Russ Roberts on Life as an Economics Educator

Conversations with Tyler is produced by the Mercatus Center at George Mason University, bridging the gap between academic ideas and real-world problems. Learn more at mercatus.org. And for more conversations, including videos, transcripts, and upcoming dates, visit conversationswithtyler.com. Today, I'm very honored to be here with Russ Roberts. Russ is an old friend of mine, a former colleague. He is one of the world's leading economic educators, if not the leading. He is currently a research fellow at Stanford University's Hoover Institution. Russ runs a very famous podcast, EconTalk. He is the godfather of economics podcasting. He has produced some amazing rap videos, written numerous significant books, including several novels outlining economic concepts and has done much, much more. Welcome, Russ.

It's great to be here, Tyler Cowen. Can we just go home now? I don't think it'll— that's the high point for me, that introduction. I appreciate that.

Now, you've argued in the past that the actual increase in living standards over, say, the last 50 years, it might be greater than what we're measuring or at least greater than what many people claim is the case. If that's true and growth is so strong, Is there actually any case left for fiscal conservatism? Because if the growth rate of the economy is higher than the government's borrowing rate, which is the case even under the pessimistic numbers, why do we need to worry about budget deficits?

I wouldn't say that's the most important thing to worry about. You're right, I do think that the worry du jour, the thing that I think is the sort of mainstream everyone knows worry, is that a rising tide no longer lifts all boats. And I think that's absolutely wrong. I think a rising tide has definitely lifted most boats widely across the income distribution and that the belief that is otherwise is the result of a selective use of certain kinds of data that are imperfect. But then if it's really true that our— well, let me say two things actually. One is that my optimism, my cheery view of growth in the past isn't just that we've mismeasured inflation. It's that we've mismeasured the gains to the average American because of changes in household structure, for example, which I think is probably the most important fact. Just take a simple example. Everyone's married and all households have two people in them, whether they're both earners or not, but that makes it easiest just to assume they're both working. Now all of a sudden you increase the divorce rate or lower the marriage rate, two things that have actually happened in America dramatically over the last— 40 years, especially among low-education individuals, people who didn't finish high school or have finished high school but didn't graduate college, you start adding additional households in the left-hand tail of the distribution. That alone is going— a disproportionate share because of that difference in the marriage and divorce rate. That's going to pull the median down. As I show that the median has moved to the left. And I think that failure to recognize that is an extraordinary failure on the part of our profession that so many studies have been done on quintiles and medians. Now, you should use the median relative to the average because the median takes out outliers, the high right-hand tail. Good idea, but then you still have this other problem that people don't acknowledge or seem to pay attention to, which is that your analysis is now going to be distorted by changes in household structure. So my first claim is that—

Yeah, but say that's all true. Can the government just spend a lot more money and borrow and we'll just grow out of the debt? Not much crowding out?

Well, it depends what the government spends the money on. I've always felt that the real cost isn't the interest payments but the activity of the government. Transfers, which is, I think, probably not so distortionary relative to doing stuff. Maybe that's okay, but I think government does a lot of stuff. That means lower consumption for the rest of us except the people who are the beneficiaries. Government, if they don't spend the money wisely, if they dig holes and fill them back in, I don't think that's a good idea. So I don't think the— I think the proper tax that the government is taking on the private sector is the amount it spends, not what it borrows or what it taxes. So we have two ways to finance government taxes today. Taxes tomorrow and the mix is not as important to me as how— what we do with the money that government actually spends unless of course we go to the point of bankruptcy, which case, that's a whole different story and I think it's bizarre to pick on our profession again. It's bizarre how many economists are willing to say it doesn't matter. It doesn't make sense to me.

If government spending had to be increased by say 20%, what would you spend the money on?

Do I still beat my wife? What kind of a question is that, Tyler? I don't understand that.

If it had to be where it had to be and they call you in, Ross, how should we spend the money?

We know you think this is a terrible idea, but we want to minimize that. We want to get the biggest bang for our buck. One thing I would do is I'd seed some prizes and fund some prizes for breakthroughs in technology. I think that would be a good use of the money relative to what we— what some alternatives. I try to think of some ways to get better outcomes in education using that money rather than just say increasing expenditure across the board and try to find some ways to incentivize schools to get that money not by scores, say on tests, but by other methods. What else would I spend it on? Well, other than infrastructure, of course, which we're woefully inadequate. I don't know if you know it, but American Society of Engineers gave us like I think a D. A D minus, I think. A D minus. Well, yeah, they would. So I don't— there are some things of infrastructure we could we could improve, of course. Whether best done at the federal level would be a different question. I don't think that's the case generally.

Are there ways to use incentives to lower the rate of suicide, which is today a rising epidemic, or is that a hopeless battle?

I'm going to pick on your question if I could. I think the natural impulse of many economists is to look at a symptom of a problem and figure out a way to play with that. So for example, some workers don't have enough skills. They don't get enough education, so they have a low market wage. So how do we fix that? Well, we either pass a law that says they have to earn a certain amount or we give them a subsidy to that. We don't spend as much time, I believe, thinking about how would we improve the education and the skill set. Now people worry about that, but that's not necessarily the central worry. I think it should be the central worry. As you know, there's a number of people Talking now about the failure of SSRIs, the drugs that try to fight depression, to be effective. And recent article, recent book, I think, and people writing about that book, I think the author's Anne Harrison, you know, making the point that in the old days, psychiatrists had this model that mental illness was a chemical imbalance. And this drug, this psychiatric attempt to fix it, repairs the imbalance. Turns out it's not true. We don't have any clinical measures of imbalance that are responsible for mental illness. Some of the drugs might work. There's debate about how effective they are, of course, but they're definitely not doing what they claim to do. And when you ask psychiatrists, "What about that claim that things are out of balance?" They say, "Oh, just a metaphor." So suicide, is a symptom of something horrible, something very, very wrong with us, with people's lives. And as you said, you called it an epidemic. I looked at the data recently. It's hard to believe the increase over a very short period of time. Often that's due to a change in the way data is collected or change the way data is collected across states, that different states reporting in different ways. The fact that it's going up nationwide, if it's really true and it's not a data compositional issue, is quite striking. It should be almost all we're talking about, trying to figure out why that is. What are the characteristics of the— and I think the rate's growing quite rapidly among younger people.

