Welcome, this is a real pleasure for me to get to introduce Robert Frank and to both engage in a Q and A and then take your questions. Robert was an undergraduate at Georgia Tech and did his masters in stats and his PhD in econ here at UC Berkeley, so we can berate what’s changed and that sort of thing at some length.
And has been a long time faculty member in the Johnson School at Cornell. During this time he has been massively prolific in both research articles and in books that both look in detail at what we’re learning from microeconomics, macroeconomics, and a lot of behavioral economics, and applying that to all kinds of interesting systems.
We’ll get in a second to his latest book. But in terms of past books, he wrote “Principles of Economics” with Ben Bernanke who occupied the office next to me at the Wilson School for a while before moving on to other jobs in DC.
“Choosing the Right Pond”, something I think we’ll bring up a little bit later on, “Passion Within Reason”, “Luxury Fever”, “The Economic Naturalist”, which a friend of mine got confused with a number of the sort of “Freakonomnics” sorts of literature at a couple of different levels.
“Success and Luck”, and today’s “Under the Influence”. And for those reading “Under the Influence” thinking about climate change which is how I jumped in. I was, in some ways, incredibly pleasantly surprised that you don’t actually get to climate until well over half the book, and it really highlighted to me one of the many things I hope we’ll talk about, and that is there’s been a very dogmatic look at energy and climate issues of which some of us on stage, not you, are guilty of.
But one of the real key lessons that I think has come out of the last sets of effort from Greta Thunberg, efforts from the Extinction Rebellion, from the efforts to think about Friday’s for the Future, is to put this in a much larger context.
And the Green New Deal is one of the topics in the book as well as many of the ways that we have used and misused our understanding of behavioral processes in general to sort of understand where we are.
And so I’m keen to hear the run through about the material, but in particular for me when I went through the book, what really struck me was the breadth of which, if you think more broadly about how we can transform behavior, climate change is a critical piece of that, it often occupies a very large part of the story in terms of what the campus community on energy and climate think about, but that bigger context is absolutely critical to try to understand where we’ve head a few successes but where we’ve had just a litany of failures and really being able to communicate more broadly.
And so I want to welcome you to Berkeley, welcome you to the Goldman School, I should say welcome you back to Berkeley and look forward to you launching in. And again we’ll do about 25 minutes of presentation.
About equal amount of some dialogue back and forth and then we’ll open it up to questions and use that as a segue into the refreshments and snack. And once again, thank you and welcome to campus, thank you so much.
(applause) – And thank you Dan, it’s a real honor and a pleasure to be back, I always love coming back to Berkeley, I spent four fond years here. And it’s different each time I come back, but it’s always fun to see how it’s evolved.
I’m excited especially to talk to you about the new book. The core premise of the book is completely uncontroversial, I hope people would agree. It’s that the social environment is the most important determinant of what we do in most situations.
The psychologists have a saying, it’s the situation, not the person. The tendency is to explain why somebody does something by asking what kind of person she is, what kind of values she holds, but really the psychologists are on very firm ground when they say you should really look at the social matrix the person finds their self in when you’re trying to predict what she’ll do in that situation.
So for example, if you’re worried that your daughter, your teenage daughter will become a smoker, it really doesn’t help to know if she’s a science fiction buff or whether she’s good or bad at math.
What you need to know is the percentage of her peers who smoke, that’s the uniquely best predictor of whether she will. And it’s a big effect if that number goes from 20 to 30%, she’s 25% more likely to become a smoker.
It’s by far the biggest influence on that decision. That’s widely accepted as a true fact about human behavior. I think it’s also uncontroversial but less widely noted that the social environment is itself a consequence of choice we make, so what’s the proportion of smokers out there that influences whether a person will smoke? It’s in part a consequence of whether or not I choose to smoke.
And yet, I have never met anybody who said I was thinking about smoking but decided not to because I was worried I might encourage others to smoke. That’s just not a step most people take, mostly because of the effect that we have on the social environment is minuscule for all practical purposes, so the world would be the same whether we thought about that or not.
But collectively, the fact that we don’t think about it has consequences, we have an interest in the social environment since it affects us profoundly in terms of what we do, often for ill, as in the smoking example, but sometimes also for good.
And so if we could steer people towards being concerned about how their own choices would affect the social environment, that would be a good thing. If we could do it without incurring costs too high in the process.
I came across this tweet in an economist I follow on Twitter. She writes, “there is this amazing Tumblr post, “presumably from a high schooler somewhere “that I think about often, it just says, “I’ve always been told not to give in to peer pressure, “but I’ve never been told not to pressure my peers.
” And so the thesis of the book in a very simple statement is that there are steps policy makers could take that would encourage us to act as if we care about the social environment. And these steps are neither invasive, nor costly in other ways, many of them have beneficial side effects as I’ll explain.
And so why wouldn’t we want to think about policies to encourage people to act as if they cared about the social environment? And so far as I’ve been able to discover, there’s been virtually no serious attention given to that question at all by policy makers.
And my colleagues in economics, most of them are very smart, much smarter than I, why haven’t they written about this is a question I cannot yet answer, because it just seems like what the investors call a Green Field.
It’s like when the iPhone came out, there were all these scores of products and services that couldn’t have existed until then, but then it was a gold rush to see who could bring them to market the most quickly.
Here we’ve got a Green Field in the public policy domain, there are so many things we could do that would make people behave in ways that either make benign social environments more prevalent or malicious ones less prevalent.
Let me start with an example of why the social environment is more important than most people think. More important certainly than I used to think. I see enough people who know what the “Candid Camera” show used to be, maybe it’s still available on YouTube.
If it is, you should watch some of the old episodes, they’re great. He had a film that he did in the 1970s, and it was like the episodes on the TV show but in one of them he posted an advertisement for a spectacularly good job, it paid really well, it didn’t have any complex requirements, the hours were short, good travel opportunities.
How could there be such a good, so of course people contacted the number in the ad and wanted to come and interview for it. Scheduled interviews, people would arrive for the interview at the appointed hour, they’d be shown into a waiting room where there were four people already seated, told to sit and we’ll let you know what’s next.
So the five of them are sitting there, the camera shows them, they’re not talking to one another, they’re all sitting there silently. The film goes on about its business to other scenes, coming back occasionally to see the five guys still sitting there, then comes back one last time and zooms in on the subject’s face, the subject being the last guy to arrive.
He doesn’t know, but we know, that the other four are confederates of Funt, they’re working with the filmmaker, and so at no apparent signal, the other four stand up and begin taking off all their clothing.
And you can see the bewildered look on the subject’s face, what’s going on here? But then you can see a look of resignation come onto his visage, he stands and he starts taking off all his clothing, we see him as the scene ends, they’re all standing there naked, waiting for what comes next.
And you want to say, I wanted to say when I saw the film, I wouldn’t have done that, no way I would have done that. And I don’t know how many people Funt had to run through this experiment to get somebody to do it, but there were more than one in the film who did it.
And I think it’s meant to be an illustration of the folly of being too influenced by your peers, but think about it from the perspective of this guy. It’s a great job, he arrived the last of the five, he doesn’t know what comes next, he doesn’t know if they do or not, but if anybody knows it would be them, not him, they seem to know that now’s the time to get up and start taking off all your clothing.
And they’ve made a decision obviously that it’s worth doing and so he does it too. And it’s very hard for me thinking about it in those terms to find fault with his decision to do that. It might have been better to say screw this, I’m not gonna do it, but to be influenced by peers who seem to know what they’re doing, is a totally understandable and almost certainly adaptive impulse to have.
They don’t know individually maybe any more than you do, but together they probably know much more than you. And if the group is acting in a certain way and they seem to know what you’re doing, you would ignore that queue systematically at your peril.
So I show in the group there’s quite persuasive evidence I believe that peer behavior, social influence, has profound impacts on a variety of problems in the social domain, these are all negatives.
I’ll mention some positives momentarily. Problem drinking is very heavily implicated, sexual predation, the Me Too movement was one of the most vivid examples of behavioral contagion that we’ve seen of late.
Cheating, the effect is particularly strong here because most people want to do the right thing, but when they see other people cheating and profiting and not being punished, then they feel like chumps and so there’s an explosive tendency for cheating to increase in an environment where there’s no obvious punishment for doing it.
Bullying has been shown to be highly socially contagious. Obesity, if the military sends a family to a new post, a county where the obesity rate is 1% higher than where they were, the adult members of that military family are 5% more likely to become obese while they’re in there new post.
The two very most profound effects of contagion and the only other ones I’ll talk about are the way they influence what we spend. The influence here is both profound and the number is big, I estimated in the book, back of the envelope, the fact that we spend in ways that are shaped by what our peers spend causes us to waste probably upwards of two trillion dollars a year in the US economy alone.
All of the inefficiencies that I call attention to are of the same general ilk. It’s analogous to the situation where all stand to get a better view, no one sees any better, than if everyone had remained comfortably seated, you’re not irrational to stand, you don’t regret standing.
You don’t see it all if you don’t stand, but it would be better if none of us stood. In the climate domain, our tendency to buy heavier vehicles to buy bigger houses to have destination weddings.
I’ve never heard of a destination wedding when I got married, now my kids are going to destination bachelor parties, even far away places, and it’s just a matter of trying to stage a celebration that meets the standards of the particular time and place so take the example of these heavy vehicles.
The engineers laughed, the very guys who designed these vehicles were astounded that they sold in such quantities. Why did people need off road vehicles, they wondered. The only time they go off road is when they miss their driveway on a Saturday night.
It’s not necessary to have an off road vehicle, nor a high riding vehicle, nor a 7,000 pound vehicle. But if others have these vehicles and you don’t, then you can’t see when you’re in traffic if you get hit by one, you’re more likely to be injured or killed.
And so if they built bigger or they buy bigger, it makes sense for you to do likewise. But the rub is when everybody has bigger, the risk of injury and death goes up, not down. It’s counterproductive and yet it’s not palpably irrational to have done what the individuals were doing.
On the positive side, we know that if you install a solar panel on your rooftop, that’s the very most important predictor of whether your neighbor will do that. This is Project Sunroof. Google will show you your neighborhood shot from the air.
They identified the houses that have solar panels on the rooftops with red dots. Note the pattern, if a house has a red dot, it’s next to another house, or very close to another house that also has one.
If it doesn’t have a red dot, it’s in a cluster where none of the neighbors have red dots either. And you can talk to the Renova CEO, that’s our company in Ithaca, he’ll tell you, oh he put in a new unit on Hanas Lane and then he can show you the six units that in the next two months were installed is a direct result of the installation that he first mentioned.
So I’m gonna just do a quick metaphor for wasteful spending. There’s much more to say about this, but I think this captures the idea. And I’m gonna couch it in the form of a thought experiment.
We’ve got two parallel worlds, one is a high tax world, one is a low tax world. And in these two worlds, the low tax world, you can think of it as the US. The rich are awash in after tax income, so they buy the Ferrari Berlinetta, that’s the car of choice for wealthy drivers in the US.
In the high tax world, you can think Norway, if you want to have a tag for that one, they have much less after tax income, and so they make due with the lowly Porsche 911 Turbo, only 150,000 dollars, a third of a million in the low tax world.
The question then I’ll pose in this thought experiment, who is happier, the wealthy drivers in the low tax world, or the wealthy drivers in the high tax world if all other dimensions of the two worlds were exactly the same? And here we don’t have an experiment to give us direct evidence, but there’s a lot of indirect evidence that there would be very little measurable difference in the happiness levels of the drivers.
Partly that’s because by the time you get to the Porsche 911 Turbo, that car’s got every feature that has any material impact on handling and performance. Many drivers would say in fact it’s a better car in absolute terms than the Ferrari.
Set that to one side, just imagine that the Ferrari is better, if it is, it’s only epsilon better than the Porsche. And at each local environment since they don’t touch one another, the drivers of these cars would have the knowledge and satisfaction that they were driving the best cars on the road there, so I think it’s a reasonable conjecture that they would be equally happy in these two environments.
But the fact is since the tax laws are so different in the two environments, there will be much more tax revenue in the high tax world. Take whatever jaundiced view you’d like of how wasteful government is, and the private sector is wasteful too, mind you.
We build bigger houses than we need because others are building bigger, we build heavier vehicles than we need because there’s waste there too, but let the government be wasteful. They don’t waste everything, and some of the money that goes to them in the form of higher tax revenues is gonna be spent on road maintenance.
And so here’s the question then on the happiness front, who’s happier, the people that drive their Ferraris on roads like we drive on, or the people that drive their Porsche’s on well-maintained roads? And that’s not even an interesting question.
