Steven Levitt Does Standup At Princeton

Steven Levitt, coauthor of the controversial book, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, spoke at Princeton on September 27, 2006. You will need to search and scroll a little to find the lecture on the permanent links, but you can view it here, or listen to it here. Levitt is truly funny, and you might listen to him only for that reason, but he also discusses interesting economics.

Beginning at 33 minutes and 50 seconds into the lecture, Levitt describes economists' research exploring altruism, which they historically doom to oblivion assuming self-interest. Much of the research centers on the dictator game in which two people are brought into a lab. They never see each other. One person, the dictator, is given $10 and the option of keeping all of the money or giving all to part of it to the other person. On average, the dictator gives $3 of the $10 to the other person, leading economists to conclude that people are innately altruistic.

In a discussion with a friend, John List, Levitt observes that no one ever came up to him on a bus and said, "I have $10, take $3." List reworked the experiment so that the dictator retained the option of keeping the awarded $10, or giving all or part of it away, but could now take up to $10 from the other participant. Now on average, the dictator took $3 rather than giving $3, so much for altruism.

But List was not done. He modified the experiment so that both the dictator and the other participant had to stuff envelopes for an hour, and then performed the same experiment. In this case, on average, the dictator neither gave money nor took it from the other participant.

Levitt concluded that the early experiments only captured the dictators' desire to please the person conducting the test by being generous rather than measuring altruism.

Levitt also discusses the relative importance to graduate students of having deep economic insight versus good mathematical ability, his experience consulting businesses, and the economics of prostitution.