That's correct.

And that's deeply disturbing. Now, some people have pointed out that a TV show may have stimulated some imitative behavior. Yeah, I think it's 13 Reasons Why, that was a show that encouraged kids to think it's okay. I don't know. We don't know, but wouldn't you kind of want to pay attention to that before you said, let's try to alter this symptom? So I'd want to go to the core if I could. If I couldn't, maybe it'd be worthwhile to subsidize. So what would you do? What would be an idea of a subsidy for suicide? If you don't kill yourself, we'll give you money. If you do kill yourself, we'll burn down your parents' house. No, that won't work. That could go the other way. That could be a moral hazard problem. What would be the— what kind of— what do you have in mind?

Maybe lowering the sanctions for getting mental healthcare. So right now there's some stigma.

Oh, stigma. So culturally, that's a good idea. I like that. We reduced it a lot in the last 50 years. You could argue we haven't reduced it as far as it could be reduced. Uh, we've done a lot to try to convince people it's an illness rather than a lack of mental fortitude or whatever. A lot of mental issues have been put into the box of illness. It's still a pretty big problem and I'd also argue I don't think we're that good at altering culture in knowable ways. So I like the idea of it. Interesting.

Which book by Hayek has influenced you the most?

That would be The Fatal Conceit. It's certainly not The Road to Serfdom, which is the book that everyone tells me they've read or that they plan to read and I say, "Don't read it. It's really slow going. It's not that interesting. The style is even more turgid than some of Hayek's other work." tell people to read his essays. I think the right book to read is Individualism and Economic Order. It's the best place to get acquainted with Hayek. But for me, The Fatal Conceit is an incredible book. I think it's 108 pages in the edition I usually look at or maybe 118. It's a very short book. So you think, "Well, that's accessible." You give it to people. I used to give it away a lot because I loved it and nobody read it. They'd read a few pages. Reason is, is that every page is a little bit dense. It's all interesting, but if you don't— if you're not really interested in it, it's pretty slow going. But I do love that book, and I would say it's by far the most influential Hayek book I've read.

Now, there's somewhat of a—

Oh, by the way, some people said he didn't write it, I should add, of course.

Bill Bartley had some role, but it sounds like Hayek to me.

Yeah, some of it. Yeah. I like the idea of it being Hayek.

There's a somewhat historicist argument in that book that successful societies somehow have higher population. I'm not even sure. How Hayek states it or what he meant, but do you attach any credence to that at all?

No, I don't. And I— he also, when I read it, I don't know, 20 years or so, 15 years or so ago, I read it quite late and was totally taken by it, but at the time I was uneasy with— I think it's in there and it's a number of his other books that successful societies will thrive in competition with other sides, whether it's in population or other measures. There's a lot of ruin in a nation, as Adam Smith said. There's plenty of wiggle room for for countries to fail horribly and still, quote, "do better than their neighbors." So I don't know. That argument of cultural competition seems a bit overconfident.

Which part of behavioral economics has turned out to be the most interesting?

It's funny. I'm not a big fan of behavioral economics as a piece of economics, formal academic discipline. I'm a big fan of it as a way to think about life and it seems a bit strange to make that division perhaps. I feel like a lot of the behavioral economists play gotcha. Oh, people aren't rational. No kidding. There's this view that somehow our models, whether that's our, mine, and yours, or ours, mine, and somebody else's, or mainstream economics, or so-called price theory, microeconomics, they rely on perfect competition, rational consumers. And since those things don't hold, we can ignore all the conclusions. And I will say that one of the things that I loved when I came to George Mason Tyler Cowen in 2003 was how happy people were to take a piece of behavioral economics to say, "Well, in this area, people don't maybe work as rationally as in other areas and therefore I could assume this, that, and the other," as opposed to like wearing it as a religion in a form of clothing that you always had on. I also feel like much of the behavioral economics field has been damaged by the replication crisis in psychology. Now, I would think that way because I'm not as big a fan of behavioral economics as some people are. When I claim that, people will offer something and say, "Well, but this finding still holds up, doesn't it?" I'll think, "Yeah, sometimes in a laboratory in certain situations with a large enough sample, maybe." So I think for me, it's more of a perspective than a discipline. In many ways, I think its promise has been Disappointing, right? To gore neoclassical economics by proving that people aren't totally rational seems like a very unexciting finding, but it is greeted with great glee in some circles.

As a Hayekian, how can we do science better?

I think that's a trick question. Hayek, of course, was concerned with scientism, the illusion that what we're doing was scientific. I'm a big fan of The Pretense of Knowledge, his Nobel Prize acceptance speech.

But not in the social sciences. Actual hard science. How can we as a society have a higher rate of scientific advance? You get to change things.

Well, I'll cheat for a minute and say that what I'll change is for people to be more willing to accept the possibility that they're wrong, which is not a policy lever that we actually have control of. You know, I'm a big fan of Richard Feynman's quote, "The first thing is not to fool yourself, and you are the easiest person to fool." We romanticize science a great deal, and I think we romanticize the objectivity of academics and scientific researchers. They have their own pet theories, their own fads, their own reputations. Just— it's very hard to do science, very hard to do good science. So if you ask me what policy lever I choose, it's not obvious to me. I will say that I'm not happy with the patent situation, and particularly in the case of pharmaceuticals. So I think there is some research there. One thing alarms me in the pharmaceutical business right now I think is that the return to certain research and development isn't as— is too high. The patent system I think and the restrictions on generics have made research in pharmaceuticals less productive than it would otherwise be. That'd be one thing I would like to change. I would encourage changing the patent landscape. I'm a big fan, as I think you are, of prizes to solve problems. There's a wonderful website called InnoCentive that just puts up prizes, $10,000, $25,000. I saw $100,000.

I don't know what the—

I don't know if that's the top or whether there are probably some that are bigger where creative people from outside the field that's usually being looked at come up with creative ideas. Other than that, I'm not sure what we can do. I think else comes to my mind. What would you do, Tyler?

To encourage science?

Yeah.

