When to Rob a Bank: ...And 131 More Warped Suggestions and Well-Intended Rants

by Steven D. Levitt

  Why do we fear the unknown more than the known? That’s a larger question than I can answer here (not that I’m capable anyway), but it probably has to do with the heuristics—the shortcut guesses—our brains use to solve problems, and the fact that these heuristics rely on the information already stored in our memories.

  And what gets stored away? Anomalies—the big, rare, “black swan” events that are so dramatic, so unpredictable, and perhaps world-changing, that they imprint themselves on our memories and con us into thinking of them as typical, or at least likely, whereas in fact they are extraordinarily rare.

  Which brings us back to Bruce Pardo and Atif Irfan. The people who didn’t seem to fear Pardo were friends and relatives. The people who did fear Irfan were strangers. Everyone got it backward. In general, we fear strangers way more than we should. Consider a few supporting pieces of evidence:

  1. In the U.S., the proportion of murder victims who knew their assailants to victims killed by strangers is about 3 to 1.

  2. Sixty-four percent of women who are raped know their attackers; and 61 percent of female victims of aggravated assault know their attackers. (Men, on the other hand, are more likely to be assaulted by a stranger.)

  3. How about child abduction? Isn’t that the classic stranger crime? A 2007 Slate article explains that of the missing children in one recent year, “203,900 were family abductions, 58,200 were nonfamily abductions, and only 115 were ‘stereotypical kidnappings,’ defined in one study as ‘a nonfamily abduction perpetrated by a slight acquaintance or stranger in which a child is detained overnight, transported at least 50 miles, held for ransom, or abducted with the intent to keep the child permanently, or killed.’”

  So the next time your brain insists on fearing strangers, try to tell it to cool out a bit. It’s not that you necessarily need to insist that it fear your friends and family instead—unless, of course, you are friends with someone like Bernie Madoff. Let’s not forget that the greatest financial fraud in history was committed primarily among friends. And with friends like that, who needs strangers?

  CHAPTER 6

  If You’re Not Cheating, You’re Not Trying

  ©iStock.com/mstay

  “Cheating may or may not be human nature,” we wrote in the first chapter of Freakonomics, “but it is certainly a prominent feature in just about every human endeavor. Cheating is a primordial economic act: getting more for less.” That chapter was called “What Do Schoolteachers and Sumo Wrestlers Have in Common?” Over the ensuing ten years, we’ve had no trouble finding further evidence in support of this argument.

  Cheating to Be Hot

  (SJD)

  Are we too cynical?

  I don’t think so, but some people do. We routinely hear from readers who say it’s a shame that we’ve called attention to so much deceit, trickery, and cheating among sumo wrestlers, schoolteachers, tax filers, and online daters. I could argue back and say, “Hey, we also called attention to people who don’t cheat, like the office workers who put money in an ‘honesty box’ to pay for their bagels.”

  The point isn’t that you can divide people into piles of bad people and good people, cheaters and non-cheaters. The point is that people’s behavior is determined by how the incentives of a particular scenario are aligned.

  So it was interesting to read Farhad Manjoo’s article on Salon about a contest run by FishbowlDC to decide Washington’s two hottest media folks. While agreeing that the winners were indeed a comely pair, Manjoo reports that the contest was a total rig job:

  [The winners] Capps and Andrews acknowledge that they won only because their online friends—without their express encouragement, they both say—built software “bots” that voted thousands of times for each of them. The bots were distributed on Unfogged, a humorously wonky blog and discussion site popular with D.C. types, within a day of the poll’s opening. If you downloaded and ran the software, your machine began tallying up votes for Capps and Andrews faster than a Diebold rigged for George W. Bush.

  Which makes me say:

  1. The stakes don’t have to be very high for people to cheat.

  2. When no punishment exists for cheating, it’s pretty damn appealing.

  3. We have been accused of stuffing a ballot box or two ourselves although there were no bots involved (that I know of).

  4. Can anyone please point me in the direction of the Diebold folks who might have rigged those machines? It would be fun to talk to them!

