Overcoming Bias

Showing That You Care

My ambitious theory paper, which attempts to explain diverse health behavior puzzles with just a few assumptions, has finally been published in Medical Hypotheses.  (Print copies were mailed today.)  The abstract: 

Human behavior regarding medicine seems strange; assumptions and models that seem workable in other areas seem less so in medicine. Perhaps, we need to rethink the basics. Toward this end, I have collected many puzzling stylized facts about behavior regarding medicine, and have sought a small number of simple assumptions which might together account for as many puzzles as possible.

The puzzles I consider include a willingness to provide more medical than other assistance to associates, a desire to be seen as so providing, support for nation, firm, or family provided medical care, placebo benefits of medicine, a small average health value of additional medical spending relative to other health influences, more interest in public than private signals of medical quality, medical spending as an individual necessity but national luxury, a strong stress-mediated health status correlation, and support for regulating health behaviors of the low status. These phenomena seem widespread across time and cultures.

Morality Is Overrated

Hanging out with moral philosophers last week at Oxford reminded me of the old complaint that economists neglect morality.  Actually, I think the real problem is the reverse!  Let me explain.

Many people advise us on what to do.  Some discuss personal actions, while others suggest how groups could better coordinate.  And, crucially, some advise us on what we should do, while others advise us on how to get what we want. 

At the personal level, parents, teachers, preachers, and activists tend to tell us what is morally right, while friends, mentors, lawyers, doctors, therapists, and financial planners tend to tell us what will achieve our ends.  At the level of social policy, pundits and wonks give a mixture of rationales for their suggestions.  Moral philosophers, for example, tend to emphasize policies we should pick, while economists tend to emphasize policies to better get us what we want.   

All else equal, we may each prefer to do what is right, but when all else is not equal we often allow other considerations to weigh against morality.  After all, morality is only one of the many ends we pursue.  Yes we want to be moral, but we also want other things, and we each choose as if we often care about those other things more than morality.  (Some say moral beliefs directly cause us to be moral even if we don't want that, but I prefer to describe this as a revealed preference for moral ends, i.e., for "wanting" to be moral.) 

Contingent Truth Value

Does allowing prophets, whistle-blowers, and dissidents to tell people truths they don't want to hear help those other people or hurt them?  Today I heard an excellent talk (see slides and paper) by Roland Benabou explaining how it can help or hurt, depending on the situation:

HURT: If your future is likely to be enjoyable, and if before then anticipating your great future gives you enough joy, then if you come across bad news suggesting otherwise you might enjoy your life more overall if you quickly look the other way and forget about it.  Even if later on you realize you are the sort of person who would forget such news, you'd still reasonably guess you had a good chance of an enjoyable future, and you'd enjoy savoring that prospect, at least for a while.  Someone who forced you to pay attention to the bad news could do you a real harm.

HELP: On the other hand, if a group of you worked together to build an enjoyable future, how hard you each worked might depend on the chances you each assigned to your efforts working out well.  Given that you expected other people to avoid looking at bad news, you might also find it in your interest to avoid looking at bad news, so that you were all in an equilibrium where you all avoided bad news.  But for certain parameter values you might all be better off in a different equilibrium where you all expect each other to look at bad news and change your behavior in response.  In this case someone who collected bad news, saved it, and later forced you all to pay attention to the bad news you had tried to forget could upgrade your equilibrium.  This could do you all a favor, a favor you were individually not willing to do for yourselves. 

The value of truth is contingent, and depends on the details of your world and values.  It is not guaranteed.   So honestly demands that my commitment to truth also be contingent.

For Discount Rates

(A long retort to Eliezer's post Against Discount Rates.)

Imagine you are a multi-billionaire who, to benefit mankind, will construct an asteroid deflector.  Since your budget is limited, the deflector cannot be perfect. And trying to deflect an asteroid heading toward one place may mean increasing the risk it will hit somewhere else.  So you must decide how much protection to offer different parts of the globe.  Let us assume that your protection can be described by a single parameter P at each place X -- roughly how much you have reduced the probability that an impact there will cause a physical effect (e.g. temperature) there above a certain threshold. 

