I am John List, economist and author of The Why Axis: Hidden Motives and the Undiscovered Economics of Everyday Life. AMA!

what was your grade in real analysis?

Great question! As the Director of Admissions and Aid in our graduate program here at Chicago for several years, this was a question that came up about many of our candidates. I actually received an A in my Real courses, but I think I still would have been denied admission to UC.

Do you think Steve Levitt feels emasculated around you as a result of your superior grade in real analysis?

You can be honest.

LOL. Did he receive something lower than me? Note that you should adjust grades by school when making this comparison: UW Stevens Point grades much harder than Harvard!

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Magic: That is a great question--thanks for logging on! I would lean towards doing a macro experiment where I could shock the economy in certain ways and learn about how allocations and prices change. IRB would view this as too dangerous, and the FED likely would not allow me to do it either! I am looking in to this type of experiment on a more micro scale in the 2nd-life type worlds so stay tuned!

Hi John,

As an experimentalist in the physical sciences, I'm fascinated by the challenge of constructing experiments in open systems (such as economic markets). It's so much harder than designing benchtop experiments where all 'stuff' (atoms, electrons, what have you) is identical, and usually assumed to be non-correlated.

My questions:

0) Are there some common (generic) mistakes people make in designing economic experiments? How do you guard against them?

1) Have you (or could you) apply experimental methods to non-academic economics, i.e. business (I believe 'pilot' programs common in business are different from experiments).

Do you have a specific example of how this has worked in business strategy/decision-making?

2) You're an advisor to Levitt's consulting firm (the greatest good). How involved are you with day-to-day work there, and do you believe their approach is something fundamentally different from the McKinsey's of the world?

Great questions Atomic. Let me take them on one by one, but first note that randomization (randomly putting people into treatment and control groups) ends up being the great tool here: in chemistry experiments, for example, we need all of the test tubes to be clean. In economics, of course the world is quite complicated (dirty) and one could never find that clean test tube. In this case, randomization serves an important purpose: it balances the dirt across control and treatment groups. Now to the queries:

0) The most common mistakes that I see are I) not having a control group and II) running too many treatments to the power to reject null hypotheses are too low.

1) Absolutely, and we do this everyday. You can visit my U Chicago website to download tons of papers that show experiments with non-profits as well as for profits.

2) TGG is indeed very different, and very special. Unfortunately, as Chairman of the Department of Economics, and the fact that I am constantly running large scale field experiments, I just do not have time for that work just yet.

Economics undergrad here, (1) in your opinion, is a Master's degree enough to break into data analysis? (2) What are your thoughts on this quote, "You know what the problem is with being an economist? Everyone has an opinion about the economy. Nobody goes up to a geologist and says, 'Igneous rocks are fcking bullsht.'"?

Call me: Absolutely, a masters is enough to do data analysis, provided the training was good. On 2) I do not view that as a problem, but a benefit. I would rather be in a room where I know everyone than in a room where I know no one. More gets done in the common room.

Hello Professor List! Loved your Freakonomics episode!

Between public universities increasingly relying on donors to make up for shrinking state funding dollars, artists giving their work away online and hoping their fans donate to let them make a living on it, and crowdfunding supporting all sorts of new projects, it seems like there are a lot of people asking for donations today, especially online. Does that present new challenges to nonprofits and the like compared to 10 years ago? How can they break through the noise?

Mark, excellent observation. There are two facts that I should draw from. First, a secret that few understand is that the charitable sector has essentially been stagnant for years: from 1971-2011, the share of income given to charitable causes by individuals has actually decreased. Second, the field has gotten much more competitive. There are now all sorts of providers in every space, whereas as little as a decade or so ago there were monopolists in provision. As an economist I like this competition because it will drive efficiency. But, this leads to how you can get a leg up.

I would begin by being data driven--generate your own data and understand what academic studies have found. A good way to start is by picking up the WHY AXIS, which has 2 chapters about charity and how you can do better.

