'm right, how should a person live? How should a person approach these kind of issues? And, how should you think about them? It's not a how-to book. Literally, it doesn't give you a different algorithm. It suggests that algorithms are not so helpful and therefore you need to take a whole different framework for thinking about them.
The reason I think cost/benefit is misleading--what some people might call a rational approach--and actually, you know, underlying the books a critique of economics in some sense, which I'm sure we'll get into--it's not the focus of the book. It's not written for economists or non-economists. It's written for human beings trying to get by.
But, I was taught that the rule of the rational life is to set marginal benefit equal to marginal cost.
That is: Pursue an activity until the next little bit of benefit, pleasure, enjoyment, satisfaction is just equal the extra cost from that little bit more.
And, to go beyond that--to watch the nth hour of television, to eat the fourth ice cream cone, to have the seventh beer--those are where the marginal benefit is less than the marginal cost. You should stop there.
So, a lot of the economic approach to rational decision-making is about optimization. It's about making sure that you get the maximum benefit with every activity you pursue, whether it's investing, consumption, your career, and so on.
And, I would argue that in the kind of decisions that I'm talking about--and we'll take whether to marry or not maybe as a template--that's the wrong approach. It's misleading. And, if you'd like, we could talk about why.
Michael Munger: I thought one of the interesting concepts that you invoke repeatedly is the process of becoming, rather than the process of deciding. And so, that becoming, though you have a pretty strong claim about the sort of person people should--and I don't mean normatively; I mean rationally--should want to become. People should, if I understand you, want to become maybe not more self-aware, but at least more self-critical and more aware of the set of habits that they're developing. What is the sort of person that I want to be?
So, not so much: How will I decide in this one instance person--I walking down corridor J deciding consumption level at time T--but rather, what sort of person do I want to become? And, a lot of choices will then flow from that because through that process of becoming.
And, I had sent you an email in advance saying, it seemed to me a difficulty with this is that you're just assuming that the unexamined life is not worth living.
And, there's plenty of precedent. There's a lot of people that have claimed the unexamined life is not worth living. But, Fyodor Dostoevsky, in Notes from Underground talks about a person who is literally paralyzed by the fact that he is aware of just how inadequate he is. He's smarter than everyone else. And, he looks out through the little window in this basement and he sees what he calls insects walking by. And in a way he envies them because they're happy. They're not aware of how meaningless their life is. He is fully aware of how meaningless his life is.
Aren't you just creating a recipe for despair?
Russ Roberts: We could just end the interview here, I guess, but we'll carry on as best we can.
Michael Munger: Oh, you're right. Munger, I give up. I don't know what I was thinking.
Russ Roberts: Oh, that's terrible. But, it's a great question, actually.
And, I do think there are plenty of people who live happy lives. I think I've said this EconTalk before, in the last year or so, that plenty of people lead happy lives without self-awareness, without worrying about who they want to become, without worrying about meaning or purpose or growth, which is really another idea that's part of this book.
I want to step back for a minute and say that some of the ideas from this book came out of two EconTalk interviews I did, one with Agnes Callard on Aspiration--her book about aspiring, about trying to be someone we could become, trying to become someone we want to be, excuse me, is a better way to say it. And, LA Paul, her book, Transformative Experiences--we're talking about the vampire problem, which is about the challenge that once you make a decision, often you enter a state that's radically different. The economist would describe it as your preferences change or utility function changes. And, in that situation, rationality is very difficult to define.
Having had those two conversations, read those two books, I then discovered, as I suspect you knew before I wrote this book, that there's a literature in economics on this. It's an older literature. Nobody writes about it anymore. It's a literature that comes from Frank Knight and James Buchanan; and it's about seeing human beings as aspiring, as becoming. And, that the essence of economics, the way it's taught today is: You are who you are. You come to the world with a set of preferences, a set of tastes. We often call them--a fancy word is we have a 'utility function' that talks about what we value and how much we value an extra unit of the things we value relative to an extra unit of a different thing we might value.
And, that's what determines our choices, our behavior, subject to the limits of our income, the constraints of income.
And what the older literature and economics said--the Knight and Buchanan literature--is that's actually not who human beings really are. We're not static; we're actually dynamic. And, a lot of the biggest choices that we make in life are about trying to decide who we want to be. What do we want our utility function to be? What do we want to care about, rather than given what we care about what's the best choice?
And, the example I use in the book for this kind of phenomenon is going from here to there, A to B: If I want to go from A to B, I have an app called Waze that tells me the quickest way to get there, or Google Maps. It doesn't tell me whether I should go to B to start with.
And, part of the theme of the book is to think more about where you should be headed and not be as worried about how to get there quickly or most efficiently. And, our obsession with life hacks, productivity hacks, apps to make us more productive, more efficient, could deceive us into thinking that's the essential question of life, rather than who do you want to be? What do you want to become? How might you deal with the fact that you're not happy with what makes you happy? What gives you satisfaction?
And so, it's a radical idea for a modern economist. I really like it, but that's just the prelude. So, you then ask: 'Okay, you're arguing,'--I'm arguing--'that you should give this some serious thought. You should think about who you should be. You should talk about growth. You should think about becoming a principled person. You should think about adopting ethics. The unexamined life is not worth living. Don't just take who you are as data. Think about who you want to be.'
And, my answer to that, I guess at the first pass is, 'Well, the book's not for everybody.' If you're content with who you are you are and don't want to worry about who you want to be, that's fine. That's your choice. I don't think there's anything horrible about it. And, I concede that if you start worrying about who you want to be, you can become very unhappy. So, there is a sub-theme of the book that happiness is overrated, that--
Michael Munger: That utilitarian happiness is overrated.
Russ Roberts: Yeah. That moment to moment satisfaction.
And, I think the best way to frame this question that you're raising is the John Stuart Mill quote that I talk about at some length, as well as Daniel Gilbert's response to it, the psychologist.
So, the Mill quote is: Better to be a philosopher unsatisfied than a pig satisfied. I think that's the quote. I may have the order opposite. I think that's the quote. And, you're saying, 'You sure?' A lot of happy pigs out there; you point out in your email, a pig is kind of pejorative term. It kind of implies that it's a negative. And Daniel Gilbert, who wants to defend the pig, takes it away from the pigs/philosopher metaphor and says instead: Suppose you have a swimming pool. You like to swim. It's a beautiful day. Sun's out. And, you're in the pool 23 hours a day, enjoying life, just being in the water, enjoying the breeze when you put your head above water, enjoying the clouds, sipping a pina colada from a float you're basking in. And, then he says, 'Yeah, okay; but, an hour a day of the 24, you're on the side of the pool. You step out of the pool to towel off for an hour and you think, wow, this is it? I'm just enjoying the pool? May maybe I should aspire to something more serious, something more purposeful, something more meaningful, something more ethical, something fill in the blank.'
And, his argument is that it's just a majoritarian calculation. If your days in the pool are happy and your days out of the pool are unhappy, all you care about is the total sums--the utilitarian part--at an individual level. All you should care about is your total amount of happiness versus unhappiness. Now, while you're out of the pool, you might feel guilty about the pool, but if it's only an hour a day and you have 23 hours a day of happiness, you're killing it.