Initially you decide that it would be biased to prefer some places X on Earth to others, and so you decide to give the same protection level P(X) = P to all places.  To make clear to everyone the magnitude of your generosity, you publish a cost schedule C(X) saying how many dollars per square mile it will cost you, per unit of protection, to increase (or decrease) protection at each place.  It might, for example, cost more to protect places near the equator, and less to protect places toward the poles.

Soon you find that rich densely-populated places X toward the poles are offering to pay you a price above C(X) to increase their protection P(X).  Accepting their offers benefits them, and gives you more money to spend on benefiting everyone, so you accept.

Leading bias researcher turns out to be... biased, renounces result

A few days ago, Robin posted on the Edge's annual question, which this year is about the changing of minds.  One of the participants (a social scientist who undoubtedly knows lots) is Daniel Kahneman.  It's impossible to overstate Kahneman's eminence.  He's unquestionably one of a handful of top researchers ever, and arguably the most important yet alive, on the subjects that make up the theme of this very blog.  In addition to being one of the inventors of the "heuristics and biases" research program, as well as prospect theory, he also won the 2002 "Nobel Prize" in economics. 

Yet he, too, is not immune from motivated error.  A friend and colleague recently forwarded Kahneman's Edge answer to me.  Apparently, Kahneman himself was so captivated by the lure of a neat theory to handle some difficulties in hedonic experience that he managed to misinterpret the first set of results!

Our hypothesis was that differences in life circumstances would have more impact on this measure than on life satisfaction.  We were so convinced that when we got our first batch of data, comparing teachers in top-rated schools to teachers in inferior schools, we actually misread the results as confirming our hypothesis.  In fact, they showed the opposite: the groups of teachers differed more in their work satisfaction than in their affective experience at work. This was the first of many such findings: income, marital status and education all influence experienced happiness less than satisfaction, and we could show that the difference is not a statistical artifact.  Measuring experienced happiness turned out to be interesting and useful, but not in the way we had expected.  We had simply been wrong. (Emphasis added)

Social scientists, beware.  If this can happen to Daniel Kahneman, it can happen to anyone.

How To Fix Wage Bias

It seems reasonably well documented that tall, slim, pretty people get higher wages.  A 2005 review:

Hamermesh and Biddle found that the "plainness penalty" is 9 percent and that the "beauty premium" is 5 percent after controlling for other variables, such as education and experience. In other words, a person with below-average looks tended to earn 9 percent less per hour, and an above-average person tended to earn 5 percent more per hour than an average-looking person. For the median male in 1996 working fulltime, the respective penalty and premium amounted to approximately $2,600 and $1,400 annually. The corresponding penalty and premium for the median female worker are $2,000 and $1,100. ... In a separate paper . ...They found evidence of a beauty premium for attorneys that increases with age, at least for the 1971-78 classes. Five years after graduating, a male lawyer from these classes with a beauty rating of one rank above average had approximately 10 percent higher earnings than his counterpart with a rating of one rank below average. Fifteen years after graduation, the beauty premium increased to 12 percent.

Social Scientists Know Lots

For me, the year's best reading is usually the many thoughtful answers to The Edge's annual question.  This year they ask: 

What have you changed your mind about?  Why?

I'd love to hang out with these folks, so maybe I should audition.  My answer:

Social scientists know lots.

As a physics student and computer science researcher, I assimilated the usual "hard science" perception that "social science" is an oxymoron -- no one knows much about it, so your opinion is as good as anyone's.  When I finally decided I needed social science credentials, to turn my institution hobby into a career, I focused on experimental economics, the only sort a hard scientist could trust, and Caltech, with impeccable hard science credentials.  But I was soon thoroughly convinced: social scientists know tons. 

Why then do so many people think otherwise?  Many say it is because social scientists are stupid, or the social world is too complex or uncontrollable.  Better answers are that social expertize conflicts with our overconfidence about familiar experience, or with our democratic ideology that everyone's political opinions should get equal weight.  But the best answer, I think is that most public talk by social experts reflects little social science.  That is, what social experts say in legal or congressional testimony, or in newspapers or magazines, mostly reflects what they and we want and expect to hear, instead of what expert evidence reveals.   

