A Capital Writing interview with the author of Wild Problems.
A Capital Writing interview with the author of Wild Problems.
As part of a new project for Capital Matters, called Capital Writing, I’ll be interviewing authors of economics books for the National Review Institute’s YouTube channel. This time around, I talked to Russ Roberts of Shalem College and the EconTalk podcast about his book Wild Problems: A Guide to the Decisions That Define Us. Below you will find an edited transcript of a few key parts of our conversation as well as the full video of our interview.
Dominic Pino: The book is called Wild Problems: A Guide to the Decisions That Define Us. What is a wild problem, and what separates it from a tame problem?
Russ Roberts: A wild problem is a problem where the usual techniques of data and analysis are not that helpful in making a decision. This kind of problems arise early in adult life, mostly, although there are some that run through all of it. Decisions like whether to get married, whether to have children, who to marry, whether to take a particular career or change careers, where to live — these are decisions that we make usually without much helpful data. If we have data, it might deceive us if we’re not careful, and these are decisions that, as I say in the subtitle, define us. They define who we are, our sense of self, our identity — they’re important, very important, and the usual apps or algorithms or processes we might use for making decisions in other parts of our life are just not that helpful.
DP: There’s been an effort by economists to squeeze those loosely defined things into a more mathematized form, basically saying that everything is utility maximization, and you can fit everything into your utility function. There is a way you can do that, but you push back against that idea. What about it do you think comes up short?
RR: Well, I used to do that. I’ve done it, I’ve put things into my utility function as an academic modeler, an economist, a scholar, a researcher. Obviously, we care about things other than stuff. Let’s start there. We care about stuff. We like our gadgets, we might like our car, we might like our house, we like a nice evening out with our friends. These are the things that give us day-to-day pleasure. They’re a huge part of our life; they’re not unimportant. But I would argue that the rest of our life — the decisions we were talking about a minute ago, the wild problems — these are things that involve more than just our day-to-day pleasures and pains and the trade-offs that economics is really good at.
Now, you can shove them into the economist’s framework, as you point out. You can say, well, I don’t just get pleasure from the amount of stuff I can buy with my salary. I get pleasure from the satisfaction I get from my work — that what I work on doesn’t just make me feel good when I’m doing the actual work, but when I sit back late Saturday night, maybe with scotch in my hand, and I’m thinking, “Am I doing a good job with my life?” A whole bunch of other things are going to come into that beyond just whether I’m happy with my day-to-day work life, and I can get satisfaction from that, too. I can say, it’s really nice to build and help improve an unusual college here in Israel, which is what my day-to-day job is, and it gives me a sense of deep satisfaction. But how do I weigh that against the fact that I have to go to a meeting tomorrow that I’m maybe not so excited about. There’s sort of a different order of magnitude of what’s going on there. I would argue that our sense of self, our sense of identity, how we perceive ourselves, overarches the entire project of our lives. It’s more than just, “That felt good,” or “That was annoying.” It’s more, “This is who I am.” So you can think of it in the usual toolkit of the economist, but I think you’re kind of fooling yourself if you think you’ve made some progress there.
So that’s what I argue in the book, and what I’d add to that is that a lot of this kind of decisions we’re talking about are things that have to do with another person. Marriage, children, or even work. And the idea that somehow my preferences are the only way to help me think about what the right choices are in those settings — yes, I can add to those preferences the fact that I care about my wife, and her happiness makes me happy, but again, it doesn’t get you very far down the road in thinking about how you should prioritize, help out, conceive of your role at home. The shared activities: child raising, for example, the whole idea of where you’re headed as a family, the values that you hold. Should you be thinking about that the same way you think about shopping on the internet? Getting the best deal? Should I be thinking at night, “Oh, I killed it today, I got that thing on sale at Best Buy, and I didn’t take out the garbage and my wife didn’t notice, so she took it out — what a great day!” That’s kind of disgusting and not smart, and kind of misses the whole point of marriage. So my suggestion is that when we think about these significant parts of our lives that involve other people, do we really want to think about them using the economist’s toolkit?
DP: That’s true, but you also wrote a book on Adam Smith, and on the Theory of Moral Sentiments in particular. It’s a book that is based on sympathy and based on Smith’s idea of fellow feeling with other people, and that seems to me very much aligned with what you’re saying about how these are decisions that involve other people, so how did Smith’s thought influence your writing this book?
