The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life

by Gneezy, Uri

  Bronwyn Fryer played a key role in writing this manuscript and breathing life into our research. We learned every day from her writing excellence as she turned our “academese” into something that our neighbors can read. Our agent, James Levine of the Levine Greenberg Literary Agency, provided the professional support and excellent guidance that helped us navigate the many different turns that this book has taken to reach publication. None of this endeavor would have been possible without the great work of Bronwyn and Jim.

  Our editor, John Mahaney, provided professional advice and assistance in polishing this manuscript, lending keen insights to sharpen our thoughts. Our graphic designer designed the front cover, which effectively delivers our message. We thank our publisher, PublicAffairs, who believed in us enough to allow us to write this book in the manner that conveys our key message, and for giving us much-needed flexibility.

  Finally, a number of people provided comments that helped to shape this manuscript. These include Jennifer List, Ayelet Gneezy, Augie List, Alec Brandon, Molly Wright Buck, Joseph Buck, Winnie Pitcock, David “Lenny” Haas, Michael Price, Anya Samak, Edie Dobrez, Katie Baca-Motes, Sally Sadoff, Jeff Livingston, Steven Levitt, Stephen Dubner, Dave Novgorodsky, David Herberich, Annika List, Sandi Einerson, Jeff Einerson, Ron Huberman, Scott Cook, Freddie Chaney, Michael Goldberg, Pete Williams, Joe Gonzalez, Ryan “Mamba” Pitcock, Eric Faoro, Pete Bartolomei, John Friel, Michael McCallister, Brian Mullaney, Min Lee, Katie Spring, and our friends and associates at Intuit and Humana. Thanks to everyone for all your help and support along the way.

  NOTES

  Introduction

  1. Syed Z. Ahmed, “What Do Men Want?” New York Times, February 15, 1994, A21.

  2. David Brooks, “What You’ll Do Next,” New York Times, April 15, 2013.

  3. When we use the pronoun “we” throughout this book, it means that either or both of us were involved in the experiments described, most often with other researchers as noted. Also, at certain points in the book we use pseudonyms to protect those who preferred anonymity.

  4. All in the Family, Season 2. Accessed on YouTube, March 25, 2013, http://www.youtube.com/watch?v=O_UBgkFHm8o.

  5. Thomas Carlyle, “Occasional Discourse on The Negro Question,” Fraser’s Magazine (December 1849). Reprinted as a separate pamphlet (1853), reproduced in The Collected Works of Thomas Carlyle vol. 13 (1864).

  Chapter 1: How Can You Get People to Do What You Want?

  1. Uri Gneezy, Steven Meier, and Pedro Rey-Biel, “When and Why Incentives (Don’t) Work to Modify Behavior,” Journal of Economic Perspectives 25 (2011): 191–210, http://rady.ucsd.edu/faculty/directory/gneezy/pub/docs/jep_published.pdf.

  2. Uri Gneezy and Aldo Rustichini, “A Fine Is a Price,” Journal of Legal Studies 29 (January 2000): 1–17.

  3. Uri Gneezy and Aldo Rustichini, “Pay Enough or Don’t Pay At All,” Quarterly Journal of Economics (August 2000): 791–810, http://rady.ucsd.edu/faculty/directory/gneezy/pub/docs/pay-enough.pdf.

  4. As our friend Dan Ariely has shown, the currency with which you are paying is important. In particular, money is different than most other forms of payment. Ariely and his research partner, James Heyman, started by showing that students who got no payment for a task (helping other students load a sofa into a van) invested more effort than people who received just a small amount of cash. Another group received a candy bar. As they expected, they found that people who were paid with candy put in more effort than those who got a small amount of money (and the same effort as those who were not paid). But here comes the interesting part: in a different treatment, they left the price tag on the candy. They predicted that once students knew the retail value of the candy they’d put out as much effort as those who received the cash payment. And indeed that happened. See “Effort for Payment,” Psychological Science 15, no. 11 (2004).