Of course the Porsche drivers will be happier. Find me a guy that would defend that position in front of this smart audience. He would embarrass himself more than even some of our public figures have been embarrassing themselves arguing in the forums of late.
So it’s clear that if the rich in this example allowed themselves to be taxed more heavily, they would be happier because then they would drive cars that cost less, but would still deliver what they’re really looking for.
And they would drive them on roads that would be vastly better than the roads they actually do drive them on. So the claim is higher taxes don’t hurt the rich at all. That’s my claim. So I’ve been arguing this for a long time.
And I wish I had had the wit earlier in my career to tackle the obvious question, if you’re so smart, how come you’re not rich question, which is, if we would be happier if we taxed ourselves more heavily and invested more vigorously in the public sphere, why don’t we elect people who would do that? That’s a great question.
That’s the question I’m gonna try to grapple with here, in the last minutes I’ll spend on the presentation. So my answer or my attempt at an answer to this question is that the wealthy, the people who think that higher taxes would be injurious to their wellbeing, hold that position because they suffer from what I’m calling the mother of all cognitive illusions.
We’ve got here in the room, one of the pioneers in cognitive illusions, I hope he’ll agree at the end of the talk that this is a big one. What’s the mother of all cognitive illusions? Let me say a little bit first about cognitive illusions generally, if you are influenced by them, if you reach faulty judgments because of them, it’s not because you’re stupid.
That’s important to recognize. So here is the so-called checkered shadow illusion. I’ve given away the central point by calling it an illusion. Here’s the question. Which square is darker, A or B? How many of you think A is darker? How many of you think B is darker? How many of you think they’re the same? If you’re smart, which everybody in the room obviously is or you wouldn’t have taken the time out to be in this environment in the first place, you know it’s a trick so you’re guessing that the right answer is the same.
I’ll say this, if you think they look the same, if you think that, then you should schedule an appointment with your neurologist as soon as possible. There’s something amiss in your circuitry that is making you think they look the same shade.
The explanation of why B looks lighter, which to the normal brain it does, it’s plausible, it’s interesting, it’s that the two squares send exactly the same value of light to us to the eyes and brain, but the brain has an additional piece of information, namely that the square B sits in a shadow.
So that’s telling us that it’s really sending less light out. So the brain wants to make a correction, we’re not cognitively aware of the fact that it wants to do that, but in an effort to tell us the true relationship between A and B, it’s telling us that B is lighter than it appears.
It’s in a shadow that makes it darker, but the true color of it is lighter than it appears. Boy I thought that explanation sounded exactly right, but then I looked at the diagram again, and I said no, I still don’t believe that they’re the same color.
Until I saw what the diagram looked like when I joined squares A and B with a strip of uniform gray, and there’s zero detectable contrast between A, B, and the strip anywhere in the diagram. Only on seeing that strip and the lack of contrast was I able to accept even that the two squares were the same shade of gray.
I showed this to my wife, I said boy this is a really humbling experience, and she says good. We need more like that. So the reason I show it to you is just to make plausible the idea that you could believe something for sure to be true when in fact it’s not true.
I believe A is darker than B, I believe that with certainty to be true, it’s not true. The rich believe that if they had to pay higher taxes that would be painful for them. That seems almost obviously true, it is not true, and here is why it’s not true.
So you’re a wealthy person and they’ve got a tax proposal, they’re gonna tax your income a little bit more heavily because we need to decarbonize the economy and for anything less than what, two trillion a year, we have no hope of doing that.
So yeah, we’ve got to raise the money somehow, we’re not gonna get it from the poor people, we’re gonna tax the well to do people, they’ve got it. Yeah, we’re a 20 trillion dollar economy and most of it is up there, so we can get it if we can persuade them to part with it.
They don’t want to part with it ’cause they think it will be painful. How do they come to that belief? They think back, the normal way to think about any event, how’s it gonna affect me, is try to remember the last time an event like that happened, how did it affect me? So when’s the last time my taxes went up, how did you feel then? You can’t think of an event like that if you’re a wealthy person alive today.
In World War Two, the top tax rate was 92%. By the time I graduated from Georgia Tech in 1966, 70%. Reagan’s first term, 50%. Now 37%, a couple of minuscule increases along the way, too small to notice or even remember.
So you can’t think about how a higher tax rate would affect you in the usual way, how do you think about it? What you do is you say all right, higher taxes, I know for sure that means I’ll have less money to spend.
Am I worried they’re not gonna let me buy what I need? No, there’s no tax proposal on the table that would have that effect. I’m worried that I won’t be able to get the special extras I want.
Well what are those? Those are the things that are in short supply. Special is just inherently a relative concept. How do you get those things? You have to bid for them, so I’m worried the tax increase, because I’ll have less money, will make me less effective at bidding for those things.
And so when I think about how I felt about times when I had less money, even the most charmed life, there are examples like that. So maybe had a bad business year, maybe your kid got arrested for something serious, you had to hire a high profile lawyer to deal with the case, maybe you had a divorce, maybe you had a home fire.
Here that’s not unlikely that you would have had a home fire. A health crisis, there are many things that would make you have lower disposable income. Each one of those things generated an intensely bad memory so when you think about them, you think oh, higher taxes, less income, I don’t like that.
But what each of those events has in common is they cause you to have less income, but the other people like you had the same amount of income as always. And so when you come to think about what it takes to buy the things you want, in New York, everybody wants the penthouse overlooking the park, there aren’t very many of those.
You get them by outbidding other people who want them, and if your tax rate goes up, if you were a contender for that apartment and the people like you also experienced an increase in their tax rates, that apartment goes to the exact same bidder as before.
And so I think if Mike Bloomberg or Tom Steyer could hire Pixar to make a 10 minute video that they would run during the halftime of the Superbowl explaining why if you’re wealthy and you’re thinking about the extra revenue you’d need to pay in to enable us to decarbonize the economy, he could, either one of those guys could pay for the campaign that would convince you that it wouldn’t cost you anything at all that you care about to do that, and that would be a good thing, if we could do that.
I’ll close with something that generated a much stronger reaction in the conversations I’ve been having about the book than I anticipated when I started on the tour. Economists and climate people have long been hostile to the concept, I shouldn’t say all climate people, ’cause that’s not true, to the concept of what they call conscious consumption.
Oh I’ll save the environment, I’ll buy a Prius. Oh I’ll save the environment, I’ll eat meat less often. I’ll save the environment, I’ll bike to work a few times a week instead of driving.
They say that’s just noise. If you do that or if you don’t do that, the climate’s going down the toilet unless we enact robust changes in public policy, a really stiff carbon tax and multi-trillion dollars worth of investment in infrastructure to decarbonize the economy, not just eventually, but quickly.
So you’re thinking about buying a Prius to save the world, you’re barking up the wrong tree. I tell people, the only thing that’s gonna matter, I’ve long told people, is to write checks to the people who are gonna vote for the policies that are gonna make a difference in the environmental crisis that we face.
But I’ve gone soft on this objection in the last year, working on this project, for two reasons. The least important one is that if you buy a Prius or if you adopt a different diet or if you fly less or whatever you might do in your own effort to impose smaller costs on the planet, you have an effect, it’s a small effect.
If you don’t do it, the world will be the same as if you do do it, but the effect you have through your own actions are only a small fraction of the total effect you have, because when you do something other people see you do it and they do it too.
So I think one vivid example of that is the Prius. There was a Honda Civic hybrid introduced in the same years that the Prius came out. The Civic hybrid looked just like the Civic gas engine version, and no one bought it.
- We bought it, but. (laughter) – Only people who knew the facts and cared about the facts bought it. Most people wanted to engage in virtue signaling, many of them, wanted others to know that they were doing their part, maybe they didn’t care, maybe they liked the odd shape of the Prius, but it was the shape that mattered.
Others could see that you had taken that step and this car by many orders of magnitude outsold the Honda. It’s one of the clearest case studies of behavioral contagion. And so that’s one reason that conscious consumption matters, because it has a much bigger impact than you imagine it would happen.
Have, because of the indirect effects. But I think far more important is the second reason that I’ve gone soft on this objection, which is that you aren’t born into the world being a certain kind of person, you become the kind of person you are through what you do.
Aristotle was very much focused on this. We are what we repeatedly do. So if you want to become an honest person, if you want others to think of you as an honest person, how do you do that, you just be honest all the time and you become an honest person, and there’s something different about you that others can tell.
If you take these steps, you become climate advocate in the process. And if you become one, then you were much more likely to vote for candidates who will enact the robust policy changes that the climate community insists are the only way we’re gonna solve this problem.
You’re more likely to write checks to their campaign headquarters, you’re more likely to go out and knock on doors to help get them elected. It really matters if you do these things, because not just of the small effect you have.
Yeah if you buy a Prius or you don’t, the world’s the same just from the impact of that one decision, but it’s a much broader impact than most people are aware. And if you do that you feel like you’re in the game.
It’s a crisis moment as Dan an describe more accurately than I can, and you may not think your little step will matter. I love this picture of Greta Thunberg, she’s I think 14 in this slide, she’s 16 or 17 now.
But she was just setting out on her Save the Planet crusade. I’m sure she hoped but didn’t expect that her crusade would make a big difference. Pleasant surprise, it has made an enormous difference.
There are young people all over the planet that may be, the leverage that gets actual policy movement on this issue. So if you’re in the game, that’s an important part of being alive in this particular moment.
And I am delighted to have written all the books I’ve written, there’s some of them. I’m proud of each one. I hoped each one would make a difference. I have to say I maybe didn’t really expect that they would make a difference.
Although the first one, I imagined there would be bills, it came out in the winter, I imagined there would be bills wending their way their way through both houses of Congress by the fall session adopting my policy recommendations.
Of course that didn’t happen. It didn’t happen with any of the other books I’ve written in the meantime. I’ve never regretted any of those books. I have really deep hopes that this book might make a difference in helping launch a conversation about what we do about the fix we’re in.
I have to say I don’t really expect with any high confidence that it will make a difference, but if it doesn’t make a difference, I won’t be sorry to have written it. It will be the next step in trying to make a difference in some other way.
So it’s bad moment we’re in. Samuel Johnson said “it’s within the power of any man “not to act.” Yes, we can drop out and take no action, but we also have the power to act. Why choose despair when we could actually become part of a solution? And I love the last line of Katherine Wilkinson’s talk to a climate group, she’s a climate advocate in Marin County.
She said “it’s a magnificent moment to be alive “in a time that matters so much.” The next years are the make or break years. So unless you have something really much more pressing to do, you should get involved in this battle.
And I hope as many of you who can will do it, even only through changes in your own behavior. So I probably consumed too much time. – No that’s perfect. Thank you so much. (applause) So I’ve got a long list of questions, but I’m gonna try to steer them less to the Milgram experiment and the quotes from George Washington and a variety of fascinating things in the first part, but try to steer a little bit more to the second part, and I’m gonna pick up on one that you highlighted well before we get to Greta and her efforts.
And that is you mentioned the Tom Steyer and the debate over billionaires. And I’m gonna jump right in on something where these lessons on contagion play out. We have some candidates saying that I won’t take money from billionaires, that’s very much the Sanders category, and then we have some billionaires saying I should be taxed much more.
Steyer has said it even a little more so than Bloomberg, but they’ve both been in the conversation. If they were to each read your book, so on the one hand, Bernie Sanders, on the one hand, Tom Steyer.
What would you advice each of them as the Secretary of the Treasury for what’s the best thing to do based on what you’ve got here? And I say that because Steyer is very much saying my tax rate is too low, people like me should be giving much more, and Sanders is steering a campaign designed to be the presidency for labor and against this.
So just compare what your advice would be if you’re the same person in each of their cabinets? – Well Steyer and Bloomberg, I actually have given advice, I don’t know if they’ve heard it. I just sent it out into the ether, maybe somebody passed it along to them, probably not.
But my advice to each of them was that the biggest impact they could have in the short run would be to pay the fines of the felons in Florida who won’t be able to vote in 2020 unless their fines are paid.
That referendum passed by 60 odd percent to re-grant the franchise to felons in Florida. There are a very large number of them, and a good percentage of them will not be able to vote in 2020 because of the legislatures move to strip them of that newly granted power until they paid their back fines.
That’s a small investment. If you’re Sanders and Warren, you need to, as you say, there are many billionaires that are already well aware that it would be better if people like them were taxed more heavily.
I think if the country knew that it wouldn’t involve any sacrifice at all on the part of the well to do if their tax rates went up, it would be easy to vote for people who would campaign on a platform of doing exactly that.
