1 00:00:00,012 --> 00:00:08,320 >> Hello, welcome to this week's Office Hours. 2 00:00:08,320 --> 00:00:11,718 Thank you Dan for joining me again. I'm glad I did not scare you off last 3 00:00:11,718 --> 00:00:14,194 time. >> You did not, and it's a pleasure to 4 00:00:14,194 --> 00:00:15,770 be back. >> Excellent. 5 00:00:15,770 --> 00:00:19,540 And thank you guys for submitting such awesome questions. 6 00:00:19,540 --> 00:00:22,834 I have one of the best problems in the world now, which is I'm faced with far 7 00:00:22,834 --> 00:00:27,354 too many to choose from. And, it's been very difficult. 8 00:00:27,354 --> 00:00:32,018 So, keep submitting them, and I will keep asking Dan questions. 9 00:00:32,018 --> 00:00:37,680 so Dan, let's start out with, a conversation about free. 10 00:00:37,680 --> 00:00:40,816 You talk about the price of free in your lectures. 11 00:00:40,816 --> 00:00:45,646 And, the students, not surprisingly, have made this connection with Coursera, 12 00:00:45,646 --> 00:00:50,109 itself being free. So I have a bunch of questions about 13 00:00:50,109 --> 00:00:53,701 that. first, how does that fact that this class 14 00:00:53,701 --> 00:00:58,404 is free affect the number of people who take it seriously? 15 00:00:58,404 --> 00:01:02,928 >> So free's a very interesting numbers, a very interesting number, and 16 00:01:02,928 --> 00:01:08,822 lots of things happened when, when free's kind of introduced. 17 00:01:08,822 --> 00:01:13,378 So, sometimes there's something that we know the quality of, a particular piece 18 00:01:13,378 --> 00:01:17,594 of chocolate, a particular book, something that you know what the quality 19 00:01:17,594 --> 00:01:22,068 is in advance. And then the free doesn't necessarily 20 00:01:22,068 --> 00:01:26,710 have an effect on our perceived quality, but it does make us want it much more. 21 00:01:26,710 --> 00:01:30,640 So if you think about your favorite. Brand of ice cream, let's say Ben and 22 00:01:30,640 --> 00:01:34,422 Jerry's, you can ask yourself how long will you stand in line to get the free 23 00:01:34,422 --> 00:01:39,856 ice cream from that particular make? And most people say for quite a long 24 00:01:39,856 --> 00:01:42,355 time. The moment something is free, a known 25 00:01:42,355 --> 00:01:46,724 quality, we really drive toward it. With Coursera there's another thing, 26 00:01:46,724 --> 00:01:50,740 which is Coursera was introduced at the free price. 27 00:01:50,740 --> 00:01:54,800 And most people have no idea what the quality is, what to expect. 28 00:01:54,800 --> 00:01:58,948 And now free is not only an attractive price, we can also draw an inference 29 00:01:58,948 --> 00:02:03,732 about what is the expected quality. And what we know is that the moment you 30 00:02:03,732 --> 00:02:07,579 give people something for free, there's a chance, something they don't know about. 31 00:02:07,579 --> 00:02:11,160 There's a chance that they will perceive the quality to be, to be low. 32 00:02:11,160 --> 00:02:15,576 So, I think that this is something that Coursera really needs to think about is, 33 00:02:15,576 --> 00:02:20,421 how do we not create this expectation of flow low quality? 34 00:02:20,421 --> 00:02:24,447 Actually, if I was advising Coursera and of course, they're not asking me for my 35 00:02:24,447 --> 00:02:30,163 advice but if you were asking me for my advice I would say, this is not free. 36 00:02:30,163 --> 00:02:34,379 This is something that has a substantial cost, but for the first year, we're going 37 00:02:34,379 --> 00:02:38,378 to reduce the cost. Or for the first year, if you the 38 00:02:38,378 --> 00:02:42,347 students will give us feedback and participate and so on, we will waive this 39 00:02:42,347 --> 00:02:46,265 back. So I would have tried not to come out 40 00:02:46,265 --> 00:02:51,710 with, kind of, take advantage of a real free, no price. 