Our scientific institutions are too bureaucratic. They fund too many older scientists. They have too many layers of bureaucracy. I would unpack some of those and start all over again. And have mandates about funding riskier ideas, younger principal investigators. Perhaps unlike you, I think government funding of science on average works, though I don't think we're doing it especially well right now. IP, I have mixed feelings on. Some areas I think it should be tighter, others looser. But I'm not sure that's the main problem. It's the number of yeses you need to get something done that I tend to focus on as the main barrier.

Yeah. Well, let me respond to the point about government. Obviously, well-run government science is fabulous. The problem is it's not so well run, and we could talk about if we could actually make it better, would it be more worth— would it be worthwhile to spend even more money than we do now? And the answer, of course, is probably, but it's really hard to do. As you say, it's too bureaucratic. Well, there's a reason for that. It's done through the government. There's a certain way that you rise to the top of that hand-out-the-money game. There's a certain set of reputations. They're not big on risk-taking.

But it seems to me it was once better and something has changed. And it may be there's never a way back, but it seems some government institutions can refresh themselves over time.

Don't you think they get more sclerotic as time passes? So one way to think about how to improve that is to sunset them, right? Just say we're going to start from scratch, which is hard to do. I'm not sure how that would be done and what would— what would you change? To me, it's like the public school system. Certain habits have become ingrained in our educational philosophy. There's a lot of safety and lack of risk-taking, obviously, for good reasons on the part of the people involved. But I'd like to fund more risk-takers, more outside-the-box thinkers. And of course, one way to argue for that is to let foundations and philanthropic organizations do that, and they are. Obviously, there's a lot of R&D going on in America right now that's funded not by the government, not by corporations, but by foundations, which is encouraging. They too become sclerotic, of course, after a while, which is a whole—

They're sometimes the worst offenders of that.

Yeah. Well, it's very hard to— I find in my experience, it's very hard for— as much as I like the nonprofit world as an alternative to government and business, in my experience, they often tend toward mission creep to expand budget rather than to achieve their— what was their original goal and what the problem they were trying to solve. And that's a tragedy. It's evidently a very human tragedy. It's very hard to avoid that. So I think that's a very good reason for philanthropists to sunset their foundations and have them die after a certain amount of time.

Here's a reader question. "In which areas are you more pro-regulation than the average American?" And they mean government regulation.

Than the average American?

Yes.

I can't think of any. Can you help me out there, Tyler?

Well, I'm not sure I know all of your views.

What would you guess? What would be— give me some things to think about there. In general, I think government should be smaller and regulations should be smaller. Let me give you a trick answer then. I'll let you feed me some. Many people believe that the financial crisis was caused by deregulation and I think that's a misreading of the evidence. It's true that some pieces of the financial sector were deregulated, but government intervention in the financial sector was quite significant. In the advance of the crisis. In particular, the bailouts that we did of past failed financial institutions I think encouraged lenders to be more careless with how they lent their money, both mainly to other institutions, not so much to people out in the world like you and me. So deregulation is a little bit tricky. So I'm not— so I just wanted to get that in. I'm not sure how that pertains to the question. It does probably in some way, but Give me something I should be more regulatory about. Baseball? Baseball, of course.

I would say animal welfare, government should have a larger role, but also what counts as a tax-exempt institution. I would prefer our government be stricter.

Oh, I'm with you there.

Well, that's more regulation.

Kind of, I guess. Kind of.

Higher capital requirements for banks.

Okay, I'm okay with that. Yeah, that would probably be— that's a good one. If we can't have— I prefer a laissez-faire world for banks, more or less. If we can't credibly promise not to bail out banks, if that's the case, we live in a world where banks get to keep their profits and put their losses on taxpayers. Bad world. So a more regulated world would be better than the world we live in. Not as good as my ideal world though, but there's a case where I would be in favor, like you just said, more capital requirements. You're on a roll. See what else you can come up with for me.

Spending more money for tax enforcement, especially on the wealthy.—

not the worst thing in the world. Yeah.

You can spend a dollar and bring in several times that.

I don't think rich people cheat on their taxes, do you?

Cheat's a tricky word, but I think we could spend more money and probably collect more than pay for itself.

That's probably true.

So we're actually big fans of government regulation.

Yeah, we've really expanded the tent here.

Podcasting.

Yeah.

What's the largest change of heart you've had as the result of an EconTalk podcast conversation?

I don't think it's any one talk. What I have found extraordinary about interviewing somebody once a week for now 13 years is it exposes you to an enormously wider range of ideas and insights than you would normally— than I would normally have been exposed to. I assume that's true for you too, which means that in, I don't know, 10 or 12 years, Tyler, you're going to be even smarter than you are now, which is very cool. But what I realized, and it doesn't— It's not a lightning bolt, it's just over time. I realized at some point that my views had changed on a bunch of things. And if I had to say why, it's because I've talked to a lot of people and read a lot of books. And early on in EconTalk, not early on, but at some point in EconTalk, I realized I wanted to be open about my biases. And I discovered that by being open about my biases, I had to confront them a little bit because here I am saying them out loud. And I realized, well, gee, do I really believe this now? Something I believed, say, a long time ago. And so as a result of the accumulation of those conversations, my views on a number of things I think have changed quite dramatically.

And what's the net shift there? How would you characterize it other than more diverse?

