Tim Harford at the RSA

I headed to the Royal Society for the encouragement of the Arts yesterday to hear Tim Harford speak on The Logic of Life. Tim’s talks in London are invariable a sell out and last night was no exception. His recent globetrotting book tour has afforded the opportunity to flesh out some of the key themes in his book and we were treated to a very entertaining and thought provoking talk.

Tim opened up by introducing us to one of the and his heroes from the book – the septuagenarian Nobel-prize winner Gary Becker, creator of a theory of rational crime and one of the leading early figures in what has come to be known as behavioural economics. There are often great problems in disentangling causation when it comes to some of the deepest economic and social problems of our age. Delinquency is clearly one of these and it turns out that much of the new evidence on criminal behaviour still has some resonance to many of Becker’s ideas – namely that many (but not all) crimes have at their core, a rational assessment by the perpetrator of the potential profits from committing a crime set against the risks from detection and punishment.

We moved from crime to speed-dating (no one in a large and distinguished audience was prepared to admit publically that they had ever participated in one!) and then to instances where people often found it difficult to engage in rational behaviour. Tim focused in particular on the misfiring of short and longer term decision making that we can identify in decisions that we make about saving for our pensions, plans to quit smoking, go on an effective diet or make marginal changes to our everyday lives to combat climate change. I liked the idea of making credible pre-commitments as an approach to overcoming myopia in our daily lives – drawing on the acclaimed work of Thomas Schelling.

Tim’s view is that Economics does have something useful to say in the policy arena and that am emerging cohort of behavioural economists - who can now access real world data on the choices and decisions that we make in our lives and who use data from randomised trials and from neurological studies – can at least add a few more pieces of the jigsaw when policy-makers are groping however tentatively towards stronger policy combinations.

The post-talk discussion raised the issue of the difference between our hard choices (many of which might ultimately be ‘hard wired’) and our preferences – often exposed to cultural influences, peer group pressures and which might be softer and more open to change that many presume. Ultimately preferences are driven by incentives, and changing incentives can lead to behavioural change even if many of use still go about our daily lives relying on comfortable ‘rules of thumb’ and driven by habitual behaviour.

The RSA offers over 150 free lectures every year and the venue (located just behind the Strand) is superb and easily accessible – here are the details of their current lecture programme. In a few weeks time, a selection of their recent events will be able to access via a video and audio podcast.