41 00:02:51,710 --> 00:02:56,955 But not give the perception of free. And then finally there's the question of, 42 00:02:56,955 --> 00:03:02,343 what is a free to barrier of entry? So if you think about money, monies also 43 00:03:02,343 --> 00:03:07,055 can be used as a gauge of seriousness. Now it's all not only a gauge of 44 00:03:07,055 --> 00:03:12,440 seriousness but that's part of it. So let's say this class was $10,000. 45 00:03:12,440 --> 00:03:15,272 Few people would say that this is a reasonable price because they're so 46 00:03:15,272 --> 00:03:18,503 interested in that. And then as you lower the price, more and 47 00:03:18,503 --> 00:03:22,821 more people would, would enter. But there's a kind of a, a question about 48 00:03:22,821 --> 00:03:28,120 what causes people to enter the course. And in this case, free would get the much 49 00:03:28,120 --> 00:03:31,446 bigger group of people. And then there's the question of, once 50 00:03:31,446 --> 00:03:35,460 people have paid something. What will they keep on doing. 51 00:03:35,460 --> 00:03:40,212 And from this perspective I think there's a, there's a bad cycle where if you pay 52 00:03:40,212 --> 00:03:46,630 nothing for something, your level of seriousness is likely to be lower. 53 00:03:46,630 --> 00:03:48,650 And there's this beautiful paper by Hal Arkes. 54 00:03:48,650 --> 00:03:53,570 And what they did was they this was in Athens, Ohio. 55 00:03:53,570 --> 00:03:57,291 Nothing bad about Athens, Ohio, but the winters there are kind of gray and 56 00:03:57,291 --> 00:04:01,104 miserable. And local theater, which is quite good, 57 00:04:01,104 --> 00:04:05,238 is selling seasonal tickets. And some people pay the full price for 58 00:04:05,238 --> 00:04:09,240 the seasonal tickets and some people pay a vastly discount amount for the seasonal 59 00:04:09,240 --> 00:04:12,890 tickets. And the question was, how long, you know, 60 00:04:12,890 --> 00:04:15,880 how long will people still go to the theater? 61 00:04:15,880 --> 00:04:18,880 And what happened was that in the beginning of the season, the people who 62 00:04:18,880 --> 00:04:22,080 paid more were more likely to go, the people who paid less, were less likely to 63 00:04:22,080 --> 00:04:25,586 go. Basically the payment, when people paid 64 00:04:25,586 --> 00:04:29,150 in advance, they looked at the weather, they say it's a miserable weather, but I 65 00:04:29,150 --> 00:04:33,626 paid for it, I might as well, go. Where as the people who paid small 66 00:04:33,626 --> 00:04:37,723 amounts, were much less likely to go. If you paid nothing, probably nobody 67 00:04:37,723 --> 00:04:42,856 would have gone on those miserable days. But what also happened is that over time, 68 00:04:42,856 --> 00:04:46,510 this gap decreased. And at the end of the season it didn't 69 00:04:46,510 --> 00:04:51,359 really matter how much you paid, nobody went on these, on these miserable nights. 70 00:04:51,359 --> 00:04:55,080 So, guilt of payment causes us to behave a certain way, but over time guilt 71 00:04:55,080 --> 00:04:58,880 diminishes. So I'm answering, it's a long answer 72 00:04:58,880 --> 00:05:01,666 isn't it? >> Yeah, but so do you think that if 73 00:05:01,666 --> 00:05:06,013 students paid for this course they would be more motivated and actually perform at 74 00:05:06,013 --> 00:05:09,649 a higher level? >> I think if people paid two things 75 00:05:09,649 --> 00:05:12,235 would happen. We would lose some of the people who 76 00:05:12,235 --> 00:05:15,170 would, who joined but not really interested. 77 00:05:15,170 --> 00:05:18,824 So there will be some self selection process and that could of even happened 78 00:05:18,824 --> 00:05:22,536 if it was $1 or $10 and so on. And some people just say hey, you know, 79 00:05:22,536 --> 00:05:25,279 it's free to join. Let me, let me just join, what, what's 80 00:05:25,279 --> 00:05:28,996 the negative part and, have you joined any Coursera classes and never took a 81 00:05:28,996 --> 00:05:31,559 class? >> At least 20. 