  5. Uri Gneezy, Ernan Haruvy, and Hadas Yafe, “The Inefficiency of Splitting the Bill,” Economic Journal 114, no. 495 (April 2004): 265–280.

  6. Our friends Stefano DellaVigna and Ulrike Malmandier demonstrated this in “Paying Not to Go to the Gym,” American Economic Review 96 (2006): 694–719, http://emlab.berkeley.edu/~ulrike/Papers/gym.pdf.

  7. Steven A. Burd, “How Safeway Is Cutting Health-Care Costs,” Wall Street Journal, June 12, 2009.

  8. See David S. Hilzenrath, “Misleading Claims About Safeway Wellness Incentives Shape Health-Care Bill,” Washington Post, January 17, 2010.

  9. Gary Charness and Uri Gneezy, “Incentives to Exercise,” Econometrica 77 (2009): 909–931.

  Chapter 2: What Can Craigslist, Mazes, and a Ball and Bucket Teach Us About Why Women Earn Less Than Men?

  1. Archive of Remarks at NBER Conference on Diversifying the Science & Engineering Workforce, January 14, 2005. See also “Lawrence Summers,” Wikipedia, http://en.wikipedia.org/wiki/Lawrence_Summers#cite_note-harvard2005%E2%80%9336 (last accessed March 26, 2013).

  2. Daniel J. Hemel, “Summers’ Comments on Women and Science Draw Ire,” The Harvard Crimson, January 14, 2005, http://www.thecrimson.com/article/2005/1/14/summers-comments-on-women-and-science/.

  3. “Fast Facts: Degrees Conferred by Sex and Race,” National Center for Education Statistics, http://nces.ed.gov/fastfacts/display.asp?id=72 (last accessed March 26, 2013); “Women in Management in the United States, 1960–Present,” Catalyst, http://www.catalyst.org/publication/207/women-in-management-in-the-united-states-1960-present (last accessed March 26, 2013); and Patricia Sellers, “New Yahoo CEO Mayer Is Pregnant,” CNN Money, July 16, 2012, http://postcards.blogs.fortune.cnn.com/2012/07/16/mayer-yahoo-ceo-pregnant/ (last accessed March 26, 2013).

  4. “Working Women: Still Struggling,” The Economist, November 25, 2011, http://www.economist.com/blogs/dailychart/2011/11/working-women.

  5. See Jeffrey A. Flory, Andreas Leibbrandt, and John A. List, “Do Competitive Work Places Deter Female Workers? A Large-Scale Natural Field Experiment on Gender Differences in Job-Entry Decisions,” NBER Working Paper w16546, November 2010.

  6. We ended up offering jobs to some applicants.

  7. It is not appropriate—and in some cases it’s illegal—to ask the job applicant about their gender. So we resorted to a tried and true method to determine whether each applicant was male or female—the applicant’s first name. Based on probabilities derived from the Social Security Administration (SSA) database on name popularity by gender and birth year in the various cities, we assigned gender. For any names not included in the SSA database, we used an additional database created by baby-name collector Geoff Peters, which calculates gender ratios by first name, using the Internet to analyze patterns of name usage for over 100,000 first names. Finally, for gender-neutral names, where neither database yielded a large enough gender ratio to make a confident assignment, we searched the Internet for gender identifiers of the actual subjects themselves on their social-networking websites. In the end, we are pretty confident that we had the genders correct.

  8. For a laboratory test of this, see Muriel Niederle and Lise Vesterlund, “Do Women Shy Away from Competition? Do Men Compete Too Much?” Quarterly Journal of Economics 122, no. 3 (2007): 1067–1101.