And, this is a comment--which he was very kind, Daniel Gilbert shared his unpublished comment on a Kahneman paper and that's what this has taken from and his punchline--and we talked about this by the way, on EconTalk in a Paul Bloom episode; that's how this all came about. Paul Bloom had referred to this paper. I said, 'That's crazy, but I should give Daniel Gilbert a chance to respond to it.' He didn't want to be on EconTalk. That's fine. But, he was kind enough to send me this paper, this unpublished note.
And, what's interesting--and this is to me--is that for Gilbert, the punchline of this whole thing, for him, that proves that he's right is: What would you want for your children? Would you want your children to be happy for 23 hours and unhappy for an hour, or would you want them to be unhappy for 23 hours and happy for only an hour?
And, his answer was: No, you'd obviously want that you'd use the same metric. You just look at the number of hours of happiness versus unhappiness, number of days of happiness versus unhappiness.
And, I take a different approach in the book. For starters--and then I'll come back to the pig, then I'll let you respond. So, I argue in the book that there are a lot of things in life where the day-to-day pleasure--and we don't just mean pleasure in the hedonistic sense, but pleasure in the economist's sense, meaning things that give you satisfaction--could be a lot of different flavors of pleasure. I don't think life is about making sure that you have more days of pleasure than days of pain. There are many, many things we do in life that have more pain than pleasure. And, we do them gladly and willingly.
And, the example I give is people volunteer to fight in wars, they have children and sometimes it can be the case that children mean more bad days than good days; and they don't regret the choice. I don't think. And, economists, yeah, they can answer that objection. They can say, 'Well, and I know you mean pleasures from days as a parent versus days of unpleasure or pain,' but that then you have to add in say satisfaction from being a parent or meaning that having a kid gives you.
And, that's true. You can play around with economics and make it still examine these kind of cases.
But, my claim is that it's very hard to keep in mind when you make your decisions. If you're only looking at the day-to-day pleasures and displeasures you get from various decisions, and you forget about the overarching sense of identity or the overarching sense of meaning that come from these decisions, you're going to often mess up. That's my claim.
Daniel Gilbert doesn't agree with me. A lot of other people don't agree with me. Certainly plenty of utilitarians--literal utilitarians--don't agree with me. But that's the claim.
So, when you say to me: Why would you burden someone with this challenge of leading a meaningful life, say, or growing and aspiring to be someone you're not right now, but someone you could be? You're right: it could lead to some unhappiness and it might not even be made up for by extra meaning or so on.
My claim, which is a stretch, is that it's part of who we are as human beings, is to aspire. And, certainly Buchanan and Knight felt that way. But, I would concede that that's not true of all human beings. So, if that isn't you, don't buy this book. Go home, after you've listened to this; open a beer, get in the pool, relax and do it for as long as you can, until you feel like you have to towel off because your skin's getting all wrinkly; and, take that hour off, then get back in. So, you can argue either way.
Michael Munger: You are underselling the force of your own argument. Because--
Russ Roberts: Won't be the first time, Michael Munger.
Michael Munger: No, look: your argument is stronger than what you just gave it credit for. Dan Gilbert is wrong. And, the reason that he's wrong is that one hour spent in that contemplation will rob the pleasure of the 23 hours in the pool. You can't go back. It's the vampire problem. So, once I have started to think about how meaningless utilitarian pleasures are, I can't go back. That's Dostoevsky's challenge, is he would say, after having read your book, 'Ah, it's the vampire problem.' Once you start to think about how meaningless life is without some kind of becoming,and if I'm just not capable of that because I lack the sort of character that enables me to work on something so difficult, I can't go back to the 23 hours in the pool because the whole time I'll be thinking, 'Damn, I suck.'
Russ Roberts: Except, Daniel Gilbert's a really smart person and very thoughtful and he answers that. I don't agree with his answer. His answer is that when you're out of the pool, you look down on the pig, you look down on the swimmer; but he says: but when you're in the pool, you look down on the philosopher. You're enjoying yourself. And, who cares about that all that highfalutin' stuff? And, that's why he comes down on this argument, which leads to more hours of pleasure and pain.
But, I think it's really important, I want to add, you said 'utilitarian'--certainly Bentham and other utilitarians allow for other things other than what we would call 'hedonism'--the kind of pleasures of the physical life. They allowed for many, many kinds of pleasures that were psychic in nature, that involved the kind of things we're talking about in terms of meaning. My claim isn't that they're wrong. My claim is that using that calculus is really hard for real human beings to do.
Michael Munger: Well, how about this? It cannot be true that both Dostoevsky and Dan Gilbert are correct. And, it could be that Dostoevsky is just wrong and that I can compartmentalize the sort of contemplation of my own inadequacies. But I think there are plenty of people whose lives might be ruined by that process of becoming. And, the force of my objection is: you can't tell that until you do it. So, you say it's not for everyone. I can't tell until I try. And, then I say, 'Damnit, I'm not the sort of person this book was intended for, but I can't go back. I took the red pill.'
Russ Roberts: I love that. Yeah, there should have been a disclaimer around page 40 that read--
Michael Munger: Prescription. I think it should be by prescription only.
Russ Roberts: Or: 'Read ahead at your own risk. Here's what you're putting in jeopardy: your future happiness or your future pleasure.'
Michael Munger: It would increase sales, actually. It would increase sales. 'This is really dangerous. Be careful.'
Russ Roberts: So, it's a really interesting question as to--let's step away from my book for a minute and think about just the Socrates quote: The unexamined life is not worth living. Should you teach that to your children? Is that a kind thing to do to your children or a friend? That's kind of what you're saying is that: Hey, if they're happy in their ignorance, ignorance is bliss, leave them alone. Don't burden them with all this guilt and unease with their status as a human being.
But, what I've found--and this is a different way to approach your question--is that there are a lot of people out there who come to this without reading my book, Mike. There's an EconTalk listener--I don't know if he's still an EconTalk listener--but he wrote me and he said, 'I'm a computer engineer. I make a lot of money. I made a huge amount of money so far overall in stock options and other things. And, I don't know what I'm doing. I look at my life and I think this is it? I got a nice house. I'm well paid at work, but is this all there is?' And, I think a lot of people come to that conclusion.
Now, a lot of people don't. A lot of people you could argue, get the nice house, get the nice car, totally happy. It's fine. They don't need to think about bigger questions. But sometimes people get nagged by these things--could be our culture, could be religion, could be too many great books of the Socratic variety.
But I think, for many people, these are very real questions in 2022. And, similarly I think that many of the decisions that I write about in the book are much harder today than they were in the past when our choices were easier.
Now I'm a big fan of choice--huge fan of choice. But, I think coping with choice is--I find it easy in the drugstore or grocery when there's lots of toothpaste, I don't stand there like Buridan's ass. Buridan's ass is an ass--a donkey, whatever the right mammalian category they are. Buridan's ass is a creature that is exactly halfway between two bales of hay and therefore is immobilized. I've always been puzzled by that.
