Imagine There’s a $5 Discount. It’s Easy If You Try. . . .

June 21, 2016
Posted by Jay Livingston

Reading Robert H. Frank’s new book Luck and Success, I came across this allusion to the famous Kahneman and Tversky finding about “framing.”

It is common . . . for someone to be willing to drive across town to save $10 on a $20 clock radio, but unwilling to do so to save $10 on a $1,000 television set.

Is it common? Do we really have data on crosstown driving to save $10? The research that I assume Frank is alluding to is a 1981 study by Daniel Kahneman and Amos Tversky (pdf here). Here are the two scenarios that Kahneman and Tversky presented to their subjects.

A.  Imagine that you are about to purchase a jacket for $125 and a calculator for $15. The calculator salesman informs you that the calculator you wish to buy is on sale for $10 at the other branch of the store, located 20 minutes drive away. Would you make the trip to the other store? B. Imagine that you are about to purchase a calculator for $125 and a jacket for $15. The calculator salesman informs you that the calculator you wish to buy is on sale for $120 at the other branch of the store, located 20 minutes drive away. Would you make the trip to the other store?

The two are really the same: would you drive 20 minutes to save $5 on a calculator? But when the discount was on a $15 calculator, 68% of the subject said they would make the 20 minute trip. When the $5 savings applied to the $125 calculator, only 29% said they’d make the trip.

The study is famous even outside behavioral economics, and rightly so. It points up one of the many ways that we are not perfectly rational when we think about money. But whenever I read about this result, I wonder: how many of those people actually did drive to the other store? The answer of course is none. There was no actual store, no $125 calculator, no $15 jacket. The subjects were asked to “imagine.” They were thinking about an abstract calculator and an abstract 20-minute drive, not real ones.*

But if they really did want a jacket and a calculator, would 60 of the 90 people really have driven the 20 minutes to save $5 on a $15 calculator? One of the things we have long known in social research is that what people say they would do is not always what they actually will do. And even if these subjects were accurate about what they would do, their thinking might be including real-world factors beyond just the two in the Kahneman-Tversky abstract scenario (20 minutes, $5). Maybe they were thinking that they might be over by that other mall later in the week, or that if they didn’t buy the $15 calculator right now, they could always come back to this same store and get it.

It’s surprising that social scientists who cite this study take the “would do” response at face value, surprising because another well-known topic in behavioral economics is the discrepancy between what people say they will do and what they actually do. People say that they will start exercising regularly, or save more of their income, or start that diet on Monday. Then Monday comes, and everyone else at the table is having dessert, and well, you know how it is.

In the absence of data on behavior, I prefer to think that these results tell us not so much what people will do. They tell us what people think a rational person in that situation would do. What’s interesting then is that their ideas about abstract economic rationality are themselves not so rational.

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* I had the same reaction to another Kahneman study, the one involving “Linda,” an imaginary bank teller. (My post about that one, nearly four years ago, is here ). What I said of the Linda problem might also apply to the jacket-and-calculator problem: “It’s like some clever riddle or a joke – something with little relevance outside its own small universe. You’re never going to be having a real drink in a real bar and see, walking in through the door, an Irishman, a rabbi, and a panda.”

The Full Ferguson

June 17, 2016
Posted by Jay Livingston

FBI director, James Comey, didn’t call it “the Ferguson effect.” Instead, the recent rise in homicide rates was a “viral video effect” – a more accurately descriptive term for the same idea: that murder rates increased because the police were withdrawing from proactive policing.

The full sequence goes something like this:  Police kill unarmed Black person. Video goes viral. Groups like Black Lives Matter organize protests. Politicians fail to defend the police. Police decrease their presence in high-crime areas. More people in those areas commit murder.

Baltimore is a good example, as Peter Moskos has strongly argued on his blog Cop in the Hood. But many cities, even some with all the Ferguson elements, have not seen large increases in homicide.* Other factors – gang conflict, drugs, and the availability of guns – make a big difference, and these vary among cities. Chicago is not New York. Las Vegas is not Houston. All homicide is local.

There’s something else about the viral-video theory. It assumes that the crime is a game of cops and robbers (or cops and murderers), where the only important players are the bad guys and the cops. If the cops ease up, the bad guys start pulling the trigger more often. Or as Director Comey put it,

“There’s a perception that police are less likely to do the marginal additional policing that suppresses crime — the getting out of your car at 2 in the morning and saying to a group of guys, ‘Hey, what are you doing here?’”