  9. Uri Gneezy, Muriel Niederle, and Aldo Rustichini, “Performance in Competitive Environments: Gender Differences,” Quarterly Journal of Economics 118, no. 3 (2003): 1049–1074, http://rady.ucsd.edu/faculty/directory/gneezy/pub/docs/gender-differences.pdf

  10. Much has been written about the reasons why girls feel discouraged in math, engineering, and science and are outnumbered in science, technology, and mathematics professions. See Valerie Strauss, “Decoding Why Few Girls Choose Science, Math,” Washington Post, February 1, 2005, http://www.washingtonpost.com/wp-dyn/articles/A52344–2005Jan31.html; and Jeanna Bryner, “Why Men Dominate Math and Science Fields,” LiveScience, October 10, 2007, http://www.livescience.com/1927-men-dominate-math-science-fields.html (last accessed March 26, 2013).

  11. Uri Gneezy and Aldo Rustichini, “Gender and Competition
at a Young Age,” American Economic Review Papers and Proceedings 94, no. 2 (2004): 377–381, http://rady.ucsd.edu/faculty/directory/gneezy/pub/docs/gender.pdf.

  12. Unlike most of our large-scale experiments—such as one we are currently conducting in the Chicago Public Schools—this investigation in far-flung locations would have to be relatively small in scale and use some of the techniques that might be used in a laboratory setting. We call this kind of research an “artefactual field experiment” or a “lab-in-the-field” study. Uri Gneezy, Kenneth L. Leonard, and John A. List, “Gender Differences in Competition: Evidence from a Matrilineal and a Patriarchal Society,” Econometrica 77, no. 5 (2009): 1637–1664, http://rady.ucsd.edu/faculty/directory/gneezy/pub/docs/gender-differences-competition.pdf.

  13. Dorothy L. Hodgson, “Gender, Culture and the Myth of the Patriarchal Pastoralist,” in Rethinking Pastoralism in Africa, ed. D.L. Hodgson (London: James Currey, 1639, 1641, 2000).

  14. “Male Boards Holding Back Female Recruitment, Report Says,” BBC News, May 28, 2012, http://www.bbc.co.uk/news/business-18235815.

  15. Barbara Black, “Stalled: Gender Diversity on Corporate Boards,” University of Dayton Public Law Research Paper no. 11–06, http://www.udayton.edu/law/_resources/documents/law_review/stalled_gender_diversity_on_corporate_boards.pdf.

  16. Aileen Lee, “Why Your Next Board Member Should Be a Woman,” TechCrunch, February 19, 2012, http://techcrunch.com/2012/02/19/why-your-next-board-member-should-be-a-woman-why-your-next-board-member-should-be-a-woman/ (last accessed March 26, 2013).

  Chapter 3: What Can a Matrilineal Society Teach Us About Women and Competition?

  1. Garrett Hardin, “The Tragedy of the Commons,” Science 162 (1968): 1243–1248.

  2. This framing manipulation is taken from our friend James Andreoni, who famously introduced interesting variants of the public goods game.

  3. Linda Babcock and Sara Laschever, Women Don’t Ask: The High Cost of Avoiding Negotiation—and Positive Strategies for Change (New York: Bantam, 2007).

  4. See Andreas Grandt and John A. List, “Do Women Avoid Salary Negotiations? Evidence from a Large-Scale Natural Field Experiment,” NBER, working paper, 2012.

  5. “Best Companies for Women’s Enhancement,” Working Mother, http://www.workingmother.com/best-companies/deloitte-3 (last accessed March 26, 2013).

  6. See Richard A. Lippa, Gender, Nature and Nurture (Mahwah, NJ: Laurence Erlbaum Associates, 2005).

  7. Steffen Andersen, Seda Ertac, Uri Gneezy, John A. List, and Sandra Maximiano, “Gender, Competitiveness and Socialization at a Young Age: Evidence from a Matrilineal and a Patriarchal Society,” forthcoming in The Review of Economics and Statistics.

  Chapter 4: How Can Sad Silver Medalists and Happy Bronze Medalists Help Us Close the Achievement Gap?

  1. Thomas D. Snyder and Sally A. Dillow, Digest of Education Statistics 2010 (Washington, DC: US Department of Education, National Center for Education Statistics, Institute of Education Sciences, 2011).