Econ of Longer Lives

I'm a little late to the party, but in December's Cato Unbound debate, Aubrey de Grey and Ronald Bailey argued that much longer healthy lifespans would be good, while Diana Schaub and Daniel Callahan had doubts.  Some samples:

Daniel Callahan: My standing complaint against de Grey and his enthusiastic colleagues is that they defend themselves by hypothesizing a variety of changes in our present way of life that would make our extended lives a kind of heaven on earth. We would be so healthy and energetic we would want to keep working indefinitely. We could start new careers, new families, new ways of life. That we might get tired of it all, or bored, is not allowed into their calculations. Nor is any imaginative effort to imagine the deleterious social effects allowed.

Ronald Bailey: So what about the social consequences of radically longer and healthier lives? In that regard, Diana Schaub in her reaction essay raises many questions for reflection about those consequences, but curiously she fails to actually reflect on them.  Schaub ... simply recapitulates the standard issue pro-mortalist rhetorical technique of asking allegedly "unnerving questions" and then allowing them to "fester in the mind." Sadly, all too many bioethicists think they've done real philosophic work by posing "hard" questions, then sitting back with steepled hands and a grave look on their countenances.

This issue has sparked many debates, conferences etc. over the last few years.  The invited participants have naturally been intellectuals who have published on the topic recently, mainly activists and bioethicists.  We economists have not published on this topic, and so have not been included.  But this is not because we have nothing to say.  Instead, no economist has anything special to say.  We can all easily see that standard economic theory seems to say longer healthy lives are a good thing.  So none of us thinks any of us should get precious academic publication credit for saying such an obvious thing.  As a result, life extension debates ignore economic theory. 

Of course appearances may be deceiving, so perhaps there are good economic theory reasons against longer healthy lives.  And perhaps economists would typically let their "judgment" overrule economic theory on this issue.  But it still seems to me a shame that observers of this debate can remain unaware of what standard economic theory seems to say on this subject. 

Interior Economics

Imagine you asked what fraction of whipped cream should be air, and someone responded "it is impossible to have whipped cream without air."  Or imagine you asked how much discretion judges should have, relative to following clear legal rules, and someone responded "it is impossible to eliminate all discretion from legal decisions."  You'd think they were avoiding the question.  Similarly, I asked:

For good policy advice, what is the best weight to place on economic theory, versus (individual or cultural) intuitive judgment?

And offered a tentative answer:

My guess is over 75% weight, so I try to mostly just straightforwardly apply economic theory, adding little personal or cultural judgment.

Tyler Cowen "answers":

There is no such thing as "straightforwardly applying economic theory." ... Theories are always applied and interpreted through our personal and cultural filters and there is no other way it can be.  Robin believes in an Archimedean point for using theory, I do not. ... Robin's post is the clearest example I have seen of what I call Robin's logical atomism.

Gender Tax

Last week I noted that, in an hour of searching, I couldn't find any defenders of the economic-theory-supported tall tax, even among economists.  Today I report it was easy to find supporters (1, 2, 3, 4, 5, 6, 7, 8) of Alesina, Ichino, and Karabarbounis's proposed man tax, also well supported by economic theory:

Gender Based Taxation ... changes spouses' implicit bargaining power and induces a more balanced allocation of house work and working opportunities between males and females. Because of decreasing returns to specialization in home and market work, social welfare improves by taxing conditional on gender. When income sharing within the family is substantial, both spouses may gain from [it].

So riddle me this: if careful economic analysis had instead favored taxing men less than women, how many supporters do you think that proposal would have found, even among economists?  And what does that say about how much economic theory influences economists' policy conclusions?

P.S.  The best "man tax" is not a fixed tax amount for being a man, nor is the best "height" tax a fixed amount per inch of height.  Instead, each gender or height has a different income tax schedule.  So there is no special reason to fear some "couldn't pay the tax."

Added 20Dec:  Here's a paper on a more general tax on genetic features.