Michael Munger: And, starves.
Russ Roberts: And starves to death, exactly, because it can't make a decision. May be true of an ass--I don't think so--but a human being in that situation should say it doesn't matter which I choose. They're both equally close. I'll just pick one randomly. I don't need to agonize over it. So, when I go into the grocery store or the drug store and I'm confronted with dozens of deodorants, dozens of toothpastes, and so on, I don't actually find that crippling.
But, I do think there are challenges for a modern person today who is confronting choices that were not choices in the past. And, I don't think our culture has necessarily evolved ways to cope with that uncertainty. And the natural place to look is indeed the kind of applications and websites and others--tools that we use for finding, say, a book recommendation, where very little as at stake. A spouse recommendation, there's a lot at stake.
And I don't think it's as easy for many of us as it once was when we had fewer choices. Our parents often decided who we would marry; they decided what career we'd go into. Many things we'd want to do weren't available to us, just not open.
And so, that world has really opened up, which is fantastic, but I think we could use some help in thinking about how to make those choices.
Michael Munger: Well, and that's the way to think about the contribution of the book. One of the problems you pose at the beginning is the canonical difficulty--something that's not amenable to treatment by traditional cost-benefit analysis, although some people have tried--was the decision about whether to get married or whether to have children.
You claim there's three reasons why that approach can't work: that I can't know, or even imagine what the costs and benefits are going to be; the vampire problem that I'm going to be different and my preferences over those things is going to be different. And, the third is the problem of flourishing, which you illustrate by the Persi Diaconis anecdote. Can you say something about the problem? A recurrent theme is your conversation with Charles Darwin about getting married and then say something about the Persi Diaconis quote, which I thought was just fabulous.
Russ Roberts: So, the Darwin thing is a somewhat--well, a number of thoughtful people have written about it, including Agnes Callard and others. We have access to Darwin's journal. You can get online and you can look at Darwin's own handwriting in his journal. And, he's trying to decide whether to get married. He's 29 years old and he makes a list of pros and cons.
And, he's smart enough to know that there's a lot at stake for him because he is going to have a chance to be a serious scientist. I don't know if he knew he had a chance to be one of the top two or three scientists of all time, but he's worried about how marriage might bite into his productivity as a researcher. And, he's worried about whether he is going to have to go visit his wife's relatives a lot. He's worried she might not like London, so he's going to be stuck out the countryside. He's worried he's going to have to spend time with her or the kids instead of his work. And, he makes a list of the pros and the cons and--unbelievably embarrassing list in 2022--one of the pros is female chitchat, and at one point: There's someone to come home to, parentheses, 'better than a dog anyway'. So, it's a little bit awkward. He'd be canceled.
He may still be canceled when my book comes out, but let's take him as a man of his time for a moment.
Anyway, he makes this list. And, what I thought about when I looked at it was--and by the way, sorry, important point: the negatives way outweigh the positives. And, they're bigger. It's pretty clear that he shouldn't get married if he's going to make a rational choice based on his list. That kind of bothers him. And so, at one point he comes back to the list and he has this stream of consciousness, and he says, 'Ahhh, got to be in a dingy apartment by myself, late in life, no one to talk to, no kids--ehhh, I'm going to get married.
Michael Munger: In fact, he says, 'Marry. Marry. Marry. QED [quod erat demonstrandum].'
Russ Roberts: Yeah. Three times. I think with exclamation point? No, no exclamation point. It's in my mind that it is exclamation points. He says QED--quod est demonstrandum.
Michael Munger: It's decisive. It is decisive.
Russ Roberts: Decisive. Quod est demonstratum, meaning what was to be proved has been proved, demonstrated has been demonstrated--
Michael Munger: So, we're done--
Russ Roberts: Yes: we should get married. And, it's a really bad proof, as it turns out. You can read it again online or in my book.
But, what's fascinating to me is, as you alluded to, is that he's really in the dark. He doesn't have any data on what it's like to be married. He probably has some married friends he's watched and hung out with and seen. And, he's seen the interactions between two married people. But he has no access to the inner life. And, I argue that most people have trouble sharing that in their life with strangers. They have trouble sharing it with themselves. We don't always want to think about it much, and to find the words for it is not easy.
So, the first problem he has, he doesn't really know what he might be getting into.
The second problem he has is the vampire problem. After he gets married and turns out--SPOILER--he does get married. He marries a cousin who doesn't live far. He doesn't spend a lot of time on the search process for the optimal wife. He marries a cousin and has a bunch of kids, and some of his worst fears come true. He loses some of his children to disease, and it's heartbreaking to him. He had mentioned that as a possible negative. He leaves London; his wife doesn't want to live, or he decides eventually they don't want to live in London. And they end up in the countryside. But it turns out he kind of likes it. And, he likes that he comes home at night or stops working and spends time with his wife. And, she reads to him, and it's quite sweet. They have some issues later on with her religious views, and I'll put those to the side. But, for most of his life, he has a very good marriage.
And, he has a bunch of children who give him a lot of satisfaction and some pain. And, he turns out to be a pretty decent scientist, even with the opportunity cost of having to spend time with his wife and kids.
My joke is, yeah, maybe he could have amounted to something if he'd stayed single, but I think he did okay.
I also have the case in the book of Kafka, who makes a similar pro/con list and decides not to marry and that's a different choice; but Darwin, as you've talked about in the first two reasons, he can't figure out what it's going to be like. He has no access to it. And, if he did, he wouldn't realize how it's going to change how he feels: that he might like domestic life, even though from a distance, it may seem bourgeois and unappealing.
And, then the third issue--what was the third issue? What was that thing about flourishing?
Michael Munger: Persi Diaconis.
Russ Roberts: Oh yeah. It's too good.
Michael Munger: You just wanted to see if I knew.
Russ Roberts: Yeah, no; I forgot about Persi. So, Persi, you couldn't make it up. And, he's very thoughtful. And, this comes from a--
Michael Munger: He didn't make it up. It was an emotional reaction. It was just off the top of his consciousness--
Russ Roberts: It's true. It burst out of him. So, he was, I think at Stanford and was offered a job at Harvard. And, he couldn't decide what to do--paralyzed, like Buridan's ass halfway between two hay containers. And so, after a while his friends got tired of listening to him go back and forth about which was better. And, somebody said, 'You know, you're a decision theorist. This is really awkward. Could you just use your theory, just make a pro/con list and see which is better?'
Michael Munger: Come up with a set of weights? It should be easy.
Russ Roberts: Yeah, if you have to weight them, weight them.
And, his reaction was, 'Come on. This is serious. This is not some academic exercise.'
Michael Munger: This is a guy with hundreds--he has hundreds of journal articles on decision theory. It couldn't be more serious. But this--this is serious.
Russ Roberts: Yeah. Because it's him, is one reason. And the second is, it's just a titch more real to him because it's going to be him.
I also give the example of Phoebe Ellsworth--who has got a chair in psychology at the University of Michigan, a fellow the American Academy of Arts and Sciences--and she has a similar story to Diaconis', which is that she's offered another academic appointment. And, she makes a list of pros and cons. And, then she says, 'Oh, it's not coming out right. I better add some pros.'