I think the fact that we’re shy about taking things away from people, the status quo has an enormous presumption of validity. We’ve been told again and again that if the tax rates go up the economy will go to hell in a hand basket.
If we can just mount the campaign that would make clear to those people that no such effect would happen at all. Steve Jobs says I want to make a dent in the universe. Except for that, why even be here? He doesn’t care what the tax rate is, he wants to make something happen.
And that’s what most of those people care about. And they would put out the same yeoman effort one way as the next. The wealth tax that Warren has proposed, there are implementation questions but she’s got smart people advising her and I think that’s a very popular proposal, notwithstanding what the people on Wall Street say about it.
So I would say, think that through fully and then if you can get the votes for it, do it. – So one of the features, I’m not sure that any candidate is gonna want to campaign on the fact that they’re gonna invest in convicts, although I can really envision that could be a fun platform.
- They can just write a check, they don’t have to campaign, and they could do it in the dead of night. – They could do it in secret. But one version of that might be we have seen a bit of a revolution in terms of the people are running for office, much more diversity, more women running.
One of the things that when each of Steyer and Bloomberg got in, you heard a lot of the negatives about them saying well I’m glad you’re interested in the issue, but why aren’t you for example doing everything you can to find all of these down ticket candidates and really getting involved in being the supporter, as opposed to running yourself? Is one of the lessons here that you, that there’s a real upside to be in that .
1% and being a climate supporter? Is that part of the dynamic that’s made this interesting? – We’re not talking the top 1% here, we’re talking the top. – [Dan] Fractions of a percent. – One millionth of 1% in the case of Bloomberg.
They asked Bloomberg, how does it feel, the prospect of two New York billionaires running against one another? And he said who is the other one? Went over my head the first time I heard it too. The fact of being a billionaire, a multibillionaire in Bloomberg’s case, 50 or 60 billion dollars gives you enormous leverage to do good if you choose to do good.
So I think if you look at the people in that category who have accepted that they don’t need any more money to spend on themselves, how can I leave the world a better place than how I found it, hats off to them and I think in Bloomberg’s case he’s data driven, he’s at least asking how best to spend the money, so he’s running ads in the right places.
He’s not running ads in the places that would benefit his candidacy most, he’s running them in the places that would tip swing states the most and influence the debate the most central way. So yeah, I think they seem to be going about it in a way that I admire.
I’m sorry that it’s displaced a couple of very worthy candidates from the debate stage, and it’s hard to feel that that’s the best feature of democracy to celebrate, but there are good sides and bad sides to it.
- So one aspect of the story that you’ve written about in some previous books is the degree to which we don’t always make decisions that look like the economic rationalist. We stick with marriages, we do a variety of things, even if the data indicates otherwise.
So go back to some of the previous work you’ve done to highlight, what aspects of the climate issue should we be doing because bottom line, there’s maybe more jobs in clean energy or we’re gonna have less of those externalities, better infrastructure, versus things that we do because we actually just think it’s a good thing? We can’t make that economic rational argument.
- No that question is exactly pointed toward this, what for me I think was a slow awakening to the potential value of conscious consumption. Even if you don’t think it will have any effect, it feels good to be doing what you feel you ought to be doing.
My early work was much of it about how honest people might emerge and prosper even in a world without rules and sanctions and if there’s something about you as an honest person that other people can detect, that differentiates you from people who are more opportunistic, and if you can identify that same spirit of trustworthiness in them, then you can interact selectively and you get the high payoffs that correspond to successful cooperation.
The defectors are stuck interacting with themselves. So I was very much a celebrant of this can all happen all by itself. But I think as I’ve gotten further into the weeds on this I’ve realized that enforcement is just such a huge element of the picture.
The IRS cut its budget, it was Republicans in Congress who voted for these cuts in 2011. Every year, further cuts in the IRS budget, the audit rate is about half what it was in 2011. And now people are getting to understand that others are cheating and getting away with it.
We’ve always been a high tax compliance nation. We’re not like the Italys and the Greeces that are far down on the list. It’s a huge disadvantage when your citizens don’t pay their taxes, and that’s where we’re headed if we cut back on the enforcement budget further.
In fact, the IRS just from the direct effects of their enforcement reduction, says for every one dollar we would spend extra on enforcement, we’d get four dollars back. That’s the tip of the iceberg.
That doesn’t take any account of what happens when people understand that others are getting away with cheating and how they respond to that. – So one of the issues that Berkeley has been debating hotly is the evolution of what you do, about you local policies in the face of national or international effort.
And so California, we like to think we built up a pretty good mix of things, and when Obama came in there was a lot of detailed, thoughtful hand wringing here. Should we hold back and kind of let the feds catch up and then be on that wave, or should we keep sticking it to pollution because of local benefits? And everyone in office is delighted, a sigh of relief, that California didn’t let up when we went from what was a very good regime to a bad regime.
So “Under the Influence” in terms of policy making is another part of the story. How does one set of good policies egg on a another here? – Yeah, policy is contagious, one jurisdiction to another.
The New York City congestion fee got voted down again and again, the mayor in Ithaca favored it. Politicians in Albany were against it, they say what do you mean, only rich people can drive into the city? The New York congestion fee has now formally been adopted, it will be implemented in due course in the months ahead.
And there are five other cities in the US that now have congestion fees moved to the top of their to-do list precisely because of New York having done that. Stockholm did it a few years ago. It was very controversial, nobody thought it would be a good idea, the sponsors of the measure almost bailed out at the last minute.
But they thought it was based on sound reasoning and so they did it and they took heat in the process. But within months they had solid majorities in favor of it. Now the people who pay the most in terms of congestion fees.
A big majority of that group also is in favor of making them permanent. So it’s very contagious, and full speed ahead California I think. Many of you weren’t here, don’t remember what happened in the old days.
The UC system was getting gutted, the roads were going to hell. – Still being gutted, but we’ll get back to that. – I thought they were finally getting the budgets back on track. But Brown raised the top tax rate by 50% amid cries that the wealthy would move to Oregon and Nevada.
The Stanford study I saw recently estimated that the top 1% migrate out of California at a much lower rate than any other percentile position on the income scale. So this usual protest that we’re gonna kill the geese that lay the golden eggs has no empirical foundation whatsoever.
- So you need to keep saying that because even though many of us think that there’s no empirical foundation, this one still pops up all the time, that we’re gonna lose jobs, we’re gonna lose clean energy projects, we’re gonna lose all these things.
So this one definitely needs a great deal of attention. But let me turn to Greta, because one of the interesting features of the process that we’ve seen over the last couple of years has been that there’s been a very technical physics community, economics community, analytic debate about climate change and the last couple years that’s been turned on its head a little bit by this youth movement which has highlighted dramatic changes of behavior and not waiting for adults.
It’s not clear we’re giving them much space to do the things they want to do, but this contagious effect among young people is just massively different than certainly the climate change, the IPCC, the technical briefs written by a NRDC kind of world view.
And so optimistically and pessimistic, maybe start with pessimism. There are some negatives if the youth don’t get a space to express this more than just their personal choices. – Yeah. – What’s the downside of “Under the Influence”, if we don’t give influence a space to really be decision makers? – Well the young people have influenced one another, I think the rate at which they’ve bought into the claim that we need to do something major and we need to do it quickly, it’s really quite remarkable the extent to which that generation of people is on board with that.
We can say in time they will age into being a majority and then it will happen, but we don’t have that time. – Clearly that’s there for us. – So the fact that they’re as intense as they are and willing to gum up the works at personal costs to themselves in order to encourage action on the part of the people who still have their hands on the levers, I think on balance is a good thing.
We have a Sunrise Movement in Ithaca. The city council is very frustrated with the Sunrise Movement. They want to add bureaucrats to the city payroll, they want to have, the things they’re lobbying for are not in the considered judgment of the city council the best things to be spending that money on in the next round.
But they are in the thick of things, they’re at all the meetings, they’re making a fuss. And I think, I’ve been negotiating for opportunities to speak to several chapters of the Sunrise Movement and I think it would be good for the Sunrise Movement to think about how to focus their policy demands in a slightly different way than sometimes they do.
But no, the energy and the determination to make something happen are indispensable. – So let me do then the full positive side. So youth are changing more quickly in terms of diets and no question the debate about air travel is something that really came out of news after, not just Greta doing the sailboats one way and that kind of thing, but there is a huge set of pressures which weren’t there even a couple years ago, even if we knew the numbers.
So radical change or evolving change coming out of “Under the Influence”. At some level if all your friends are smokers and you’re not and then you start to smoke or everyone decides they’re going to not only not eat beef, but then they’re gonna question the Impossible Burger because maybe it’s not as clean as doing other things.
How much can these sort of dramatic shifts, because certainly the decade, 12 year time horizon that we’re seeing might work for evolving change when these 15 year olds get into office, but you can argue that we have made many of the choices.
If the infrastructure analogy you put up there doesn’t happen tomorrow. – I don’t see that as a dichotomous choice. I had the pleasure to listen to Ezra Klein interview Cory Booker a couple of weeks ago.
It was just before he dropped out of the presidential race, and Booker as most of you may know, is a vegan, and the question was did he think everybody should be a vegan? And his answer was no, he didn’t think that.
He thought if he urged everybody to be a vegan he would lose his audience in a heartbeat. It was much much better for him to urge people to think about altering their diets at the margin, eat meat maybe two or three times a week rather than every day.
If you urge them to do that, and if 60% of them did that, the reduction in meat consumption would be orders of magnitude greater than if you urge them to become vegans and 2% of the population followed that advice.
So if you can encourage people to take a small step, then it’s very much easier to take the next step. So yeah, start in small ways, reach out for something that’s within your grasp to do, knowing full well that unless we have radical change we’re all cooked.
It’s kind of having to hold two contradictory notions in your head at once. – So let me go back to earlier, the middle section of the book is this series of case studies. And I mentioned that climate doesn’t really come up in them, but they’re about food and and marriage and sex and all the things that are kind of part of our normal life as opposed to the climate story which for a long time was seen as an extra add-on.
Is part of the contagion to make this a top level thing? I don’t just mean in terms of political campaigns by Steyer but is there a path to make the climate choices we make as core as eating well, or are we still a long way from that? – The order of topics in the book isn’t an accident, and I will say that climate doesn’t come up for the first time in the last half of the book.
I mentioned the essence of the argument in the prologue and in chapter one, but I think until I feel that enough is on the table for people to have a firm intuitive grasp of how powerful the contagion impulse is and how easy it is to shift its course, can we really get full buy-in on the possibility that hey, we could apply that in these two really big ticket arenas.
The two big tickets are where are we gonna get the money to pay for the Green New Deal. The Green New Deal is like mobilizing for World War Two, the sponsors admit that. We did that so we know it’s possible to do that.
Where can we get the money to do that? Part of the mission of the book is to show where you get the money. Simple changes in tax policy can make the mansions grow less rapidly, it could make the vehicles actually constrict.
We could harvest two trillion dollars a year without much difficulty from the revenue stream. And then the idea that these changes in policy would actually create contagions that would have wholesale effects on the way we use energy and the way we generate it.
- So last question before we throw it open, and that is you’re back in the room with, not one of these Democratic candidates, but in the ugly world, in my opinion, where Trump is re-elected. What is a strategy to use contagion that moves the needle at all, because we certainly cannot afford four more years, if under the unfortunate situation of which many people think Trump stays in office? How do you use this to craft a, I don’t even want to call it a conservative ground, I’ve already called it an irrational ground, but how do you try to influence someone like this? – The last chapter in the book is devoted to the question of how you can have a more productive conversation with someone on the other side.
Those conversations are notoriously unsuccessful. When Al Gore would make an announcement of a new study showing that the climate trajectory was worse than previously thought, the people who didn’t like the idea of climate change became more firmly rooted in their belief that it was a myth, that we didn’t need to worry about it.
So really it’s very difficult to make a connection of any kind with people who are in a different camp from you. And there’s actually some interesting research on this question, and the common thread in many of the studies is that if you try to explain something to somebody on the other side, that almost always is counterproductive.
They dig in, they get defensive, they become resistant to whatever message you’re trying. If you can listen attentively, if you can ask the right question, that’s the one step that has a bigger impact than any other.
And I don’t have a good list of exactly the right questions for the climate domain, but I can give you, I have two, I think compelling examples from my experience in early debates, one was involved in the debate about the Affordable Care Act, the opponents of it were viscerally outraged by the mandate.
They thought the government had no right to make you buy insurance if you didn’t want to. And you could try to explain to people why if you didn’t have a mandate the whole insurance pool would collapse, but they wouldn’t listen, you would get nowhere in a hurry with that approach.
