A Behavioral Econ Lab Is Not a Restaurant

July 16, 2018
Posted by Jay Livingston

Great title for an article

We should totally open a restaurant:
How optimism and overconfidence affect beliefs

It will be in the August issue of the Journal of Economic Psychology. The link popped up in my Twitter feed this morning.

No, the failure rate for restaurants is not 90% in the first year as a 2003 American Express ad claimed. But most restaurants don’t make it to three years. So it’s only natural to ask about the people who think that their new restaurant will be among those that beat the odds. This was an article I wanted to read.

Imagine my surprise when I discovered that the article was not at all about people who started up a restaurant. True, the word restaurant appears 13 times in the article, plus another seven if you include restauranteur [sic – the preferred term is still restaurateur, no n]. But the data in the article is a from a laboratory experiment where subjects try to guess whether a ball drawn from an urn will be white or black. No chefs brilliant but overweaning, no surly waitstaff, no price-gouging suppliers, no unpredictable customers, no food, and no location, location, location. Just opaque jars with white balls and black balls.

The procedure is too complicated to summarize here – I’m still not sure I understand it – but the authors (Stephanie A. Hegera and Nicholas W. Papageorge) want to distinguish, as the title of the article says, between optimism and overconfidence. Both are rosy perceptions that can make risky ventures seem less risky. Optimism looks outward; it overestimates the chances of success that are inherent in the external situation. Optimism would be the misperception that most restaurants survive for years and bring their owners wealth and happiness. Overconfidence, by contrast, looks inward; it is an inflated belief in one’s own abilities.

Both in the lab and probably in real life, there’s a strong correlation between optimism and overconfidence. People who were optimistic also overestimated their own abilities. (Not their ability to run a restaurant, remember, but their ability to predict white balls.) So it’s hard to know which process is really influencing decisions.

The big trouble is that the leap from lab to restaurant is a long one. It’s the same long leap that Cass Sunstein takes in using his experiment about “blaps” to conclude that New York Times readers would not choose a doctor who was a Republican. (See this earlier post.)

The Hegera-Papageorge article left me hungry for an ethnography about real people starting a real restaurant. How did they estimate their chances of success, how did they size up the external conditions (the “market”), and how did they estimate their own abilities. How did those perceptions change over time from the germ of the idea (“You know, I’ve always thought I could . . .”) to the actual restaurant and everything in between — and what caused those perceptions to change? On these questions, the lab experiment has nothing to say.

But you’ve got to admit, it’s a great title. Totally.

Minority Rule, the Legitimacy of Courts, and a Penny Bet

July 12, 2018
Posted by Jay Livingston

It’s almost certain that the Republicans in the Senate will confirm Trump’s Supreme Court nominee. And when they do, they will speak glowingly about democracy and convince themselves that they are carrying out the will of the people.

In 2006, I was having coffee at Zabar’s café one morning with a conservative I knew. We were talking about Bush’s nomination of Alito to the Supreme Court. The Democrats were wrong to oppose Alito, said my coffee companion, because most Americans wanted him confirmed. (He also said that those who opposed Alito were “disloyal,” but that’s another matter.)

As Robin Hanson says, a bet is a tax on bullshit, so by way of calling bullshit on him, I offered him a bet — a penny bet.

“When the Judiciary Committee votes on Alito,” I said,”some will vote for him, others will vote against. America is a democracy. Our senators are elected democratically. So I’ll give you a penny for every person who voted for the senators who vote for Alito. Then you give me back a penny for every person who voted for the senators who vote against.” I offered him the same bet for when the full Senate would vote on the nomination.

He declined my offer. He may have been deluding himself about what the American people wanted, but he wasn’t stupid enough to take the bet.

I’d love for someone to take this same penny bet on Kavanagh. After all, the Republican senators outnumber the Democrats 11-10 . But if the vote goes along party lines, I’ll walk away with nearly $80,000. Another penny bet on the full Senate would add about $20,000.

Far more important than my potential $100K windfall, is the issue of legitimacy.

In December 2000, the Supreme Court ruled against Al Gore, halted the Florida recount, and gave the presidency to George W. Bush.. The majority of the justices had been appointed by Republican presidents (including one appointed by Bush’s father). The next day, Gore made a speech saying that while he disagreed with the Court’s decision, he accepted it. He was upholding the legitimacy of the Court and the president-elect. Can anyone imagine Trump doing anything like that?

The Court, like other political institutions is losing the confidence of the American people, at least according to Gallup.