I'm less in love with economic theory than I was when I was 26 years old, fresh out of grad school. I used to believe that— it's embarrassing to admit this and I hear people claim it and I think it was true of me that I actually thought my models described the world as opposed to gave me insight into the world. I actually thought this is the way the world works. And of course sometimes it does, but the relentless application of price theory to the world, which is the way I was trained at the University of Chicago proudly, which has helped me understand lots of things I wouldn't otherwise understand, I think a little too overconfident. And so I'm much more open to imperfect aspects of economic theory. I've become disenchanted with economics in general in the following sense. We tend to— we have this idea, which is a very strange idea when you go deeply into it, which is we teach our students— I stopped doing it in undergraduate, but most people still do, and certainly in graduate school, we teach them something called utility theory. The real reason I think we developed utility theory in economics at the end of the 19th century, early part of the 20th century, was to explain why people buy what they buy. We're trying to generate demand curves and explain why when a price of some good goes up, you buy more of a different type of good. We call that a substitute. There might be— you buy less of it, we call that a complement. And so we were very focused on what I would call commercial behavior, what people do with their money. And that somehow we made a leap from that bizarre, narrow We made a bizarre leap from that narrow focus to arguing that we have something to say about people's well-being. And you think about how strange that is? Now, if I said to you, does what people buy contribute to their well-being? Of course it does. And we want to buy things that add more to our well-being than things that add less. We all understand that's reasonable. Most people would agree with that. Would you then jump to the fact, to the conclusion, that what people consume determines how happy they are? No, that would be ludicrous. Adam Smith understood that in 1759, that that isn't the case. And if you asked economists, is that true? Of course not. No, when I mean utility, I mean everything. I mean the non-monetary aspects of a job, for example, and the non-monetary aspects of the steak you cook at night for the romantic dinner. It's the romance that's more important than the consumption of the steak. Of course, we all know that. And yet somehow we've become the arbiters of how policy translates into wellbeing. I find that really deeply disturbing. When I was younger, it's like the fish in water. I didn't even know I was in that water. It was just the world I lived in. But now I look at it and I think— I look at the things that I think are important in America today that we ignore as economists. Tribalism, the feeling of belonging, the importance of community, conversation that right now that we're having, you and I, across the table and you're actually paying attention for a minute there instead of looking at your questions. Hard being the host of a podcast, folks. I know how it works. And those things are what really make our hearts sing. Pride, dignity, respect. They're clichés, but they're not in our models. So then you say, well, yeah, they're working in the background or we're holding them constant or they're not important for the question I'm looking at. But then we get to something like universal basic income. Where we say, "Okay, we're worried, say, because of, say, autonomous vehicles or artificial intelligence, that people aren't gonna be able to find work, but that's okay. Let's give a check." Like, who would say, "Oh, that's a good idea. That's a good substitute for a feeling of pride and agency and responsibility and dignity that a job well done provides." We'd say, "Well, that's absurd." And yet people on the left and the right have adopted the economist's view that says there's a function that translates stuff to wellbeing. And I think that's just, grotesque. So we're talking about things I've changed on, that'd be a big one. Obviously I've become much less enamored— my listeners know I've become much less enamored of statistical modeling, which, you know, again, when I was younger I thought, well, just the truth. Now it's true that the other side has their statistical models. Those are the bad models. Mine are the good ones. I have the good studies on my side. And I've, you know, I've come to reject that view. I don't, I don't think, I don't think any of them are very good. And more importantly, I don't think The reasons we hold the views we hold are due to the empirical results that we find from our models. It's true some people change their minds based on scientific evidence or studies, but in general, it's not really what happens much. And so it's deeply disturbing to me that our field has become so focused on advanced forms of econometrics as a way of understanding how the world works and to alter policy. I don't think we have enough skin in the game to do that, and I don't think we understand the relationships and causal connections as well as we think we do.

What's your all-time favorite EconTalk episode?

I have a couple. Christopher Hitchens on Orwell was a thrill. I did that face-to-face. He is one of the great talkers of our age, incredibly articulate. Richard Epstein with a British accent. Richard Epstein, I remember I interviewed him, I think it was on property rights. And I was— either I'd done 2 that day or I was just tired. I thought, I'm just going to let him go. In the first, I think, 9 minutes, he reels out a perfect set of paragraphs that could be an essay on property rights. Interviewing Milton Friedman was a thrill. One of my all-time favorites was the guy who does the potato chips for Northern California. O'Donohoe is his last name. Great episode where I learned a lot about industrial production and Frito-Lay strategies. He does Frito-Lay. Potato chips for Northern California. He was in charge of it. Let's see, any others that jump to mind? It was fun to interview Mark Halperin, my favorite novelist, living novelist. That was just a thrill. Interviewing Bill James, who taught me to love statistics and data and baseball, was an incredible thrill. And to get him to say that we— something like, he said something like, "We know 1,000th of what we could know," even though baseball is a very narrow— in baseball, which is a very narrow controlled environment. And I get a lot of flack for interviewing Nassim Taleb because his online persona seems to be different from mine. That's the way I'll say it judiciously. I've learned an immense amount from him.

We had a great interview with him.

I interviewed him a number of times where I said things to him repeating what he had said. He agreed that's what he had said. Later I realized, I don't think that's quite what he said. And I realized he'd said something quite a bit deeper. And I've just found that, I find that really, They're really fun.

A few questions related to religion, but feel free to pass, of course. How do you as a podcaster, economist, and education specialist read the Bible differently?

I could say as an economist, there's a lot of fun things in the Bible that are— that tell us things about incentives and behavior in ancient times. That's an untapped area, I think. There's a paper or two or three there, and of course a number of great economists have written either on the Bible or the Talmud, Robert Alman most notably. You know, there's a classic problem in, I wanna say Leviticus, where if your ox gores a neighbor's ox or gores a person, if it gores within your area versus a public area. Yeah, that's in Exodus. It's in Exodus?

After the commandments are issued and they're then elaborated.

Yeah, when I read that, Oh yeah, actually it's in— yeah, it is. It's right after the giving of the Ten Commandments. I think it's in Mishpatim is the section in the Jewish calendar. But I look at that as a Kosean, and I look at how there are some aspects of the rewards and punishments in that area that are a little bit puzzling, and I think Kose helps me understand that. It's a little easier to enforce some of those restrictions and punishments from having understood Kos. And most rabbis don't read Kos, so that's helpful, I think. Other than that, not sure what else would come to mind. But that's tort law basically is what those restrictions are. Those commandments are about tort law.

Epstein and Kos are in the Book of Exodus, I would say. Can one find classical liberalism in the Hebrew Bible?

