Superfreakonomics and bad incentives

2005’s Freakonomics was one of the most refreshing reads in a long time. It had a theme that I always enjoy, of taking a fresh, evidence-based look at everyday phenomena and challenging the conventional wisdom. Of course, most everybody likes this and Freakonomics was a huge hit. Its examination of how incentives affect behaviour was truly fascinating, for instance that imposing a fine on parents for being late to collect their children from daycare lead to more late parents, as the fine legitimised the overtime asked of the carers. The finances of a major urban crack-dealing operation were also really fascinating.

Journalist Stephen Dubner has again teamed up with economist Steven Levitt and their new book, Superfreakonomics (released in October), has proved more controversial than the original. Unfortunately, the controversy is less to do with the amazing insights they have revealed, but more to do with their sloppy handling of some important topics. Foremost among these was climate change.

I’m pretty late to the party when it comes to this particular debate, but a summary can be found here – among other salvoes fired, ClimateProgress’ Joe Romm took the authors to task for misrepresenting their sources, and the authors responded, aggrieved, on their own blog. It seems clear that at least one climate scientist was misrepresented in the book, and there are several glaring factual errors. These quotes and mis-quotes are largely irrelevant to the big picture, however. Anyone who read the book couldn’t help but come away with the following impression:

• Predictions of doom by scientists are often wrong and not to be taken seriously, to whit: the crisis of horse manure in big cities, or the supposed consensus on “global cooling” by scientists in the 70s.
• The global warming scare may have something to it, but the risks are overblown, CO2 isn’t really the problem, and the scare campaign is mainly due to a quasi-religious cult headed by Al Gore.
• Simple and cheap solutions exist to problems if only we are willing to think outside the box, and these are the preferred solutions.
• The solution to global warming, such as it is, isn’t carbon abatement, but a geoengineering project that would inject thousands of tons of sulphur dioxide into the stratosphere.

These points are hammered home in the global cooling chapter and are reinforced elsewhere in the book. Loaded terms like “doomsayer” and “heretic” pepper the chapter. The message of the preceding chapter is clear: We can rely on simple, cheap technological solutions to problems that once seemed insurmountable. Furthermore, they don’t require us to modify our behaviour, which would be nigh impossible to accomplish. (As others have noted, there is strangely no mention of how incentives could be employed to induce such behaviour change.)

In case you’ve been in a coma, it turns out that climate change is actually a big problem, it’s well studied, CO2 emissions are the major component, and the risks and uncertainties inherent in large-scale tampering with the stratosphere should give anyone serious pause.

Levitt and Dubner have, I think, irreparably damaged the brand they established with their first book. Although by all accounts the conclusions of their first book have not been seriously challenged, I am certainly now very skeptical of everything they have written, and am taking the other chapters in Superfreakonomics with an extraordinarily large dose of seasoning.

So, back to incentives. Freakonomics sold over 3 million copies. This creates a powerful incentive to to get a sequel out while the memory of the first is still strong. It’s clear that this incentive is at odds with taking the time to gather data and perform solid, thoughtful and responsible research.

Sadly, Levitt and Dubner will be the first to point out, the financial incentive always wins out.