And, it's a deep, deep thing.
And, I also quote Piet Hein, the mathematician and poet who has a wonderful little poem about flipping a coin. And, if you can't come to a decision, flip a coin and when it's in the air, you'll--
Michael Munger: What do I hope--
Russ Roberts: what are you hoping for? Heads? Tails?
Michael Munger: Just great.
Russ Roberts: And, that way you'll know what you, quote--
Michael Munger: I was so excited. I'm going to do that every time. That's a great insight.
Russ Roberts: You'll know what you, quote, "really want."
Michael Munger: It doesn't matter if it's heads or tails. I'm not interested. As it goes up, I think, 'Oh,' or you might wait and see and think, 'Oh, I'm disappointed. That's not what I wanted.' Then I know what I want. It's an amazing insight. I had not thought of that before.
Russ Roberts: So, what does that mean? That's the question I raise. What does that mean, what you really want or what you wanted? Your gut? [?] I mean, you've made the list rationally in a calm, sober calculation of the pluses and minuses: what could be more about what you want?
And the answer is, I think partly, that there are things beyond just that cost/benefit list and these are these questions of identity, these questions of aspiration, who you want to be, what gives you meaning, what gives you purpose? And, they tend to leave those off of your cost/benefit list.
Or, equally troubling, if you add them in, it's not that helpful. So, you have Darwin putting as a plus of staying single, 'Don't have to deal with my wife's relatives,' and a negative of marriage, 'Won't become one of the greatest scientists of all time.' How am I supposed to compare those apples and oranges?
And, we do. We make decisions. And the economist says, 'So, ah, you compared them.' But, I don't think that's a good way to think about what is rational, what is best for us. And, my claim is that a lot of these great scientists, academics, analytical minds, struggled for these exact same reasons that I think normal people struggle with them, me and you.
Michael Munger: One thing I thought was interesting, and this is actually something that Nassim Taleb has often said, and I've taken it more and more to heart: Human beings are evolved creatures. There are constructivists that say all of social relations and all the way that we think, those are constructed, but in fact, we're evolved. And, it's interesting that we're evolved to have what you might call emotion or intuition.
And, to many people in decision theory say what we're trying to do is to get rid of that--to take it out of the process, to make it rational.
Well, under some circumstances, yes: if we're trying to analyze the problem of price gouging and it's complicated, and there's some underlying theory and evidence that people might emotionally react to in a way that doesn't serve them very well.
But sometimes, for some large problem like this, when you're talking about flourishing--the sort of person that I want to try to become--the fact that I have what you might call an emotional or intuitive reaction is actually an important evolved response.
And, you raise the question in here of the Chesterton Fence. Emotions are a Chesterton Fence. So, rather than just saying, we need to get rid of those and use rationality, you need to think why is it that human beings have this kind of intuitive, emotional response, and at least give it some credit as being a possible input to the way that we should decide things.
So, you can't just say, 'I don't know why that fence is there. Let's take that thing out'--
Russ Roberts: Has Chesterton's Fence ever been mentioned on EconTalk before?
Michael Munger: Not this episode--
Russ Roberts: Just another 20 different episodes.
Yeah, it comes up now and then. And I mention it in the book. But I didn't think about it as nicely as you just mentioned it. I wish I had.
The Chesterton Fence--this idea, as Mike just said--that, when you see a fence that doesn't seem to be serving any purpose, you think, 'Well, I can take that down without any trouble. It's just in the way.' And, you might want to give some thought as to why it's there. Of course, after you've done that, you might take it down just like you could have an emotional reaction that you might ignore, but sometimes it is telling you something that's of value about who you are or who you want to be or things you haven't thought about.
The brain is a complicated thing.
I have a scheduled episode with Gerd Gigerenzer and we had talked about some of these issues with him before. He has a new book out. I'm going to be interviewing him. The episode is either coming out a little after this one or a little before, as I said.
And, his argument is that one of the greatest human achievements is common sense. And a dramatic, kind of obvious example, is that if you show a computer school bus and a set of stripes, it could think the stripes are a school bus; and human beings immediately see that it's not.
This kind of heuristic recognition is something that people do a lot better than most computers. And, it has evolved through millennia to preserve us.
Now, of course, sometimes it leads us astray, just like the artificial intelligence thinking the stripes are a bus would lead a driverless car astray. And remarkably, he points out--I hope I get to this in my interview with him--that an infant can recognize its mother immediately and I think within a few days, and it will nurse more energetically when it sees its mother's face, regardless of who it's nursing from. Which is unbelievable.
And, this is the craziest part: but it's not perfect, an infant, it recognizes faces. It's really good at that one face at first. And, then it starts to acquire the ability to recognize other faces.
But, what's extraordinary is that it loses the ability to recognize the face as easily when it's upside down. So, an infant is really good at that, an adult not so much. And, you'd argue, correctly, that that's pretty useful--maybe when you're an infant, not so useful when you get older.
But these kind of intuitive, gut, emotional reactions that we, I think in the so-called rational community, look down on, have something to tell us. And it's not obvious what it has to tell us. I think, again, as I mentioned, you have to be thoughtful about it. But, seeing emotion as a Chesterton Fence is a beautiful image.
Michael Munger: In Chapter Seven there's a--I have a personal anecdote that I thought was kind of funny because it illustrates some of the themes of the book. My wife and I are celebrating our 36th wedding anniversary next week--
Russ Roberts: [whistling] Wild applause ripples through the EconTalk audience.
Michael Munger: Well, she has developed a sense of humor about this. She says, we've been happily married for 12 years, not consecutive. So, of the 36, we've been happily married for 12. There doesn't have to be a majority. It's all fine. She was reading Hillary Clinton's new book-- Hillary Clinton and a co-author wrote a book about the sort of thinly disguised Donald Trump and problems of international relations and threats of nuclear war. And, in it, they mention the Secretary Problem. And, she says, 'Do you know the Secretary Problem?'
And I said I had literally just read about your discussion of the Secretary Problem. And, my wife and I then had about a 15-minute conversation that I think an outsider might have characterized as an argument--but we've been married 36 years, and it was a discussion, I can assure you. She's a professional litigator. So, you should pity me. I lose every argument. Because professional litigators are pretty good at arguing.
Russ Roberts: Mike, I don't pity you. You know I pity her. You know that.
Michael Munger: Everyone pities her, including herself. So, it caused us to have this really interesting discussion about somewhat different experiences with the same thing, but it is because we have 36 years of becoming the sort of people that participate in marriage that way. So, I think it is fair to say our marriage is pretty discursive. It wasn't at first. And, it may have been--
Russ Roberts: What does that mean, 'discursive'?
Michael Munger: We talk about things, we argue about things, we try out claims and then we actually count on the other person to show mistakes in the claim that we've made. I rely and she relies on me, I think, to be able to help us work through things. So, it's discursive in the sense that we don't brood: we tend to talk about things.
Russ Roberts: It's like an EconTalk episode, you're saying.
