Behavioural Science is a rapidly expanding field and everyday new research is being developed in academia, tested and implemented by practitioners in financial organisations, development agencies, government ‘nudge’ units and more. This interview is part of a series interviewing prominent people in the field. And in today's interview the answers are provided by John List.
John is the Kenneth C. Griffin Distinguished Service Professor in Economics at the University of Chicago, and Chairman of the Department of Economics. He received his B.S. in economics at the University of Wisconsin-Stevens Point, and Ph.D. in economics at the University of Wyoming. His research focuses on questions in microeconomics, with a particular emphasis on using field experiments to address both positive and normative issues. For decades his field experimental research has focused on issues related to the inner-workings of markets, the effects of various incentives schemes on market equilibria and allocations, and how behavioural economics can augment the standard economic model. This includes research into why inner city schools fail, why people discriminate, why people give to charity, why firms fail, why women make less money than men in labour markets, and why people generally do what they do. This research has also culminated his latest book: 'The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale.
How did you get into behavioural science?
As an undergraduate student, I was a baseball card dealer. And in doing that, I figured out two things. One, I could use science, like experimentation, to figure out what works and why. And two, when I explored what I was learning and tried to match it with neoclassical economics, it wasn't always a great match. So, I began to think about alternative types of models that could help explain and help forecast what might happen in new settings, and that's where behavioural economics began to creep into my thinking. Now to be clear, I didn't even know I was becoming a behavioural economist, as this was happening in the late 80s. I didn’t even plan to become an economist, or even an academic. I went to college for one reason and that was to become a golf professional. And I went to college and was able to afford going to college because I got a golf scholarship. If I wouldn't have gotten a golf scholarship, I wouldn't have gone to college. But as I progressed through college I started to realise that my love for economics, and my aptitude for it, were much stronger than the ones I had for gold. And as per chapter 8 of my book, I had identified the optimal point of quitting. Economics was just second nature to me. So when you put that all together and you start to think where you can make a difference in the world, it all came together in doing research and teaching at the academy for me.
What are you currently proudest of as a behavioural scientist?
Helping to usher in field experiments in economics and helping to show the importance of using the world as your lab. And helping to show that we can test behavioural theories outside of the lab or outside of using naturally occurring data; we can actually control the assignment mechanism in the field to learn about which behavioural theories are correct, and also to learn about the whys: why does a behavioural theory work? And without field experiments I don't think you can do that. I think it's very difficult to do it without, and field experiments give you a chance because When you control the assignment mechanism, you can set up the treatment arms to give yourself a shot to understand ‘the why’. Field experiments give us a chance not only to measure frontline effects but also understand the mediation paths and I'm just really proud of my work in the late 80s and early 90s, which helped to usher in field experiments as a tool to test behavioural theories in the field.
... And what do you still want to achieve?
On the one hand, there are so many important questions that as social scientists, we can lend insights to. Think of climate change, think of diversity, equity and inclusiveness. Think of education, production functions, either an early age or in the adolescent years. I think that in all of these areas and in many more, you have a real chance to innovate. What I mean by innovate is show that an intervention can work in a Petri dish, but also to understand whether that idea will scale. And to me, something I've thought about a lot lately, is that we have a lot of solutions that work in a Petri dish, but when we scale them, they fail miserably. I think deepening our understanding of ideas that have a chance to scale and ideas that don't have a chance to scale comes from revising and fixing the unscalable ideas and then learn form that exercise. Almost studying the science of using science. So whereas the first half of my career was introducing and using field experiments to take on important social questions, the second part I’d consider as scaling those ideas that we found in the first stage and scaling them to really make a difference in people's lives.
Having said this the question remains: how do you do that? And we have constant partnerships with governments, for-profit firms and non-profit firms, and I think that's really going to be an important future of experimental economics and of behavioural economics. Because these organizations give us a real chance to answer questions that heretofore have been really unexplored because they're very difficult to take on. Unless you have a partner who's trying to raise $10 million or a firm like Uber, which has a worldwide market. These entities have absorbed a bunch of fixed cost already and they've set up their business in a way that makes it a lot easier for me to go in and try to understand how we can use the economic science to understand the world and change the world. So I feel that more people are gonna begin to do this. I think we are really gonna get an influx of new insights, not only in behavioural economics, but also in neoclassical economics, but more generally, many more empirical insights that are that are really gotten using field experimentation or let's say, means where you control the assignment mechanism. And I would like to continue to contribute to this.
What do you think the future of behavioural science holds?
For one part we have to understand how all of these individual behaviours, whether they're irrational or partly irrational, aggregate up to a market outcome that we care about. And how different market features or institutions might proliferate those types of behaviours or might attenuate them. And then how those results that we learned in one setting translate to other settings. I think those are all issues that we face as economists, but in behavioural economics and experimental economics a lot of our earlier evidence was from lab experiments and from settings that might be too far removed from more natural settings that were really trying to understand. So I think one of the most important questions being faced by behavioural economists is how to move from theory into formal testing in the field to a much larger extent. More field experiments are going to take behavioural economics to another level. I think they have already. But I think that that interplay will continue.
What are your biggest frustrations with the field as it currently stands?