82 00:05:31,559 --> 00:05:34,105 [LAUGH] >> so, so I think that's, that's one, 83 00:05:34,105 --> 00:05:37,318 that's one thing. So we would have, from a self selection 84 00:05:37,318 --> 00:05:40,865 perspective there's a, a group of people who were never really serious. 85 00:05:40,865 --> 00:05:46,140 And signed up, but don't really intend to and if we had a price for doing it. 86 00:05:46,140 --> 00:05:49,612 But then, the people who paid, I think the payment would have caused them to 87 00:05:49,612 --> 00:05:53,766 become more serious. And if I, again, were designing this, the 88 00:05:53,766 --> 00:05:57,670 system, and I was going to try to maximize that, I would have reminded them 89 00:05:57,670 --> 00:06:01,840 every, every time. So imagine every time. 90 00:06:01,840 --> 00:06:05,610 Before a lecture comes up, we will say you paid for that lecture. 91 00:06:05,610 --> 00:06:10,500 It's your money, if you want to get your money's worth go and watch it. 92 00:06:10,500 --> 00:06:14,394 Maybe I would have taken their payment, not all up front but I would have 93 00:06:14,394 --> 00:06:18,260 committed them to the class for six weeks. 94 00:06:18,260 --> 00:06:20,860 I would have committed them to six installements. 95 00:06:20,860 --> 00:06:25,178 One two coming out of their bank account two hours before each lecture. 96 00:06:25,178 --> 00:06:28,712 Then they would have reminded, being reminded about it, and there's a good 97 00:06:28,712 --> 00:06:32,268 chance they would try to get their money's worth. 98 00:06:32,268 --> 00:06:35,733 But, you know, it's, it's also an interesting kind of educational question 99 00:06:35,733 --> 00:06:40,375 of what is really our, our goal. Is our goal to provide the resource for 100 00:06:40,375 --> 00:06:44,707 everybody that wants to? Is our goal to help people do things in 101 00:06:44,707 --> 00:06:47,960 the way that we think is better for themselves. 102 00:06:47,960 --> 00:06:50,670 Kind of fighting through procrastination and decision. 103 00:06:50,670 --> 00:06:55,257 It's our goal to just you know push the information down peoples throat's. 104 00:06:55,257 --> 00:07:00,134 I, I'm not sure about that one yet. >> Alright, now it, it's definitely a 105 00:07:00,134 --> 00:07:05,559 complex question that we're still still thinking about. 106 00:07:05,559 --> 00:07:14,059 so, in terms of the, the whole Coursera process and creating this free product. 107 00:07:14,059 --> 00:07:19,685 It is not free in terms of what we are doing and you know, Duke and you are 108 00:07:19,685 --> 00:07:24,286 swallowing a lot of the. >> And you. 109 00:07:24,286 --> 00:07:26,364 >> Well, yes. >> Sure, I was trying to be humble. 110 00:07:26,364 --> 00:07:30,224 we're swallowing the, the cost of production. 111 00:07:30,224 --> 00:07:37,528 so how sustainable is this kind of model when students expect it to be free? 112 00:07:37,528 --> 00:07:42,874 >> So I don't think it's sustainable. So we did the calculation and we kind of 113 00:07:42,874 --> 00:07:46,717 tried to estimate how many hours we put into this and our estimate so far is 114 00:07:46,717 --> 00:07:52,462 about 3,000 hours. So, we put 3,000 hours into this. 115 00:07:52,462 --> 00:07:55,260 It's, it's our time, Duke's money, I mean all kind of things. 