Michael Munger: Many people have suggested you and I get married, in fact, for just that reason. I think--
Russ Roberts: We've been heavily married for 16 years, 42 episodes.
Michael Munger: And, they were consecutive.
But I think it is fair to say we're not always happily married at the beginning. And, it was a problem of becoming. So, my good friend, Steve Horowitz, who has now passed away, was inexplicably a big fan of the band Rush. And, one of their songs had the line, "If you choose not to decide, you still have made a choice." And, I worry that many people approach marriage that way--that in effect, they decide not to get married because they can't come up with a list of reasons why they would want to get married. And, the fact is, you don't really know about whether this is going to work until three years or five years down because you become the sort of person that wants to be married to the person that has become your spouse.
And, it actually takes intentionality. You have to want to become the sort of person who is married.
So, you used the example of going to Chicago. Well, if I think that becoming married is going magically to transport me to a land of delights, and after three years it hasn't happened, I think, 'Well, that was a mistake.' No. You have to get in the car and fight traffic and get lost and go to Chicago. That's how marriage works. It's actually the trip of deciding, 'I'm going to go there.'
Now, how you get there is going to be difficult. But sitting and waiting and saying: I want to be in Chicago and marriage is going magically to transport me there is a mistake.
So, when you talk about the Secretary Problem, the difficulty is that--and you use the example of eHarmony, which I thought you might talk about for a bit--because I think many people would compare and you rightly make the contrast, the eHarmony problem looks like the Secretary Problem in the sense that I sample some possible spouses, and then I pick the best one. But that's not the way eHarmony works. So, could you talk about that?
Russ Roberts: Well, I [?] want to talk about your marriage first--because--first I want to put a footnote on there. Your wife makes this joke: 'So how long you've been married?' 'Well, we've been happily married for 12 years--not in a row.' And, the Gilbert point would be: Well, you made a mistake, Mike, because you chose a spouse that led to only one third of the time being pleasant and two thirds not so pleasant, and therefore you made a mistake.
And, what I understand you to be saying, which I think is profound, is that: that's not the right calculus. The right calculus is: How about the next 36 years? Even if you're a utilitarian: Am I going to be 24 out of 36 for those next 36? Or am I going to be 12 again?
And, you hope to be a different person than you were when you first got married. You hope to interact with your wife in a different way.
And, I'm going to put a footnote here because we haven't talked about this yet; I want to make sure we talk about it--and then we'll come back to your question, which you remember, and I won't. And I even forgot what the question is, what I was going to say, what the footnote was. Oh! That when Darwin makes his list of pros and cons, not surprisingly, he's thinking mostly about himself. He's thinking, 'Am I going to enjoy this?' When you get married, you come to the view that it's not just about you: it's about us. And, this is a very trite thing to say, but it's quite important and quite powerful.
Economics is not well suited to 'us'. It's much better at 'me'. And, to think about what we might want would entail making a sacrifice from time to time, even a sacrifice that might not pay off as 'Oh, but future gains will be higher.' Right? And so I think that--which is the economist's tautology--and I think that's really important.
I think what you're saying about marriage--I was talking about this in a different interview, about how much I hate the phrase 'you have to work at your marriage.' As if you have to schedule a workshop, that, once a week, 45 minutes a week, you've got to talk about yourself and how your marriage is working with your spouse and then work things out.
And, I think that's a totally misleading model. You might do that from time to time, but that's not what it really means to work at your marriage. To work at your marriage, what it really means--and that phrase doesn't capture it, so I don't like it--to work at your marriage means to work at yourself. It means to consider things other than you in how the person you live with interacts with you and vice versa.
And, I think that's the discursive part, which is really quite beautiful. You're accepting the reality that for you to have a good life with this other person, you need to interact with each other in unpredictable ways and you're going to evolve, the two of you together, and each of you individually from the interactions with each other. And that's really what marriage is about.
Now to come back to your question, which had something to do with the Secretary Problem. Which we didn't identify. We should talk about what it is.
Michael Munger: Right. There really were three parts to the question that are interwoven. One was Penelope's problem when she doesn't know that Odysseus has come back. There's 108 suitors. How should she choose? And, then the Secretary Problem was: There are a lot of applicants for the position of secretary. How should I decide? Because if I hire one, there may be a bunch of others in the pool. And, then the eHarmony observation, which actually goes in kind of a different direction, even though it seems related.
Russ Roberts: So first, the Secretary Problem is--it's got very strict rules. You're interviewing applicants for a position--and of course it was immediately applied to marriage because marriage and hiring someone are both what economists call Matching Problems: trying to have two people at the same time agree to something.
So, in the case of the Secretary Problem is, you have an applicant for a position, and the rule of the game is that once you've sampled them and said, 'No, you're not going to hire them,' you can't have them back.
So, if that's the case, and you have 108 applicants for the Secretary position, what should you do to maximize the probability that you hire the best one?
And, what a solution to that is--which is quite extraordinary and beautiful and involves letter e, which I think is really one of my favorite things in the world--it's the only equation in the book, and it's a faux equation because of course I don't use it in any way--
Michael Munger: But, it is an equation. So, you get over that hurdle.
Russ Roberts: Yeah. I'm in.
The idea is that you sample a bunch of the potential secretaries--or spouses, mates--and with no plan of marrying those: you're just going to use them as a benchmark.
So, you sample 37 of the 108--I think I've got the number right--and you find the best one of the 37. You don't--you can't marry or hire that one because that one's gone. You've already said no to all of them unless it happened to be the 37th.
But, you decide in advance: 'I'm going to interview 37 people.'
And let's say number 11 was the best one of the 37.
Then you use number 11 as the benchmark. 'The next candidate that's better than 11, I am going to hire or marry.'
And, that leads to a shockingly high percentage of a chance that you'll pick the best one.
Of course, if 11 is the best one, you're cooked, because you're only going to get the last one. Because you'll never find one better than that one.
But, as long as the second best is in the first 37, you're then, you're going to get the best one. Which is pretty cool.
And so, that's how the problem is set up. And, it turns out you have a 37% chance of hiring the best one. And that's amazingly high in my view, or at least this wouldn't have been my guess if I hadn't thought about it much.
And, my point in the book is that--and so I apply it to Penelope: you had 108 suitors in her house waiting for Odysseus. She's waiting for Odysseus to come home or she's trying to make a decision by not making a decision. She's trying to stall. We know she's stalling, hoping he'll come home, we think, or maybe just not so happy with any of the 108, ex ante.
And, that's what she should do if she wants the chance to find the best one. Go out for dinner in Ithaca with 37 of them, and then after that pick the best one.
Of course, if the best one was number 11, you end up with the very last one, assuming you're going to marry one of them or hiring the last one. Therefore, you're going to get the average quality of the group, which is quite misleading because you actually don't get the average quality. You get the quality of the 108th. On average, that's going to be the average, but it could be--
Michael Munger: It's a draw--
Russ Roberts: a horrible person to work for you and a very tough person to live with, if it's spouse.
So, my point in the book is that this is a totally misleading way of thinking about either hiring people or marrying people.