  2. See Richard Knox, “The Teen Brain: It’s Just Not Grown Up Yet,” National Public Radio, March 1, 2010, http://www.npr.org/templates/story/story.php?storyId=124119468. For a fascinating insight into teenage brains, see Frontline’s program, “Inside the Teenage Brain,” http://www.pbs.org/wgbh/pages/frontline/shows/teenbrain/.

  3. Our friend and colleague Roland Fryer, a coauthor on some of the work discussed here, has made an important effort to implement financial incentives in schools across the United States.

  4. Sally is now an assistant professor at University of California, San Diego.

  5. To see their stories and learn more about our experiment, watch the fourth episode in the 2010 documentary “Freakonomics” (“Can You Bribe a Ninth Grader to Succeed?”). Note that in the documentary, Urail King wins the lottery and the ride in the limo: it is unclear that this moment was actually supposed to be a dream sequence. Although Urail was not actually chosen, he did improve his grades enough to qualify for the lottery. For the academic paper on which this episode is based, see Steven D. Levitt, John A. List, and Sally Sadoff, “The Effect of Performance-Based Incentives on Educational Achievement: Evidence from a Randomized Experiment,” unpublished, 2011.

  6. Levitt, List, and Sadoff, “The Effect of Performance-Based Incentives.”

  7. Steven D. Levitt, John A. List, Susanne Neckermann, and Sally Sadoff, “The Behavioralist Goes to School: Leveraging Behavioral Economics to Improve Educational Performance,” NBER Working Paper 18165 (June 2012).

  8. This idea comes from Victoria H. Medvec, Scott F. Madey, and Thomas Gilovitch, “When Less Is More: Counterfactual Thinking and Satisfaction Among Olympic Medalists,” Journal of Personality and Social Psychology 69 (1995): 603–610, http://www.psych.cornell.edu/sec/pubPeople/tdg1/Medvec.Madey.Gilo.pdf.

  9. Uri Gneezy, Stephen Meier, and Pedro Rey-Biel, “When and Why Incentives (Don’t) Work to Modify Behavior,” Journal of Economic Perspectives 25, no. 4 (2011): 191–210.

  10. See Roland G. Fryer Jr., Steven D. Levitt, John A. List, and Sally Sadoff, “Enhancing the Efficacy of Teacher Incentives Through Loss Aversion: A Field Experiment,” NBER Working Paper 18237 (July 2012).

  11. See “Teacher Salary in Chicago Heights, IL”, Indeed, http://www.indeed.com/salary/q-Teacher-l-Chicago-Heights,-IL.html (last accessed March 28, 2013).

  12. See John A. List, Jeffrey A. Livingston, and Susanne Neckermann, “Harnessing Complimentarities in the Education Production Function,” University of Chicago mimeo.

  Chapter 5: How Can Poor Kids Catch Rich Kids in Just Months?

  1. See Steven Levitt and Stephen Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything (New York: William Morrow, 2005), Chapter 5: What Makes a Perfect Parent?

  2. Joe Klein, “Time to Ax Public Programs That Don’t Yield Results,” Time, July 7, 2011, http://www.time.com/time/nation/article/0,8599,2081778,00.html#ixzz1caSTom00.

  3. For a more complete description of the GECC project, see Oliver Staley, “Chicago Economist’s ‘Crazy Idea’ wins Ken Griffin’s Backing,” Bloomberg Markets (April 2011): 85–92.

  4. The academic manuscripts are currently in process, with the first prepared study as: Roland Fryer, Steve Levitt, and John A. List, “Toward an Understanding of the Pre-K Education Production Function.”

  Chapter 6: What Seven Words Can End Modern Discrimination?

  1. In the United States, asking such questions would be illegal. This, of course, doesn’t mean that US employers don’t use such information when making hiring decisions.

  2. See “General Orders #11,” Jewish-American History Foundation, http://www.jewish-history.com/civilwar/go11.htm (last accessed March 28, 2013). Abraham Lincoln rescinded the order.

