Tim Harford
Not All Economists Have Neat Bookshelves
Intro
Tim Harford, although now a famous economist, doesn’t like to think in discrete terms. He is a disruptor—someone who lives outside the box—and has made a name for himself through his famous research and writing on economic and psychological concepts. Since starting “The Undercover Economist,” a weekly column in the Financial Times in which he explains the economic concepts behind our day-to-day tasks, Harford has written ten books, spoken three times for TED, and hosted multiple podcasts. These include “More or Less” and “50 Things that Made the Modern Economy” on BBC, as well as his latest hit from Pushkin Industries, entitled “Cautionary Tales.” Harford’s early writing focuses on making economic concepts accessible to everyday readers. His work has expanded into the fields of behavioral science and psychology, as he examines concepts like attention, rationality, creativity, and decision making.
Someone who knows the price of everything and the value of nothing. Oscar Wilde’s definition of a cynic, now commonly applied to economists.
– Tim Harford, The Undercover Economist
On their shoulders
For millennia, great thinkers and scholars have been working to understand the quirks of the human mind. Today, we’re privileged to put their insights to work, helping organizations to reduce bias and create better outcomes.
Slow motion multitasking
“Accepting trial and error means accepting error. It means taking problems in our stride when a decision doesn't work out, whether through luck or misjudgment. And that is not something human brains seem to be able to do without a struggle.”
― Tim Harford, Adapt: Why Success Always Starts with FailureSlow motion multitasking—having multiple projects on the go at the same time and going back and forth according to your mood.
Harford’s concept of slow motion multitasking inspires us to make the most of our creativity by being able to alternate between different subjects or projects. This way, one thing doesn’t require all your focus at once; rather, he says, you will benefit by juggling multiple endeavours.
“Managers could be tidy-minded simply because tidiness seemed like the right and proper way to be.”
― Tim Harford, Messy: The Power of Disorder to Transform Our Lives
Harford came up with the term “slow motion multitasking,” however he built on a foundation of multitasking research done by Bernice Eiduson. Eiduson was a psychologist who studied what made certain people produce consistently creative work. Her research, which continued in the hands of others after she died, found that people who consistently produced creative and important work focused on multiple projects at once.
“Hours are long. Wages are pitiful. But sweatshops are the symptom, not the cause, of shocking global poverty. Workers go there voluntarily, which means—hard as it is to believe—that whatever their alternatives are, they are worse. They stay there, too; turnover rates of multinational-owned factories are low, because conditions and pay, while bad, are better than those in factories run by local firms. And even a local company is likely to pay better than trying to earn money without a job: running an illegal street stall, working as a prostitute, or combing reeking landfills in cities like Manila to find recyclable goods.”
― Tim Harford, The Undercover Economist
Eiduson studied some of the top creative scientists, and found that, on average, creative scientists switched their research topics 43 times while writing their first 100 research papers.
According to Harford, slow motion multitasking works because creativity occurs when a subject is taken from its original context and applied elsewhere. Even more so, specific content knowledge can apply and help out in other fields. When a certain group of medical students were tasked with analyzing art in a museum, they actually became better at diagnosing eye diseases. In other words, bouncing back and forth between subject areas helped their skills in both areas grow.
“Pluralism matters because life is not worth living without new experiences - new people, new places, new challenges. But discipline matters too; we cannot simply treat life as a psychedelic trip through a series of novel sensations.”
― Tim Harford, Adapt: Why Success Always Starts with Failure
Moreover, slow motion multitasking gives your brain a break when it is stuck, allowing it space to rediscover what it’s looking for. In 1905, Albert Einstein didn’t just discover the famous equation, E = mc2. He also wrote three other famous papers that made strides in economics, special relativity, and the photoelectric effect. His time spent away from his famous equation allowed his brain the room to grow his understanding—in other words, a much-needed break. This may also be why your English teacher once advised you to finish writing your essay, do something else and come back to proofread and edit it.
As you can see from the Einstein example, slow motion multitasking can have great effects on increasing our creativity and productivity as individuals or as a society. The long-held notion that you need to focus on one thing and then complete it can be thrown out the window. Having multiple creative projects going simultaneously is likely to benefit all of them, as your knowledge from each one’s creation can help contribute to the others.
“It’s easier to think outside the box if you spend your time clambering from one box to another.”
―Tim Harford
Overwhelming gain paradox
Overwhelming gain paradox—the paradox by which people make drastically different choices based on possible rewards, even when their choices will turn out the same 99% of the time.
"We should aim to make ours a world where people feel free to do things they enjoy, even if others are mildly inconvenienced, but also one where we all refrain from harming other people if the effort involved to avoid harming them is small.”
― Tim Harford, The Undercover Economist, Revised and Updated Edition
Imagine you stand in front of three cases on a show like Deal or No Deal. On this version of the show, however, you must complete a task in order to win money.