  Why Do You Lie? The Perils of Self-Reporting

  (SJD)

  I am always surprised at how easily, and cheaply, we humans lie.

  Have you ever been in a conversation about, say, a particular book and been tempted to say you’ve read it even though you haven’t?

  I am guessing the answer is yes. But why would anyone bother to lie in such a low-stakes situation?

  The book lie is what you might call a lie of reputation: you are concerned with what other people think of you. Of the many reasons that people lie, I have always thought that the lie of reputation is the most interesting—as opposed to a lie to gain advantage, to avoid trouble, to get out of an obligation, etc.

  A new paper by César Martinelli and Susan W. Parker, called “Deception and Misreporting in a Social Program,” offers some fascinating insights into lies of reputation. It takes advantage of a remarkably rich data set from the Mexican welfare program Oportunidades. It records the household goods that people say they have when they are applying for the program and it also records the household goods that are actually found in that household once the recipient’s application has been accepted. Martinelli and Parker worked with data from more than one hundred thousand applicants, representing 10 percent of the applicants interviewed that year (2002).

  It turned out that a lot of people underreported certain items that they thought might exclude them from getting benefits. Below is a list of underreported items followed by the percentage of recipients who owned that item but said they didn’t:

  Car (83 percent)

  Truck (82 percent)

  Video recorder (80 percent)

  Satellite TV (74 percent)

  Gas boiler (73 percent)

  Phone (73 percent)

  Washing machine (53 percent)

  That’s not very surprising: you might expect people to lie to gain the advantage of a welfare benefit. But here’s the surprise. Below is a list of household items that were overreported—i.e., the items that applicants said they had but in fact did not (again, followed by percentages):

  Toilet (39 percent)

  Tap water (32 percent)

  Gas stove (29 percent)

  Concrete floor (25 percent)

  Refrigerator (12 percent)

  So four out of ten applicants without a toilet said they had one. Why?

  Martinelli and Parker chalk it up to embarrassment, plain and simple. People who were desperately poor were also apparently desperate to not admit to a welfare clerk that they lived without a toilet or running water or even a concrete floor. This is one of the most amazing lies of reputation I can imagine.

  It should be noted that there is a lot of incentive to lie to get into the Oportunidades program, for the cash benefit equals about 25 percent of the average applicant household’s expenditures. Furthermore, the penalty for underreporting was not very strong: many of the people found to be underreporting goods like satellite TVs and trucks were not kicked out of the program. You could argue that the penalty for overreporting, meanwhile, was greater since it might mean being excluded from the program in the first place—which makes the overreporting even more costly.

  The Martinelli-Parker paper may have broad implications for not only poverty programs but any kind of project where the data are self-reported. Think about a typical survey on drug use, sexual behavior, personal hygiene, voting preference, environmental behavior, etc. Here’s what we once wrote, for instance, in an article about the lack of hand hygiene in hospitals:

  In one
Australian medical study, doctors self-reported their hand-washing rate at 73 percent, whereas when these same doctors were observed, their actual rate was a paltry 9 percent.

  We’ve also written about the topics that online daters are most likely to lie about and the risky business of election polling—especially when the issue of race is involved.

  But as often as we or anyone else writes about the perils of self-reporting, the Martinelli-Parker paper really gives the whole topic a foundation to stand on. Not only does it deliver a surprising insight into why we lie, but it is also a sobering reminder to naturally distrust self-reported data—at least until some scientists enable us to peer into one another’s minds and see what’s really going on there.

  How to Cheat the Mumbai Train System

  (SJD)

  A blogger named Ganesh Kulkarni discovered that the commuter trains of Mumbai serve six million passengers daily but the system isn’t equipped to check everyone’s ticket. Instead, Kulkarni writes, ticket agents conduct random ticket checks. This has given rise to a form of cheating that is elegantly called “ticketless travel.” Although it’s probably not very common to get busted for traveling ticketlessly, there is a significant fine if you are. And so, Kulkarni writes, one clever traveler has devised an insurance policy to make sure that ticketless travelers who are caught can lay off some of the expense.