  3. “History of Antisemitism in the United States: Early Twentieth Century,” Wikipedia, http://en.wikipedia.org/wiki/History_of_antisemitism_in_the_United_States#Early_Twentieth_Century (last accessed March 28, 2013).

  4. Press Release, NobelPrize.org, October 13, 1992, http://www.nobelprize.org/nobel_prizes/economics/laureates/1992/press.html.

  5. Among adults twenty-five years old and older, 10.6 million US women have master’s degrees or higher, compared to 10.5 million men.

  6. See Kerwin K. Charles and Jonathan Guryan, “Prejudice and Wages: An Empirical Assessment of Becker’s The Economics of Discrimination,” Journal of Political Economy 116 (2008): 773–809.

  7. Jeffrey M. Jones, “Record-High 86% Approve Black-White Marriages,” Gallup, September 12, 2011, http://www.gallup.com/poll/149390/Record-High-Approve-Black-White-Marriages.aspx (last accessed March 28, 2013).

  8. The economics literature refers to this kind of discrimination as “statistical discrimination.” See Kenneth Arrow, “The Theory of Discrimination,” in Orley Ashenfelter and Albert Rees, eds., Discrimination in Labor Markets (Princeton, NJ: Princeton University Press, 1973), 3–33.

  9. Aisha Sultan, “Data Mining Spurs Users to Protect Privacy Online,” The Bullet
in (Oregon), September 29, 2012, http://www.bendbulletin.com/article/20120929/NEWS0107/209290322/.

  10. See “Web Sites Change Prices Based on Customers’ Habits,” CNN.com, June 25, 2005, http://edition.cnn.com/2005/LAW/06/24/ramasastry.website.prices/ (last accessed March 28, 2013).

  11. This work and the following builds on John’s earlier research published in the 2000s. See John A. List, “The Nature and Extent of Discrimination in the Marketplace, Evidence from the Field,” Quarterly Journal of Economics, 2004, 119 (1), 49–49.

  12. Read more at M. J. Lee, “Geraldo Rivera Apologizes for ‘Hoodie’ Comment,” Politico, March 27, 2012, http://www.politico.com/news/stories/0312/74529.html#ixzz1qusQkm6A (last accessed March 28, 2013).

  Chapter 7: Be Careful What You Chose, It May Be Used Against You!

  1. At firms with more than 20,000 employees, 24 percent vary premiums based on whether someone smokes, as do 12 percent of companies with 500 or more workers. See “Smokers, Forced to Pay More for Health Insurance, Can Get Help with Quitting,” Washington Post, January 2, 2012. See also, “Firms to Charge Smokers, Obese More For Healthcare,” Reuters, October 31, 2011.

  2. “Kenlie Tiggeman, Southwest’s ‘Too Fat To Fly’ Passenger, Sues Airline,” Huffington Post, May 4, 2012, http://www.huffingtonpost.com/2012/05/04/kenlie-tiggeman-southwests_n_1476907.html.

  3. See Andrew Dainty and Helen Lingard, “Indirect Discrimination in Construction Organizations and the Impact on Women’s Careers,” Journal of Management in Engineering 22 (2006): 108–118.

  4. “Nazi Persecution of Homosexuals, 1933–1945,” United States Holocaust Memorial Museum, http://www.ushmm.org/museum/exhibit/online/hsx/ (last accessed April 27, 2013).

  5. “The Black Church,” BlackDemographics.com, http://www.blackdemographics.com/religion.html (last accessed March 28, 2013).

  6. All in the Family, Season 2. Accessed on YouTube, March 25, 2013, http://www.youtube.com/watch?v=O_UBgkFHm8o.

  7. See Uri Gneezy, John A. List, and Michael K. Price, “Toward an Understanding of Why People Discriminate: Evidence from a Series of Natural Field Experiments,” NBER Working Paper 17855 (February 2012).