RR: In many ways, as you suggest, Smith’s book, Theory of Moral Sentiments, and my book about that book, How Adam Smith Can Change Your Life, are in some sense the prelude or prequel to this book. Smith understood that a lot of what gives us the deepest satisfaction is how we’re perceived by others, and how we see ourselves. My favorite quote from Theory of Moral Sentiments is that, “Man naturally desires not only to be loved, but to be lovely,” and by “loved,” he didn’t just mean romantic love, he meant praised, honored, that you matter, that you’re seen and respected. Smith said that’s really what we care deeply about, and we want to be lovely, we want to be praiseworthy, worthy of respect and honor and attention. So Smith fundamentally understood that day-to-day life is about a lot more than the pleasures and pains of the choices we make. It’s also about who we are and how others perceive us, and how we proceed in life in a world that’s fundamentally social. I would just add that most economists don’t read that book. “Most” is an understatement. Very few economists have read the Theory of Moral Sentiments.
DP: I think of other areas, like religion, for example, you have tithing, where people give 10 percent of their income to their church or wherever they worship, and you could model that as contributions in exchange for services. They are giving the money in exchange for religious services that they receive in return. But really if you ask people why they are giving their tithe, it’s not that. They’re probably going to tell you it’s what they think they need to do to worship God, and that’s a totally separate question. What other ways to do you think religion in particular fits into your story?
RR: Giving to charity is a good example to think about motivation and behavior, both as an outsider looking at other people and trying to understand how the world works, but also looking at our own heart and thinking about how we ought to be conceptualizing it. So, as you say, I tithe in my charitable giving as a religious Jew, and I do it because I think I’m supposed to. I don’t do it for the fun of it. I’d rather have the money myself. You could say I get fun from keeping the religious obligation, and that’s fine if you want to word it that way, but I think that confuses the other kinds of things I get fun from. They’re not of the same nature.
I give the same kind of analysis to the ethical problem of finding a wallet on the street, and no one sees you pick it up, and should you return the money or keep it for yourself? I put this in the book because it’s a true story. I was teaching a class via Zoom to a bunch of elite high-school students who were taking AP economics, and they almost unanimously, about 120 of them, said that economics says you should keep the money. I asked why, and they said that because you’ll have the money, you don’t have to worry about it because nobody saw you, so obviously the rational thing is to keep the money. I said, “What if you feel guilty?” Well, that’s a problem, so that’s one way to think about why people return lost objects, but the more interesting case for me is, suppose you don’t feel guilty. You’re not a nice person, you just want the money, so you pick it up and keep it, right? And my answer is, well, you could, but you might aspire to being a better person. And it won’t be fun to be a better person, at least in the narrow, day-to-day sense. It’s annoying. It means you have to tip in restaurants you’re never going to eat in again, and you have to donate blood sometimes, or even worse, a kidney, and you have to return money you find on the street. Do you really want to argue that people aspire to being better than they are now because they’ll get more pleasure? That might not be a bad way to think about it as an external observer, which is what economists do, but looking into your own heart, I think the right way to think about it is that this is not an investment in future pleasure. This is a commitment to an ideal. It’s the idea that sometimes there are principles that are worth adhering to even when they bring you pain. And I think most of us have principles like that. We don’t always live up to them because it’s hard, it’s painful sometimes, but I think that is part of what is a life well lived.
DP: Your book is a warning against this overly rationalistic way of thinking, but to what extent is it also a description? Do you think that people have, in fact, adopted this way of thinking? Fewer people decide to have children now than used to. Is that because of the over-rationalizing, or are there other explanations?
RR: That’s a really good question, and we can think about it in so many different ways. There are people who are rationalistic, or would see themselves as rational, who think that the right way to make that decision is to weigh the costs and benefits and make your best guess. They may tell themselves that’s what they’re doing, but is that actually what they’re doing? We have no way of knowing, but I know, looking into my own heart, I often notice that the reasons that I give for what I do are not always the actual reasons. I think we need to be careful in thinking of how rational people actually are. There are people who are more eager to claim rationality, and for those people, I would suggest they might be made aware that it might not work as well as they might hope. That’s the perspective of the book.
You said fewer people are having children than in the past. It’s absolutely true, certainly in wealthier nations like the United States. So, what’s the reason? You could say it’s because people make a rational decision, they look at the pros and the cons, and more people are doing that than they used to because rationalism is on the rise. As an economist, I’d sit back and say it has gotten more expensive to have children, in the full sense of the word “expensive,” that what you have to forgo, certainly for women now compared with 50 or 100 years ago, is a lot different. So, that matters, and that’s the economist’s using the toolkit in the most obvious way: that as things get more expensive, people do less of them. Is that rational? Some people would say it is, but others might ask if that’s the only thing that we care about. And not just women but men as well, because time is more expensive for men than it was 100 years ago as well, and child-raising is time-intensive for both men and women. Others might say they are worried about the environment or are being selfless — we can tell a lot of stories both to ourselves and to others for why we do what we do, but what really motivates us is often concealed from us in our own forms of self-deception. I don’t want to say what people should do, but what my book suggests is that sometimes what looks like the rational choice might not be, so if you do care about that, you might think about it more widely.