I just stumbled onto the right question, I was convinced it was effective just by seeing how it played out. I finally started asking people, what do you think would happen if the government required home insurers to sell fire insurance at affordable rates to people after their houses had already burned down? And the question doesn’t spark outrage, it’s a neutral kind of thought question.
People would think about it, and it wouldn’t take them very long to respond correctly that if the government did that, fire insurance companies would go bankrupt in short order because nobody would buy fire insurance until after his house had already burned down.
That’s exactly the right answer. And then by themselves they would, if you had been talking about the mandate, they would see that the guy with pre-existing conditions is exactly that guy whose house has already burned down.
And they’re not wondering any more why you need a mandate. It can’t work unless you have a mandate, unless you can get everybody in the pool, the insurance pool can’t provide coverage to people with pre-existing conditions.
Which they all thought the government should require. So that’s one. – So that’s contagion, right? – I asked people about lucky breaks they’d enjoyed on their paths to the top, successful people.
Obama tried to remind business owners that if they’d succeeded, remember the teacher that helped you, remember the roads you shipped your goods through. The business owners got bent out of shape big time when they heard that.
Oh that’s the, you didn’t build that speech, he was dissing them for not earning their lofty spot in society. Don’t remind people they were lucky, ask them if they can recall times when they were lucky.
And they’re not threatened at all by that question, they think of an example, their eyes light up, they want to tell you about it. Telling you about it kindles the memory of a second, then they tell you about that example, and then suddenly why aren’t we investing more in the schools, they’re asking you.
But you can’t push them to that, ask them. The chapter title is Ask, Don’t Tell. And I’m working on the right questions for these other arenas, I don’t have a good laundry list to recite to you.
- And pay it forward, right? – Pay it forward, pay it forward. – So let me open it up so we can do some of those questions, and I will get ancy if someone makes their question into a long statement. But let’s just start over here and keep questions and keep them coming.
- [Man] Thanks so much for your presentation, it’s inspiring and wonderful. I wonder if you’d comment on the potential role of a carbon tax in addressing the climate crisis and its potentially regressive effect.
- And maybe carbon tax and the social cost of carbon to kind of broaden this out. – Yes I think if we had enacted a stiff carbon tax in 1924 we probably wouldn’t need to do much else besides that.
If we enact a stiff carbon tax now and do nothing else, then we’re not gonna solve the problem. I think nonetheless we should enact one. I think it is political malpractice of the very highest order that the people who have enacted them or who have proposed enacting them have not taken the trouble to educate the public on what a revenue neutral carbon tax would be.
A revenue neutral tax is, as you all know, one that collects all the revenue from the people who buy goods with carbon footprints, takes that revenue, and then gives it back to the people who paid it in.
And what we know is that worldwide the top 10% of the income distribution uses 49% of all energy. It’s not that skewed in the US, but it’s skewed here too. Most of the revenue coming in will be from high income voters, they will pay in the lion’s share of the revenue.
Even if you gave it back in equal monthly rebate checks to everybody, just on a head count basis, it would be strongly in favor of middle and low income families since they pay the least in carbon taxes and will be getting back, but you could make it progressive in the rebate scheme.
Don’t give anything back to the people at the top, tell them about the mother of all cognitive illusions and reassure them that they’re still gonna be able to buy what they want, and they’re gonna benefit more than anyone else from cleaning up the air.
And so they’re a winner on that score too. But if you could get 70, 80, 90% of the voters getting more money back than they paid in in a carbon tax, how much of a political genius would you have to be to get people to vote for that? It’s of course, you have the big oil running campaigns to oppose it, so you’ve got to communicate the message, but that’s the kind of message that Steyer or Bloomberg could explain to people without any difficulty whatsoever.
- And yet we’ve been remarkably unsuccessful. There was the Republican effort, there’s been the Democrat effort, these have been remarkably hard to package in something close to a bumper sticker or whatever version.
- I have never recalled any occasion when I wished that my net worth was 50 billion dollars. But on that ground alone, I wish it was, because I think I could persuade everybody in the world that that would be a good idea to do, if I had 50 billion dollars.
- I like that. Maybe the one reason to do PayPal. – [Man] Thank you very much. Mixing some of this work with some of your previous work, I wanted to throw out a wild idea and hear your thought. What would you think of making the very very high marginal tax rate a positional good itself? What I think here it’s, what if 400 people pay a tax rate, 390 people pay a tax rate that is slightly higher so they can show off that they are in the 390 as opposed to the 400 or something like that.
How would you react to that? – You can color code the tax forms. – Yeah, I can’t remember who it was, it was somebody that Richard and I know who was from Israel and they used to publish how much tax you paid every year and her father had a bad business hear, but he paid the same amount of tax he would have paid in a good business year so people would see that he wasn’t.
- That he was doing well. – So yeah, selling position as a sort of, that’s easy pickings, that’s low hanging fruit. We ought to enable people to buy more position in ways like that. – In Thailand of course, they do the reverse, they have the shame index.
And so they publish people’s names who got speeding tickets and didn’t pay in their home taxes and things. So there’s an alternate version of this as well. So let’s keep going. Well I’m gonna jump in if no one, okay.
- [Man] So in your writing you parallel the smoking cessation movement and climate change. And how sort of the herd mentality helped us solve or helped us solve much of the smoking crisis. But smoking had a critical event.
And that was when the Japanese Wives Study showed the impact of second hand smoke. So Americans didn’t respond much when you were just killing yourself, but when you were killing other people, that became a critical event.
And so I’m wondering what is that trigger event in climate change, ’cause some of us would have thought we’ve had those, and the world just ignored them. Whereas somehow in the smoking world, there was a trigger event that mattered.
- You know, if the Australia fires don’t prove to be a triggering event in Australian politics in the next round, I’m gonna be deeply discouraged by that. If not that as a triggering event, then what? Those fires spewed nine times the amount of CO2 into the air as the California wildfires of 2018 which have been the record culprit up until then.
So yeah, there are, the second hand smoke trigger actually is bogus. We don’t like regulation in the United States, we don’t like taxation, so I think whenever we do regulate or tax, we reach for John Stuart Mill’s harm principle.
The only legitimate reason for the government to tell you you can’t do what you want to do is to prevent harm to others. And he must have meant undo harm because you can’t do anything without harming somebody in the real or imagined way, so the second hand smoke was the trigger that regulators seized on as their rational for here’s why we need to do this.
If we don’t do this, people will be harmed in ways that they have no recourse. You can’t move away from second hand smoke in most situations. The damage from second hand smoke is real, as you cite the Japanese study, there have been many other studies since then.
But it is minuscule compared to the damage caused by smoking itself, to you in particular, but we say it’s not the government’s job to protect you from harming yourself. That’s a more interesting debate than I think Mill realized.
I think the behavioral literature has opened that premise up to interesting counterarguments in the century or so since. But the idea that we regulate because of second hand smoke is a total, the harm it causes is minuscule, not only to the harm smokers cause themselves, but the harm they cause by making other people more likely to smoke.
So that’s something where the Mill people can say well they have recourse, it’s not the government’s job to tell you which behaviors to copy and which ones to avoid, that’s your responsibility.
Okay, I like that sentiment. But what about the parent? Does anybody ever recall hearing a parent say I hope my kid grows up to be a smoker? But most people who smoke which they hadn’t started, they try to quit, usually unsuccessfully, it’s one of the most addictive and harmful substances in our arsenal.
They don’t want their kids to smoke, they try to persuade them not to. My parents both smoked, they tried to persuade me not to smoke, I smoked anyway at age 14 for two and a half years. If others around you smoke, you smoke.
And if you want to say we don’t care about the harm to parents who don’t achieve their goal of raising their kids to be non-smokers okay, but that’s real harm. If you want to raise a kid, there’s a lot of grunt work along the way, you’ve got to care about that kid.
And if you invest a big slice of your life raising your kid and your kid goes off and damages his health willy nilly, that’s harm to you. Would you want people to be raising kids who didn’t care that much about their kids? I mean the utilitarians, some of them will say you pull this lever, you kill your son.
You pull this lever, you kill two strangers. You ought to pull the first lever to kill your son because one person dying is better than two people dying. I would pull the second lever. I’m guessing most people would do that.
And if you thought about it, you wouldn’t want to live in a society where the people who raised the kids who populated that society were ones that would pull the lever that killed their kid. You’ve got to care about your kid too much to be willing to do that.
And so the harm you caused when you smoke is you make other people’s kids more likely to smoke, and that’s real harm, and we ought to care about it. Unless there was some reason not to care about it, which I can’t think of one.
The other reason they offered for regulating smoking is that we needed to spare the poor taxpayer who has to pay for the health costs of the smokers. False, the smokers die younger, they don’t collect pensions for nearly as long, they die of illnesses that kill them more quickly, they don’t draw big Medicare bills down year after year.
Smokers are a net plus to the government budget. – [Man] So if I. – To the microphone, so we can get it on the record. – [Man] If I go to the supermarket, (coughs) and I take out a can of beans and eat them, I deprive the rest of the world of those beans and I have to pay a dollar and a half.
And nobody I know would call that charge a tax. It’s a charge for the resources I’m consuming and depriving everyone else of. If I use the atmosphere by putting carbon into it, shouldn’t that be called a carbon charge? And I’m not quibbling because Bob as you said, we don’t like taxes, but guy who bought that 300,000 dollar Ferrari didn’t think that it was unjust that he had to pay for it.
- Yeah, exactly right, and we have a right wing congressman in our district and he’s open to the idea of a carbon fee and dividend. He is 100% opposed to a carbon tax. That those two are isomorphic is not of any concern at all to him.
- It’s the paradox of Tompkins County, is what this is. – [Robert] Marketing matters, yes. – Let’s go up to the front. – [Man] Information on the potentially catastrophic effects of climate change and a plethora of seemingly catastrophic news events, as we’ve discussed already, has been available for some time, so presumably people are discounting the importance of this information, and in an economic sense, discounting the potential benefits of fighting climate change in the future.
This could, from a microeconomic point of view, be construed as rational behavior. You’ve talked about fighting this through information, but if information is already available, what recourse do we have? – I was with you right along the way until you got to the point where you said this can be construed as rational behavior.
When you have the information about it’s worse, much worse than you think, and you do nothing, even though there are things that you could do that would not be burdensome to do, that is not comfortably within my conception of rational behavior.
I think it is primarily an information problem. The people in the youngest generation of voters are all already there, they understand the gravity of the problem and the need to act quickly to solve it if even they don’t understand all of the nuances of the policy choices that we face.
The group above them is closer to them than to the Boomers but still not quite there yet. And so I think, any way you can get new information into the system and start conversations by asking questions or getting people to reconsider.
So you don’t think climate change is a problem? I don’t think we’re gonna see anybody willing to say publicly that that’s what they believe. – Except for you talked about Ian Hoff in your book and the snowball, and he certainly said, so there are some.
- He said it in 2015, I bet he wouldn’t say it today. – I like to hope you’re right. – In two years from now I’d be willing to bet a hefty sum that it would be very difficult to find a public figure wiling to say anything remotely like what he said in 2015, but that’s the conversation.
You can’t do it all by yourself, but you can play a meaningful part in starting a conversation. Same sex marriage was one of the issues I talked about in the chapter that Dan mentioned on cases. 1989, Andrew Sullivan writes a very persuasive argument that if we permitted it, it would have nothing but beneficial effects on the social structure, there would be no harm, it was very well argued.
12% of the population thought it was okay to permit people to marry whom they please at that time. Barack Obama and Hillary Clinton were publicly on record against same sex marriage when the referendum was fought in 2008, 2009 here in California.
Six years later comes Obergefell, the Supreme Court decision everywhere in the country it’s the law of the land now. Now more than 70% of the people, yeah, why should we tell people they can’t marry whom they please.
So you can get big movement in a short span of time through essentially behavioral contagion. – Let’s do one more down here, and then we’ll ask you to wrap up a little bit. – [Man] Thanks very much.
You mentioned on several occasions that basically the demographic message is in, that the younger generation is on board. In your studies of, you just mentioned same sex marriage and other areas where we’ve had this change, did you see a quick tipping point where suddenly there was a windfall of change of opinion of activism or did it come very slowly? – Great question, and the answer is that it’s always idiosyncratic.
Tim Baccharin has a great book about the importance of information cascades of various kinds. And a point he makes is that although there were some cranks who every year for many years had predicted that the Soviet Union countries were gonna dissolve this year it never happened, but then with no serious pundit predicting it, they all fell within the span of 12 or 18 months.