I think a lot of my frustrations are that some of our designs and some of our empirical work don't have enough theory guiding what exactly the parameter estimate means. I'm very happy with the amount of empiricism and the amount of experimentation, but where I get frustrated a little bit is that it's not always attached to a theory. And we might want to argue that the theory is portable. And if you have a general theory and the theory is truly general, all I need to do is understand behaviour in one setting and then I can use a theory to transform those insights or those findings to other settings. A lot of people would argue that it's theory that's portable, not data, and I'm trying to think about generalization in both a theoretical and an empirical sense. So really, I think about scaling, constantly. And I think that is both a theoretical and empirical exercise, and we haven’t struck a real balance here yet.
What skills set apart a good from a great behavioural scientist?
The skill set that I’d want to have as a young behavioural scientist would be to be able to write down a model that is at once insightful and also provides predictions that aren't obvious, and that are testable. Once I’d been able do that, now I want to have the understanding of optimal experimental design. And I’d want to understand the best way to generate the data, whether it's generation through experimentation or I go out and find observational data. That I have the wisdom to be able to carry that data exercise out in a convincing way, to where I can test my theory and also try to generalize about broader implications of my empirical results. So I’d want my training to include being able to swiftly go between theory and data and also have the ability to generate new data. I think all those skillset make for a great behavioural scientist.
What advice would you give to young/new behavioural scientists? The one piece of advice I’d give to a young person is to work with as many co-authors as possible. And that co-authorship should span both other junior people, so other PhD students (people of your own level), as well as more senior people. Each of those relationships will not only help the science itself, but it's going to really help in that each of those relationships will make you learn a little bit about economics. You’ll learn a little bit about how to attack a problem, how to write up problems and how to think about data. You should choose your co-authors carefully. In that not only do you want to produce good science today, but you want your science to be better tomorrow. So I think my best advice is to work with as many and as many different types of people as you possibly can. When I look at a paper that I write today, it really is in amalgamation of all of my previous co-authors, and they all have a little piece of how I think about problems. That’s why it’s incredibly important to diversify your co-authorship pool.
Do you actually apply any behavioural science to your own life, to your personal life?
100%! Let's talk about a few examples. One example would be loss aversion and I was having some issues with potty training my first child. And that's when we lived in Orlando. I was able to leverage the loss aversion of Disney World: ‘If you continue to go potty where you should, we will continue to go to Disney World. If you do not go to potty where you should, Disney World will be taken away.’ It worked like magic. I also work with a lot of charitable fundraisers and I put a lot of the behavioural insights to work, for example, one recent project we had is we leveraged the fact that a lot of people give because of warm glow reasons; they give because it makes him feel good to give to the charitable cause, not necessarily because it's gonna lead to some really great outcome. So we leveraged that when we worked with Alaska, pick, click and give and we ended up raising a lot more money because we leveraged that behavioural insight.
If you weren't a behavioural scientist, what would you be?
I think I would probably be a straight experimentalist, maybe a statistician, that is trying to create methodological improvements in experimentation. Or maybe just straight neoclassical economics with a focus on methodology. But I think I’d still be using the world as my lab. But I’m still quite convinced I’d be an economist, because I'm really not good at anything else.
Which behavioural scientist would you love to read an interview by?
Jason Shogren, who ended up moving from Iowa State to the University of Wyoming. When I was in my last year of Graduate School, and at that moment I had been running field experiments for a while, but I was messing them up and people around me really didn't believe in it. But Jay did. Jay really came in and was inspirational for me. We co-authored some early work and he really importantly both inspired me, and also gave me confidence that this was a good road to take. So I think Jay was important. Second is Vernon Smith. He really helped my career win in the late 90s. He sort of came to me and said: ‘I really like your field experiments. I think this can be an important future.’ and he helped to recruit me to the University of Arizona in the year 2000. So Vernon's always been an important inspiration as well.
Now, more recently, Steve Levitt has been a really important contributor, both as a co-author and friend and supporter. And then there’s people like Orley Ashenfelter (editor at the AER): I would send them some papers that people would just roundly reject and Orley said in the late 90s, ‘I really like this innovation of field experiments. Now send me anything that's good and something that I can actually publish.’ So he ended up publishing my paper in 2000 on demand reduction. And then in 2001, I published another field experiment and he was one of the very first editors who was open to field experiments and really understood the importance of them. So Orley Ashenfelter was important to me as well.
What challenges do you foresee for behavioural science?
I think the main challenge is that for any field to be vibrant, you need a constant inflow of young talent. It's really important that, we have a constant inflow of ideas and diverse ideas. For too long we've been a field in economics that's been dominated by white men, frankly, and white men don't have a monopoly on good ideas. And the more we welcome others, and when I say others, I mean great women, great minorities, people from areas that we've never drawn from before. So I've started programs to try to increase the diversity in economics that go all the way back to high school. We have high school and Undergrad programs and Graduate School programs now here at the University of Chicago, where we broaden the net of people who are interested in our field. Once you bring together the talent, now we need to put them in good jobs. Jobs where they can make a difference. And once you start that cycle of being able to place really good people, they will continue to come right. By placing really good minds in the academy, in top government jobs or with top firms and making changes and giving opportunities to younger people in those new organizations. The macro point is we need more and more talent to make sure our field stays vibrant. And I say that because this is not a field that will ever, in our lifetimes, have a dearth of interesting questions.
Thank you so much for taking the time to answer my questions John!
As I said before, this interview is part of a larger series which can also be found here on the blog. Make sure you don't miss any of those, nor any of the upcoming interviews!
Keep your eye on Money on the Mind!