116 00:07:55,260 --> 00:07:59,356 Coursera, I don't know how many hours they put into developing the system and 117 00:07:59,356 --> 00:08:02,363 so on. And I think lots of people are doing it 118 00:08:02,363 --> 00:08:05,316 because it's exciting and interesting and new. 119 00:08:05,316 --> 00:08:08,761 And one of the reasons we decide to spend so much effort into is when we decide to 120 00:08:08,761 --> 00:08:12,656 try it out for real. We felt that if we were going to do 121 00:08:12,656 --> 00:08:17,076 something that is just me talking in front of a camera, that might excite my 122 00:08:17,076 --> 00:08:22,109 mother and maybe my sisters but that's about it. 123 00:08:22,109 --> 00:08:26,121 but if we try to edit and create a animations and try to explain the 124 00:08:26,121 --> 00:08:31,766 concepts and shoot some skits and so on. We felt that you know, TV is successful 125 00:08:31,766 --> 00:08:36,255 partially because they spend a ton of time and thought about how things are. 126 00:08:36,255 --> 00:08:39,880 And online education is partially hard to make online education fun. 127 00:08:39,880 --> 00:08:43,766 But partially the production value is very low, and, and we decided to try you 128 00:08:43,766 --> 00:08:47,468 know, we don't go all the way to what TV does. 129 00:08:47,468 --> 00:08:51,362 But we try to do as much as we could to give it a real, a real go. 130 00:08:51,362 --> 00:08:56,507 but if we thought about kind of a 3,000 hour investment in a class. 131 00:08:56,507 --> 00:09:00,971 And a continuous desire to keep on changing it and improving it, learn what 132 00:09:00,971 --> 00:09:07,345 works, what doesn't work and so on so. Maybe every year we would not need 3,000 133 00:09:07,345 --> 00:09:11,704 maybe we could settle for 1,000. I'm, I'm not sure what it is. 134 00:09:11,704 --> 00:09:17,978 It, it's hard to imagine that something could sustain 10 years of that. 135 00:09:17,978 --> 00:09:22,238 volunteering is a wonderful thing but, but at some point somebody will have to 136 00:09:22,238 --> 00:09:25,780 get paid. At some point Coursera will have to get 137 00:09:25,780 --> 00:09:28,321 paid. At some point universities have to 138 00:09:28,321 --> 00:09:33,126 supports the mission, you know, the, the online part is given for free. 139 00:09:33,126 --> 00:09:36,780 The people who actually attend university and pay for the buildings and the 140 00:09:36,780 --> 00:09:40,320 equipment and so on, that's, that's important. 141 00:09:40,320 --> 00:09:43,330 So I, I don't know how it would look at the end. 142 00:09:43,330 --> 00:09:47,174 I think there would be some people who would keep on producing stuff on the, 143 00:09:47,174 --> 00:09:52,900 from the kindness of their hearts and I don't know how sustainable this is. 144 00:09:52,900 --> 00:09:56,292 So the question is, whether ten years from now we'll have lots of classes that 145 00:09:56,292 --> 00:10:00,890 were new ten years ago and then nobody is working to maintaining them. 146 00:10:00,890 --> 00:10:05,260 Or will we have this reinvigorated approach? 147 00:10:05,260 --> 00:10:08,428 Now I. we've done this Beginner's Guide to 148 00:10:08,428 --> 00:10:12,368 Irrational Behavior. Would we do Advanced Guide to[LAUGH] 149 00:10:12,368 --> 00:10:16,650 Irrational Behavior, you know? can we, can we afford to spend another 150 00:10:16,650 --> 00:10:20,598 chunk of time like this on, on the next version? 151 00:10:20,598 --> 00:10:23,433 Not, not clear to us because we have all kinds of other things to do including 152 00:10:23,433 --> 00:10:28,030 having to pay the bills for the research center and so, and so. 153 00:10:28,030 --> 00:10:31,530 I worry about this. I think that online education is a 154 00:10:31,530 --> 00:10:35,773 fantastic endeavor. It's a fantastic gift for the world, but 155 00:10:35,773 --> 00:10:39,982 I think that starting it from this free perspective and creating the expectations 156 00:10:39,982 --> 00:10:44,867 that this should be free. And people would start getting used to it 157 00:10:44,867 --> 00:10:50,810 as their right to get education for free. is going to be a substantial challenge, 158 00:10:50,810 --> 00:10:54,170 and I'm not sure Coursera could ever get out of this. 159 00:10:54,170 --> 00:10:57,114 I mean, once, once you start charging nothing. 