I’m not sure whether surveys like Gallup are measuring reactions that are specific to the Court or just a more general feeling about government. But the current and future Court provides ample material for questions of legitimacy. Trump lost the popular vote by nearly 3 million, and his first Court appointment, Gorsuch, was made possible through an unprecedented and blatantly political maneuver by Mitch McConnell, whose party represented a minority of voters as it will when it confirms Kavanagh.

What will happen to the Court’s legitimacy if Trump’s appointees wind up ruling on cases directly involving Trump that emerge from the Mueller investigation?

R-E-S-P-E-C-T, Find Out What It Means to Me . . . Or Not

July 8, 2018
Posted by Jay Livingston

In the previous post, I wondered why Republican women surveyed by Pew saw Donald Trump as having “a great deal” or “a fair amount” of respect for women. One of the explanations I didn’t consider is that people don’t always answer the question that researchers are asking. The Pew survey asked dozens of questions. Several were about respect — how much respect does Trump have for women, men, Blacks, Hispanics, Evangelicals, and more. Others asked how believable Trump is, whether he keeps his business interests separate from his presidential decisions, whether he respects democratic institutions. (Results from the survey are here.)

But maybe to the people being interviewed, these were all the same question: Trump – good or bad?

Claude Fischer blogged recently (here) about this difference between questions researchers think they are asking and the questions people are actually responding to. Sometimes people give incorrect answers to basic factual questions. But it’s not that these respondents are ignorant.

an interesting fragment of respondents treat polls not as a quiz to be graded on but as an opportunity for what survey scholars have termed “expressiveness” and partisan “cheerleading.” I would broaden this kind of poll responding to include “self-presentation” or, more simply, “sending a message.” That is, there are respondents who treat some factual questions not as chances to show what they know but as chances to tell the interviewer, or data analyst, or reader, or even themselves something more important than facts.

If expressing feelings or sending a message underlie people’s responses to factual questions, those same purposes should have even more importance when it comes to subjective judgments, like whether Trump has a lot of respect for women.

Fischer seems to side with the “sending a message” explanation. But that phrase suggests, to me at least, an intention to have some specific effect. For example, proponents of harsher criminal penalties claim that these will “send a message” to potential criminals. The obvious corollary is that these punishments will have an actual effect – less crime.

When pollsters call me, I’m often tempted to send a message. I consider what the implications of my answer will be when it’s reported in the survey and how that might affect politicians’ decisions. I’m even tempted to lie on demographic questions (age, income, party affiliation). Maybe my preferences will swing more weight coming from a young Independent.

But my hunch is that in most of the Pew questions about respect, people are not trying to influence policy. They’re just expressing a global feeling about Trump. The message, as Fischer says, is that they want others to know how they feel.        

Which is it — a deliberate strategy or an expression of sentiment? The trouble is that the only way to know what people are thinking when we ask them whether Trump respects women is to ask them and to listen to their answers instead of giving them four choices and then moving on to the next question. That is the great limitation of questionnaire surveys.

Flashback Friday — Wynette v. Franklin

July 6, 2018
Posted by Jay Livingston

Ten years ago, I blogged (here) about “Stand By Your Man,” the country-and-Western classic song by Tammy Wynette. I didn’t use the phrase “false consciousness” but I should have. The lyrics document the ills that women suffer at the hands of men, but then, instead of urging women to rethink their roles and expectations, the song tells them to uphold the system – and the man – that is the cause of their heartbreak. (Here’s a link to Ms Wynette lip synching to her own recording of the song.)

I flashed back to that post today when I saw the results of a recent Pew survey. One of the questions asked. “How much does Donald Trump respect women?. Pew offered respondents these choices:

a great deal               
a fair amount                   
not too much
none at all

Men were more likely than women to say Trump respected women. Three-fourths of men put him in the positive categories (“a great deal,” “a fair amount”). Less than half the women were so sanguine. That’s no surprise. But among women who identified themselves as Republicans, nearly three-fourths said that Trump respected women. They were split nearly evenly between the two favorable categories.

(Click on the image for a larger view.)

Is this merely motivated perception? Have these women, once they’ve decided for whatever reason to support Trump, then selected the details from his biography that seem to show respect for women and ignored or discounted the rest?

Do these women have a definition of respect that is different from that of their more liberal sisters? If so, what is it? I confess I am not familiar with the research on this. Do Arlie Hochschild  or Katherine Cramer tell us how these women see the world and how they see men like Trump?

Or is this perception that Trump respects women the same old “Stand By Your Man” consciousness that Tammy Wynette was singing about a half-century ago? After all, Trump does embody those two staples of country songs – lyin’ and cheatin’.  Are these women willing to accept whatever the man does and find in it some sign of respect? Contrast that with Aretha, first issuing a demand for that respect and then, just to make sure the man cannot misunderstand, clearly spelling it out.