Robert Frank, professor of economics at Cornell University and CASBS fellow 1992-93, sat down with host John Markoff to discuss his latest book “Under the Influence: Putting Peer Pressure to Work”.
Robert Frank on Twitter
His new book “Under the Influence: Putting Peer Pressure to Work”
His choice of influential book is Nobel Prize winner Thomas Schelling’s “Micromotives and Macrobehavior”
Center for Advanced Study in the Behavioral Sciences
@casbsstanford on twitter
Narrator: From the Center for Advanced Study in the Behavioral Sciences at Stanford University, this is Human Centered. Today we'll hear from economist and best-selling author Robert Frank. Frank is a former CASBS fellow and is currently a professor of economics at Cornell University. His most recent book, Under the Influence: Putting Peer Pressure to Work, explores how our social context shapes our behavior. The book launched this week, and Dr. Frank returned to CASBS to share his ideas and engage in conversation with current fellows. Host John Markoff caught up with Dr. Frank after lunch, and they discussed teaching economics, the myth of government waste, and the power of peer pressure and whether it can be harnessed to address larger issues like climate change.
John Markoff: Since this is the day that your book is being published, could we begin by— I would like to ask you to introduce your book.
Robert Frank: The title is Under the Influence, and the subtitle is Putting Peer Pressure to Work. The book is about social influence, and I was very opposed to having peer pressure appear anywhere in the title or marketing materials because that has such a negative connotation in most people's minds. But when the editor proposed calling the subtitle Putting Peer Pressure to Work, that seemed a little eccentric enough, it would catch people by surprise. Wait a minute, peer pressure is a bad thing. How do we put it to work? Then I thought, yeah, let's go with that. And we'll see if it's a good subtitle or not. We don't know yet.
John Markoff: Is climate a subtopic? Where does climate fit in it?
Robert Frank: There were really two issues that stood out from all the others that I'd written about. One was how behavioral contagion or social contagion affects the way we spend our money. And I claim in the book that it leads us to spend our money in grotesquely inefficient ways. $2 trillion a year of pure waste by my conservative calculation. If there were waste of that sort that anybody caused deliberately, it would be a moral violation of the very gravest degree. I don't think it's deliberate, I think we just, aren't aware of how our spending is influenced by what others spend around us, but it's the inefficiencies all are of a stripe. We have no trouble with the idea that when everybody stands to see better, nobody sees any better than if everybody had remained comfortably seated in the event. And in the same fashion, it's natural to think a big house is a good thing to have. You would think that. Even if you lived all by yourself on a desert island. But big, of course, is a relative concept. And when others build bigger, your house seems small unless you too build bigger. And so we've seen, as the incomes have continued to concentrate at the top of the income ladder, more and more people are spending more and more money on bigger and bigger houses. And that serves no one's interests at all. It wastes a lot of energy. If we could harvest the money that's spent in those ways, we could actually afford to decarbonize the economy on a crash basis without having to require difficult sacrifices from anybody.
John Markoff: Which we will need to do. Do your ideas— when you were talking about waste, it made me think of an earlier Stanford economist who wrote a book called The Theory of the Leisure Class within about a mile of here.
Robert Frank: Thorsten Veblen. Thorsten Veblen, yeah.
John Markoff: The notion of conspicuous consumption. Are there echoes of that in your thinking?
Robert Frank: Oh, in the claim about spending being wasteful, very much so, yes.
John Markoff: There was also a status component in his argument.
Robert Frank: Yeah, and I think he saw the problem that way. We were trying to outdo one another. I see it in a more neutral way. I mean, there are jerks who want to show up their neighbors by having something obviously better than they have, but I think mostly it's that even if you lived on a desert island, nobody else in sight, if you had a house that was bigger than what you were used to, that would seem special to you. You would get used to that and it wouldn't seem special to you for long, but if it seemed bigger than the houses other people had, that's the same phenomenon. It's not that you're trying to show them that they're inferior. I think that's often how people look at that, but it's not really the essence of what's happening.
John Markoff: You've written enough books now that I was wondering if there's a general model. Do you have a— if I asked, how do you find your ideas? Is there— do you have a general answer? Is it serendipitous or is it systematic?
