Freakonomics Radio - 112. Would You Let a Coin Toss Decide Your Future?

Episode Date: January 30, 2013

Levitt and Dubner go deep on "Freakonomics Experiments," a new research project that lets you take a chance on life.

If you ask Daniel Harrington to introduce himself, tell you what he does, this is what he says. Hi, this is Daniel Harrington, and I work for ARPA-E, the Advanced Research Projects Agency for Energy within the Department of Energy. But if you'd asked him that question two years ago, you would have gotten a different answer. Here we come off of turn number four for the final time. To the line, it's going to be Daniel Harrington. He will win his first race at Firestone Indy Light Series. I would have said, hi, this is Daniel Harrington, and I'm a professional race car driver. Harrington is 26.

Two years ago, he was a race car driver. He was doing all right. A few good finishes in IndyCar races. A few million dollars in sponsorship. But he wasn't setting the world on fire. He started thinking about other options. It was a hard decision. I felt indecisive the whole time.

I didn't know on a day-to-day basis what I should be doing. And that's kind of a terrible feeling. So during this period of Harrington's indecision, we put out a podcast called The Upside of Quitting. Harrington listened to it. He stared his indecision in the face, and he quit driving his race car, for the most part at least. He went back to school at Duke, got a master's in engineering management, and that led to a very good job at the Department of Energy in Raleigh, North Carolina. He advises teams who receive government money to develop energy technologies, and he likes the work. But a familiar feeling has already come back to him. I know. It's the same thing. Actually, this is kind of funny. This is revealing about me.

I'm trying to decide whether I should leave what I'm doing now and go do something else where I'm more hands-on or not. That's right. Daniel Harrington is thinking about quitting again. Now, to his credit, he acknowledges that he's a pretty indecisive guy, not just with big things like his career, but even simple decisions like where to eat, what movie to see. For those smaller decisions, though, he's come up with a solution. I've actually started flipping a coin or doing rock, paper, scissors. Actually, my girlfriend and I are both pretty indecisive, so we start coming up with a list of a few restaurants and then rock, paper, scissors it out until we've got a winner.

It's actually, it's beautiful. It works so well. I don't know why I wasn't doing this for years. When the stakes are low, like picking a restaurant or a movie, flipping a coin is easy. But you'd never do that for a really important decision, like a big move or a spouse or a new profession, would you? Or would you? From WNYC and APM American Public Media, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dubner. Hey, so, Levitt, you wanted to try something a little bit different for the podcast today, yeah? Yeah, I think I'm more excited for this podcast than for any of the 100-plus that we've ever done.

Which isn't saying much. You've never been very excited, have you? I know. This time, I'm really excited. Steve Levitt is my Freakonomics friend and co-author. He's the first to admit that most of our stories are fact-based entertainment. They're not really meant to help people. I think in general we don't think we know the answers. That in order to be a helper, you really have to think you've got the magic serum that will get people to the right answer. And that's not really our style. It's not very often that what we do translates directly into real positive changes in people's

lives. But then there was that one episode, the upside of quitting. We raised the possibility that the old conventional wisdom, you know, a winner never quits and a quitter never wins, that it might be for some people and in some circumstances just wrong. We talked about the sunk cost fallacy and opportunity cost. And we suggested that overall quitting has a bad rap, but that strategic quitting can actually be a great thing. We heard from a man who quit his dream job running the U.S. Department of Labor. I made the decision that shortly after the election I would leave. And then one day I went into the Oval Office and explained to the president that I just felt that I had no choice.

He was very understanding about it. We heard from a woman who quit a good IT job to become an escort. You know, of course, it's always scary to leave behind something that's legit and go with something that maybe isn't considered that. You know, I know that it was the right decision for me. For me, I don't have a problem with having sex with strangers. And from a woman who quit her religion. The upside of it is there have been so many times, so many moments in my life when I knew that quitting the Amish was the right thing to do. Even Steve Levitt is a big fan of quitting.

A lot of people, you make choices without a lot of information, and then you get new information. And quitting is often the right thing to do. I try to talk my kids into quitting soccer or baseball if they're not good at it. I mean, I've never had any shame in quitting. I pretty much quit everything that I'm bad at. We got a lot of emails after that quitting episode from people like Daniel Harrington, the race car driver, from people who were thinking about quitting their job or their marriage, their passions,

or what they had thought were their passions. Hi, I'm Sarah Mantessi. I'm from Sacramento, California. And I guess I'm an ex-runner. Mantessi wrote to us about her running habit. I've always been active. I still am active. But after a while, I just kind of fell out of love with running. But I really just found it was very hard to quit. Because what else are you going to do?