And it was just a matter of it being dangerous to speak out against a regime. Some people are crazy, they’ll speak out no matter what. Others are more cautious, the obvious equilibrium for a long time was only the nutcase spoke out, he got punished, nobody else spoke out.
But what people believed and what they said publicly were not the same thing. Something happened to make the next guy in the queue speak out and that made the proportion of people speaking out just high enough to tip the thing, and then bang, like a row of dominoes, down it went.
Other times it takes a long time. The slavery debate played out over a long long time. No young person today could summarize the issues in the slavery debate. They all believe passionately that slavery is wrong.
Why do they believe that? Because everybody else believes that. They don’t know what the details of the argument, what kind of pro side arguments people offered back in the day, because it’s a settled issue to them.
But it didn’t get settled quickly, in that case it took a long time. And the one thing about contagion dynamics is that prediction is very difficult. I did a Twitter thread, I tried to help get the conversation started by putting threads out on Twitter of examples of this sort, and one of the threads I put out a couple of weeks ago was that the trajectory of the impeachment conversation was more uncertain that most pundits seem to think.
I’m not gonna say 67 senators are going to vote to acquit Trump. But if you can make a small goal your first step, well I guess the obvious would get the four to vote for additional evidence being admitted into the discussion.
Nobody knows what comes next. And if it tips, it’ll tip overnight. It Was Until It Wasn’t was the title of the chapter that I summarized a lot of these case studies in. – You certainly miss 100% of the shots you don’t take.
- Exactly. – So that is a definite start. So I want to thank you for coming and welcome you to the Goldman school again, thank you. (applause) We’ll have some drinks and thank you all for the great questions.
That was perfect. (light music) [Music] welcome this is a real pleasure for me to get to introduce Robert Frank and to both engage in a Q&A and then take your questions Robert was an undergraduate Georgia Tech and did his master’s in stats and his PhD in econ here at UC Berkeley so we can berate what’s changed and that sort of thing at some length and has been a longtime faculty member in the Johnson school at Cornell during this time he has been massively prolific in both research articles and in in books that both look in detail and what we’re learning from microeconomics macroeconomics and a lot of behavioral economics and applying that to all kinds of inner school systems we’ll get in a second to his latest book but in terms of past books he wrote principles of economics with Ben Bernanke who occupied the office next to me at the Wilson School for a while before moving on to other jobs in DC choosing the right pond something I think will bring up a little bit later on passion within reason luxury fever the economic naturalist which a friend of mine got confused with a number of the of the the freakonomics sorts of literature at a couple different levels success and luck and today’s under the influence and for those reading under the influence thinking about climate change which is how I jumped in I was in some ways incredibly pleasantly surprised so you don’t actually get to climate until well over half the book and it really highlighted to me one of the many things I will talk about and that is there’s been a very dogmatic look at energy and climate issues of which some of us on the stage not you are guilty of but one of the real key lessons that I think has come out of the last sets of efforts from Greta Thune berg efforts from the extinction rival rebellion from the efforts to think about Friday’s for the future is to put this in a much larger context and the green New Deal is one of the topics in the book as well as many of the ways that we have used and misused our understanding of behavioral processes in general to sort of understand where we are and so I’m keen to hear so the the run-through about the material but in in and in particular for me when I went through the book what really struck me was the breadth of which if you think more broadly about how we can transform behavior climate change is a critical piece of that it often occupies a very large part of the story in terms of of what the campus community and interesting climate think about but that bigger context is absolutely critical to try to understand where we’ve had a few successes but where we’ve had just a litany of failures and really being able to communicate more broadly and so I want to welcome you to Berkeley welcome you to the global school I should say welcome you back to Berkeley and look forward to you launching in and again we’ll do about 25 minutes of presentation about equal amount of some dialogue back and forth and then we’ll open it up to questions and use that as the segue into the refreshments of Stax once again thank you and welcome and thank you Dan it’s a real honor and a pleasure to be back I always love coming back to Berkeley I spent four five years here and it’s different each time I come back but it’s always fun to see how it’s evolved I’m excited especially to talk to you about the new book the the core premise of the book is is completely uncontroversial I hope people would agree it’s that the social environment is the most important determinant of what we do in most situations I think the psychologists have a saying it’s the situation not the person the the tendency is to explain why somebody does something by asking what kind of person she is what kind of value she holds but but really the psychologists are on very firm ground when they say you should really look at the social matrix the person finds herself in when you’re trying to predict what she’ll do in that situation so for example if you’re worried that your daughter your teenage daughter will become a smoker it really doesn’t help to know if she’s a science fiction buff or whether she’s good or bad at math what you need to know is the percentage of her peers who smoke that’s the uniquely best predictor of whether she will and it’s a big effect if that number goes from 20 to 30% she is 25% more likely to become a smoker it’s it’s by far the biggest influence on that decision that’s widely accepted as a true true fact about human behavior I think it’s what also uncontroversial but less widely noted that the social environment is itself a consequence of choices we make so what’s the proportion of smokers out there that influences whether a person will smoke it’s in part a consequence of whether or not I choose to smoke and yet I have never met anybody who said I was thinking about smoking but decided not to because I was worried I might encourage a to smoke that’s just not a step most people take mostly because the effect that we have on the social environment is minuscule for all practical purposes so the world would be the same whether we thought about that or not but collectively the fact that we don’t think about it has consequences we have an interest in the social environment since it affects us profoundly in terms of what we do often for ill as in the smoking example but sometimes also for good and so if we could steer people towards being concerned about how their own choices would affect the social environment that would be a good thing if we could do it without incurring costs too high in the process I came across this tweet in a Economist I follow on Twitter she writes there is this amazing tumblr post presumably from a high schooler somewhere that I think about often it just says I’ve always been told not to give in to peer pressure but I’ve never been told not to pressure my peers and so the the the thesis of the book in a very simple statements is that there are steps policymakers could take that would encourage us to act as if we care about the social environment and these steps are neither invasive nor costly and in in other ways many of them have beneficial side effects as I’ll explain and so why wouldn’t we want to think about policies and to encourage people to act as if they cared about the social environment and so far as I’ve been able to discover there’s been virtually no serious attention given to that question at all by policymakers and and my colleagues in economics most of them are very smart much smarter than I why am they written about this is a question I cannot yet answer because it just seems like what the the investors call a green field it’s like when the iPhone came out there all these scores of products and services that couldn’t have existed until then but then it was a gold rush to see who could bring them to market the most quickly here we’ve got a Greenfield in the public policy domain there are so many things we could do that would make people behave in ways that either make benign social environments more prevalent or malicious ones less prevalent let me start with an example of why the social environment is more important than most people think more important certainly than I used to think I see enough people who know what the candid camera show used to be maybe it’s still available on YouTube if if it is you should watch some of the old episodes that’s great he had a film that he did in 1970s and it was like the episodes on the TV show but but in one of them he posted a advertisement for a spectacularly good job it paid really well it didn’t have any complex requirements the hours were short good travel opportunist how could there be such a good duck so of course people contacted the the number in the ad and wanted to come an interview for it scheduled interviews people would arrive for their interview at the appointed hour they’d be shown into a waiting room where there were four people already seated told to sit and we’ll we’ll let you know what’s next so the five of them are sitting there the the camera shows them they’re not talking to one another they’re all sitting there silently the film goes on about its business to other scenes coming back occasionally to see the five guys still sitting there then comes back one last time and zooms in on the subjects face the subject being the last guy to arrive he doesn’t know but we know that the other four are Confederates of fun they’re working with the filmmaker and so at no apparent signal the other four stand up and begin taking off all their clothing and you can see the bewildered look on the subjects face what’s going on here but then you can see a look of resignation come on to his village he stands and he starts taking off all his clothing we we see him as the scene ends they’re all standing there naked waiting for what comes next and you want to say I wanted to say when I saw the film I wouldn’t have done that no way I would have done that and I don’t know how many people front had to run through this experiment to get somebody to do it but there were more than one in the film who did it and if I think it’s meant to be an illustration of the follow the folly of being too influenced by your peers but think about it from the perspective of this guy it’s a great job he arrived the last of the five he doesn’t know what comes next he doesn’t know if they do or not but if anybody knows it would be them not him they seemed to know that now is the time to get up and start taking off all your clothing and they’ve made a decision obviously that it’s worth doing and so he does it too and it’s it’s very hard for me thinking about it in those terms to find fault with his decision to do that it it might have been better safe screw this I’m not gonna do it but but to be influenced by peers who seem to know what they’re doing is a totally understandable and and and almost certainly adaptive impulse to have they don’t know individually maybe any more than you do but together they probably know much more than you and if the group is acting in a certain way and they seem to know what you’re doing you would ignore that cue systematically at your peril so I show in the book there’s quite persuasive evidence I believe that peer behavior social influence has profound impacts on a variety a variety of problems in the social domain these are all negatives I’ll mention some positives momentarily problem drinking is very heavily implicated sexual predation the me to movement was one of the most vivid examples of behavioural contagion that we’ve seen of late cheating the the the effect is particularly strong here because most people want to do the right thing but when they see other people cheating and profiting and not being punished then they feel like chumps and so there’s an explosive tendency for cheating to increase in an environment where there’s no obvious punishment for doing it bullying has been shown to be highly socially contagious obesity if the military sends a family to a new post a county where the obesity rate is 1% higher than where they were the adult members of that military family are 5% more likely to become obese while they’re in their new post the two very most profound effects of contagion and the one only other ones I’ll talk about are the way they influence what we spend the influence here is both profound and the number is big estimate in the book back-of-the-envelope that the fact that we spend in ways that are shaped by what our peers spend causes us to waste probably upwards of two trillion dollars a year in the US economy alone all of the of the inefficiencies that I call attention to are of the same general ilk it’s analogous to the situation when all stand to get a better view no one sees any better than if everyone had remained comfortably seated you’re not irrational to stand you don’t regret standing you don’t see it all if you don’t stand but it would be better if none of us stood in the climate domain our tendency to to buy heavier vehicles to build bigger houses to to have destination weddings I never heard of a destination wedding when I got married now my kids are going to destination bachelor parties even faraway places and it’s just a matter of trying to stage a celebration that meets the standards of the particular time and place so so take the example of these heavy vehicles the engineers laughed the one the very guys who designed these vehicles were astounded that they sold in such quantities why did people need off-road vehicles they wondered the only time they go off-road is when they missed their driveway on a Saturday night it’s not necessary to have an off-road vehicle nor a high riding vehicle nor a hit a 7,000 pound vehicle but if I were others have these vehicles and you don’t then you can’t see when you’re in traffic if you get hit by one you’re more likely to be injured or killed and so if they built bigger or if they buy bigger it makes sense for you to do likewise but the rub is when everybody has bigger the risk of injury and death goes up not down it’s counterproductive and yet it’s not palpably irrational to have done what the individuals were doing on the positive side we know that if you install a solar panel on your rooftop that’s the very most important predictor of whether your neighbor will do that this is project sunroof Google will show you your neighborhood shot from the air they identify the houses that have solar panels on the rooftops with red dots note the pattern if if a house has a red dot it’s next to another house or very close to another house that also has one if it doesn’t have a red dot it’s in a cluster where none of the neighbors have red dots either and you could talk to the Renova CEO that’s our company in Ithaca he’ll tell you oh he put in a new unit on honnest Lane and then he can show you the six units that in the next two months were installed is there a direct result of the installation that he first mentioned so I’m gonna just do us a quick metaphor for wasteful spending there’s much more to say about this but I think this captures the idea and I’m going to couch it in the form of a thought experiment we’ve got two parallel worlds one is a high tax world one is a low tax world and in these two worlds the low tax world you could think of it as the us the rich are awash in after-tax income and so they buy the Ferrari Berlinetta that’s the car of choice for wealthy drivers in the US in the high tax world you can think Norway if you want to have a tag for that one they have much less after-tax income and so they make do with the lonely Porsche 911 Turbo only one hundred and fifty thousand dollars a third of a million in the in the low tax world the question then I’ll pose in this thought expect happier the wealthy drivers in the low tax world or the wealthy drivers in the high tax world if all other other dimensions of the two worlds were exactly the same and here we don’t have an experiment to give us direct evidence but there’s a lot of indirect evidence that there would be very little measurable difference in the happiness levels of the drivers partly that’s because by the time you get to the Porsche 911 Turbo that cars got every feature that has any material impact on handling and performance many drivers who would say in fact it’s a better car in absolute terms than the Ferrari set that to one side just imagine that the Ferrari is better if it is it’s only epsilon better than the Porsche so and in each local environment since they don’t touch one another that the drivers of these cars would have the knowledge and satisfaction that they were driving the best cars on the road there and so I think it’s a reasonable conjecture that they would be equally happy in these two environments but the fact is since the tax laws are so different in the two environments there’ll be much more tax revenue in the high tax world take whatever jaundiced view you like of how wasteful government is and and the private sector is wasteful to mind you we build bigger houses than we need because others are building bigger we buy heavier vehicles than we need because there’s waste there too but let the government be wasteful there they don’t waste everything and some of the money that goes to them in the form of higher tax revenues is going to be spent on road maintenance and so here’s the the question then on the happiness front who’s happier the the people who drive their