Robert Frank: One of my books, it's the one that worldwide I think has probably sold more copies than any other, is The Economic Naturalist. And that's a collection that I put together of submissions by my students in my introductory economics course. Their assignment is to pose an interesting question, which is not easy to do, on your first try especially. Pose an interesting question and then use basic economic reasoning to try to craft a plausible answer to it. And so, for example, why do regulators make you strap your toddler into a safety seat to drive 2 blocks to the grocery store, yet they let you hold your toddler loose on your lap flying from New York to LA? Why that difference? And he— the student who wrote that, James Ballot, said he would ask his classmates the question and they would— their eyes would light up. Yeah, that's interesting. Their most frequent response was that if the plane goes down, it doesn't matter whether you're strapped in. That's why they don't require it. And he did a little digging and he realized that seat belts had been required in planes long before they had been in automobiles. And the reason was to— the turbulence in the early aviation days was very common and quite dangerous. And so you could really expect a lot of impact from requiring people to be restrained, well, why not then toddlers in safety seats? The answer is that if you're going to the grocery store, it's essentially free, minus a little bit of time and effort to put your kid into the safety seat that's already tethered in the back seat. If you're going from New York to LA and you wanted to strap your kid into a safety seat, you'd have to buy an extra ticket. On a full flight, that might cost you $1,000, $1,500. And regulators seem to be saying, although not out loud, that we'd like to keep you safer, kids, but it's too expensive. The cost-benefit test fails in the airplane case, not because the benefit of being strapped in is smaller than in cars, but because the cost of being strapped in is so much higher.
John Markoff: You use the term naturalist. What do you refer to when you're talking about economic being an economic naturalist?
Robert Frank: I had a great biology course in the 11th grade. The instructor's name was Casper Wirtz. I never will forget him. I hadn't had any biology before that, and his focus was on evolution, and I thought it was so exciting to take just a couple of simple principles from that course and see them in action in natural settings over and over again in interesting ways. It made taking a walk in a nature setting way more exciting. And so my aim in giving that assignment to students was to get students to use economic ideas in a similar way, which is quite possible to do, and yet most people don't attempt to get students to do that in their courses. In fact, we know that the introductory courses are notoriously ineffective. The students take them, then we give them tests that probe their knowledge of basic economic principles 6 months later. They score no better on those tests than people who never even took the course. The typical course just puts thousands of items on the syllabus, it goes by quickly, each one. It all passes in a blur, nobody retains anything, and the shame of that is that there really are only about a half dozen basic ideas in economics, the cost-benefit principle being foremost among them. Do it if the benefit exceeds the cost. Completely uncontroversial sounding, but not so easy to identify what the relevant benefits and costs are in practical settings. If you do that over and again during a single semester, you'll leave the course with a really solid grasp of the basic ideas. And so that's the book that I think— it didn't sell the most of any copies in the US, but it was a bestseller in many other countries and is still one of the top-selling economics books in China, where it was on the number one nonfiction list for a long, long time.
John Markoff: If I asked you to describe your methodology, how do you think about methodology as an economist?
Robert Frank: Well, this was really the point of your previous question, and I never got to that, so let me try to backfill a little bit. How do I come up with ideas? Almost in every case, it's because I see something that is puzzling to me, and in an attempt to construct an explanation for the thing I see, I sometimes stumble onto interesting notions that I can then develop further. So basically, I don't think I'm nearly as smart as many, maybe even most of my colleagues, but I think I'm more attuned to things that don't seem to make sense out in the natural environment. And when I see one, I feel more agitated than I think many people do by that observation, and I think harder about what's going on in that setting than many people do. So if I've I've had success with that strategy. It's not because I'm insightful so much as because I'm just more puzzled by anomalies than many people.