First of all, you don't care about the best. It's a meaningless concept. It can't be defined. It's not a singular scalar thing about how good someone is as a spouse, or a secretary. So, that's totally misleading.
So, you don't really care about getting the best one because you can't even define it.
And, then you have to figure out how many to interview.
The problem comes with set number already determined. You have 108. In fact, in real life, you can interview the 109th. There's nothing stopping you. And of course, we all know that can be a problem of procrastination. I'll just keep looking.
So, I don't find it very helpful. But it's very, very precise. And so, I did enjoy making fun of it a little bit in the book.
Coming to eHarmony--what's your point about eHarmony?
Michael Munger: Well, it seems like eHarmony ought to [crosstalk 00:50:11]
Russ Roberts: [crosstalk 00:50:11] eHarmony is a matching thing where you fill out a questionnaire and--
Michael Munger: I have a friend who has been very seriously looking for a spouse for the past two years. He works in Silicon Valley, is quite wealthy. He's about 42 years old and is very seriously looking for a spouse. He actually keeps a log about how this is going. He has been on 150 first dates. He's been on 12 second dates--because, in every case he was on the first one and just said, 'No, this is no good.' I don't think he's ever going to get married.
Russ Roberts: Possible.
Michael Munger: But, he's using eHarmony. He's just using it the wrong way.
And, you had an observation about why eHarmony works and it seems paradoxical. It's not that you can sample a large number of people and find the best one.
Russ Roberts: Or one that's, quote, "really well matched for you." Because, you have to fill out an elaborate questionnaire of about--hundreds of questions about your preferences and your tastes and your religiosity and your habits with money and so on and so forth, I assume. I used to be an advisor on the eHarmony Advisory Board. It didn't last very long.
But I want to come back before I talk about that to say something else about your friend.
I give the example in the book. Tell me, did I get this right? Did I talk about Kepler in the book? Do you remember? Okay, phew. So, Kepler was an astronomer. Not exactly a normal person, pretty clear. But he is one of the greatest astronomers of all time, which is great, has a good resume. And his friends know he has trouble meeting women.
So, they set him up with 11 job candidates, 11 secretaries, 11 possible spouses. And, he, like the Secretary Problem, methodically interviews them one by one.
And he turns them down; and I think he gets to 11; and he's, like, 'I think I like seven the best,' but of course she's gone and she's remarried. Or five, whichever one it was. Just like the Secretary Problem. He eventually is able, fortunately, to go back and resample and marry one of the ones he rejected, but he did go very methodically, like your friend, thinking that was the right way to do it.
It does seem to be a difficult algorithm to stick to and for it to be successful. And, I think that's a psychological challenge, not a question of rationality.
But the insight I got about eHarmony, I got from an insider who preferred to remain anonymous, and he said, 'You know, I think to the extent that eHarmony is successful in matching people'--and this is an interesting question; and, footnote, Gigerenzer also writes about this in his new book very thoughtfully kind of interesting--but this insider said, 'I think the reason eHarmony is successful is not so much that had this fantastic algorithm that figured out that birds of a feather flock together, and therefore if you like Chinese food and she likes Chinese food, you're going to have a happy life--which is absurd. It's really that it selected people who were willing to fill out a really long questionnaire' and therefore--
Michael Munger: They want to get married--
Russ Roberts: They want to get married. Which is a hugely important aspect of the dating scene, which is unobserved in general. And, what eHarmony does is that it's a signaling mechanism and is what--
Michael Munger: A costly sorting process.
Russ Roberts: Exactly. And so, it tells--
Michael Munger: So, it's a separating equilibrium. These are people who want to get married. I had to go for a walk after I read that part of your book, I had to go for a walk. I was so--
Russ Roberts: Why?
Michael Munger: so thrilled that I had--I had learned something. That's--it's such a neat--now it may not even be true. This was a speculation. But it's a great illustration of the sort of unexpected result that you might get from having some sort of process that has a completely different rationale from the one that we usually associate with it.
Russ Roberts: Yeah. It's a little like the psych experiment where they make you do something and what they're really doing is watching how you sit in the chair and that's the whole point of the experiment. Right?
I'm really glad, though, that you went for a walk and that it was good, because usually when you go for a walk with me, it's on an EconTalk episode you're listening to with an inferior guest and you get really mad and you're yelling.
Michael Munger: No, it's usually with a superior guest that you are having some argument about statistics about that pisses me off. So, I'm yelling at you and the people come out of their house and take their children back inside. So, there's a crazy man.
Russ Roberts: But, this isn't one of those.
Michael Munger: No, that was not that. I went for just a regular walk.
Russ Roberts: They want to know what you're eating. They said, 'He looks awfully happy. Did he eat something really important?'
Michael Munger: Yeah. He must have had something.
Michael Munger: Switching gears a little bit, Chapter Nine: you talk about privileging your principles. And, this was actually a claim that one of my dissertation advisers, Douglass North, would often make. And so, I wanted to ask some questions about this.
You used the wallet example, and you talk about talking to students about if you found a wallet and it had money in it--but no one saw you pick it up; you knew you could get away with it--what would you do?
And, you claim that there's three kinds of arguments or claim that might condition our decisions.
One is just utilitarianism: Am I better off with this money? Second is, does it give me pleasure to return the wallet? And the third is, a kind of habit: Am I the sort of person that does the right thing? And, I've decided that returning wallets is the right thing.
So, then you give the example of Theodora in the Grand Tetons. So, what do you mean by privilege your principles? And, in practical terms, how might someone cultivate being the sort of person that privileges their principles? And, can you say something about the wallet example and Theodora?
Russ Roberts: So, in the wallet example--it came out of a class I was giving to some high school students at an elite private high school, and they were all students in an economics class. And, I asked them, 'If you found the wallet, what does economics tell you you should do?' And, they said: number one, what you just said: 'Well, keep it. Come on, what are you an idiot? You get the benefit of whatever you'd buy with the money and there's no cost.'
Michael Munger: With no cost.
Russ Roberts: No one saw you. Now I want to concede that I don't like these kind of thought experiments at some level, because the idea that no one saw you, it's really not a totally credible hypothesis to presume. There's always a chance someone saw. So, actually, before I read this book, I actually found a wallet on the street, in San Francisco, in the Tenderloin. Don't ask me what I was doing in the Tenderloin. But I was in the Tenderloin with my wife, and the wallet was sitting there, and I thought, 'Oh my gosh, a lost wallet.' I picked it up, saw that it was full of cash. And I put it in my pocket, and I walked to a place where I could look at it with care. And, I saw that it belonged to someone, but it wasn't going to be easy to find that person. But, that's a long story; I decided not to tell that in the book. I eventually found the person, got them back their wallet, got them back the cash that was in it. At least I hope so. But, in my mind, no one saw me pick it up. And, I wanted to pick it up, partly because I was afraid someone else could pick it up who wouldn't return it: they'd just keep it.
So I took it, returned it. But, to be truthful, the idea that no one saw me, is that really--there's actually experiments with wallets, and it would be awkward if I were seen with a hidden camera, finding a wallet and keeping it. But, anyway, I assume no one did actually see me.