Yoram Hazony would say you could. I don't know if you've read The Philosophy of Hebrew Scripture. It's an extraordinary, interesting totally different take on the Old Testament. There's classical liberalism in the sense, you know, there's some obvious places there's classical liberalism. You have to be careful, you know, the devil can quote scripture. There's a lot of things in the Bible that you can take in different directions. If you wanted to read it through classical liberal eyes, you would look at the decentralized nature of welfare. So for example, a farmer is not to cut the corners of the farmer's field, to leave them for the poor. If things fall that you're loading onto your truck, you have to leave those for the poor. Then of course, but there is a minimum expected 10% tithe to go toward communal institutions and to the poor as well. Big negative thoughts on monarchy in the Bible and centralized power generally. But I think you have to be careful when you look at Jewish law and in particular Talmudic law, you know, it's written for a community structure where people know each other, interact with each other in repeated ways. So when we look at, say, the restriction on charging interest, which is clearly a restriction to me, it's clearly a restriction to get you to be a more humane person to your neighbor. As your neighbor gets more distant, it's harder and harder to feel that. And so the rabbis found ways around that restriction because people were giving last year's The Economist reading the Bible and the Talmud, people weren't as eager to lend out money as they could be. And so there were ways to get around some of the interest restrictions or the restrictions of the Jubilee year. Every 50 years, all debts are eliminated and changes in land ownership. So it's a, you know, I think There's a lot of decentralized aspects to the Bible, but a lot of people read it a different way.

What are non-religious people missing in general?

Well, we live in a very interesting time. I think it's increasingly hard for a highly educated person to believe in God. It's a cliché that with the Enlightenment, a lot of people lost faith. They replaced that faith with a belief in science and the belief of humankind's ability to manipulate the world in godly ways. And yet religion has not died. I think David Foster Wallace says it best, "Everyone worships." So we as human beings like things that are larger than ourselves. We like belonging to causes that are more than just our daily lives. His advice is to pick one of the good— one of the bigger— actually any religion, actual religion rather than say beauty or money or fame. He says if you worship those, you'll find yourself deeply disappointed as you get older. Adam Smith would, I think, say the same thing in The Theory of Moral Sentiments. So when I ask what— we ask what are people missing? For me, a lot of religious belief in the modern age is two things. It's an ability to embrace some— a little bit of agnosticism, a little bit of intellectual humility to say I don't fully understand As a believer, I don't fully— it's not easy to fully embrace a belief in God in today's age. And that makes most people uncomfortable. They tend to either be— fundamentalism is very attractive, and then there's nothing. So those two extremes are very attractive. The in-between, which says, you know, I'm not sure there's a God, but I want to use religion as a way to express my sense of awe and wonder at being a human being alive in an extraordinary universe. That's a tough sell. That I think is the easiest sell to a thoughtful person in many ways. And it's a little bit like for me, in my experience, having an ear for music. Some people don't have an ear for music, doesn't speak to them, or for art, or for bitter beer. It just doesn't appeal to them. It doesn't make their neurons fire in a particular way. And I think religion may be like that as well. I think there's some people who are very prone to it, who find either transcendence or belief easier to embrace than for others. And so I would never say someone's missing something by not being religious, not leading a religious life. I will say that in my case, religion is a lot like marriage. And I say this as someone who is very happily married now for almost 30 years. We're doing this in front of a live audience, wild applause. If you ever mention how long you've been married, if it's more than a year, people applaud 'cause it's such an achievement, I guess. They don't realize it could be my wife's achievement, not mine. But at any rate, Any one day, you might wish it were otherwise. Any one day, as a religious Jew, there are days I wish I could have shrimp. There are days I wish I could watch the game on Saturday morning, Saturday afternoon on TV. There are times I wish I didn't feel different. But over a lifetime, it's a very powerful enricher of the texture of everyday life. I would say that's true of marriage and religion. Any one day, you might sometimes think it's a hard deal. Most days it's good or great. And then more importantly, over a longer period of time, it's deeply satisfying. And I think in today's world, those two institutions are struggling because for whatever reason, people are more interested in today. If I say to you, forgo this pleasure today and you'll have great pleasure tomorrow, that's a tough sell in today's world. It's like saying, in my case, I don't look at my cell phone for 25 hours over the Jewish Sabbath. What? It's crazy because on any non-Sabbath day, I look at my phone compulsively. Really? Why would you give that up? How can you give that up? And yet it's been a good trade for me. So that's all I can say. I can't say whether it's good for other people. You know, a lot of people, I think, find the Sabbath idea very appealing, but if you don't believe in God, it's really hard to keep it with any regularity. So I think, again, I would emphasize, you don't have to embrace fundamentalism to have a taste of the transcendent in your life. And I think it's an important part of being a human being. Recently read a book on neuroscience by Robert Burton. You know, I think there are 3 ways that we stimulate our brain's love of the transcendent. Psychedelics, mushrooms and LSD, direct brain stimulation. You can give someone an out-of-body feeling of being part of something enormous, I think, through a brain stimulus, according to Burton, and religion. And the value of religion is it's better than a knife and it's probably better than mushrooms, at least if you're worried about some of the side effects. But I just think it's part of being human. And if you struggle to make that leap of faith, which I think everyone should struggle, you don't have to make the leap of faith. You could just say, "I'm open to the possibility that the reason there's something rather than nothing is because some force started it." And then you need to choose a religion, which, you know, you need an institutional framework for experiencing that. And it's, that's, you know, Works for me, might not work for you.

Let's try some overrated versus underrated. Saul Bellow.

So overrated for me. It's interesting you picked him. Just talking to my dad, loves Saul Bellow. My dad was a big influence on my reading habits when I was younger, less so when I got older. My dad could never get into John Updike. I love John Updike stories. He's like, "What's the point? Where's the..." He's an O. Henry fan, or that's a cheap shot to some extent. I like O. Henry too, but my dad loves Saul Bellow. To my mind, he's not a great writer in the sense of— he's not a poetic, elegant writer of sentences. Nothing happens in his stories. He just follows around somebody who's a lot like him and writes down what they say in his interactions. So I've always found him very disappointing. I've read probably, I don't know, 3 or 4 of his novels trying to like him. Can't do it.

The Sabermetrics revolution in baseball, overrated or underrated?