John Markoff: And so in Under the Influence, you're extracting economic principles from— you read the literature widely and try to understand what there is to know about peer pressure and how it might be used. I mean, is that the simple sort of architecture of your—
Robert Frank: The books I've written often grow out of a New York Times column. That I've written. And in, I think it was January of '17, I wrote a column about smoking, and I made several of the points I made in my lecture at CASBS today, which is that the reason we regulate smoking, or the reason we should regulate smoking, has very little to do with injuries caused by secondhand smoke. It's really the fact that if you smoke, you will make other people more likely to smoke. That's by far a more grave and serious injury than any injury associated with secondhand smoke. And so if I publish a column and nobody reacts to it, I often think, "Well, okay, I'll move on." But there was an especially strong reaction to that one. A lot of pushback. "Oh, it's not the government's responsibility to tell people that they shouldn't copy their peers in this domain or that they should in that domain." And so I thought, well, there's some value to be added here. We don't regulate for that reason generally. We don't say, even though nobody would dispute the claim that the social environment has a huge effect on our behavior, Often for ill, but in many cases for good. We would like to have supportive social environments. If you're a parent, you want an environment where there aren't many smokers out there. It'll be easier for you to raise kids not to smoke in an environment like that. If there are good behaviors, you'd like to see more of them. If you live in Boulder, Colorado, it's much easier there to exercise regularly and eat prudently because so many other people have adopted that as a norm. A lifestyle choice, and yet nobody, almost nobody, worries about how his own choices will affect the social environment. And it's no mystery that they don't worry about that. Why would they? The individual's effect on the overall environment is very small, negligible really. So individuals don't worry about that, but it would be better if they did. And the question is, Are there practical ways, ways that wouldn't generate costs of their own, that we could push people to act as if they cared about their effect on the social environment? And so that was the book idea that emerged from the reaction to that particular New York Times column. And then it's just been a question of trying to flesh out where that takes you in the months since then.
John Markoff: In your talk, —before lunch, you put up this very interesting slide that came from sort of a Google project to show rooftop solar, and you pointed out that many of the arrays were adjacent to each other. And it made me think about—for some reason I jumped immediately, largely because they were selected by red dots. It made me think about red-state/blue-state division and adjacency in terms of politics, and I was wondering if if that was on your radar.
Robert Frank: Yeah, the beliefs that we find it comfortable to hold are enormously influenced by the beliefs of other people around us. In 1989, 12% of Americans thought it would be okay if people could marry whomever they pleased—same sex, opposite sex, no matter. There was a very cogent article published that year, and the case seemed almost word for word the same as the case for the benefits to society of having heterosexual marriage. And yet most people were loath to say that it would be okay to allow same-sex marriage. Maybe many of them believed, why not? But they were afraid that they would seem extreme or or not thoughtful by people who would hear them say it, and so there was an enormous reserve on people's parts to voice an opinion like that. But as more and more gay people became known— they were quite heavily closeted for most of the previous century— as we learned more about who was gay and who wasn't, parents learned that one of their children was gay. I'm not going to stop loving my child because She's gay, I'm gonna go on loving her. And that change of view was contagious. In 19— excuse me, in 2008 and '09, when was the referendum on same-sex marriage here? It was January 2009. California, yeah. Okay, so both Barack Obama and Hillary Clinton both were on the "you shouldn't allow this" side of that referendum, which seems very difficult to imagine now because just 6 years later, of course, the Supreme the Supreme Court said, yeah, you can marry whomever you please. Now support in every state, red state, blue state, it's virtually no difference, is over 70% saying, yeah, why not? So what you believe or what you're willing to say you believe depends very much on what other people are willing to say publicly. You're afraid of standing out in some negative way, and so you hold your tongue.
John Markoff: —You know, in the discussion also after your talk, the policy sort of tools were almost all sort of punitive in the sense of taxation or regulation, but I was wondering what you think of the nudge ideas and the behavioral economists who argue you can give people incentives to—
Robert Frank: —Yeah, absolutely. And in fact, we do exactly that in the case of solar panel installations. The subsidies are quite significant for those. And I think they're slated to phase out gradually. But the idea is that once you get that contagion process going, it acquires a momentum of its own and the costs fall as more people adopt them. So you don't really need to keep pushing people in that direction. Once the train leaves, it has a momentum of its own. So, so yeah, we definitely can encourage behaviors that we think would be good for us if more people adopted them, and we do do that.
John Markoff: There's this electrical engineer on campus, Balaji Prabhakar, who's run these wonderful experiments where he— since we're all instrumented because we carry phones with us and we know where we all are— he's found that you can have a meaningful impact on traffic and traffic jams by giving people small incentives to change the time at which they travel. Turns out to offset a traffic jam, you only have to change about 5% of the travel time and you get this huge flow. And the way he did it was you enter people in a lottery, which you can do automatically now. And people, it turns out, love lotteries. So they'll change their behavior for a very small—
Robert Frank: So you get a prize if you're picked.
John Markoff: Yeah, but you only have to put up $50 a day and everybody will change their behavior. Oh, that's lovely.
Robert Frank: Yeah, no, I'm an enthusiastic supporter of policies like that.