But anyway, I gave this example to the students. I said. No one sees you; what should you do? And they said, 'Obviously economics says the rational choice is to keep it.' And, I'm going to call that the narrow utilitarian calculus, that--you called it utilitarian. I'm going to call it the narrow utilitarian. The broader utilitarian calculus says, 'Yeah, but what if you were[?felt?] really guilty keeping the money? Then, the rational thing is to give it back, if the guilt that you feel outweighs the pleasure you'd get from spending the money on something you'd like.
But, my real point is that's really not the right way to think about it, because the right way to think about it is: Do you want to be a person who returns wallets or the person who keeps them?
And, you could say that's kind of silly. You're a sucker. That comes back to our pig and philosopher conversation earlier. Don't make people feel guilty about stealing wallets. It's much better to let them be happy, keeping the money and spending it.
And, I would argue that if you want to live in a good society, actually we want to cultivate the other norm. So, I disagree. And I think it's good to be a person who returns wallets.
Now I'll tell the Theodora story and we'll talk about privileging your principles. And, we're almost done Mike, and soon there's going to be nothing left for listeners to bother reading the book because we've covered almost everything interesting in the book. You're way too good at interviewing. This is my goal, by the way, when I'm the host is to make sure that no one really buys the--I don't tell my guests this, but the real goal is that no one has to buy the book. Because they've learned all the good stuff--anyway. I'm just kidding.
So, my wife and I were in the Grand Tetons and we went out for the day and we came back and she realized she'd lost an earring. It was a diamond earring. It was really sad.
Michael Munger: An anniversary diamond earring. Something that you had given her.
Russ Roberts: Yeah. And, it was worth a lot of money, but not an immense amount of money. Let's just say hundreds of dollars.
Michael Munger: Sentimental and monetary value. It's a significant loss.
Russ Roberts: The real problem was the sentimental part. I said to her, 'Let's not ruin our vacation. I'll buy you an even nicer one and we'll replace the earring. We'll replace two of them or we could just replace the one. It'll be fine.' But, she was troubled by it. We went out the next day and we came back, we had changed rooms and there was a note on the--it's actually pretty fun: I didn't[?] put this in a book, added value for the podcast listener. We went to a rodeo in--
Michael Munger: Okay, you're making this up. You did not go to a rodeo.
Russ Roberts: I did. It was so great. It was so great, in what do you call it, the little town outside of Grand Tetons? I can't even remember the town now. It's so embarrassing. Anyway, we went to a little town in Wyoming and we saw a rodeo. It was really fun, really interesting. And, we come back really tired after a long day and it's 10 o'clock at night and we let ourselves into into our new room, and there on the bedside is a note from Theodora, our housekeeper, saying, 'I found this. I don't know if it's yours.' I love that wording, 'I don't know if it's yours,' meaning: If it's not, could you give it to me? It was the earring. She had found that in the kitchen. You have to read the book to get all the full, emotional back-and-forth between my wife and Theodora at that later, which happened.
But, the real point is, is that: I think it's a fabulous thing to think about. Theodora was an immigrant, here for the summer in America, for the summer, to work as a housekeeper at Grant Teton National Park, and she finds this really wonderful thing. Truth be told, it's a little like the wallet. There's no camera in the room. The people who have lost it don't know they lost it. And, she wrote, she doesn't know it was us--could have been up against the counter, on the ground, in the floor in the kitchen for months. And so, really, totally rational to keep it. Something in her said, 'That's not right.' And she did a wonderful, remarkable thing, which is that she soothed my wife's mind by returning something sentimental that she had lost.
And, again: read the book for all the details, but my argument is you should privilege your principles. And, there's an economic term for this--I don't remember if I put this in the book--it's called lexicographical, meaning: Don't do trade-offs. Always do the ethical thing regardless of what it costs you.
Now, if Theodora had a child who was dying from an illness and needed money, that would be a different--then her principles would conflict, and I [?didn't?] write about that. But, assuming it's just that this would be really pleasant to have something worth hundreds of dollars that I can get away with and no one's going to know any different versus giving it back, she decided to give it back.
And so, I ask the question: Is that something you should aspire to? And then I ask: How might you aspire to it if you don't aspire to it now? If it's not in your habit to return things that are really unpleasant to return--because you could, you know, buy something really nice?
And so, that's what that's about. And so, privileging your principles to me means there's certain things you should live by: that you shouldn't use the economic, the so-called rational ideas of an economist of making trade-offs against it, unless there's a really important other principle that we're talking about, like saving a child's life or something like that.
Michael Munger: So, Douglass North had a version of this where he thought that people had ideologies or often shared principles that they would use to decide how to live and that it was wrong to use economics to think about this. But he admitted that it might, at least at the margin, be amenable to that sort of treatment. And, he called it the Becker approach, which I think is probably right.
The fact is, that--well, he claimed that economists don't have anything to say about where preferences come from. What we do is, we could say it might be affected by income and price. And so: Yes, rich people can afford to perceive themselves as honest because they don't give up very much by being honest--
Russ Roberts: Cost of honesty is low.
Michael Munger: And, their income is high. So, it's maybe a luxury good. But of course, all these rich people are going to profess honesty. And, I actually thought of it the other day. I have a BMW [Bayerische Motoren Werke], standard transmission. I didn't realize that I had pushed in the clutch and I thought I hit the brake on, and I was fiddling with the radio. And, then I heard this loud schshsh [sound effect]. And it turns out I had rolled forward and just sheared off the whole side of a pretty nice pickup truck in the parking lot at Duke. And, I looked around and there was no one around. Phew!
Russ Roberts: Thank goodness!
Michael Munger: So, I left a note on the windshield saying, 'I'm really sorry I did this. Here is my name and phone number. Here's where my office is.'
So, the guy called the next day and said, 'I can't believe you called. I don't think most people would call.' And, I mean here [crosstalk 01:05:17]
Russ Roberts: [crosstalk 01:05:18] would leave the note.
Michael Munger: Yeah, because the old anecdote is: immediately if someone sees you, you immediately get out and you leave a note and the note says, 'They think I'm leaving my name. Screw you.' And then you put that under the windshield wiper, because they don't go and read the note. They think, 'Oh, he's doing the right thing.'
But, I didn't do that. I left my actual name, phone number, contact information. My insurance covered it. I probably had to pay a $250 deductible. But I'm rich. I can afford it. I can afford to make myself feel good about it.
What I thought was so powerful about Theodora--your Theodora example--was that it takes North's side and says, this is not something you can just explain with income and price. This was probably close to a week's pay after taxes for her.
And, she's pretty poor. So, the price was high, her income is low, and she did it anyway, because she's just that sort of person.
So, the income and price variation in privileging your principles--I'm glad you said lexicographic because it means it's not subject to trade-offs. So, if you can manage to cultivate a habit--because that is really is what that is. Aristotle said that our character is composed of the habits that we have cultivated. The good habits are virtues, the bad habits are vices. And the whole set of habits that we have, that's what our character is. What do we do without thinking about it? If we do the right thing, just out of habit, that's a person of good character.
