With the kickoff of Robert Shiller’s book tour this week, on Monday he appeared on the influential business talk show Squawk Box on CNBC to discuss FINANCE AND THE GOOD SOCIETY. It’s a very informative and entertaining interview so take a look!
A series of excerpts from FINANCE AND THE GOOD SOCIETY, the new book from economist and New York Times Economic Scene columnist Robert J. Shiller, is running this week on Bloomberg View. Yesterday’s piece, “Walt Whitman, First Artist of Finance,” is already generating quite a discussion and today’s “Finance Isn’t as Amoral as It Seems,” already is sure to continue . Stay tuned thoughout the week for more slices from the book.
Walt Whitman, First Artist of Finance
One of the myths surrounding economic inequality in our society is that high incomes are often the result of selfishness and narrow-mindedness, rather than idealism and humanity. We tend to think that those in careers other than our own are fundamentally different kinds of people.
Personality and character differences are, indeed, somewhat associated with occupation. But we tend to attribute the behavior of others to personality differences far more often than is warranted.
We tend to think of philosophers, artists or poets as the polar opposite of chief executive officers, bankers or businesspeople. But the idea that those involved in business have personalities fundamentally different from those in other walks of life is belied by the fact that many often combine or switch careers. Consider a few examples.
Walt Whitman is one of our most revered poets, and his poetry is among the most transcendent. But he could not ignore more material concerns; he had to make a living. To do so, he turned to fiction — more marketable than poetry — and made his name with a commercial novel called “Franklin Evans, or The Inebriate: A Tale of the Times”….
Check out a terrific review of Ruth Grant’s new book STRINGS ATTACHED: Untangling the Ethics of Incentives in yesterday’s Sunday Business section of the New York Times.
Ruth Grant, author of Strings Attached: Untangling the Ethics of Incentives, sat down with our co-publishers The Russell Sage Foundation for a brief Q&A in which she offers her take on what happens when you dig beneath the surface of incentives and view them as a form of power. Here are a few questions to whet your appetite, but head over to the Russell Sage Foundation site to read the complete interview: http://www.russellsage.org/blog/interview-ruth-grant-ethics-incentives
Q: While incentives are largely viewed now as an alternative to social control, you look at the history of their use at the turn of the 20th century and find a much more controversial and worrying story. How were incentives perceived back then, and in what context were they discussed?
A: The term “incentives” was introduced in America in the early 20th century in several different contexts, including Frederick Taylor’s scientific management in industry and the new field of behaviorism in psychology. (Surprisingly, the term is not found in 18th century writers like Adam Smith). Incentives were introduced in industry as a tool of social engineering, while in psychology, behaviorists believed that they could gain social control by using incentives to induce desired behaviors. Incentives were quite controversial at the time. They were often criticized as dehumanizing, and in the form of piece-rate wages, they were a source of conflict between unionized labor and management.
Q: Someone defending incentives could say they merely offer a choice to the public. So, for example, states didn’t have to compete in the Race to the Top education program if they didn’t want the strings attached to the federal funds. But you suggest this focus on voluntariness relies on a rather narrow definition of freedom and rationality. Could you elaborate?
A: When incentives are viewed as a type of bargain or trade, the ethical focus is exclusively on whether or not the transaction is voluntary. So, for example, people argue over whether offering large sums of money to a poor person to participate in research is “coercive.” But this is not the only question. When incentives are viewed as a form of power – one way I can get you to do something you otherwise wouldn’t – additional ethical questions arise of the sort that always arise about the use and abuse of power. To return to the example — if the research is filling out a questionnaire, nobody would really worry about coercion. If the research involves invasive and painful procedures, then the first question is whether the researcher ought to be conducting this study on human subjects at all. (Of course, often the answer will be “yes”).
Incentives do offer a choice – but that is not sufficient. Mice in a maze also have choices: left or right? Studies have shown that incentives with human beings often backfire in situations where people find the incentives insulting. Incentives imply that you wouldn’t do the thing you are being asked to do for intrinsic reasons. Studies show that people tend to feel insulted by incentives when they take the place of persuasion; when they micromanage; or when they fly in the face of people’s generous impulses – for example, paying for blood “donations” can decrease the number willing to give. In other words, while incentives offer choices, they are based on a psychology that assumes people are reactive and malleable, like the mouse. They do not treat people as fully autonomous rational agents.
You can also read a sample from Ruth’s book here: http://press.princeton.edu/chapters/s9546.pdf
Economist Carmen Reinhart, coauthor of THIS TIME IS DIFFERENT, shares a prestigious NY Times Opinion panel with Paul Krugman, Tom Friedman, and Joseph Nocera, and
Wow, what a lineup! We are so proud to see Carmen Reinhart, the co-author of our New York Times bestselling classic THIS TIME IS DIFFERENT: Eight Centuries of Financial Folly, discuss economic issues on a recent New York Times Opinion talk with Times journalists Tom Friedman, Paul Krugman, and Joe Nocera. This brilliant and entertaining program streamed live on the internet and covered today’s economic issues such as the Eurozone crisis, deleveraging, inequality, Occupy Wall Street, and space aliens. Check out the video if you want to see what great minds have to say about our economic situation and what’s coming next.
Check out this video of Robert Frank’s 11/10 LSE Lecture on his new book: The Darwin Economy: liberty, competition, and the common good. The book’s Facebook page is updated regularly with news, clippings, and author videos!
Dan Hamermesh discusses his provocative NY Times op-ed and his new book BEAUTY PAYS on Fox & Friends
Thanks to Dan Hamermesh’s much-discussed op-ed in The New York Times on whehter there should be legal protection for the ugly in the workplace, many media outlets have come calling. Check out a recent interview with Dan on Fox News’s Fox & Friends.
Why Beauty is Good for Business
UT Economist and PUP author Daniel Hamermesh on why beauty if good for business.
“Some of our papers show that those companies that had better looking executives–same location, same size–had better sales. And the effect was not small.”
This is the second of five videos in which he explains some of the research he did for Beauty Pays. Tomorrow: “why economists care about beauty.”
King Kong vs. Godzilla!
New York University, Stern School of Business prof and Princeton University Press author Matthew Richardson discussed his new book, with Viral Acharya, Stijn van Nieuwerburgh, and Lawrence J. White, GUARANTEED TO FAIL: Fannie Mae, Freddie Mac, and teh Debacle of Mortgage Finance on the Emmy-winning program The Daily Show with Jon Stewart. Check out the clip!
“Why Smart Business Wants Stronger Government” a new Bloomberg Government article by Jack Donahue and Richard Zeckhauser
Can you conceive of a world where business wants stronger government? Jack Donahue and Richard Zeckhauser explain why it is the best interest of business to have a strong, functioning, and collaborative government as a partner in this original Bloomberg Government article.
If you have a Bloomberg account, you can read this terrific article online: http://www.bgov.com/news_item/0EfXRKdDrw8iYcwLplzlvw
Otherwise, Bloomberg has generously provided this screen grab for our readers, too.