I think it's still underrated. It's kind of amazing how far it's come. A sociologist— maybe it's already been done, but a sociologist should study how that world changed and how it has changed sports writing, sports reporting, sports commentary. And yet, it's so hard for people to accept things that disagree with what they see with their own eyes. And that OPS adjusted is commonly used now is an extraordinary thing, an incredible achievement of Bill James and the others. John Thorn, and Pete Palmer, the three people I associate with this revolution. It's, of course, spread to other sports. It continues to spread, the application of analytical technique. So in that sense, it's underrated in that I think there's still some really bad sports commentary. It's overrated in that it's part of a revolution that I'm deeply worried about. Big data is part of that, that everything can be reduced to measurement. We can measure everything important. "And if we can't, we will, and eventually everything will be quantified and we'll get better lives as a result." And I think that's a misreading of the human experience and I'm not an optimist on that.

Penn Station in New York City, overrated or underrated?

Ooh, boy, that's a tough call.

You've been there, right?

Way too many times I've stood under those— it used to be an enormously large thing that had the arrivals and departures and I thought it was gonna crash and kill people. What I find remarkable about that space is how uncomfortable it is that there's no place to sit down except the Acela waiting room, which I've had the privilege of being in maybe 3 times, that these people are standing around often holding their bags on their shoulder, getting ready to race to a gate so they can get a seat that they already have reserved. And I do it. I'm ashamed of it. Is so strange and it's ugly. It's ugly on the outside. It's ugly on the inside, but most people know it. So it could be underrated. I don't think there's anybody who loves it.

I enjoy it. I wouldn't say I love it.

You like it?

By the way, if you pay them, they will let you board first. I don't do this, but there is an implicit markets and everything going on here.

A bribe.

Yes.

That's interesting. To the station, the person who's sort of standing there.

That's right. If you just say, "Oh, I need some extra help. Could you help me out here or something?" They'll bring you down early.

Oh, well, that's, yeah, that's the, what are they called? Anyway, they have a name.

Bribe is the name.

No, no, no, no. I'm talking about the people, but I'm thinking is there, what if you don't have any luggage? I guess you could still do it, couldn't you? Yeah, I need some extra help. Where is it, sir? It's imaginary. It's virtual. Let's go. Here's a 20.

Dropping out of college, underrated or overrated?

Oh, another tough one. That's a great example of where I think people misunderstand the heterogeneity of the people who make that choice. I normally would say it's greatly underrated. I think finishing is over— dropping out is underrated. Finishing is overrated. I think you and I have both written that. I'll ask you, how many books— what's the ratio of books that you finish relative to the books you start?

Well, eventually it will be all of them, right? My latest book, whatever that is, I haven't finished.

But don't you pick up some books and don't finish?

No, no, reading books. I thought you meant writing them. Oh, maybe I finish one.

It's too good. Leave it.

Maybe I finished 1 out of 10. I don't know.

Right. 1 out of 10. So when I was younger, I found it deeply disturbing not to finish a book I started. It's an interesting rule, right, that says finish every book you start. If you have that rule, you will pick more judiciously, ideally, and be a little more careful. But that was my rule. And I also had a rule not to write in my books because I found that to be sacrilegious in some sense, to deface the book. So when I finished and I never opened it all the way, So when I finished a book in my youth, it looked brand new, but I had, but I had read it. I've changed all those things. I'm now, I write in my books, I don't finish lots of books. And so quitting is, is a good strategy if you know when to do it. Quitting school, or I would even say not attending in the first place, is, uh, is underrated except that for a lot of people who don't finish, they don't do very well. You know, I don't think the people I don't think the average is a good predictor for necessarily what's going to happen to you, Tyler. Tyler, you could have not finished, and I wonder what Tyler— what would have happened to Tyler? My favorite example of this outlier, of course, by definition, is Kevin Kelly. Kevin Kelly, who's just a wonderful writer on technology and many, many other things, and a brilliant photographer, by the way, also. I don't think he ever went to college. Most of our learning takes place elsewhere, but for some people it's good.

What's the most underrated part of the Hebrew Bible?

Well, that's an easy one, he said after a long pause of about a minute and a half. That would be the Book of Esther. The Book of Esther comes across as a clown show. A crazy king listens to his crazy anti-Semitic advisor, wants to kill all the Jews. The queen who's a secret Jew, a Marrano in the court of Ahasuerus, entraps Haman, the advisor to the king, and gets him killed and saves the Jews. And Ahasuerus is written as sort of a buffoon who's somehow manipulated by this wicked advisor. And there's some moments in it, but a little more careful reading I think gives you a different impression. Yoram Hazony wrote a wonderful book on it. Called The Dawn, which I think has now been reissued under a different title, but it takes it more seriously. So I think it's very underrated.

Few questions about Adam Smith, if I may.

Sure. One of my best friends.

You've written extensively on Smith. Does his notion of the impartial spectator beg the question? Because impartial by what standard? So doesn't he need some external standard of ethics, which in fact he doesn't have?

Yeah, that's bothered me actually. It's a great— I think a great insight. When I think of Smith's impartial spectator, which is this idea that It's Smith's attempt to understand why we do anything for other people besides ourselves, which he argues that we have perched on our shoulder or within our breast an observer, someone that we use or invoke to think about how that person would judge us. And of course, that person is going to be a lot like our friends, and our friends are a lot like the circle in society and culture we come from. What is honorable and kind and thoughtful in one circle will not be so in another. There's no honor among thieves, the saying goes. So do thieves have a different kind of impartial spectator who would judge them harshly for keeping a bargain deal that they've made with someone? So I think that's correct and I think Smith's own society of Hume and others is a pretty unusual one on so many grounds. So I think it's a good point. So I do think it's culturally subjective and at the same time, I think it understands something deeply about the way we behave in the world, which is that we look to how our friends judge us and how people who are not our friends judge us, the people in our casual circle who might observe our behavior. I think it's incredibly useful either as a way of understanding what people do or if you wanted to improve your own behavior to think about how you should behave if someone was watching all the time.

In your own reading of Smith, does the pursuit of approbation in fact make us happy? And if not, why do we do it? If you praise them too much, you don't make them happier?

Well, I don't think it's so much the ratchet effect. And I have a different nit to pick about the approbation issue and the love we have for the respective circle of friends or associates or acquaintances, which is, I think Smith's trying to say something quite subtle, or at least I hope he is. I claimed he was. I don't know if it's really accurate or not, because I think it's hard to know. But what really motivates us? Is it really, do I really want Tyler to think I gave a great interview? Is that why I'm trying hard right now? Because I would like your approbation. I'd like you to say, "Oh, great job," afterward. And I suspect you'll say that. Great job.