Hello Mr. List! Three questions for you:

1) Do you ever get tired of getting mixed up with the murder who shares your name?

2) If you could give one piece of economic advice to President Obama, what would it be and why?

3) Do you have any hidden talents?

Thanks much for your questions. Here goes:

1) At about one in three lectures I give I have someone raise the name issue. I am indeed the most unfortunately named economist. Sometimes I can turn it into a discussion, so it has not gotten old just yet. 2) To keep the incentives in place for charitable giving. There is the usual banter about taking them away, but I think for the sector to remain vibrant we need the price incentives in place. 3) Not really--I am just a truck driver's son who happens to love economics.

Hi Professor List! I took your experimental economics class two years ago. I just wanted to thank you for being one of the best professors I had during my entire time in UofC undergrad. You showed me that econ was more than just endless lagrangians, and I ended up in a (private sector) research position largely because of your class and how it opened my mind to new ways of thinking. Thank you.

That is very kind! Come back and visit sometime!

1) Why are you still in the Economics department when Booth (the business school) would likely pay you more? What are the non-price incentives?

2) Who's the best golfer on the UChicago faculty?

3) Do you think it's still possible for someone to mirror your career path, where they start at much less well known universities and move on up to the best department in the country?

4) (added by edit) What's the best way to control for the Hawthorne effect in an experiment?

These are good questions, let me take on a few of them before leaving for now:

1. I love working with graduate students and teaching graduate courses.

2. Levitt.

3. Absolutely. But, it will take hard work and some luck!

4. placebo control.

Do you think your colleague James Heckman's many dismissive comments about cute-e-conomics were directed at you? One example:

There's a trend now to come up with cute papers in an effort to be cited as many times as possible. ... In some quarters of our profession, the level of discussion has sunk to the level of a New Yorker article: coffee table articles about "cute" topics, papers using "clever" instruments.

I suspect that I was not the target of those words, as Jim and I are currently working on research together. Also, note that all of my field experiments are theory based and use randomization as my instrument. So nothing really cute about that.

Finally, if you check out my research (if your not an economist check out THE WHY AXIS for something accessible), I think that you will find nothing really cute about what I ask:

why do people discriminate? why do inner-city schools continue to lag? why do people give to charitable causes? why do people vote?
etc.

1. Are we currently part of a field experiment?

2. Do yo think there can be a non-capitalistic system that can motivate people and spur innovation as much as the US does?

Puppet: No field experiment this time, sorry! On 2) if there is I am not aware.

Hi Dr. List! Thanks for your time.

Given what you've found experimentally about the behavioral economics of charitable giving, what advice would you give to someone starting on online fundraiser campaign on a website like Indiegogo or Kickstarter in terms of structuring their incentives?

Excellent query Hamburger man: I would begin by making a commitment to using data to make decisions. If data are not available, then you should generate your own using field experiments. To gain some ideas on how to make that work, I would start by taking a look at my U Chicago website, which has roughly a dozen or so papers that might lend advice to you.

Mr. List,

Which would you attribute more to the current stain on economics as a science, unethical academic research or non-academic policy biased economics?

Auto: good question. Yet, this is similar to asking me: what do you dislike more a wart on your left cheek or a wart on your right cheek. My answer: they are both terrible!

And, this case is no different. They are both repugnant.

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Thanks much for your queries Honey; here goes:

1) yes, in theory, but we have no solid evidence in practice. 2) I would say the new car feeling has a ton of satisfaction for many people. I would never undervalue the power of social pressure and showing others what you have as factors that motivate humans.

Prof List, what is your favorite place to eat in Hyde Park?

Noodles.

Is there a friendly (or not-so-friendly) rivalry between the faculty at Booth and the faculty in the Econ department? Also, how do you feel about the Econ department getting to take over the seminary on campus?

The relationship between booth and economics is actually quite strong. We certainly need each other to keep Chicago as a great place to study economics. The seminary transformation is an important component of our renewal at the U. Chicago.