John Markoff: I was really also very interested in your— I think it was just an aside, but you pointed out that you thought that there was actually more private waste than public waste. And yet the public perception in America, largely because of, I think, sort of the media echo chamber, is that public waste is the problem in society. Yeah, I, I, I was trying to wonder where to go with that, but it seems like a profound observation to me.
Robert Frank: The, the sources of waste are different in the two domains. So, so in, in the private sector, people are pretty well informed about what their options are. If there's a cheaper version of something that's just as good here, uh, compared to the outlet there, they'll buy from the better supplier. Uh, they don't spend more than is necessary, uh, to get what they're trying to get. But what's different in the private sector from what we see in the public sector is that your ability to achieve basic goals depends not on buying a thing at the most reasonable price on offer, it depends on how much you spent compared to how much others spent. So the easiest example of that is you want to send your kids to good schools. Every parent wants that. Good schools are in more expensive neighborhoods. And so if you're just the median earner and your ambition is to send your kids to a school of average quality, and, you know, we would think ill of a a parent that wasn't at least that ambitious, what must you do? You must gain access somehow to the median-priced house in your area. And to do that means to spend what others like you in the earnings distribution are spending, and they're spending way more than before, even though they don't have more income than before relative to the costs involved. And so the people in the middle face a dilemma. You can either You can bid aggressively for a house in the best school district you can afford, or you can spend prudently, buy a house that you can comfortably afford, and then see your kids go to schools that have metal detectors out front. Tough choice, but most parents pick option 1, given that choice. And yet, when they do that, half of all kids still go to bottom half schools, the same as before. Yeah, that's the canonical structure of the waste we see in the private sector. In the public sector, maybe there's some corruption, maybe there's somebody on the take. The waste, fraud, and abuse charge rings true in specific cases, but as a fraction of the total, it's very, very small. I think the waste in the private sector is much, much bigger.
John Markoff: And yet, I mean, there's some investigative journalism, but by and large, there's this chorus in the media that indicts public waste.
Robert Frank: Yeah. Oh, and it wasn't that way until the 1980s. Maybe Goldwater had a little bit of that in his rhetoric, but basically that's what we've been hearing since the 1980s. The government is the problem, not the solution. There's just so many things that we cannot do as individuals that we can do quite easily if we act collectively. That mantra steers us away from the kind of interventions that would really make a difference to people.
John Markoff: What happened in the 1980s? Was it an artifact of Reaganism?
Robert Frank: I think it was in large part because of that. That was seen as an effective way to advance that party's policy agenda if the government can't do anything, then they have a case for taking money away from the government, starve the beast, and giving it back to the people who know how to spend it more productively than the government does. That's the mantra. And if you hear that often enough, yeah, it makes sense. Yeah, government's wasteful. We know bureaucrats don't care. They're wasteful. So the fact that we heard it so often, if you hear something over and over again, you start to think, well, it must be true. Or why would they keep saying it? I was thinking about—
John Markoff: in thinking about your focus on peer pressure, and I was thinking about the internet as a mechanism, and it's actually sort of the basis of one of the things I was most disappointed about myself as a reporter. Facebook, before the election— well, actually, probably it was 2012 or 2013— ran an experiment where they proved that you could affect somebody's propensity to vote if you put a little "I voted" emblem on Facebook. And they had all the social science data. And I dutifully wrote the article about, you know, it was a nice thing without thinking at all about the issue. If you could influence somebody's propensity to vote, obviously you could influence their propensity not to vote. And I believe the evidence is that that was a significant factor in the last election actually. Oh, yeah. Facebook.
Robert Frank: They're all the same. They're all corrupt.
John Markoff: Yeah, but there was systematic targeting. One of the arguments is there was systematic targeting of particular populations, particular individuals, to persuade them not to vote and that it had a material impact on the election.
Robert Frank: I've seen those studies and I find them compelling.
John Markoff: Both sides of the peer pressure issue. I mean, this is sort of the downside of—
Robert Frank: But if you don't acknowledge the strength of it and think of it as a legitimate subject of inquiry, how do we respond to the fact that it's so powerful, then we're stuck letting people use it for their own ends. We should really be involved in a conversation about how we harness this powerful force.