Better than ready.

Yeah, I suspect you'll say that regardless because it's the polite thing to say. But let's say I don't care about what you think. I'm independent. I'm not going to be motivated by that. That's rather consequentialist, isn't it? It certainly suggests a lack of integrity on my part that I need your tawdry praise, Tyler, to really make me do a good job here. So I think there's a tension there. I think about this a lot with Steve Jobs. Steve Jobs claimed he didn't care what people thought of him, and he acted that way a lot. He went barefoot to the office when he was young. He was cruel. He was incredibly demanding and didn't care whether he was loved by his employees. And I think he would've said he was oblivious to the praise of others. And yet he wanted to put a dent in the universe. He wanted somebody's praise. I'm not sure whose, but my point is that— that's an aside. But my point is that I think if we're— you can read Smith, and I think this would be wrong, but you can read Smith as saying people are dishonest. They're not true to themselves. They dissemble because they want the praise of other people. And I think that's the wrong way to think about it as a human being.

I don't—

again, I don't know what Smith really thought, but for me, when I think about how pleasant it is when someone says something nice about me, I try to discount it. I try not to use that as a motivator for me. I don't want to use that as a motivator. I want to do it for its own sake, the right thing, whatever it is. And I know I'm prone to manipulation. Through praise as I think many of us are as human beings. So there's a certain— there's a tension that Smith doesn't write about so much that I think is not easily resolved.

Given that the latter sections of Wealth of Nations seem to be arguing that the division of labor can in fact work out for both education and protection, was the ultimate point of the whole book Wealth of Nations in a way to respond actually to Plato and Socrates? Is that the right way to read Wealth of Nations?

Because they said what?

Well, you need the guardians. Education has to be centralized. There's the danger of a decline of martial virtue. But for Smith, you have firearms, which gives you a standing army, and that's favorable to liberty because you don't now have to worry about being taken over by the ruder peoples, as he called them, and that therefore division of labor and capitalist wealth was just fine for education and protection. Therefore Plato/Socrates, they were wrong.

When you say division of labor though, you mean more decentralized solutions or not?

But also literally the division of labor, which is a theme in the Greeks and it's a huge theme in Adam Smith. So it's partly commercial society, but just the notion that you have a separate set of people to protect the republic.

A class.

A class, right? Separate set of people who are teachers, for profit of course in Smith., which is taking the side of the sophists, right?

Yeah, that's an interesting point. I don't know much Plato and Aristotle, as you might tell from my question, but the part I do understand is, I've started, you know, Keynes said we're the, what does he say about the babbling of madmen? I should know the quote by heart. Do you know it by heart?

No, but I know the quote.

Right, that we're all the— Slaves of some other— Yeah, to defunct ideas. And you think, ah, that's something an academic would say to justify and feel good about himself. 'cause his ideas will be defunct down the road. But I am struck by how the hand of Plato and Aristotle reaches across so many things, certainly modern religion, certainly our love of mathematics as a perfect source. Mentioning Joramasoni again, I think he makes the point that there's no circle in the real world. The circle's a concept, and yet the idea that it's out there This human creation, a mathematical definition, is a very powerful, I think, influence on our thinking still. Maybe we're hardwired to think that way, I don't know. So to come back to your question, I think it's a really interesting question in modern America. There are parts of America that have a respect for, say, military culture that's very scarce. There aren't a lot of places that have respect for military culture.

The South mainly, right?

Yep, it's the South. The Coast, much less so. And part of me wants to say, yeah, you don't really want to romanticize the Army. It's a bad thing. But we're blessed to live in a time where our enemies are very far away. And if they were closer, maybe that's a really useful thing. So having—

in the meantime, someone has to serve, right? The pay alone is not going to do it.

Yeah, probably not. We could make it higher, but I think you could get enough people in there eventually. But maybe our political process wouldn't like that higher pay. Interesting question. I'm going to ask you a question, Tyler.

Sure.

Do you think the volunteer army has reduced or increased the willingness of the president to use the army as a— to get into more wars? Do you think it reduces the chance of war or increases the chance of war?

Depends what you mean by war. If you mean any conflict at all, I think it increases the chance of a lot of small-scale activity. A lot of it is led by drones and there may be ground troops as support, but casualties remain. Really quite low. It's what we've seen in the world. But if there were a truly major nation-threatening war, I actually think it might be easier to go to war with the draft army.

Well, you mean we'd be more likely to intervene?

That's correct.

So I think there's a tension there that most economists who, like you and I were— I don't know about you, I shouldn't say you, but certainly I was a very strong proponent of the volunteer army. And I used to quote Milton Friedman all the time when he testified allegedly, "Would you want a—" when he was advocating for a volunteer army that would be paid to come to serve rather than drafted and they said, "You want to be defended by an army of mercenaries?" and he brilliantly responded, "Better than an army of slaves where you force people to serve." I always found that compelling given my libertarian youth but the argument on behalf of that of why that was actually a good thing besides philosophically was, well, if we had to pay soldiers instead of forcing them to serve and paying them a pittance, budgetary costs of enlarging the army would start to bite and that would discourage a large army. I think that's just— I don't think— I'm not sure that's true. Then the argument was, well, if— because then the flip side, excuse me, on the other side is that if the average American doesn't have to serve, which they don't anymore, then it's cheaper to go to war. So I don't know. I think that tension's ignored by most of my friends who favor a volunteer army.

Yes, I agree with that. 3 simple Questions to close, super simple.

Oh yeah. Liar, liar, pants on fire, just a guess.

If you were to pick a deceased person from the past, but not going before the 20th century, to have on EconTalk to interview, who would it be?

I really would have liked to have interviewed Robert Nozick. That would have been really fun. Robert Nozick wrote Anarchy, State, and Utopia, which was one of my favorite books when I was 22 years old. Extraordinary book, loved it. And he was an intellectual hero of mine, and in his later years, he became disenchanted evidently with classical liberalism and small government or at least some form of libertarianism, and I'd love to know why. I'd love to ask him about that. Maybe he's written about it. I haven't read it, but— so that'd be an obvious one. Hayek is an obvious one, although he's hard to understand. His German accent's pretty thick, so he would be best asked—

We tended to get the same from Hayek when you asked him questions. I met Hayek. I knew Nozick. I would go further back. I mean, I would pick Keynes without a doubt, I think.