Ferraris on roads like we drive on or the people who drive their Porsches on well-maintained roads and that’s not even an interesting question that’s that’s of course the the Porsche drivers would be happier I find me a guy who would defend that position in front of this smart audience you know he would he would embarrass himself more than even some of our public figures have been embarrassing themselves arguing in the forums of late so it’s clear that if the rich in this example allowed themselves to be taxed more heavily they would be happier because then they would drive cars that cost less but that would still deliver what they’re really looking for and they would drive them on roads that would be vastly better than the roads they actually do driving on so the claim is higher taxes don’t hurt the rich at all that’s my claim so I’ve been arguing this for a long time and and I I wish I had had the whip earlier in my career to tackle the obvious question though if you’re so smart how come you’re not rich question which is if we would be happier if we taxed ourselves more heavily and invested more vigorously in the public sphere why don’t we elect people who would do that that’s a great question that’s the question I’m gonna try to grapple with here and then the in the last minutes I’ll spend on the presentation so my answer or my attempt at an answer to this question is that the wealthy the people who think that higher taxes would be injurious to their well being hold that position because they suffer from what I’m calling the mother of all cognitive illusion we’ve got here in the room one of the pioneers in cognitive illusions I hope he’ll agree at the end of the talk that this is a big one what’s the mother of all cognitive illusions let me say a little bit first about cognitive illusions generally if you are influenced by them if you reach faulty judgments because of them it’s not because you’re stupid that’s important to recognize so here is the so-called checkers shadow illusion I’ve given away the central point by calling it an illusion here’s the question which Square is darker A or B how many of you think a is darker how many of you think B is darker how many of you think they’re the same if you’re if you’re smart which everybody in the room obviously is or you wouldn’t have taken the time out to to be in this environment in the first place you know it’s a trick so you’re guessing that the right answer is the same I’ll say this if you think they look the same if you think that then you should schedule an appointment with your neurologist as soon as possible there’s something amiss in your in your circuitry that is making you think they look the same shape the X minute explanation of why B looks lighter which to the normal brain it does is plausible it’s interesting it’s that the two squares send exactly the same value of light to us through the eyes and brain but the brain has an additional piece of information namely that the the square B sits in a shadow so that’s telling us that it’s really sending less light out then so the brain wants to make a correction we don’t we’re not we’re not cognitively aware of the fact that it wants to do that but in an effort to tell us the true relationship between a and B it’s telling us this that B is lighter than it appears it’s in a shadow which makes it darker but the true color of it is lighter than it appears boy I thought that nation sounded exactly right but then I looked at the diagram again and I said no no I still don’t believe that they’re the same color until I saw what the diagram looked like when I joined squares a and B with a strip of uniform gray and there’s zero detectable contrast between a B and the strip anywhere in the diagram only on seeing that strip and the lack of contrast was able to accept even that the two squares were the same shade of gray I showed this to my wife I said but this is a really humbling experience and and she said good it was we need more more like that so the the reason I show it to you is just to make plausible the idea that you could believe something for sure to be true when in fact it’s not true I believe a is darker than B I believe that with certainty to be true it’s not true the rich believed that if they had to pay higher taxes that would be painful for them that seems almost obviously true it is not true and here’s why it’s not true so you’re a wealthy person and they’ve got a tax proposal they’re gonna they’re going to tax your income a little bit more heavily because we need to decarbonize the economy and for anything less than what 2 trillion a year we have no hope of doing that so yeah we’ve we’ve got to we’ve got to raise the money somehow we’re not going to get it from the poor people we’re gonna tax the well-to-do people they’ve got it that we could you know we’re a twenty trillion dollar economy and most of its up there and so we can get it if we if we can persuade them to part with it they don’t want to part with it because they think it would be painful how do they come to that belief they think back the normal way to think about any event how’s it going to affect me is try to remember the last time an event like that happened how did it affect me so when’s the last time my taxes went up how did I feel then you can’t think of an event like that if you’re a wealthy person alive today in World War two the top tax rate was 92% by the time I graduated from Georgia Tech in 1966 70% Reagan’s first term 50% now 37% a couple of minuscule increases along the way too small to notice or even remember so you can’t think about how a higher tax rate would affect you in the usual way how do you think about it what you do is you say alright higher taxes I know for sure that means I’ll have less money to spend are my word they’re not going to let me buy what I need know that there’s no tax proposal on the table that would have that effect I’m worried that I won’t be able to get the SPECIAL extras I want well what are those those are the the things that are in short supply the special is just inherently a relative concept how do you get those things you know you have to bid for them so I’m worried the tax increase because I’ll have less money will make me less effective at bidding for those things well and so when I think about how I felt about times and I had less money even the most charmed life there are examples like that so maybe had a bad business year maybe your kid got arrested for something serious you had to hire a high-profile lawyer to deal with the case maybe you had a divorce maybe you had a home fire here here that’s not unlikely that you would have had a home fire a health crisis there are many things that would make you have lower disposable income each one of those things generated an intensely bad memory so when you think about them you think Oh higher taxes less income that I don’t like that but what each of those events has in common is that they caused you to have less income but the other people like you had the same amount of income as always and so when you come to think about what it takes to buy the things you want here in New York in in New York everybody wants the penthouse overlooking the park there aren’t very many of those you get them by admitting other people who want them and if your tax rate goes up if you were a contender for that apartment and the people like you also experienced an increase in their tax rates that apartment goes to the exact same bidder as before and so I think if Mike Bloomberg or Tom Styer could hire Pixar to make a video that they would ten minute video that they would run during the halftime of Super Bowl explaining why if you’re wealthy and you’re thinking about the extra revenue you’d need to pay in to enable us to decarbonize the economy he could exceed pay for the campaign that would convince you that it wouldn’t cost you anything at all that you care about to do that and and that would be a good thing if we could do that I’ll close with something that generated a much stronger reaction to in the conversations I’ve been having about the book then I anticipated when I started on the tour economists and climate people have long been hostile to the concept or I shouldn’t say all climate people because I that’s not true to the concept of what they call conscious consumption oh I’ll save the environment I’ll buy a Prius or I’ll save the environment I’ll eat meat less often I’ll save the environment I’ll bike to work a few times a week instead of driving they say that’s just noise if you do that or if you don’t do that the climate is going down the toilet unless we enact robust changes in public policy a really stiff carbon tax and multi trillion dollars worth of investment in infrastructure to decarbonize the economy not just eventually but quickly so you you’re thinking about buy a Prius to save the world you’re barking up the wrong tree I tell people the only thing that’s gonna matter I’ve long told people is to write checks to the people who are gonna vote for the policies that are going to make a difference in the in the environmental crisis that we face but I’ve gone soft on this objective objection in in in last year working on this project for two reasons the least important one is that if you buy a Prius or if you adopt a different diet or if you fly less or whatever you might do in in your own effort to impose smaller costs on the planet you have an effect it’s a small effect if you don’t do it the world will be the same as if you do do it but the effect you have through your own actions are only a small fraction of the total effect you have because when you do something other people see you do it and they do it too so I think one vivid example of that is the Prius there was a Honda Civic Hybrid introduced and in the same years that the the Prius came out the Civic Hybrid looked just like the Civic gas engine version and no one bought it the Prius we bought it but oh only people who knew the facts and cared about the facts bought it most people wanted to engage in virtue signaling many of them wanted others to know that they were doing their part maybe didn’t care maybe they liked the odd shape of the Prius but it was the shape that mattered others could see that you had taken that step and this car by many orders of magnitude outsold its it’s one of the clearest case case studies of behavioural contagion and so that’s one reason that conscious consumption matters because it has a much bigger impact than you imagined it would happen I have because of the indirect effects but I think far more important is the second reason I’ve gone soft on this objection which is that you aren’t born into the world being a certain kind of person you’ve become the kind of person you are through what you do Aristotle was very much focused on this we are what we repeatedly do so if you want to become an honest person if you want others to think of you as an honest person how do you do that you just be honest all the time and then you become an honest person there’s something different about you that others can tell if you take these steps you become a climate advocate in the process and if you become one then you were much much more likely to vote for candidates who will enact the robust policy changes that the the climate community insists are the the only way we’re going to solve this problem you’re more like to write checks to their their campaign headquarters you’re more likely to go out and knock on doors to help get them elected it really matters if you do these things because not just of the small effect you have yeah if you buy Prius or you don’t the world is the same just from from the impact of that one decision but it’s a much broader impact than most people are aware and and if you do that you feel like you’re in the game it’s a it’s a crisis moment as dan can describe more accurately than I can and and you may not think your little step will matter I love this picture of Greta toon bird she’s I think 14 in this slide she’s 16 or 17 now she was just setting out on her save the planet crusade I’m sure she hoped but didn’t expect that her crusade would make a big difference pleasant surprise it has made an enormous difference there are young people all over the planet who may be the the the leverage that gets actual policy movement on this issue so so if you’re in the game that’s a that’s an important part of being live in this particular moment and I am delighted to have written all the books I’ve written there some of them I’m proud of each one I hoped each one would make a difference I have to say I maybe didn’t really expect that they would make a difference although the first one I imagined there would be bills it came out in the winter I imagined there would be bills when their way through both houses of Congress by default session adopting my policy recommendations of course that didn’t happen it didn’t happen with any of the other books I’ve written in the meantime I never regretted any of those books I have really deep hopes that this book might make a difference in helping launch a conversation about what we do about the fix we’re in I have to say I don’t really expect with any high confidence that it will make a difference but if it doesn’t make a difference I won’t be sorry to have written it it will be the next step in trying to make a difference in some other way so so it’s a it’s a bad moment we’re in Samuel Johnson said it’s it’s within the power of any man not to act yes we can drop out and take no action but we also have the power to act you know why choose despair when we could actually become part of a solution and I love the last line of Katherine Wilkinsons talk to a climate group she’s a climate advocate in Marin County she said it’s a magnificent moment to be alive in a time that matters so much you know they’re the next years are the make-or-break years so so if you have something really much more pressing to do you should get involved in this battle and I hope as many of you who can will do it if you even only through changes in your own behavior so I probably consume too much time so I’ve got a long list of questions but I’m in a sudden less to the Milgram experiment and the quotes from George Washington and a variety of fascinating things in the first part but try to steer a little bit more to the second part and I’m gonna pick up on one you highlighted well before we get to to Greta and and her efforts and that is you mentioned the the the Tom Steyer and the debate over billionaires and I’m gonna jump right in on something where the kind of these lessons about contagion play out okay we have some candidates saying that I won’t take money from billionaires that’s very much the Sandra’s category and then we have some billionaires saying I should be taxed much more steyr has said it even a little more so than Bloomberg but they both in the conversation if they were to each read your book so on the one hand Bernie Sanders on the one hand Tom Styer what would you advise each of them as the secretary of the Treasury for what’s the best thing to do based on on what you’ve got here and I say that because steyr is very much saying my tax rates too low people like me should be giving much more and Sanders is steering a campaign designed to be the presidency for labor and against this and so just compare what your advice would be if you’re the same person in each of their cabinets well steyr and Bloomberg I actually have given advice I don’t know if they’ve heard it I just sent it out into the ether maybe maybe somebody passed it along to them probably not but my advice to each of them was that the biggest impact they could have in the short run would be to pay the fines of the felons in Florida who won’t be able to vote to vote in 2020 unless they’re fines are paid that referendum passed by 60 odd percent to we grant the the franchise to felons in Florida there are a very large number of them and a good percentage of them will not be able to vote in 2020 because of the Legislature’s move to strip them of that newly granted power and till they paid their back fines that’s a small investment if your Sanders and Warren I think you you you need to there as you say there are many billionaires who are already well aware that it would be better if people like them were taxed more heavily I think if the country knew that it wouldn’t involve any sacrifice at all on the part of the well-to-do if their tax rates went up it would be easy to vote for people who would campaign on a on a platform of doing exactly that I think the fact that we’re we’re shy about taking things away from people the status quo as an enormous presumption of validity we’ve been told again and again that if the tax rates go up the economy will go to hell aunt Ann Bassett if we could just mount the campaign that would make clear to those people that no such effect would happen at all Steve Jobs says you know I want to make a dent in the universe if except for that why even be here he doesn’t care what the tax rate is he’s gonna he wants to make something happen and that’s what most of those people care about and they would put out the same yeomen effort one way as the next the the wealth tax that that Warren has proposed there are implementation questions but she’s got smart people advising her and I think they’re there that’s that’s a very popular proposal notwithstanding what the the people on Wall Street say say about it so I would say you know think that through fully and then if you can get the votes for it do it so one of the features I’m not sure that any candidate is gonna want to campaign on the fact that they’re going to invest in convicts although I can really envision that could be a fun a fun play they can just write a check they don’t have to campaign it is do it in the dead of night maybe they could do it in secret but one version of that might be we have seen a bit of a revolution in terms of the people are running for office much more diversity more women running one of the things that when each of steyr and Bloomberg got in you heard a lot of the negatives about them saying well I’m glad you’re interested in an issue but why aren’t you for example doing everything you can to fund all of these down-ticket candidates and really get involved in being the supporter as opposed to running yourself is one of those lessons here that you there’s a real upside to be in that 0.