If you choose Box 1, you will get a guaranteed $100, and if you successfully complete the task, you will gain $200. If you choose Box 2, you will automatically be paid $100, and if you successfully complete the task, you will have only a 1% chance of winning $200. Lastly, if you pick Box 3, you will be guaranteed $100, and if you successfully complete the task, you will have a 1% chance of winning $3 million.
Which box do you choose?
“if there’s a profitable deal to be done between somebody who has something unique and someone who has something which can be replaced, then the profits will go to the owner of the unique resource.”
― Tim Harford, The Undercover Economist
In most cases, people will try their hardest to successfully complete the task if picking Box 1—because it definitely yields a reward—or Box 3, because even though the chance of reward is low, the ultimate payout would be extremely high. If a person picks Box 2, they are unlikely to care about the success of their task—even if they do succeed, their chances of being rewarded for it is not worth its ultimate gain.
According to Tim Harford, and basic economics, this discrepancy is irrational. In both Box 2 and Box 3, the outcomes will be identical 99% of the time. Homo economicus, the fictionally perfectly rational being, would not work hard to successfully complete the task for Box 2 or Box 3.
“In the end economics is about people ... And economic growth is about a better life for individuals - more choice, less fear, less toil and hardship. ... Yang Li tried factory work and decided that it wasn't for her. Now she says that 'I can close the salon whenever I want.' Economics is about Yang Li's choice.”
― Tim Harford, The Undercover Economist
In summary, the overwhelming gain paradox describes how our choices can differ hugely dependending on differing potential outcomes, even when these differences won’t exist in 99% of cases.
A great example of the overwhelming gain paradox in our society is the high salaries of coveted careers like professional athletes or celebrities. In 99% of cases, people who try to become famous movie stars or athletes, sadly will not succeed. Still, knowing that there remains a 1% chance they could succeed justifies the high salaries of these professionals. If NBA players and Top 40 music artists made salaries equivalent to teachers and copywriters, many less people would be after these jobs. They are after them, however, knowing that their dreams of high salaries and private jets are unlikely to come true. Although they know their chances of actually attaining these salaries is grossly low, the potential payoff often justifies the struggle.
“Consider the situation: Money that was provided because of social networks rather than need; a project designed for prestige rather than to be used; a lack of monitoring and accountability; and an architect appointed for show by somebody with little interest in the quality of the work. The outcome is hardly surprising: a project that should never have been built was built, and built badly.”
― Tim Harford, The Undercover Economist
If we, as humans, did not fall prey to this paradox, there would be many less people out there after these coveted careers, making their dreams actually easier to attain. The high number of people out there hoping to be the next Ariana Grande actually raises competition, making it even harder for each individual to get there, and therefore amplifying the paradox’s existence.
The overwhelming gain paradox therefore has huge implications for how individuals make decisions, and for how society functions. Knowing that people are motivated by great rewards, even with the knowledge that they are extremely unlikely, can help you make decisions as to how you incentivize others in your life.
“It is not polite to say so, but it is obvious that paying people to be unemployed encourages unemployment. Yet, if a government scrapped unemployment benefit, there would still be jobless people, and supporting the jobless is something that every civilised society should do. The truth is that we have a trade-off: it is bad to encourage unemployment but good to support those without incomes.”
― Tim Harford, The Undercover Economist
If you are someone who may be attracted to an unlikely but endearing prospect, remember to weigh the heftiness of the reward with its likelihood of actually becoming a reality.
Historical biography
Born in England in 1973, Tim Harford earned his BA in philosophy, politics, and economics at the University of Oxford. He then pursued a Master of Philosophy in economics at the same school.
“The more grotesque your boss's pay and the less he has do to earn it, the bigger the motivation for you to work with the aim of being promoted to what he has.”
― Tim Harford, The Logic of Life: The Rational Economics of an Irrational World
After graduating, Harford joined the Financial Times as an economics writer. He also worked at investment and asset-management firm International Finance Corporation. He soon made his way into broadcast journalism, presenting BBC television series Trust Me, I’m An Economist. He began producing more content for BBC, including his podcast, “More or Less,” and his radio series, “50 Things that Made the Modern Economy.”
“Here’s the thing about failure in innovation: it’s a price worth paying.”
― Tim Harford, Adapt: Why Success Always Starts with Failure
Harford is most well-known for his book-turned-Financial Times column The Undercover Economist, in which he responds to daily struggles and concepts with economic advice, and explores the economics behind everyday topics such as the price of coffee or the US healthcare system.
The book was written in 2005, turned into a column that same year, and then adapted into a sequel in 2014. Its original was translated into 30 languages and sold to over a million readers worldwide.
As a result of his contributions to world understanding of economics, Harford was appointed Officer of the Order of the British Empire (OBE) in 2018.
“And the fundamental point of all these massively parallel experiments is the same: when a problem reaches a certain level of complexity, formal theory won’t get you nearly as far as an incredibly rapid, systematic process of trial and error.”