  Here’s how it works. You pay five hundred rupees (about eleven dollars) to join an organization of fellow ticketless travelers. If you do get caught traveling without a ticket, you pay the fine and turn in your receipt to the ticketless-traveler organization, which refunds you 100 percent of the fine.

  Don’t you wish that everyone in society was as creative as the cheaters?

  Why Does the Post Office Deliver Mail That Has No Stamp?

  (SDL)

  If you had asked me that question a week ago, I would have said with great certainty that the post office would not mail a letter without a stamp.

  A few days ago, however, my daughter got a letter delivered in the mail. Where the stamp should have been, the sender had instead written “Exempt from postage: Guinness Book of World Records attempt.”

  The envelope contained a single sheet of paper, describing an attempt to set the record for the world’s longest-running chain letter, along with instructions to pass this letter along to seven friends. The letter said that if we broke the chain, the Postal Service, which was monitoring the record attempt, would know that we were the individuals who ruined it for all of the people who had been part of the chain since 1991!

  The simple arithmetic of chain letters guaranteed that somebody was lying.

  A chain letter for which every recipient actually forwarded the letter to seven other people would quickly absorb every child in the world (seven raised to the power of ten is roughly the U.S. population). I did, however, give the sender credit for at least admitting this was a chain letter.

  The thing that puzzled me was why the Postal Service was aiding and abetting this effort. It seemed bizarre, but at the same time lent credence to the endeavor. Maybe this really did have something to do with a world record bid.

  A quick Google search, however, revealed that the Postal Service isn’t condoning the chain mail. Actually, the explanation for why the letter got delivered without postage is even more interesting to me: apparently the automated mail-sorting machines fail to catch many letters that are missing a stamp.

  On reflection, this does make sense—profit maximization requires setting the marginal cost of an action equal to the marginal benefit. If almost all letters have stamps, then the benefit of checking each one with 100 percent accuracy is infinitesimal, so it makes sense to let some unstamped letters through. (The same idea holds for catching people who don’t pay their train fare.)

  Now, I am curious to know exactly how lax the Postal Service is. I’m just about to drop something in the mail. Maybe I’ll skip the stamp—though I suspect my tax return will make its way to the IRS, stamp or no stamp.

  Herd Mentality? The Freakonomics of Boarding a Bus

  (SJD)

  A few days a week, I bring my daughter to nursery school on the East Side of Manhattan. We live on the West Side, and usually take the bus across town. It is a busy time of day. At the bus stop closest to our apartment (we’ll call this Point A), there are often forty or fifty people waiting for the bus. This is largely because there is a subway stop right there; a lot of people take the train from uptown or downtown, then go aboveground to catch the crosstown bus.

  I don’t like crowds much in general (I know: What am I doing living in New York?), and I especially don’t like fighting a crowd when I’m trying to cram onto a bus with my five-year-old daughter. Because there are so many people waiting for a bus at Point A, we have perhaps a 30 percent chance of getting aboard the first bus that stops there, and probably an 80 percent chance of getting aboard one of the first two buses that stop at Point A. It’s that crowded.

  As for getting a seat on the bus, we have perhaps a 10 percent chance of sitting down on either of the first two buses at Point A. It’s not such a long ride across town, maybe fifteen minutes, but standing on a crowded bus in winter gear, my daughter’s lunch getting smushed in her backpack, isn’t the ideal way to start the day. Point A is so crowded that when eastbound passengers get off the bus at Point A, using the bus’s back door, a bunch of people surge onto the bus via the back door, which means that a) they don’t pay, since the paybox is up front, and b) they take room away from the people who are legitimately waiting at the head of the crowd to get on the bus.