1% and being a climate supporter is that part of the dynamic that that’s made this interesting you know if I mean we’re not talking the top 1% here we’re talking the top fractions of a percent one millionth of 1% in the case of Bloomberg they asked Bloomberg has it feel the prospect of running to New York billionaires running against one another and he said who’s the other one and and went over my head the first time I rode it to the the the fact of being a melee a billionaire a multi billionaire and in bloomers case 50 or 60 billion dollars gives you enormous leverage to do good if you choose to do good so III think if you if you look at the people in that category who have accepted that they don’t need any more money to spend on themselves how can I leave the the better the world a better place and then how I found it hats off to them and and I think at Bloomberg’s case he’s he’s data-driven he’s he’s at least asking how best to spend the money so he’s running ads in the right places he’s not running ads in the places that would benefit his candidacy most he’s running them in the in the places that would tip swing states the most and influence the the the debate in the most central way so yeah I think they seem to be going about it in a way that I admire I’m sorry that that you know it it’s displaced a couple of very worthy candidates from the debate stage and it’s hard to feel that that’s the best feature of democracy to to celebrate but you know there are good good sides and bad sides too so we can one aspect of the story that you’ve written about in some previous books is the degree to which we don’t always make decisions that look like the economic rationalist we stick with marriages we do a variety of things even if the data indicates otherwise so go back to some of you know some of the the previous work you’ve done to highlight what aspects of the climate issue should we be doing because bottom line there’s may be more jobs in clean energy or we’re gonna have less of those externalities better infrastructure versus things that we do because we I should just think it’s a good thing that we can’t make that economic rational argument now that that question is exactly pointed toward this what for me I think was a slow awakening to the potential value of conscious consumption you know it it even if you don’t think it will have any effect it feels good to be doing what you feel you ought to be doing my early work was much of it about how honest people might emerge and prosper even in a world without rules and sanctions and if if there’s something about you as an honest person that other people can detect that differentiates you from people who are more opportunistic and if you can identify that same spirit of trustworthiness in them then you can interact selectively and you get the high payoffs that correspond to successful cooperation the defectors are stuck interacting with themselves so I was very much a celebrant of the this can all happen all by itself but I think as I’ve gotten further into the weeds on this I realized that enforcement is just such a huge element of the picture the IRS cut its budget it was Republicans in Congress who voted for these cuts in ninety two thousand eleven every year further cuts in the IRS budget the audit rate is about half what it was in 2011 now people are getting to understand that others are cheating and getting away with it we’ve always been a high tax compliance nation we’re not like the it’ll it’ll ease and the and the and the Greek Greece’s that are far down on the list it’s a huge disadvantage when your citizens don’t pay their taxes and that’s where we’re headed if we cut back on the enforcement budget further in fact the IRS just from the direct effects of their enforcement reduction says for every one dollar we would spend extra enforcement we get four dollars back that’s the tip of the iceberg that doesn’t take any account of what happens when people understand that others are getting away with cheating and how they respond to that so one of the issues that Berkeley’s been debating hotly is the evolution of what you do about your local policies in the face of national international effort and so California we’d like to think we’ve built up a pretty good mix of things and when Obama came in there was a lot of detailed thoughtful hand wringing here should we hold back and kind of let the feds catch up and then be on that wave or should we you know keep sticking it to pollution because of local benefits and you know everyone in office is delighted we was sigh of relief that California didn’t let up when we went from what was a very good regime to a bad regime so this under the influence in terms of policymaking is another part of the state that is one set of good policies egg on another here yeah policy is contagious one jurisdiction to another the the New York City congestion fee got voted down again again the the mayors and if they’re going to favor that politicians in Albany were against it they say what do you mean only rich people can drive into the city that the New York congestion fee has now formally been adopted it will be implemented in in due course in the months ahead and there are five other cities in the US that now have congestion fees move to the top of their to-do list precisely because of New York having done that Stockholm did it a few years ago it was very controversial nobody thought it would be a good idea the sponsors of the measure almost bailed out at the last minute but they thought it was based on sound reasoning and so they did it and they took heat in the process but within months they had solid majorities in favor of it now the people who pay the most in terms of congestion fees a big majority of that group also is in favor of making them permanent so yeah it’s very contagious and and full speed ahead California I think many of you weren’t here don’t remember what happened in the old day the UC system was getting gutted the the roads were going to do you think still being gutted but we’ll get back to I thought they were friendly getting the budgets back on track but but you know the the brown raised the top tax rate by 50 percent amid cries that the wealthy would move to Oregon and Nevada the Stanford study I saw recently estimated that the top 1% migrate out of California at a much lower rate than any other percentile position on the income scale so this this usual protests that oh we’re gonna kill the goose that lays the geese that lay the golden age eggs has no empirical foundation whatsoever so you need to keep saying that because even though many of us think there’s no empirical foundation this one still pops up all the time and that we’re gonna lose jobs we’re gonna lose clean energy projects we know all these things so this one definitely needs a great deal of attention but let me turn to to Greta because one of the interesting features of the process that we’ve seen over the last couple years has been that there’s been a very technical physics community economics community analytic debate about climate change and the last couple years that’s been turned on its head a little bit by this youth movement which has highlighted dramatic changes of behavior and not waiting for adults it’s not clear we’re giving them much space to do the things they want to do but this contagion effect among young people is just massively different than certainly the Climate Change the IPCC the technical briefs written by nrdc kind of worldview and so optimistically in pessimistic and maybe start with pessimism there are some negatives if the youth don’t get a space to express this more than just their personal choices yeah what’swhat’s the downside of the of under the influence if we don’t give under influence of space to really be what the young people have influenced one another I think the the rate at which they’ve bought in to the claim that we need to do something major and we need to do it quickly it’s it’s really quite remarkable the extent to which that generation of people is on board with that we could say in time they will age into being a majority and then it will happen but we don’t have that time that’s that’s there for us so so the fact that they’re as intense as they are and willing to gum up the work works at personal cost to themselves in order to encourage action on the part of the people who still have their hands on the levers I think on balance is a good thing we have a Sun Rise movement in Ithaca the City Council is very frustrated with the Sun Rise movement they want to add bureaucrats to the city payroll they want to have the things they’re lobbying for are not in the considered judgment of the City Council the the best things to be spending that money on in the next round but they are in the in the thick of things they’re at all the meetings they’re making a fuss and and I think I’ve been negotiating for opportunities to speak to several chapters of the Sun Rise movement and and I think it would be good for the sunrise movement to think about how to focus their policy demands you know in in a in a slightly different way than sometimes they do but know the energy and the and the and the determination that makes something happen or indispensable so let me the then the full positive side so youth are changing more quickly in terms of diet and no question the debate about air travel is something that really came out of use ever not just Greta doing the sailboats one way and that kind of thing but there is a huge set of pressures which weren’t there even a couple years ago even if we knew the numbers right so radical change or evolving change coming out of under the influence I mean at some level if all your friends are smokers and you’re not and then you start to smoke or everyone decides they are going to not only not eat beef but then they’re gonna question the impossible burger because maybe it’s not as clean as doing other things how much can these sort of dramatic shifts because certainly the decade twelve year time time horizon that we’re seeing yeah might work for evolving change when these fifteen year olds get into office but you can argue that we have all made many of the choices if the infrastructure just examine ala GU put up there it doesn’t happen tomorrow I don’t see that as a as a dichotomous choice I had a pleasure to listen to Ezra Klein interview Cory Booker a couple of weeks ago was just before he dropped out of the presidential race and Booker as most of you may know is a vegan and the question was did he think everybody should be a vegan and his answer was no he didn’t think that he thought if he urged everybody to be a vegan he would lose his audience in a heartbeat it was much much better for him to urge people to think about altering their diets at the margin eat meat maybe two or three times a week rather than every day if you if you urge them to do that and if 60% of them did that the reduction in meat consumption would be orders of magnitude greater than if you urge them to become vegans and 2% of the population follow that advice so so if you can encourage people to take a small step then it’s very much easier to take the next step so so yeah start start in small ways reach out for something that’s within your grasp to do knowing full-well then unless we have radical change we’re all cooked it’s a it’s kind of having to hold two contradictory notions in your head at once so let me go back to earlier in the middle chapter the real section on the book is the series of case studies and I mentioned that climate doesn’t really come up in them but they are about food and marriage and sex and all the things that are kind of part of our normal life as opposed to the climate story which for a long time was seen as an extra add-on is part of the contagion to make this a top-level thing I don’t just mean in terms of political campaigns by Stiers but is there a path to make the climate choices we make as core as eating well or are we still a long way from that the the order of topics in the book isn’t an accident and and I will say that climate doesn’t come up for the first time in the last half of the book I mentioned the essence of the argument in the prologue and in Chapter one but but I think until I feel that enough is on the table for people to have a firm intuitive grasp of how powerful the contagion impulse is and how easy it is to shift its course can we really get full buy-in on the possibility that hey we could apply that in these two really big ticket arenas the the the two big tickets are where are we going to get the money to pay for the green New Deal the green New Deal is like mobilizing for World War two the sponsors admit that we did that so we know it’s possible to do that where can we get the money to do that part of the mission of the book is to show where you get the money simple changes in tax policy could make the mansion’s grow less rapidly could make the vehicles actually can constrict we could harvest two trillion dollars a year without much difficulty from the the revenue stream and then the idea that these changes in policy would actually create contagions that would have wholesale effects on the way we use energy and the way we generate it so last question before we throw it open and that is you’re back in the room with not one of these Democratic candidates but in the ugly world in my opinion where Trump is reelected what is a strategy to use contagion that moves the needle at all because we certainly cannot afford four more years if under the unfortunate situation of which many people think Trump stays in office how do you use this to to craft a I don’t want to call a conservative ground I would called it an irrational ground but how do you try to influence someone like this you know the last chapter in the book is devoted to the question of how you can have a more productive conversation with someone on the other side those conversations are notoriously unsuccessful when Al Gore would make an announcement of a new study showing that the climate trajectory was worse than previously thought the people who didn’t like the idea of climate change became more firmly rooted in their belief that it was a myth that we didn’t need to worry about it and so so it really is very difficult to make a connection of any kind with people who are in a different camp from you and there’s actually some interesting research on this question and the the common thread in many of the studies is that if you try to explain something to somebody on the other side that almost always is counterproductive they dig in they get defensive they become resistant to whatever message you’re trying if you can listen attentively if you can ask the right question that’s the one step that has a bigger impact than any other and I I don’t have a good list of exactly the right questions for the climate domain but I and give you I have to I think compelling examples from my experience in earlier debates one was involved in the debate about the Affordable Care Act the opponents of it were viscerally outraged by the mandate they thought the government had no right to make you buy insurance if you didn’t want to and you could try to explain to people why if you didn’t have a mandate the whole insurance pool would collapse but they wouldn’t listen you would get no no we’re in a hurry with that approach I just stumbled onto the right question I was convinced it was effective just by seeing how it played out I finally started asking people what do you think would happen if the government required home insurers to sell fire insurance at affordable rates to people after their houses had already burned down and the the question doesn’t spark outrage and it’s a neutral kind of thought thought question people would think about it it wouldn’t take them very long to respond correctly that if the government did that fire insurance companies would go bankrupt in short order because nobody would buy fire insurance until after his house had already burned down that’s exactly the right answer and then by themselves they would if you’d been talking about the mandate they would see that the guy with pre-existing conditions is exactly that guy whose house has already burned down and they’re not wondering anymore why you need a mandate it can’t work unless you have a mandate unless you can get everybody in the pool the insurance pool can’t provide coverage to people with pre-existing which they all thought the government should require so that’s one I oh that’s contagion right one feel tonight I asked people about lucky breaks they’d enjoyed on their paths to the top successful people that is Obama tried to remind business owners that if they’d succeeded remember the teacher who helped you remember the road you ship your goods to the