What's the value added from economists trying to model deviations from the neoclassical model? Can't we just think of certain situations or scenarios (like gains vs. losses) as being complements or substitutes to a consumer's demand function for a given good? Why do you think the discipline has gone one route for behavioral work and another for understanding consumption.

The roots of 'behavioral economics' date back to Adam Smith, who viewed decisions as a struggle between passions and an impartial spectator. Simon did excellent work too. But, the watershed for behavioral economics came in the 1970s when Kahneman and Tversky hit the economics scene. I think today the best behavioral research embraces precisely stated assumptions that produce a constrained optimization problem. A 'less' scientific line of behavioral research approaches the problem from the opposite direction: observing an unexpected behavior (i.e., lower stock market returns on a rainy day in NYC) and searching for a psychological theory consistent with that behavior (perhaps seasonal affective disorder in this case). yet, given the freedom the researcher has to choose to explain the observed phenomenon, one can explain an observed behavior ex post facto.

Hi Dr. List,

To what do you attribute the fairly recent explosion of crowdfunding campaigns and their relative success?

Hi Don: Crowdfunding campaigns are indeed really interesting. They leverage social pressures, and combine several small pieces to form a big powerful one. In this way, they share similarities to ROSCAs, which have been used for decades in developing countries to speed up consumption by some contributors. So the economics of them make a lot of sense. I am working with a few campaigns myself to learn more about the underlying motivations that drive their success.

Hello! Thanks for answering questions! Any advice for people looking to getting an economics PhD?

Have passion and desire to do research. If you do not have both, then I would look elsewhere.

Hey Professor List, as someone from a non-ivy school looking at the possibility of graduate school in the future, what is the most important skill to develop or skill set to have when applying or participating in econ grad schools?

Technical skills to make it through the courses, and creativity to make an impact in research. Creativity is, of course, multi-dimensional, but asking interesting questions and having the ability to creatively answer them in a convincing manner will take you to where you need to go.

Professor List,

How often do you beat Professor Levitt at golf?

Unfortunately, I just do not have much time to play golf!

Hello John List! I think this is the coolest AMA I've seen! I was introduced to lots of your work in a recent non-market valuation course, and was really impressed with your creativity.

Can you tell us the story of how you began doing all your sport cards experiments/papers? How did this idea pop into your head? Was there much support/opposition from colleagues? Was this purely a curiosity-driven endeavour?

Thanks much! In the late 1980s my girlfriend (now wife) and I would go to sportscard shows on the weekends to make extra cash. At the same time I was learning about economics in my coursework. I thought that those shows could serve as an important way to test economic theory. I took that idea to grad. school, and while learning of this "new field experimental economics" I talked to professors about doing field experiments. No one really liked it so I began to run some myself in the early 1990s (they were not very good though!). Jay Shogren then came to Wyoming and he liked the idea. He and I began working on the early field experiments in this area.

Raj Chetty recently wrote a NYT article on why Economics is a science. What are your views on this matter? Will you call Economics a science?

Absolutely

Levitt always recommends against econ grad school. What are your thoughts on it?

If you want to do research and you are passionate, graduate school is for you.

Hi Prof List, I am an economics grad and I have been trying to get my wife more interested in the subject. Is there a book or podcast or something you would recommend for introducing a newbie to the subject? Is your own new book aimed at beginners?

Luigi: This one is easy! Pick up our new book THE WHY AXIS, meant for both beginners and advanced economists alike.

What paper are you most proud of?

I oftentimes am asked this question. But, for me this is similar to asking me which of my 5 kids do I love the most! I think the papers that will end up standing the test of time will be the ones that combine theory and careful empirical work on a topic of general interest. This means that the early work on prospect theory, the work on charity, the work on discrimination, the work on education, the work on social preferences, the early cost/benefit stuff, auctions, and the methods' pieces likely stand the best chance.