That doesn't excite me. I don't have much romance for Keynes, although he's articulate and witty, and that would be fun. I think for a minute, anybody else?

But we know enough people who knew Hayek and Nozick. We can, in essence, reproduce what it would have been like. Whereas Keynes, we are quite in the dark in some ways.

That's true. I guess I'd like to interview my old philosophy professor, Robert Smyth, who taught me about pragmatism and I didn't really understand it until I got to be old enough that he wasn't alive anymore. I'd love to chat with him. I chatted with him once. He taught a great class on the philosophy of pragmatism and I think I took 3 classes from him. And later in my life, I was probably 50 or so, I realized a lot of Hayek is echoing this view that reason's overrated, which is one way to summarize pragmatism in a sentence. And I tracked him down and I called him and he said— I said, "Do you read Hayek? Have you ever read Hayek?" "Of course." Yeah, 'cause I'm an idiot. Yeah, of course he's read Hayek. So that was lovely, but I'd love to talk to him some more. I miss him. So it's an interesting thing when someone who has an intellectual influence over you that you don't realize until years later. Just think about it for another We take another 15 seconds to think about it. That's a good question. Give me some more candidates. Well, there are political leaders.

They would not be my picks, but they're plausible for many. Philosophers in the earlier part of the 20th century, great scientists, Einstein, right? Yeah. You'd have a lot of downloads for him. I would.

Yeah, exactly. That's a good line.

Norman Borlaug, the people behind the Haber-Bosch process fertilizer, right? People in technology.

Not so interesting to me. I'd like to think about somebody like— oh, here's a fun one. I'd like to interview Eric Hoffer. You ever read Eric Hoffer?

Sure, True Believer. Great book.

And The Ordeal of Change. He's a great writer. And a working-class writer. Right, and an interesting human being, I would suspect. I don't know if he'd be a good interview. Anybody else?

I think composers, conductors would be very interesting.

Oh, yeah, actually the Gershwins. If I could get the Gershwins on to talk about Collaboration and— well, actually, you know, Roger Sanhart would be good. Otto Klemperer. Cole Porter would be fun. I tried Steven Spielberg, did not get him for EconTalk, but he responded to me because I had a mutual friend who'd set it up, at least the contact. I don't know.

In a sentence, where has classical liberalism gone wrong? It's ironic.

I'm going to cheat and answer in a few sentences. Our age right now— this may change— but our age right now is obsessed with inequality and it disturbs me deeply that inequality is conflated with poverty. They're not the same thing. A lot of people blame the condition of the poor on inequality as if the world is a zero-sum game. If you press the person who says that, "Oh, of course I don't mean that," but I think there's an implicit idea that the inequality comes at the expense of the poor. I don't think that's the There are cases where that's true, of course, where rent-seeking and other privileges that people have taken from the government, from government power, have allowed them to impoverish others. But most people who are poor are poor because they do not have the tools, the skills to contribute in the modern economy. They have circumstances that keep them from rising. And I've been deeply saddened by the failure of people on so-called our side, the people who believe in smaller government. To think at all about that, to think at all about human flourishing by the people who are struggling. I think that has just been a terrible mistake. At the same time, we failed to make the case for freedom and to the extent that even saying that seems foolish. I'm going to— it's not literally true, but the last prominent politician I think who made the case for liberty and freedom in and of itself was Maggie Thatcher. Reagan to some extent also, but Maggie Thatcher did it relentlessly and that's so out of fashion in our times. We've become so consequentialist. The idea that liberty is a principle worth defending in and of itself is really, really difficult and I find it strange that people tie small government to the Republican Party. The Republican Party doesn't make the case for liberty. It loves to spend— Republican politicians love to spend money. I like to say that the only difference between— both Republicans and Democrats like to spend money on their friends. They just have different friends except they have one friend in common which is the financial sector. So they both coddle the financial sector because that's where the money is. So we don't have a political home for our ideas and I think the intellectual home has failed badly for our inability to make the case either for liberty in and of itself and for the— to understand how and why people who are being left behind by our economy and what policies might help them. I think that's an utter failure of our side and it's just—

it's a tragedy. Last question. What is your next book or project?

So I have 3 things I'm working on. I'm working on a video series on data and thinking about numbers. That does— actually, the latest episode comes out today. But in terms of books, so that project's an ongoing project, but in terms of books, I think I'm writing a book on data and our need for certainty and our challenge of interpreting numbers authentically and correctly. I think it's really hard for us to consume numbers. We tend to see them as facts. They're not facts. Some of them are, most of them aren't, and we're prone to manipulation, I think, from The use of numbers. It causes us, I think, to look under the lamppost, which is, I think, a huge failing. Where the light is rather than maybe out in the dark a little bit. We need to edge out into the dark where the numbers aren't. So that's one book I'm trying to start. Trying to write a book on prayer for people who struggle with prayer, and I think most people do, at least the ones I know. And then I'd like to write a book on forgiveness. And the virtues of forgiveness, which is totally alien to me. Totally. If you had said to me 5 years ago, "You're going to write a book on forgiveness," I would've said, "Forgiveness is a really mixed bag. Sometimes you should bear a grudge." I've changed my mind on that, and I want to see if I can make the case for forgiving yourself and forgiving others more readily and how that might actually work rather than— it's a great cliché. It's a great cliché. You need forgive yourself so you can forgive others. But most of us struggle to do that, I think. And I'm not sure— the connection's not so obvious. So, you know, same thing, you need to love yourself before you can love others. That seems counterintuitive to me. So those kind of interpersonal human aspects of life, I think, are fascinating. And maybe I could say something about it.

Russ Roberts, thank you very much. Thanks, Tyler. Thanks for listening to Conversations with Tyler. You can subscribe to the podcast in iTunes, Stitcher, or your favorite podcast app. And if you like this podcast, please consider rating it on iTunes and leaving a review. This helps other people find the show.