This model of crime leaves out the other people in those high-crime neighborhoods. It sees them as spectators or bystanders or occasionally victims. But those people, the ones who are neither cops nor shooters, can play a crucial role in crime control. In some places, it is the residents of the neighborhood who can get the troublesome kids to move off the corner. But even when residents cannot exert any direct force on the bad guys, they can provide information or in other ways help the police. Or not.

This suggests a different kind of Ferguson effect. In the standard version, the community vents its anger at the cops, the cops then withdraw, and crime goes up. But the arrows of cause and effect can point in both directions.  Those viral videos of police killing unarmed Black people reduce the general level of trust. More important, those killings are often the unusually lethal tip of an iceberg of daily unpleasant interactions between police and civilians. That was certainly the case with the Ferguson police department with its massive use of traffic citations and other fines as a major source of revenue. Little wonder that a possibly justifiable shooting by a cop elicited a huge protest.

It’s not clear exactly how the Full Ferguson works. Criminologist Rich Rosenfeld (U of Missouri, St. Louis) speculates that where people don’t trust the police, they are more likely to settle scores themselves. (An NPR story featuring Rosenfeld’s ideas is here.) That may be true, but I wonder if it accounts for increases in killings between gang members or drug dealers. They weren’t going to call the cops anyway. Nor were people who have been drinking and get into an argument, and someone has a gun.

But maybe where that trust is absent, people don’t do what most of us would do when there’s trouble we cannot handle ourselves  –  dial 911. As in Director Comey’s version, the police are less a presence in those neighborhoods but not because they are afraid of being prosecuted for being too aggressive and not because they are being petulant about what some politician said, but because people there are not calling the cops.

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* New York, the city where I live, had all of the Ferguson-effect elements. The police killed an unarmed man. The crime they were arresting him for was selling “loosies” – individual cigarettes, fifty cents each. One of the cops put him in a choke hold. A video went viral Even knee-jerk police supporters found it hard to justify.  When the prosecutor could not get a grand jury to indict the copy, there were protests. The mayor did not voice support for the cops. The cops in turn do not want to do anything to support the mayor. In addition, the courts had recently put limits on aggressive policing tactics like stop-and-frisk. The number of such stops fell dramatically. Yet the number of murders in New York did not rise, nor did rates of other crimes.

When Guns Do What Guns Are Designed to Do

June 12, 2016
Posted by Jay Livingston

An assault rifle is designed to kill – to kill a lot of people, and quickly. That’s why it was created. That’s its primary function. For soldiers in combat, it’s a very good thing to have. If it could not kill lots of people, nobody would want it.

Manufacturing assault rifles in pink and posting pictures of young girls holding them doesn’t alter that basic purpose. Neither does the statistic that nearly all civilians who own them use them for fun. What that statistic means is that we as a nation have decided through our legislators that the fun of those gun owners is more important than the lives of 50 people in Orlando or 20 schoolchildren in Sandy Hook.

Here’s an analogy. Suppose that the military developed small bomb, something like a hand grenade but much more powerful. It easily blows up a building and kills anything within a 50-yard radius. Soldiers find them to be very effective in combat.

The companies that manufacture these bombs also sell them to the public. Lots of people buy these bombs. Bomb stores spring up next to gun stores. They have names like Bombs Away or It’s Da Bomb – all in good fun. And in fact, nearly all of the buyers use them for fun – tossing them into empty fields. People go to bombing ranges that have small buildings put up so that patrons can blow them sky high. Of course, there are accidents. Bomb owners sometimes blow up themselves. Or their own houses with their children inside. 

But occasionally, once a year or so, someone tosses a bomb into a crowd of people or into a real building. Many people are killed. Predictably, liberals say that maybe we ought not allow these bombs to be freely sold. Maybe we ought not let them be sold at all. But the bomb lobby claims that bombs are armaments and therefore are protected by the Constitution from being restricted in any way, and besides, people need the bombs for their own protection. Our legislators, a majority of them, agree. The occasional slaughter is no reason to prevent everyone from getting a bomb.

The bomb lobby and the media will invariably refer to each slaughter as a “tragedy” –  unfortunate but unavoidable. After all, the bomber got his bombs legally. And if he did get them illegally, it just shows that bomb laws don’t work.

