#154 - Steve Levitt, Ph.D.: Climate change, mental health, the ethics of experiments, and more

KEYPOINTS

• 01

  Microeconomics with real data is where the action is.

  Levitt, the University of Chicago economist and Freakonomics co-author, came to economics through a Harvard intro course and took only one math class there. He considers macroeconomics too hard a problem for its models, and says the Clark Medal has gone mostly to people combining theory with messy data through econometrics in the last 20–30 years.

• 02

  Agree on the facts before arguing about the models.

  Levitt's rule: first establish the three, five, nine or twelve facts that any reasonable person looking at the data would accept, then build models on them. Data alone rarely establish causation, except in randomized experiments, which are rare in economics. He'd like debates to start with each side listing ten facts they believe, to see whether disagreement is about facts or implications.

• 03

  Climate change is unlikely to be solved by behavior change alone.

  Revisiting SuperFreakonomics, about ten years on, Levitt says its point was that asking billions to change behavior is a weak strategy. He and Attia point to smoking: even after the Surgeon General's report around the 1960s, with risk ratios around 14 times, it took roughly 40 years for smoking to fall substantially.

• 04

  Geoengineering deserves serious study.

  The book described an untested plan in which about 10,000 GPS-guided, solar-powered dinghies spray seawater to seed reflective clouds over dark oceans. Levitt says nearly everyone now expects geoengineering to be part of the solution, though such ideas are short-term relative to a real fix.

• 05

  Run a 'Manhattan Project' for climate.

  If president, Levitt would gather the 1,000 smartest scientists somewhere like Los Alamos for five years to look for a cheap solution such as carbon sequestration. He argues it's insurance: a few hundred million dollars is trivial next to government spending and to the potential payoff.

• 06

  Small risks of catastrophe justify large payments.

  Standard economic models surprised him: people should pay perhaps 10–15% of their wealth to avoid a 1% chance of death, and around 50% to avoid a 5% chance (numbers he called ballpark), because death is final. That changed his view on how seriously to treat climate tail risks.

• 07

  Blurring climate science with advocacy undermines trust.

  Levitt says the backlash to their climate chapter came from all sides partly because of conflating objectives, strategies and tactics, which he lists among humanity's big failures, and because people react to how results are portrayed rather than what was written.

• 08

  Mental health deserves a 'common core' in schools.

  Raised by a no-nonsense father who saw therapy as embarrassing and crying as forbidden, Levitt came to value mental health through parenting. He'd have the Department of Education mandate a mental-health curriculum alongside math, while letting school districts experiment to find what works.

• 09

  Most bad decisions are failures to act.

  Levitt says 99 of his 100 worst decisions were about inaction; Attia says his were the opposite. Behavioral economics over the last 40–50 years shows how poorly people decide, and Levitt's best 'decision' was to stop caring what people think.

• 10

  Ethics rules block learning that would save lives.

  Levitt argues the US should have run COVID challenge trials, and that basic questions like the origin of the six-foot distancing rule went unexamined. He supports a regulated, high-priced market for living kidney donors, since dialysis costs a measurable share of GDP and a price set well above market would avoid exploiting the poor; he imagines millions signing up.

• 11

  Chicago taught him to engage with his intellectual opponents.

  Despite loving Cambridge, Levitt chose the University of Chicago because presentations there drew such different questions; he went 'to get to know the enemy.' Gary Becker, among the most influential economists of the past 50 years and widely demonized, turned out to be brilliant, curious and a real mentor. Levitt now worries that macroeconomics has narrowed into what Chicago looked like 40 years ago, losing diversity of thought.