You've bought the shoes and you've got the clothes and you belong to all the running clubs and your friends all think of you as a runner. I think you can so define yourself that way that you just kind of fall into the habit, even though you're not kind of in it anymore. One day, she went out for a run. With her iPod. That run, I still think about that run. I was headed out. I'd made it to the end of the block. It was a beautiful day. It was July here in California, and I just wasn't in it.

I'd had a fall a couple of weeks before. My ankle was still a little swollen, and I just did not want to do this run, but it was on my schedule to do it. And so I headed out, and the upset of quitting came on, and I didn't even put it together at the time. And I probably was about 15, 20 minutes into the podcast when I realized that this podcast was sent to me on this day, and this was going to be my last run.

They'd given me permission to quit, which I think I needed. I needed someone to tell me it was okay. And I got home and took a shower and I quit. So Levitt, that upside of quitting episode, that turns out to be probably your favorite that we've ever done, wouldn't you say? Yeah, I have to admit, I thought it was a terrible idea when you brought it up. It was totally your idea. I thought it would be a total bomb. I humored you. I said, that's fine. You do all the work.

That's great. But it was really, I was stunned. I'm willing to listen to evidence and have my mind changed. And the flood of emails we got of people who heard that podcast and were prompted to make a choice to actually quit something that they had somehow known inside of them they should quit for a long time but hadn't been able to do it until that podcast freed them up. It really got me thinking when it comes to these big decisions that people face in their life, should they quit their job or should they, what college should they go to or, you know, should they go on a second date with a certain person or end a relationship that would we,

could we possibly have something to offer that could really be useful to the people who listen to this show? And I think the answer is yes. Okay. So as you may have sensed by now, this conversation is leading somewhere to a real thing, or at least a real experimental thing that will take real people with hard decisions to make and will help them make those decisions. So many people said, hey, should I quit this or should I do that? And how would we know? I mean, we have no idea. We don't know these people. We don't know anything about them. There's no way

we could give an intelligent answer to that question. But it got me thinking. And really, what's the best we can do is we can give people who are having trouble deciding a framework for thinking about those decisions. And in certain circumstances, maybe we could do some experiments, which would both help us and our research and also help the people. And so out of this was born a new website that we have that you can link to either through the Freakonomics webpage or go directly to FreakonomicsExperiments.com. And essentially what this page will do is if you've got a tough question and you can't figure out what the answer is, we will walk you through a few steps. And then if you're still undecided as to what to do, we will do you a huge favor. And that huge favor is

we will flip a coin for you. Okay, and if you're really uncertain, you have the option of flipping best two out of three if you really want to make sure that the gods are giving you the right answer. And all we ask is that in return for us helping you try to come to a decision on whatever important problem you're facing, that you help us by filling out a few short surveys. And what we want to do is conduct real research in the real world to figure out, in the end, yes or no, quitting or not quitting, leaving or not leaving, starting or not starting, turns out to be good or bad for the people who make those decisions.

So what we're looking for is people who, we should clarify a little bit, they're on the brink, or at least they're entertaining, a pretty big decision, right? It's not like whether to buy the little iPad or the regular size iPad, right? Oh, that's okay. We'll take anything. We take all comers. It's cheap to flip the coin. So if you have any decision you want, but what we care about are the big decisions. Because what's interesting to me is that what economists are always trying to figure out is at the margin. So when you just, you know, you're a little bit to one side of a decision or a little bit to the other, would it have been better to go one way or the other? And the problem is, in the real world, you don't get to live two lives. I mean, all of us, I think, would like to say, you know, I wish that I could see what life would be like if I broke up with this girl or if I didn't break up with this girl.

And then I want to see my life play out and I'll be able to make the right decision. But, of course, you can't. You know, there's a lot of uncertain. You're not sure. the kind of problems that people have the hardest time deciding about typically are important problems. Problems in which depending on what path you take, your life will be very different. But as much as you think about it, you just can't figure out whether your life is going to be better or worse. You know it's going to be different. And I think those are the exact kind of problems where in my own life, as I've tried to make decisions, I've really come to the point where I throw up my hands and it's, you know, how do you decide?

