Intro to System Thinking: Freakonomics

Freakanomics appears to be one of those love-or-hate books, with its enthusiastic advocates and its detractors. My impression is that it’s got a cult following amongst neoliberals, but I’m a reasonably big fan and come from the other side of the chasm of ideology, so let’s not damn it by its associations. Before I get into my positive reading, and what I got out of it, I’ll point you to the best demolition that I’ve read, from the always-fun Unlearning Economics.

The first thing I want to argue is that, it’s not a book about economics. The included case studies on a range of topics, and while money is usually somewhere in there, I think that mostly the point of the book is that you can’t think simply about it. For example, Unlearning Economics doesn’t like the Israeli day-care example, arguing that “The way people respond to incentives is in fact highly complex and unpredictable. … they simply select three arbitrary and incommensurable concepts and proceed as if their analysis were obviously true.” Whereas, I thought that the point of the article was exactly that incentives were complex, and didn’t hold it against them that their example wasn’t an exhaustive summation of human motivation. That example happened to spin off things like this explanation of Ultimate Frisbee’s central design concept: the spirit of the game. In essence, good behaviour in Ultimate isn’t simply a matter of your traditional penalty structure from other games, something that seems totally lost on some of the advocates for referees.

If you’ve read my previous post on Systems Thinking, you’ll recognise that Freakonomics has hit two key concepts already: a multi-variable approach to a problem, and an acceptance of non-linear responses for those variables. What Freakonomics is really about, is systems, about taking a fresh approach to systemic problems and situations. If I were to make a criticism of this book, it is that perhaps it stops a little short of recognising the centrality of system analysis. In the epilogue, the authors write “there is no unifying theme” but that “it [Freakonomics] has to do with thinking sensibly about how people behave in the real world.” I think they could go further, and point out that the “real world” is a complex interacting system – the system that constrains and controls.

Perhaps because of this bias of mine, my favourite of their little case studies is the study of cheating teachers. Of course teachers operate under incentives, just like everyone else, and when they are placed in a system of control that has operational imperatives opposed to the kind of philosophical objectives, there are going to be problems. Where the authors stop short is perhaps in thinking about the power of the system explicitly. We could compare the cheating teachers with the doctors administering single-blind clinical trials: it was found insufficient for the patient to be ignorant of whether the treatment was real or a placebo. I expect this systemic pressure is a factor implied, but not explored, in the main work itself.

In fact, it seems to me that their own summary of the work is a call to make your own conclusions based on your own fact-finding. For Unlearning Economics to point out the flaws in specific arguments is perfectly valid, but crucially, that objection is in compliance with the central tenet of the text as I understood it, rather than a demolition of its value.

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