Freakonomics Radio - 97. Lying to Ourselves

Episode Date: October 17, 2012

We rely on polls and surveys to tell us how people will behave in the future. Too bad they're completely unreliable.

From APM, American Public Media, and WNYC, this is Freakonomics Radio on Marketplace. Here's the host of Marketplace, Kai Risdahl. Time now for a little Freakonomics Radio. It's that moment every couple of weeks we talk to Stephen Dubner, the co-author of the books and the blog of the same name. It is the hidden side of everything. Dubner, it's good to have you back. Kai Rizal, thank you for having me back. I know we're all excited about the second presidential debate last night.

Yes, it was a good one. Don't you think? Interesting. It was a lot of, I thought, scintillating talk about taxation in particular. You need to get out more, but OK. Turn you. It did get me to thinking, however, about lying. Now, I don't mean the lying of the sort that each campaign is accusing the other of doing every two seconds. I mean, Kai, lying to ourselves.

All right. Go ahead because I don't know. I have no idea where you're going. All right. Let me explain. A couple weeks ago, I saw a poll on Yahoo Finance. It asked people – it said that France's wealthiest man is talking about leaving the country to avoid high taxes there. Would you ever leave the U.S., it asked, to avoid high taxation?

Now, about a third of the respondents to this poll said no, I would never leave. But everyone else was willing to entertain the idea. In fact, another third said they would leave the U.S. if taxes were to go higher than even 40 percent, which isn't really that much of a stretch. Yeah, from where they are now. All right. So I'm going to show off here. You ready? I'm ready. All right. So this is the Laffer curve, right? Arthur Laffer, the economist. And he said, you know, it in theory shows the point at which high taxes make people stop trying to work hard and make money. That is the theory. The Laffer curve theory is a bit, however, like a unicorn.

We don't really know where that cutoff point is. Sometimes they may be in California where you live, I think more real than in some places. I did ask my Economist co-author Steve Levitt what he would do if, for instance, he had to pay, let's say, 50% in taxes. All right. I wouldn't leave the U.S., but I definitely would work less hard. Maybe not at 50 percent, but at 70 or 80 percent, I would spend a lot more time playing golf and a lot less time trying to make money. That's for sure. Oh, please.

First of all, the man has what, four or five children? How are you going to feed four or five kids making less money? You don't believe him. Well, here's what I think. I think he's an economist and he sees this theory. And so he's talking to the theory. I wouldn't say you're wrong there. But let me let me also say this. We lie to ourselves all the time. We're constantly trying to predict how we're going to behave in the future in the you know, when something happens, a tax hike, a price change, a presidential election. And we're almost always wrong. You take

something as simple as driving, okay? AAA, the American Automobile Association, is constantly surveying drivers. They'll say something like, you know, if gas prices stay as high as they are now, go up, will you drive less? And people always say, oh, absolutely. And then you look at the data, and they do not drive less. Here's Joel Weichsel with AAA. I think there may be people who lie to themselves or imagine that they're doing something that they're not. But I think there are also people who maybe forget about things that they've done. Forget it. He's being very polite and just saying we're lying. That's what he's saying. It's a synonym. But I will say this. I don't believe it's necessarily intentional.

OK, one problem with any survey is that the power of suggestion comes into play. All right. So, well, let's get it back to the debate then, Dubner, and talk about this this idea of polling and people lying to themselves. Do political polls change behavior, do you think? Quite possibly. And also, we're probably just getting a lot of answers that don't reflect reality. OK, you think about it. What every poll relies on is one stranger telling the truth to another stranger about the future. OK, so there are many ways in which that answer can go wrong. Nate Silver runs the blog FiveThirtyEight.com. We had him on a couple of weeks ago. He takes all these different political polls and analyzes them and weights them depending on how good a poll they are. He says, Nate Silver says it can be hard even to figure out whether a given person will vote at all.

You can ask Americans and say, are you going to vote? But people lie about that, just like they lie about always washing their hands or using condoms or never running a red light or anything else. I don't even know what to make of this. Are you depressed yet, Guy? Is hope then lost for being able to do this kind of stuff? I wouldn't say hope is quite lost, but I will say this. The cardinal rule should be don't listen to what people say, right? Watch what they do.

So the next time you hear, you know, a friend of yours say, oh, man, if that guy gets elected president, I am out of here. I'm moving to Canada. You go and check back in a year or so. I promise you the odds are pretty good he hasn't budged an inch, guys. Stephen Dubner, he'll be back in a couple of weeks. Freakonomics.com is the website. We'll see you, man, if you're still in the country.

Thanks, guys. See you. See you. In our next Freakonomics Radio podcast, it's election time. You want to know what economists are thinking? I almost never actually listen to politicians. I sometimes read transcripts. And when I read those transcripts, no matter what the party the person is, I just think, like, I wouldn't give you a C in my economics class. This is just not acceptable for a person to be saying.

It's just so wrong. That's coming up on the next Freakonomics Radio podcast. Thank you.