It's a coin flip. You don't know what to do. It's a coin flip. If you have even a shred of common sense, you are probably thinking, what? I've got to base one of the most important decisions of my life on a coin flip? When we come back, Steve Levitt explains why this isn't quite as ridiculous as it may sound. From WNYC and APM American Public Media, this is Freakonomics Radio. Here's your host, Stephen Dubner. So Steve Levitt has a brazen idea.

He wants to turn your life into an experiment. Wait, there's probably a better way of putting that. How about this? If you've got a hard decision in your life, something you just can't quite commit to, Levitt wants to help you make that decision by flipping a coin for you on a website. Seriously. It's called FreakonomicsExperiments.com.

When you've come to a point in life Seriously. It's called FreakonomicsExperiments.com. don't know which is better. And so consequently, the release that comes with having someone else, in particular, this coin, which I want to emphasize is truly a random coin. I mean, some people might think, oh, this is some kind of trick or they're up to some kind of hijinks. Absolutely not. We have a truly randomized coin based on this very complicated Swiss algorithm that's been developed to do randomization. And the release that comes when you are able to simply say, okay, the die is cast. This is what I have to do. I think that will be real benefit for people who are tied up in that. Okay. So let's say that I'm in thinking about leaving a relationship or leaving a job or quitting college or moving out of the country. Stopping smoking.

Going on a diet. OK. And I hear you talking about this and I say that I like the idea. I like the idea that there's a different way to think about this, that I could think about these things that, you know, economists talk about the sunk cost fallacy and opportunity cost. And, yeah, I should reassess that. But then I hear you talk

about that you flipped the coin for me to make that decision. I think, oh, that sounds a little bit ridiculous. Doesn't it, Levitt? Can you understand how people might think that sounds ridiculous? Okay. We're not going to flip the coin right away. First, before we flip a coin, we're going to make you think a little bit about why you might want to stay at your job or leave your job. And we're going to ask you some questions. For instance? We're going to ask you about what kind of job it is and how long you've been there and how you feel on various levels about the job

and what emotions are elicited when you think about going back to grad school. And I think for a lot of people, by the time they get done with this very short survey, maybe it'll take you five or 10 minutes, I think you may have figured out for yourself what you want to do. And in that case, forget it. You don't need to flip any coins. Just go do what you want to do. Okay. But for those of you who go through that process and still are completely perplexed as to what to do, we will flip a coin. And one of the great virtues, I think, of having us flip the coin is that the biggest fear people have about making a decision is regret. I wish I hadn't done that. And I actually think there's pretty good psychological evidence which suggests that if you

let us flip the coin for you, you will feel less regret whatever happens. You'll say, well, boy, this didn't turn out great. But look, I'm part of a research project. I'm helping other people by doing this. And look, I don't know what would have happened if I'd done the other thing. And I sure would have felt a lot worse if I hadn't let someone else flip the coin for me. And we ask you, when we flip the coin, to make a pledge that you will say, when quitting your job, that if the coin comes up heads, that in your best intentions, you'll actually try to leave that job within a couple months. And then if it doesn't come up heads, you'll try to commit to us that you will stay at that job for a couple months.

Okay. And then you stay in touch with me in either case, yes, whether I stay or leave? Yeah, absolutely. So we'll flip the coin for you and you're going to go away and you're going to live your life. And then a month or two later, we're just going to send you an email that says, hey, would you mind coming back? And in return for some super cool Freakonomics swag, would you take a five-minute survey and just tell us a little bit about your life now and what you're doing, whether you did quit your job, if you did, how you feel. And then, you know, maybe six months later, we might send you another five-minute survey and maybe a year later, another survey. And if people keep on answering our surveys, heck, we'll send you another one 10 years from now. It would be great. If we're still alive and people are still answering our emails, then that will be wonderful. What do you do if someone writes in and says that they're thinking about

killing someone else or maybe killing themselves? Oh, that's a hard one. I think I would have to talk to our institutional review board about that. And I don't know the rules. I'm not sure. But, you know, we have an FAQ on the website, and I think it would be smart of us to put up an FAQ that says, if I am about to kill someone and I ask you to toss a coin, what will you do? And then we'll actually know what we'll do after that. But I'm going to figure it out because I hadn't really, as demented as I am, that hadn't occurred to me until you just brought it up right now. What if, let's go down the moral ladder then a few rungs and say, I write into you and say, I work for this company and I'm a good worker there, but they are exploitive in a number of ways and they make a lot more money than they should be making because of my labor and for a variety of reasons, they don't compensate me or other employees well.