John Markoff: You talked a little bit about how to talk to people who don't agree with you. I was wondering if you could walk us through your sort of— I don't know, was it a guidebook or your methodology for—
Robert Frank: Well, what we have known for a long time that's It's very difficult to speak with people who don't agree with you to begin with. And in fact, there's good evidence that trying to explain to somebody who doesn't agree with you why what you think is true is true has often a counterproductive effect. It makes them more likely to resist the idea you were hoping to persuade them was true. And so the recommendation that I think comes from the research in this area is you shouldn't try to persuade people that something is true. You should try to encourage them to think about the issue in a way that will enable them to discover that something is true. And so the example I use that I find most compelling is that in conversations with people who didn't like the Affordable Care Act, Typically, they focused on the mandate, the requirement by the government that you must buy insurance or else pay a fine. They thought that was a gross overreach of government. They shouldn't allow that. You couldn't explain to people dispassionately how insurance markets work, that if you don't have everybody in the pool, the market unravels. You could try to explain that, but it very rarely had any effect. Any impact on the listener. And one accidental discovery I made in those conversations is to watch what happens when you ask your conversation partner, what would happen if you required insurance companies, if the government had a requirement that home insurers sell fire insurance to consumers at affordable rates after their homes had already burned down? It's not a threatening question. It's kind of an interesting question. Most people are willing to think about it without any valence, and quickly they're able to see that if you required that, the insurance companies would go bankrupt in short order because you're selling a policy for a couple hundred dollars and then you have to— having to rebuild a half-million-dollar house. How can you do that? So once you grasp that on your own, then immediately you see that the patient with pre-existing conditions is exactly that guy whose house has already burned down. You want to have insurance available to the guy with pre-existing conditions. If you require that anybody be able to opt out and/or get insurance after they discover they have a pre-existing condition, no insurance company could provide coverage for those people. And so you have to have some mechanism, and the mandate is the simplest one, to keep people in the pool.
John Markoff: Have you been able to do this in practice?
Robert Frank: Yeah, I have had this conversation numerous times. And the other one I mentioned was people resist— people who are successful resist any attempt to explain to them that they succeeded in part because they were smart and in part because they work so hard, but another part of the story, even if performance depends only in the slimmest way on chance events, another part of the reason they were successful was that they had a few lucky breaks along the way. And if you try to explain that to people, it's a simple idea, but they resist that. If instead you ask them to recall an example of times you were lucky, along your path to success. They don't seem threatened by the question, they don't seem offended by it, they think about it, they explain an example where they were lucky, and that kindles the memory of a second example, they describe it too, and then soon they're on your side. They're saying, "Why aren't we investing more in education and training for the next group to come along?" A final question: Have you already started on a new book? I have not. How does the process usually work? I have never known when I finished any earlier book what I would do next in terms of a book. Somehow launching another project right now while I'm still out trying to explain why I think the message in this one is of interest, I can't go there. It just doesn't work for me. But I did write a piece in the New York Times a few years ago that generated a response that made me think, "Hey, that might be a good book idea." It was about what are the things we will value when it's possible to synthesize the things that we now consider scarce in value, diamonds being a simple example. You can make perfect diamonds at low cost, and yet people pay many tens of thousands of of dollars for diamonds that come from the earth. So if buying those real ones, quote unquote, meant doing without an apartment with a view, at some point somebody would say, well, if I buy the synthetic diamond, it looks the same to everybody, including me, but I'll get the apartment if I buy that. Why would you go ahead and buy the lesser apartment if that were your choice?
Narrator: Having written many books, including this latest, do you have any books in your life that were influential and that inspired you? Oh, that's easy for me.
Robert Frank: My intellectual hero was Thomas Schelling. I don't know if you know his work, but he was a very influential writer in the nuclear deterrence domain. And the Nobel Committee cited that work first when they gave him the prize. But the work that influenced me of his was a book called Micromotives and Macrobehavior. And it was chapter after chapter of intriguing examples of how rational people in pursuit of totally reasonable goals end up doing things that turn out to be deeply counterproductive. Much of it along the lines of all standing to get a better view, but not all of it. And yeah, if anybody asks me, what should I read? That's the book that has influenced me probably more heavily than any other.
John Markoff: Well, thank you. Appreciate your time, Myron.
Robert Frank: Yeah, what a nice opportunity for me to do this.
Narrator: Thanks again to our guests Robert Frank and host John Markoff. To learn more about the topics in this episode, check out the show notes. There you can find links to works by our guests, including Dr. Frank's new book Under the Influence: Putting Peer Pressure to Work. Human Centered is a show from the Center for Advanced Study in the Behavioral Sciences at Stanford University. And it is produced by Michael Gutani and Joseph Munzel. Thanks for listening.