Tim Harford: Make Better Mistakes
For most people, learning economics is a headache as it seems so complicated to understand. Let's change your mind a little bit today. This is a message from the undercover economist.
Tim Harford: The Undercover Economist
Tim Harford is an economist, journalist, and broadcaster. Also, he is a senior columnist for the Financial Times. He is the author of the million-selling “The Undercover Economist”, a senior columnist at the Financial Times, and the presenter of Radio 4’s “More or Less”. Tim has spoken at TED, PopTech and the Sydney Opera House and is a visiting fellow of Nuffield College, Oxford. He was Economics Commentator of the Year 2014, winner of the Royal Statistical Society journalistic excellence award 2015, and also won the Society of Business Economists writing prize 2014-15. Tim was the first Peter Martin Fellow at the Financial Times, and was a member of the Financial Times editorial board from 2006-2009.
----For those who are not familiar with you, allow us to know more about you. How did you get interested in economics and human behavior?
It was a happy accident. I studied a degree in Philosophy, Politics and Economics, but I always assumed I would concentrate on philosophy. Somehow it seemed more romantic, I guess. But the more I studied economics, the more it drew me in. As the economist John Maynard Keynes once wrote, it has so many elements – mathematics and psychology, history and forecasting, high theory and everyday experience. I think the variety kept me interested.
-----You have written several books. What is your motivation for taking lots of time and energy to help people better understand the economy?
I love the subjects I write about. Every time I start a new one it’s an adventure – trying to understand something deep about human behavior, from the macro-economy in “The Undercover Economist Strikes Back” to how we learn from mistakes in “Adapt”. It is a great privilege to be able to travel on this adventure.
-----Why do you recommend for people to learn the essence of economics and behavioral economics through your book?
The Undercover Economist and The Undercover Economist Strikes Back try to show the hidden side of the world around us – from the way that supermarkets set their prices to why we can understand recessions by looking at wartime prison camps. My aim is that after reading them, the world will look different.
Now there are many excellent books with a similar aim – for example Freakonomics or Thinking, Fast and Slow. If you read them, you’ll learn a lot and the books are wonderfully enjoyable too. But I think the difference with my books is that they rely on some basic economic concepts. So people like to read them as a gateway into economic thinking.
-----Unlike other academic subjects, economics is one of the subjects, which does not have a correct answer. It does not work like “if you do something, this happens all the time.” Why do you think the education system teaches this as simple fact?
I think that is true for most subjects, actually. Of course in mathematics one can search for a proof – an answer that if correct, will still be correct in a million years time. But in every other subject truth is always subject to revision and clarification: we are always trying to get new data, and to learn more. And I think economics has grown stronger recently because we’re using better experimental methods and have better data.
-----It is said that, "History repeats itself.” Probably because the core characteristics of humans has not changed even though the environment has. What is your suggestion to the 21st century economy?
The biggest economic challenge is environmental: how can we continue to prosper while respecting the limits of the planet, particularly the atmosphere? I think the main answer is to harness market forces by using appropriate prices – for example, a price on carbon dioxide. Then we get a response throughout the system – across the world, people are looking for ways to consume less or consume differently, or develop new technologies. I am optimistic that we can get there.
----Like what happens in the real economy, people tend to ignore what is inconvenient for them. How do you think we can overcome this?
I wrote a book, Adapt, about the importance of experimenting and learning from mistakes. We find our own mistakes awkward and often avoid collecting the feedback we need to see mistakes quickly and correct them. There are no easy answers, but I suggest facing up early to the possibility that what we are doing is wrong, and constantly gathering feedback – whether it’s hard data or friendly advice – to enable us to fix our mistakes quickly.
-----For you, what does success mean?
I love what I get paid to do. I love it. Professionally, I think that is all the success I need.
-----What are the most important values, things, and criteria for you when you make important decisions in your life?
I try to make the little decisions quickly and painlessly so that I don’t waste time and energy on them. For the important decisions, I always ask myself “if this decision is wrong, what will I learn and how bad will the consequences be.” Not all decisions are black and white – some are reversible. So it is worth thinking about decisions as experiments.
-----If you could make a call to 20-year-old Tim Harford, what kind of advice would you give to him?
Professionally, I would change nothing. I got some things wrong, but everything has worked out well. I wouldn’t want things to be any different.
-----If you could leave one message to make the world a better place, what would be your message?
Make better mistakes.