business owners got bent out of shape big time when they heard that oh that’s the you didn’t build that speech he was dissing them for not earning their lofty spot in society don’t remind people that they were lucky ask them if they can recall times when they were lucky and and they’re not threatened at all by that question they think of an example their eyes light up they want to tell you about it telling you about it Kindles the memory of a second then they tell you about that example and then suddenly they why aren’t we investing more in the schools they’re asking you but you can’t push them to that ask them the chapter title is Ask Don’t Tell and I’m working on the right questions for these other arenas I don’t have a good laundry list okay it forward right pay it forward so let me open it up so we can do some of us questions and I will get an see if someone makes their question into a long statement but let’s just start over here and keep them questions and keep them coming thanks so much for your presentation inspiring and wonderful I wonder if you’d comment on the potential role of a carbon tax in addressing climate crisis and it’s potentially regressive effects and maybe carbon tax and a social cost of carbon to kind of broaden this out yes I think if we had enacted a stiff carbon tax in 1924 we probably wouldn’t need to do much else besides that if we enact a stiff carbon tax now and do nothing else then we’re not going to solve the problem I think nonetheless we should enact one I think it is political malpractice of the very highest order that the people who have enacted them or who have proposed an act of them have not taken the trouble to educate the public about what a revenue-neutral carbon tax would be a revenue neutral taxes as you all know one that collects all the revenue from the people who buy goods with carbon footprints takes that revenue and then gives it back to the people who paid it in and what we know is that worldwide the top 10% of the income distribution uses 49 percent of all energy it’s not that skewed in the US but it’s skewed here too most of the revenue coming in will be from high-income voters they will pay in the lion’s share of the revenue even if you gave it back in equal monthly rebate checks to everybody just on a headcount basis it would be strongly in favor of middle and low income families since they pay it pay in the least in carbon taxes and be getting back but you could make it progressive in the rebate scheme don’t give anything back to the people at the top tell them about the mother of all cognitive illusions and reassure them that they’re still going to be able to buy what they they want and they’re gonna benefit more than anyone else from cleaning up the the air and so they’re our winner on that score too but you if you could get seventy eighty ninety percent of the voters getting more money back than they paid in in a carbon tax how much of a political genius would you have to be to get people to vote for that it’s of course you have the big oil running campaigns to oppose so you got a you got to communicate the message but that’s the kind of message that steyr or Bloomberg could could explain to people without any difficulty whatsoever and yet we’ve been remarkably unsuccessful I mean there was the Republican effort there’s been a Democrat effort these have been remarkably hard to package in something close to a bumper sticker a lever version I have never recalled any occasion when I wished that my net worth was fifty billion dollars but but on on that ground alone I wish it was because I think I could persuade everybody in the world that that would be a good idea to do if I had 50 billion dollars I like that Sookie may be the one music thank you very much a mixing some of this work with some of your previous work and I would want to throw a wild idea and hear your thoughts what do you think of making the the very very high marginal tax rate positional good itself what I what I think here it’s what if the four hundred people pay a tax rate the three ninety people pay a tax rate that is slightly higher so they can show off that they are paying but they’re like in the three ninety are supposed to a four hundred and some three that how how do you react to it if it color code the tax forms yeah I I can’t I can’t remember who it was it was somebody that Richard and I know who was from Israel and they used to publish how much tax he paid every year and her father had a bad business year but he volunteered he paid the same amount of tax he would have paid in a good business year so people would see that he wasn’t so yeah selling position is a sort of that’s easy pickings that’s a little hanging fruit yeah we ought to we ought to enable people to buy more position in ways like that in Thailand of course they do their verse they have the same index yeah and so they published people’s names who got speeding tickets and didn’t pay on their home taxes and things so there’s there’s no there’s an alternative version of this as well so let’s keep going well I’m gonna jump in if no one okay so in your writing you parallel the smoke is the smoking cessation movement in climate change and in how sort of the herd mentality would helped us solve or solve much of the smoking crisis but smokey had a critical event in and that was when the Japanese wives study showed the impact of secondhand smoke so Americans didn’t respond much when you were just killing yourself but when you’re killing other people that became a critical event and so I’m wondering what is that trigger event in climate change because some of us were to thought we’ve had though and the world just ignored them whereas somehow in the smoky world there was a trigger event that mattered you know the if the Australia fires don’t prove to be a triggering event in Australian politics in the next round I’m going to be deeply discouraged by that if not that as a triggering event than what those fires spewed nine times the amount of co2 into the air air as in the California wildfires of 2018 which had been the refere record culprit up until then so yeah there are the the the secondhand smoke trigger actually is bogus we we don’t like regulation in the United States we don’t like taxation and so I think whenever we do regulate or tax we we reach for John Stuart Mill’s harm principle the only legitimate reason for the government to tell you you can’t do what you want to do is to prevent harm to others and he must have meant undue harm because you can’t do anything without harming somebody real in the real or imagined way so the the secondhand smoke was the trigger that regulators seized on as their rationale for here’s why we need to do this if we don’t do this people will be harmed in ways that they have no recourse you can’t move away from secondhand smoke in most situations you’re the the damage from secondhand smoke is real as you cite the Japanese study there have been many other studies since then but it is miniscule compared to the damage caused by smoking itself to you in particular but we say well it’s not the government’s job to protect you from harming yourself that’s a more interesting debate than I think mill realized I think the the behavioral literature has has opened that premise up to interesting counter arguments in the in the century or so since but but the idea that we regulate for because of secondhand smoke is a total the the the harm it causes is minuscule not only tell the harm smokers called caused themselves but the harm they caused by making other people more likely to smoke so that’s something where the the mill people can say well they have recourse it’s not the government’s job to tell you which behaviors to copy and which ones to avoid that’s your responsibility okay I like that sentiment but what about the parent does anybody recall ever hearing a parent say I hope my kid grows up to be a smoker but most people who smoke wish they’d started they try to quit usually unsuccessful it’s one of the most addictive and harmful substances in our Arsenal they don’t want their kids to smoke they try to persuade them not to my parents both smoke they tried to persuade me not to smoke I smoked anyway at age 14 for two and a half years if others around you smoke you smoke and if you want to say we don’t care about the harm to parents who don’t achieve their goal of raising their kids to be non-smokers okay but that’s real harm you know if you want to raise a kid there’s a lot of grunt work along the way you got to care about that kid and if you invest a big slice of your life raising your kid and your kid goes off and damages his health willy-nilly that’s harm to you would you want people to be raising kids who didn’t care that much about their kids I mean the utilitarians some of them will say you pull this lever you kill your son you pull this lever you kill two strangers you ought to pull the first-level lever to kill your son because one person dying is better than two people dying I would pull the second lever I’m guessing most people would do that and if you thought about it you wouldn’t want to live in a society where the people who raised the kids who populated that society were ones who would pull the lever that killed their kid you got to care about your kid too much to be willing to do that and and so the harm you cause when you smoke is you make other people’s kids more likely to smoke that’s real hard and we ought to care about it unless there were some reason not to care about which I can’t think of one the other reason they offered four for regulating smoking was that we needed to spare the poor taxpayer who has to pay for the health costs of the smokers false the smokers die younger they don’t collect pensions for nearly as long they don’t they die of illnesses that kill them more quickly they don’t draw a big Medicare bills down year after year smokers are a net plus to the government but if I go to the supermarket and I take out a can of beans and eat them I’ve deprived the rest of the world of those beans and I have to pay a dollar and a half and nobody I know would call that charge a tax it’s a charge for the resources I’m consuming and depriving everyone else of if I use the atmosphere by putting carbon into it shouldn’t that be cool to carbon charge and I’m not quibbling because Bob as he said we don’t like taxes but guy bought that $300,000 Ferrari didn’t think was unjust that he had to pay for it yeah exactly right and we have a we have a a right-wing congressman in our district and he’s open to the idea of a carbon fee and dividend he’s a hundred percent opposed to a carbon tax that those two are isomorphic is not of any concern at all to him yeah paradox of Tompkins County is what this marketing matters yes let’s go to the friend information on the the potentially catastrophic effects of climate change and a plethora of seemingly catastrophic news events as we’ve discussed already has been available for some time so presumably people are discounting the importance of this information and in an economic sense discounting the potential benefits of fighting climate change in the future this could from the point of view from a micro economic point of view be construed as R as rational behavior how you’ve talked about fighting this through information but if information is already available what recourse do we have I I was with you right along the way until you got to the point where you said this could be construed as rational behavior when you when you have the information about it’s worse much worse than you think and you do nothing even though there are things we could do that would be not burdensome to do that is not comfortably within my conception of rational behavior I think it is primarily an information problem the the people in the in the the youngest generation of voters are all already there they they understand the gravity of the problem and the need to act quickly to solve it if even they don’t understand all of the nuances of the policy choices that we face the the group above them is closer to them than to the boomers but but still not quite there yet and so I think any way you can get new information into the system and and start conversations by asking questions or we’re getting people to Rican so so you don’t think climate change is a problem I don’t think we’re gonna see anybody willing to say publicly that that that’s what they believe except for you talking about Inhofe in your book and the snowball and you certainly he said it in 2015 I bet he wouldn’t say it today I’d like to hope you’re right in two years from now I’d be willing to bet a hefty sum that it would be very difficult to find a public figure willing to say anything remotely like what he said in 2015 but that’s a conversation you know that’s that’s you know we you can’t do it all by yourself but you can you can play a meaningful part in starting a conversation same-sex marriage was one of the the issues I talked about in the the chapter that Dan mentioned on cases nineteen eighty nine Andrew Sullivan writes a very persuasive argument that if we permitted it it would have nothing but beneficial effects on the social structure there would be no harm it was very well argued 12% of the population thought it was okay to permit people to marry whom they pleased at that time Barack Obama and Hillary Clinton were publicly on record against same-sex marriage when the referendum was fought in 2008 2009 here in California six years later comes oberfeld the Supreme Court decision everywhere in the country it’s the law of the land now now more than 70% of the people yeah why should we tell people they can’t marry whom they please so you can get big movement in a short span of time through essentially behavioral contagion let’s do one more down here and then a little bit thanks very much um you mentioned on several occasions that basically the demographic message is in that the younger generation is on board in your studies of you just mentioned same-sex marriage in other areas where we’ve had this change did you see a quick tipping point where suddenly there was a windfall of a change of opinion and activism or did it come very slowly great question and and the answer is that it’s always idiosyncratic timbre quran has a great book about the importance of information cascades of various kinds and and he a point he makes is that although there were some cranks who every year for many years had predicted that the Soviet Union countries were gonna dissolve this year it never happened but then with no serious pundit predicting it they all fell within the span of twelve or eighteen months and it was just a matter of it being dangerous to speak out against the regime some people are crazy they’ll speak out no matter what others are more cautious the the obvious equilibrium for a long time was only the nutcase spoke out he got punished nobody else spoke out but what people believed and what they said publicly were not the same thing something happened to make the next guy in the queue speak out and that made the the proportion of people speaking out just high enough to tip the thing and then bang bang like a row of dominoes down at whim other times it takes a long time I mean the slavery debate played out over a long long time no young person today could could summarize the issues in the slavery debate they they all believe passionately that slavery is wrong why do they believe that because everybody else believes that they don’t know what the the details of the argument what kind of pro side arguments people offered back in the day because it’s a settled issue down but it didn’t it didn’t get settled quickly in that case it took a long time so yeah the one thing about contagion dynamics is that prediction is very difficult I did a a Twitter thread I try to help get the conversation started by putting threads out on Twitter of examples of this sort and and one of the threads I put out a couple of weeks ago was that the the trajectory of the impeachment conversation was more uncertain than most pundits they seem to think I’m not gonna say 67 senators are gonna vote to acquit Trump but if you can make a small goal your first step well I guess the obvious one would be to get the four to vote for additional evidence being admitted into the discussion nobody knows what comes next and if a tips it’ll tip over night it was until it wasn’t was the title of the chapter that I summarized lot of these case studies in you certainly miss hundred percent of the shots you don’t take exactly oh that is a star so I want to thank you for coming and welcome you to the global school again thank you back we’ll have some drinks and thank you all for the great question that was perfect.
Source: https://youtube.com/watch?v=MQbas9rN43o