― Tim Harford, Adapt: Why Success Always Starts with Failure
Books, articles, and lectures
The Data Detective: The Easy Rules to Make Sense of Statistics (2021): To be released on February 2, Harford’s newest book breaks down barriers that exist between people and statistics. He teaches readers not to fear or ignore statistics, but rather how to use them to understand human behavior and tackle what is going on around us.
How to Make the World Add Up: Ten Rules for Thinking Differently About Numbers (2020):
Harford, in this book, convinces readers that numbers have the power to change the world and shows how to use our understanding of numbers to see world issues and events more clearly.
50 Things that Made the Modern Economy and The Next 50 Things that Made the Modern Economy (2017): Adapted from his BBC podcast that ran from 2016-2017 and was revitalized in 2019, this two-part book series lists and explains 50 inventions that advanced and revolutionized the modern economy. Examples include Google, the birth control pill, and antibiotics.
Messy: How to be Creative and Resilient in a Tidy-Minded World (2016): This disruptive book details the creative benefits of disorganization and confusion, convincing readers they’ll be more successful if they resist needing control and stop trying to plan every moment of their journey.
The Undercover Economist Strikes Back: How to Run or Ruin an Economy (2014): While his first book, listed below, explained how economics worked on the personal level, this book keeps up with modern demand by explaining how we can use economic models to understand larger concepts that take place on a wider scale. Harford zooms in on world crises, headlines, and timely financial upheaval to interrogate economic concepts.
“Companies pay amazing amounts of money to get answers from consultants with overdeveloped confidence in their own intuition.”
― Tim Harford, Adapt: Why Success Always Starts with Failure
Adapt: Why Success Always Starts with Failure (2011): In this book, Harford explains why everything we think about solving world issues is wrong. He writes that we must start from the bottom up, and explore how our failures to address problems like climate change, terrorism, and poverty can lead to our successes.
The Logic of Life (2008): In his first book on behavioral science, Harford writes that rational behavior is actually more widespread than one might expect in the general population. He relies on economic concepts to explain why some behaviors that appear illogical are actually logically sound.
The Undercover Economist (2005): In this book, Harford compassionately responds to life’s daily struggles through an economic lens. It can serve as an introduction to principles of economics like supply and demand and comparative advantage. It also uses non-technical language to explain interesting topics like why coffee is priced the way it is, why poor countries remain poor, and why the United States’ health insurance system is so utterly flawed.
Tim Harford’s TEDTalks: Harford has spoken at TED three times since 2011, about how multitasking, frustration, and making mistakes can lead to increased creativity.
References
BBC Newsnight. (2016, October 31). Tim Harford: Why being messy is good [Video]. YouTube. https://www.youtube.com/watch?v=vDxIJAyrh3s&ab_channel=BBCNewsnight
DoubleU Studio. (2021). Tim Harford. Tim Harford. https://timharford.com/
TED. (2019, February 7). A powerful way to unleash your natural creativity [Video]. YouTube. https://www.youtube.com/watch?v=yjYrxcGSWX4&t=226s&ab_channel=TED
TED. (2016, February 2). How frustration can make us more creative [Video]. YouTube. https://www.youtube.com/watch?v=N7wF2AdVy2Q&ab_channel=TED
TED. (2011, July 15). Tim Harford: Trial, error and the God complex [Video]. YouTube. https://www.youtube.com/watch?v=K5wCfYujRdE&t=51s&ab_channel=TED
Tim Harford: How can "Slow motion multitasking" Boost our creativity?. (2019, May 10). NPR.org. https://www.npr.org/2019/05/10/719575727/tim-harford-how-can-slow-motion-multitasking-boost-our-creativity
Tim Harford. (2005, July 31). Wikipedia, the free encyclopedia. Retrieved January 12, 2021, from https://en.wikipedia.org/wiki/Tim_Harford
Tim Harford OBE. (n.d.). TV News Presenters and Business Journalists | TV Presenter Agents in the UK - Knight Ayton. https://knightayton.co.uk/male-presenters/tim-harford
Tim Harford. (n.d.). Financial Times. https://www.ft.com/tim-harford
About the Authors
Dan Pilat
Dan is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. Dan has a background in organizational decision making, with a BComm in Decision & Information Systems from McGill University. He has worked on enterprise-level behavioral architecture at TD Securities and BMO Capital Markets, where he advised management on the implementation of systems processing billions of dollars per week. Driven by an appetite for the latest in technology, Dan created a course on business intelligence and lectured at McGill University, and has applied behavioral science to topics such as augmented and virtual reality.
Dr. Sekoul Krastev
Sekoul is a Co-Founder and Managing Director at The Decision Lab. He is a bestselling author of Intention - a book he wrote with Wiley on the mindful application of behavioral science in organizations. A decision scientist with a PhD in Decision Neuroscience from McGill University, Sekoul's work has been featured in peer-reviewed journals and has been presented at conferences around the world. Sekoul previously advised management on innovation and engagement strategy at The Boston Consulting Group as well as on online media strategy at Google. He has a deep interest in the applications of behavioral science to new technology and has published on these topics in places such as the Huffington Post and Strategy & Business.