So, being a person of good character is the objective of Aristotelian virtue-ethics. It's not that I think about it and I do the right thing. It's that I do the right thing without thinking about it.
Russ Roberts: So here's my question for you. You just told a story that I'm going to pretend is true. I have no way of knowing. Sheering off the side of a pickup truck, left a note--maybe, maybe, maybe. And, I told the--
Michael Munger: The other four times when I didn't leave a note, I'm not going to talk about those.
Russ Roberts: Exactly!
And, I just told a story--yeah, I found this wallet, there's no way of identifying--the finding--easily getting the wallet to the person.
What actually happened, there was an address. I went to the address, it was a PO [Post Office] box. It was a Sunday, PO [Post Office] box was closed. It turned out it was a homeless person's wallet, which is kind of like the flip side. This person had no driver's license, no easy address, no phone number.
I found one person's name and number, and it was a social worker who was helping him. Called that person and said, what was that wallet doing in San Francisco? 'He lives in--' wherever.
Anyway, so I told a self-serving story, which could be true, about my virtuousness returning a wallet. You told a self-serving story, which could be true, about you leaving a note on a pickup truck windshield, that was not--they think I'm leaving my name and number. You actually left your name and number.
It's an interesting thing. How did you feel when you tell that story? And, should we encourage people to brag about their virtue or should we encourage people to keep their light under a bushel?
Michael Munger: In my defense, remember the point of my story is that I am not virtuous because I can afford it, and I had insurance. It cost me nothing.
Russ Roberts: Almost nothing.
Michael Munger: Yeah. So, it was a little bit of embarrassment.
Russ Roberts: Your rates went up, too.
Michael Munger: Maybe a little, but this is pretty trivial because again, I'm rich! I get paid way too much by Duke University. So, I can afford my preferences.
And so, my point is: You can dismiss my story. There's no virtue in it.
Russ Roberts: Yeah, what you left out. Not only do you get paid by Duke University, have your wages as a guest for EconTalk and now a host, which is basically put you--
Russ Roberts: Yeah. Doubled. Yeah.
Michael Munger: So, Elon Musk and I will be hanging out in no time.
Russ Roberts: Which social media outlet are you thinking of buying, Mike?
Michael Munger: I have two more points. One is that there's a great chapter on Bill Belichick, but we're not going to say anything about. It's fantastic; you have to buy the dang book. And in fact, it does leave the enigmatic story of the long snapper out. I wish you had said more about the long snapper, because that's actually an example that I use. But, if you want to find out about that, you're going to have to read the book.
But I do have a closing question. Well, so this is sort of a surprise. I want to see if I can get--come on. No, come on. He's shy. Come on. Well, okay. It's Russ Roberts, 1992. I've gone back in time and I've gotten Russ Roberts 1992. I don't know what the hell's wrong with him. He's worried. I think probably since it was 1992, he doesn't know what Zoom is. And so, he's a little worried about this, but he had a question and I promised that I would let him ask, and now I'll ask for it.
What the hell are you doing writing a book like this? Russ Roberts 1992 doesn't think this way. And, in fact, the only explanation that he could come up with is that this is some income-maximizing story about how if you write this self-help book that you can come up with, you'll dramatically increase your income.
So, when did you stop being an economist, and how did you come to write this book? Can you say something about the journey from 1992, 30 years ago exactly, until now? And, what part has EconTalk had in that?
Russ Roberts: It's a really interesting question. There were different versions of this manuscript where I spent more time and more words talking about that transition. In some way, this book--you could actually go back to 1980 Russ Roberts, who freshly graduated 1981, freshly graduated from the University of Chicago and taught that the rational life is--that everything can be pushed into the calculus of costs and benefits that we're talking about.
Michael Munger: Not just taught, believed at level.
Russ Roberts: Deeply, very deeply. And, I think EconTalk played a big role in thinking about it differently. I think part of it--and I'd be interested in your response to this--I think part of it is there's a difference between how I, as a social scientist on the outside looked in on the decisions of my fellow human beings versus how they really make their decisions. And, I think it's the episode with Paul Pfleiderer, where we talk about the fact that a lot of economists forget that the models that they write up and publish are not reality. And, certainly when I was 26 years old in 1980, when I was 26 years old in 1980, I thought they were reality. I thought that people were rational and they made their decisions by this calculus. And, if you said, 'I don't know, I don't really feel that myself,' I would've said, 'Well, I learned from Milton Friedman that they act as if they do it this way, because it predicts what they actually do.'
And, I love Milton Friedman. I learned a ton from him. And I love Gary Becker. I learned a ton from him. But I think there's a sterility to their way of looking at the world. I feel very uneasy saying that because I do remember how I felt in 1980 and 1992. There's a sterility that I think Knight and Buchanan avoid when they think of us as aspiring creatures. Buchanan has an essay--I've been implicitly referring to it--he has an essay about 'Natural versus Artifactual Man,' and by artifactual, he meant we mold ourselves. We determine who we want to become.
Now it's a lot of chutzpah to think that people can actually change their preferences. In the book, I have a chapter about how you might think about doing that. But, most people don't change their preferences: as I was--believed--in 1980, they have them and we don't have anything to say about them or how they change. We don't have a model of that. We don't have a model of where they come from. So, quote, "We take them as given." And then we look and see what the predictions are that come from that.
And, somewhere along the line, certainly as a graduate student and maybe my professors came to believe that it wasn't just that's how we make predictions about what they do: That's what they actually do. And, I don't think it's what people actually do.
And more than that, this book is to argue it's not what they should do. It's not even optimal in the way that we were taught.
And, it's not to say that I didn't learn anything from those people, that I learned from at graduate school. I think I learned an enormous amount, but I do think there was something missing from the human experience that they didn't take into account.
We've talked about it here in the program many times--flourishing, eudemonia--and I have no doubt, and I'm sure that he did it in many of his papers, I have no doubt that Gary Becker could put eudemonia in the utility function and do it well. Most of us can't. I think a lot of the attempts to apply economics to broader things other than what we buy and sell have not worked so well and are not helpful to thinking about the human experience.
And so, somewhere along the line, partly for me--I think mostly from EconTalk, partly from growing up, partly from being married--I started to wonder whether the tools I was taught captured everything
But I was taught they captured everything. George Stigler said it very well. He said 'There was only one social science and we are its practitioners.' And, I believed that with every fiber of my being in 1980 and probably even in 1992. I don't believe that anymore. And, I wish Gary Becker were alive, so I could talk to him about it, but he's gone. And, I think he was the most thoughtful person who was trying to squeeze these human emotions into a constrained maximization framework, which is the economics toolkit. He got a lot of mileage out of it. But I don't think he got a lot of insight into how we actually behave--at least on some of these kind of decisions.
Michael Munger: My guest today has been Russ Roberts of Shalem College of Jerusalem and Stanford University's Hoover institution. Russ, thanks for being part of EconTalk.
Russ Roberts: And, Mike, thank you for being part of EconTalk.