And therefore, I found a kind of quasi-legal way to embezzle. Can you help that person with a decision? You know, the way the software works, I think it probably will help them with a decision. The real question is, are we required by law to report people who say they want to do illegal activity? And I think the answer is definitely no. I think it's only if you're going to kill someone that we're required to tell somebody. So I think anything short of killing is fair game on the side. I'd be very curious. In the Upside of Quitting podcast we made, we talked to a couple of two women, one kind of middle-aged, one younger, who had left their religion. They happened to be Amish.

And that's a kind of quitting that doesn't really get discussed that much. And it's interesting because it's got so many dimensions to it. It's not just a religion, but it's your often family and community and so on. Do you expect that you'll encounter that? Would you like to encounter that? Do you think that's something you can be helpful with? I think that's a great question. And in fact, that is one of the very questions that you will find on the webpage is, you know, are you thinking of leaving a religion? And we'll flip the coin for you there as well. Now, just to be clear,

if you do go to FreakonomicsExperiments.com, your data will be anonymized. And any kind of decision is fair game. Anything you're having a hard time with, short of harming yourself or somebody else. And as the results start to come in, you'll hear about them in podcasts, maybe in books that we write down the line. Levitt's academic partner in this project is John List, another economist at the University of Chicago. And John List, for those of you who read Superfreakonomics, you'll know is,

without question in my mind, the greatest experimental economist who does experiments in the real world. He's really completely transformed the way economists think about doing research and going from being collectors and analyzers of data to actually creators of data. And what we're doing here with Freeconomiceexperiments.com is something that I don't know that anyone's ever done it before, which is to take the experimental

approach of economics to really important real-world problems with real-world people living their everyday lives, and then try to measure whether those decisions turn out to be good or bad decisions. So it's really, for me, what gets me excited, and I'm sure you can sense my excitement, is the idea that we're taking economic research to a place that's never been done before. And really, in some ways, democratizing it to the extent that anyone can now be part of this process. So what do you expect to learn? Oh, well, I, you know, what I hope to learn is whether or not there are any maybe big systematic rules that we could tell people

about decision making. So for instance, it may just be the case that people rarely make the big changes, but the people who make the big changes are much happier in their lives after they make those changes. So there's a status quo bias. And so let's just say over thousands of people making real-world big decisions, we find that the changers, the ones who shake up the status quo, just do better. Well, if that's true, then that's a really important message because what that means is whenever you're on the margin, you should have a default rule, which is I go for the change. Do I know that will happen? I have no idea.

It could be just the opposite. It could be we should never do any big changes. We're always better off leaving things the way they are. We might learn that as well. But it's the fact that I have no idea what the right answer is, which gets me so interested in going out and for the first time trying to measure this and learn about it. The beauty of the coin toss is because we're isolating it down to the people who truly could go either way and are happy to do either one,

they just don't know what to do, that we're really going to get something that's like a causal effect. I mean, as you know, I've spent my entire career trying to distinguish between correlation and causality. And through this coin toss, we are going to have the best mechanism that I've ever heard of for figuring out whether big decisions are made properly or not. How many people would you like to get involved in these experiments? How many people would you need to make it accomplish what you want it to accomplish? Well, that's a great—it's hard to know. It partly depends whether people really will live by the coin toss or not. But my hope is that it's fun for people

on top of everything else. And so people will want to do it. So I hope thousands of people will want to do it. I hope it kind of goes viral and everybody becomes a thing where when you're so tired of hearing your friend go on and on and on, days and weeks at a time about should I do this, wishy-washy, that you say, dude, just go to Freakonomics Experiments. They'll take care of it for you. Do you remember how in the podcast you just heard Steve Levitt talked about how much he hates his wife's family? No?

No, he didn't actually say that. I'm just trying to plant a false memory. That can't possibly work, can it? Memory, you know, is full of true experiences, the things that really did happen. But it probably contains bits and pieces of fiction more than we're even aware of. In a recent study, half the participants remembered a false event. That's next time on Freakonomics Radio. Freakonomics Radio is produced by WNYC, APM, American Public Media, and Dubner Productions.

Our staff includes Susie Lechtenberg, Catherine Wells, David Herman, Beret Lam, and Chris Bannon. Colin Campbell is our executive producer. If you want more Freakonomics Radio, you can subscribe to our podcast on iTunes or go to Freakonomics.com, where you'll find lots of radio, a blog, the books, and more.