  So a while ago, we started walking a block west to catch the bus at what we’ll call Point B. Point B is perhaps 250 yards west of Point A, and therefore 250 yards farther from our destination. But at Point B, where there is no subway stop, the lines are considerably shorter, and the buses arrive less crowded. At Point B, we have a 90 percent chance of getting aboard the first bus that arrives, and perhaps a 40 percent chance of getting a seat. To me, this seems well worth the effort and time of walking 250 yards.

  Once we hit upon this solution, we haven’t boarded a single bus at Point A. We get to sit; we get to listen to the iPod together (we both love Lily Allen, and I don’t worry so much about the fresh parts since Lily’s British accent renders them nearly indecipherable for Anya); we don’t arrive with a smushed lunch.

  But what I can’t figure out is why so few (if any) bus passengers at Point A do what we do. To anyone standing at Point A morning after morning, the conditions are obviously bad. The conditions at Point B are clearly better since a) Point B is close enough to see with the naked eye, and b) the buses that arrive at Point A from Point B often have room on them, although only for the first ten or twenty passengers trying to board at Point A.

  Personally, I am happy that more people at Point A don’t go to Point B (which would make me have to consider boarding at Point C), but I don’t understand why this is so. Here are a few possibilities:

  1. Walking 250 yards doesn’t seem like a worthwhile investment to improve a short, if miserable, experience.

  2. Having just gotten off the subway, the Point A passengers are already broken in spirit and can’t muster the energy to improve their commute.

  3. Perhaps some Point A passengers simply never think about the existence of a Point B, or at least the conditions thereof.

  4. There is a herd at Point A; people may say they don’t like being part of a herd, but psychologically they are somehow comforted by it; they succumb to “herd mentality” and unthinkingly tag along—because if everyone else is doing it, it must be the thing to do.

  Personally, I am persuaded that all four points may be valid in varying measures, and there are undoubtedly additional points to be made. But if I had to pick an outright winner, I’d say number four: the herd mentality. The more social science we learn, the more we realize that people, while treasuring their independence, are in fact drawn to herd behavior in almost every aspect o
f daily life. The good news is that once you realize this, you can exploit the herd mentality for your own benefit (as in boarding a bus), or for the public good, as in invoking peer pressure to increase vaccination rates.

  An Experiment for Fake Memoirs

  (SJD)

  Why are there so many fake memoirs in the world? The latest is Margaret Seltzer’s Love and Consequences. (I would link to its Amazon page but, alas, it no longer has an Amazon page.)

  If you had written a memoir that was, say, 60 percent true, would you try to present it as a memoir or as a novel? If you were the editor of a memoir that you thought was 90 percent true, would you publish it as a memoir or as a novel?

  Or maybe a better question is: What are the upsides of publishing such a book as a memoir instead of a novel? Here are a few possible answers:

  1. A true story gets a lot more media coverage than a lifelike novel.

  2. A true story generates more buzz in general, including potential film sales, lecture opportunities, etc.

  3. The reader is engaged with the story on a more visceral level if a book is a memoir rather than fictional.

  Every time a memoir is exposed as a fake, you hear people say, “Well, if it’s such a good story, why didn’t they just publish it as a novel instead?” But I think reasons one to three above, and maybe many more, incentivize authors, publishers, and others to favor the memoir over the novel.

  With number three in mind, and having read recently about how an expensive sugar-pill placebo works better than a cheap sugar-pill placebo, I thought of a fun memoir/novel experiment. Here’s what you’d do:

  Take an unpublished manuscript that tells an intense and harrowing story from a first-person perspective. Something along the lines of A Million Little Pieces or Love and Consequences. Assemble a group of one hundred volunteers and randomly divide them in half. Give a copy of the manuscript to fifty of them with a cover letter describing the memoir they are about to read. Give a copy of the manuscript to the other fifty with a cover letter describing the novel they are about to read. In each case, write and attach an extensive questionnaire about the reader’s reaction to the book. Sit back, let them read, and compile the results. Does the “memoir” truly beat the “novel”?