Weiye Loh's Library tagged Practices →  View Popular, Search in Google

it’s common sense that government payments to the unemployed will lead to more jobs because those receiving the payments will spend the money, thereby increasing demand, which will lead businesses to hire more workers.  But it’s also common sense that if people are paid for not working, they will have less incentive to work, which will increase unemployment.  The trick is to find the amount of unemployment benefits that will strike the most effective balance between stimulating demand and discouraging employment.  This is where our leaders need to talk to economists.

Knowing how to talk to economists and other experts is an essential skill of good political leaders.  This in turn requires a basic understanding of how experts in various fields think and what they might have to offer for resolving a given problem. Leaders need to be intelligent “consumers” of expert opinions.

When most people think of economics, they think of money — the study of how much things cost and why. Roth distinguishes himself by being more interested in situations where money plays little or no role — for instance, the process that determines who among the thousands of patients awaiting kidney transplants nationwide should receive the small number of organs that are available. As a society, we’ve decided we’re not comfortable with people selling their organs, so some other system — some other kind of market — is required. And a market, in Roth’s view, does not necessarily come down to prices, nor is it always ruled by simple principles like supply and demand: As long as people are competing with each other to get what they want, then resources are being allocated, and that means economists should be thinking about it.

The trouble is that when you can’t rely on prices to stand in for value, things get complicated. In typical markets, “Money finds the matches,” said Utku Ünver, an associate professor of economics at Boston College who has collaborated with Roth on projects. “But when there’s no money, there’s lots of friction, and there are lots of things that may cause these markets to fail and not function efficiently.”

When you can’t use prices to express how much something’s worth, in other words, figuring out who should get what becomes a complicated business.

Roth loved the idea that he could challenge widely accepted theories about how markets worked by running experiments and producing data on how people actually behave when faced with certain choices.

if the theory and the real world were in conflict, that meant there was a problem with the theory, not with the real world.

Roth said. “A lot of economics is like that: When prices go up, demand is gonna go down. You can’t forget that and run your economy. But it’s not the only thing you need to know.”

They ensure that the relationship is about power and subordination, making candor all but impossible, and defensiveness the behavior of choice for stressed employees.

Why do managers accept this ritual? Why do they say they want candor in the workplace, but refuse to change the most obvious impediment to such truth telling? And why do they uncritically accept the notion that there is but one truth — the manager's?

five reasons, based on my experience talking to, and hearing from, thousands of executives over the years, both as a consultant and as a teacher.

intellectual laziness. It's so much less demanding for a manager to have all the answers, to let subordinates assume the manager's infallibility, than to have to bear the possibility that he or she is wrong.

ego-building. It feels good to always be right, and never have your subordinates tell you that you're wrong

managers don't want their colleagues, rivals, and bosses to know they might be wrong. Being wrong gives power to others, and managers don't want to feel vulnerable.

performance reviews allow companies to avoid the hard work of fixing internal processes. Change is tough; it can be emotionally challenging. Better to stick your head in the sand and not have to worry about it.

managers refuse to think hard about the practices that have gone terribly wrong in our business culture, for fear that they will be seen as bad leaders by the world outside their own companies.