Review of Superfreakonomics, by Steven D Levitt and Stephen J Dubner, and On Rumours, by Cass Sunstein; first published in Prospect, October 2009
Over the past two decades, economists have been rediscovering human behaviour—real, irrational, confusing human behaviour, that is, rather than the predictable actions of the “economic man” who used to be pressed into service whenever modelling was to be done. It’s a field that has conquered not only the academies but also the bestseller lists and the policy seminars—and that, given the role played by human greed and ignorance in the recent financial crisis, seems either more pertinent or more ironic than ever. Now, two new books offer an opportunity to exercise a little applied scepticism concerning the science of human waywardness itself.
The first of these, Superfreakonomics, is Steven D Levitt and Stephen J Dubner’s sequel to their 2005 hit, Freakonomics, which told a swashbuckling scientific tale about how the right data can explain even the murkiest behaviours. Freakonomics worked because its economist, Levitt—his co-author, Dubner, is a journalist—was a brilliant investigator of this “hidden side of everything,” as the subtitle put it. And the sequel is equally diverting. Did you know, for instance, that “the total impact of TV on crime in the 1960s [as it was introduced across America for the first time] was an increase of 50 per cent in property crimes and 35 per cent in violent crimes?” The authors don’t have an explanation for this disturbing statistic, but make a robust enough case for its accuracy to give this reviewer serious pause for thought. Similarly, while much of the section on climate change feels like old news, their debunking of the experimental evidence for altruism is a provoking assault on several sacred cows.
As some reviewers pointed out in 2005, Levitt’s economic approach is actually a pretty orthodox one. “There is no such thing as freakonomics,” wrote the American legal scholar Cass Sunstein in the New Republic. “Nor is there anything remotely freaky about Levitt’s approach. In assuming that people are rationally responsive to incentives, he is a perfectly conventional man of his trade.” The most exciting developments in economics, Sunstein continued, were those that dispensed with the idea of incentives, looking instead to “pervasive human errors and illusions.” This was what Sunstein set out to explore in his own bestselling book, Nudge (2008), written with American economist Richard Thaler.
Nudge was about “choice architecture”—altering the way choices are presented in order to “nudge” people towards a beneficial action, without actually banning anything or creating incentives. Presented as a “genuine third way” for policy (as opposed, presumably, to the ersatz third ways of Blair and Clinton), Nudge also offered a masterclass in political rhetoric. Here was the perfection of 1990s liberalism’s have-it-all aspirations—a moderate means of promoting radical change, and impeccably empirical too. The future of economics had arrived.
Except that, one year and a financial crisis later, this softly-softly approach towards “pervasive human errors” is already looking shaky. And its limitations are neatly, if inadvertently, traced by Sunstein’s latest book, On Rumours. Its text weighs in at a mere 100 pages, but On Rumours is more than just a book: it’s also a manifesto. This September, Sunstein was appointed Barack Obama’s internet regulation csar. And in On Rumours we find the curious spectacle of someone who wishes to regulate without ever mentioning the word “regulation.” What he favours instead is “three modest ideas” to make the online world a little less impervious to truth or reason: a general right for libelled individuals or institutions to demand the retraction of false rumours, the principle that “those who run websites would be obliged to take down falsehoods upon notice,” and “damage caps” to prevent free speech being chilled by the above.
The problem, Sunstein explains, is that the fine notion of the “marketplace of ideas” doesn’t work online. Rather than truth vanquishing falsehood via the superior currency of being not false, it turns out that false rumours actually gain strength from the balanced presentation of evidence. Sunstein describes the internet’s tendency to create “echo chambers” of extreme ideas, and identifies these as threats to “the proper functioning of democracy itself,” no less. Not to mention—as Sunstein does not, indeed, mention—the benefits of curbing the kind of hostility he himself experienced over what some bloggers (falsely) termed his own “secret animal rights agenda.”
These proposals leave the erstwhile nudge guru in a tight spot. When is a nudge not a nudge? Takedown notices represent, at the least, a firm shove. Of course, Thaler and Sunstein were never daft enough to suggest that anyone could govern by nudging alone. But it’s interesting to contrast Sunstein’s exasperation—“is it so important to provide breathing space for damaging falsehoods about entertainers?”—with Levitt and Dubner’s gleeful swagger. Sunstein bends over backwards to be reasonable but, when it comes to the anarchic democracy of the internet, it seems that neither reason nor persuasion nor the subtlest nudge can drive people away from certain kinds of lie. And this leaves him at square one, fighting the good fight against ignorance and extremism with the oldest tools in the shed: writs, fines and re-education.
Surprisingly, then, it’s the “conventional” Superfreakonomics that ends up sounding more resilient in 2009’s credit-crunched realm of digital anarchy. Its authors are not opposed to a bit of nudging, but their message is bolder and blunter than Sunstein’s: “People aren’t ‘good’ or ‘bad.’ People are people, and they respond to incentives. They can nearly always be manipulated—for good or ill—if only you find the right levers.” It’s reductive, old-fashioned and a little arrogant. But it gets results.