Punishment Isn’t About Crime

June 10, 2016
Posted by Jay Livingston


Robin Hanson has a list of statements (here) that summarize his contrarian view. These include, among many others

Charity isn’t about Helping Church isn’t about God Medicine isn’t about Health Consulting isn’t about Advice School isn’t about Learning

The furor over the sentence given to the Stanford swimmer-rapist Brock Turner shows that we should add one more to the list.

Punishment isn’t about crime.

Criminologists have spent a lot of time trying to figure out the effect of punishment on crime. Does the death penalty reduce murder rates, and if so by how much? Or more generally, do harsher punishments reduce the crimes they apply to? Does rehabilitation work – or more specifically, which kinds of programs work best? Does taking criminals off the streets reduce overall amounts of crime?

These functions of punishment go under the names of general deterrence, specific deterrence, incapacitation, and rehabilitation. They raise researchable cause-effect questions.
Not so what is probably the most important function of punishment – justice. In crim textbooks (including mine) it goes under the heading of “retribution” or “just deserts.” But basically it’s vengeance. And unlike the other rationales, it is concerned with punishment’s effects not on the behavior criminals but on the feelings of good and righteous citizens. The idea of retribution is that we want punishment for bad guys because it makes us feel better to see them suffer. If the bad person does not suffer enough, the good people feel dissatisfied, even angry, and they call for harsher punishment.

Usually, they cloak this impulse under the more rational principles like deterrence, but let’s be real. Do any of the people insisting that Brock Turner be given a longer sentence think that if he is released after only a few months he will commit more rapes? Or that the short sentence will encourage other fratboys to commit rape, as though horny, drunken 20-year old will pause to think, “Hey, it’ll only be 6 months in the slammer. Now if it were a few years . . . .” ? 

Often, this deterrence idea marches under the banner of “sending a message.” A harsh sentence “sends the message” that this behavior will not be tolerated. The cliche slap-on-the-wrist sentence sends the opposite message. But if the intended targets of these messages, potential criminals, rarely receive the messages. That’s especially true for those whose crimes are unplanned and opportunistic. Instead, the people who respond to the message are the same people who wanted it sent. And they respond according to whether the message satisfies their desire for vengeance, or as they would call it, justice.

Some social scientists argue that this desire is part of human nature and that evolution has embedded it in our genes. Even babies, some experiments show, get upset when evildoing (usually by puppets) goes unpunished. But even if the desire is universal, the punishments that arise from it vary widely. In some countries, the six-month sentence would be within the normal range. That is, it would satisfy the desire for justice. In other places, anything less than death would be too lenient.

When vengeance as the basis for policy outweighs the more rational factors like deterrence, incapacitation, and rehabilitation, you get juggernauts like the war on drugs, which was mostly vengeance under a veneer of deterrence. In the initial response to the perceived drug problem, politicians enacted harsher sentences to send a message to drug users and dealers. When these new laws failed to bring the promised reduction in crime, lawmakers might have paused to rethink their assumptions. Instead, they fell all over themselves proposing even harsher sentences, locking up more people for longer periods of time.

Doing more of the same thing and expecting a different result might be a definition of insanity. But in the war on drugs, it functioned like an addiction – addiction to punishment. When a mild amount didn’t have the desired effect, lawmakers (with public approval) raised the dose. We then became habituated to that new level, we thought that only an even higher dose would bring relief. We were punishment junkies, spending more and more of our money on something that brought little relief, all the while raising our level of tolerance. We wound up with “normal” sentences that people in many other Western countries considered medieval.

In the swimmer-rapist case, the people outraged by the six-month sentence are not campaigning for generally harsher sentences for rape. They are, however, demanding the equivalent of a policy change – replacing the judge. But the motive is the same – justice (or vengeance). If we can’t punish the rapist, then let’s try to punish the judge and replace him with someone who gives out sentences that make us feel better. Of course, only the self-delusional will think that punishing the rapist or the judge will have any effect on fratboy date-rape.

One final note: I am not saying that those who want a longer sentence for Turner are wrong. I’m not saying they’re right. What I am saying is that whoever enters that argument on either side should be clear as to the bases of their position. They should also recognize that the issue is one of morals or values, so unlike questions of deterrence, it cannot be resolved with facts.