160 00:10:57,114 --> 00:11:01,402 How, how do you switch the amount of organizations that have been able to have 161 00:11:01,402 --> 00:11:05,131 transitioned. It's not very high and it's not good to 162 00:11:05,131 --> 00:11:08,960 mean there's a good path for, that's how I truly were. 163 00:11:08,960 --> 00:11:12,984 I think we should give it a go. We should try and develop the community, 164 00:11:12,984 --> 00:11:17,489 become better at it and so on. But can, can Coursera find this useful 165 00:11:17,489 --> 00:11:21,395 financially it is to return their investment and can universities who are 166 00:11:21,395 --> 00:11:25,642 participating find this useful? I'm not sure yet. 167 00:11:25,642 --> 00:11:29,068 >> Right. And, it, may, maybe is there another 168 00:11:29,068 --> 00:11:33,366 solution that doesn't depend on the students paying? 169 00:11:33,366 --> 00:11:37,453 But maybe crowd funding from other people who want to donate money so that less 170 00:11:37,453 --> 00:11:41,924 privileged people can have this same access to education? 171 00:11:41,924 --> 00:11:45,520 >> Yes, so I think one, one model is of course the subsidy model, where you 172 00:11:45,520 --> 00:11:49,612 charge the students who can't pay and subsidize the people who don't, who don't 173 00:11:49,612 --> 00:11:52,786 pay. >> Pay what you want, pay what you can, 174 00:11:52,786 --> 00:11:54,732 that sort of model. >> Pay what you want, pay what you can. 175 00:11:54,732 --> 00:12:00,218 >> there's another of, philanthropy. would somebody like The Gates Foundation 176 00:12:00,218 --> 00:12:04,099 fund some, some classes that they're interested in. 177 00:12:04,099 --> 00:12:09,290 Would, would particular philanthropies pay for it in, in that, in that regard. 178 00:12:09,290 --> 00:12:14,051 You know would, would Coursera keep on operating because somebody would pay to 179 00:12:14,051 --> 00:12:18,374 keep the lights and the engineers and so on. 180 00:12:18,374 --> 00:12:21,938 there's another question of whether we want classes to be paid in advance or 181 00:12:21,938 --> 00:12:26,501 after the fact. So payment is often a function of what we 182 00:12:26,501 --> 00:12:31,297 feel is right and moral. so when we ask ourself, you know, if you 183 00:12:31,297 --> 00:12:34,583 go to a restaurant and at the end of the meal, the waiter said, you know what, 184 00:12:34,583 --> 00:12:39,080 just pay what you want. Most people would feel really bad paying 185 00:12:39,080 --> 00:12:41,318 nothing. They'd say, I've eaten this pasta and 186 00:12:41,318 --> 00:12:44,180 this fish, and I've eaten this dessert and. 187 00:12:44,180 --> 00:12:48,230 I know that I cost people money. It was their time and they cooked and so 188 00:12:48,230 --> 00:12:51,094 on. You see the time invested and you would 189 00:12:51,094 --> 00:12:55,564 feel really bad paying nothing. But if it was an online experience, you 190 00:12:55,564 --> 00:13:00,300 sat in some Internet cafe and all you did is to consume information. 191 00:13:00,300 --> 00:13:03,899 You read the New York Times and you watched some Coursera videos and you 192 00:13:03,899 --> 00:13:08,681 listened to some music and so on. And then they said, pay as much as you 193 00:13:08,681 --> 00:13:11,748 want. I don't think anybody would feel guilty 194 00:13:11,748 --> 00:13:17,180 about not paying, because all of this information has a zero marginal cost. 195 00:13:17,180 --> 00:13:20,042 Once it's been produced, the cost of distributing it is very low. 196 00:13:20,042 --> 00:13:23,924 And Coursera is the same thing, once we finish these 3000 hours, well. 197 00:13:23,924 --> 00:13:27,592 >> By the way, 3000[CROSSTALK] hours are just the video lectures. 198 00:13:27,592 --> 00:13:28,206 [LAUGH] >> That's right. 199 00:13:28,206 --> 00:13:31,369 >> That's a lot more. >> Yep, but wh-, it's true, Coursera 200 00:13:31,369 --> 00:13:36,716 has some ongoing costs our talking, responding to the students and so on. 201 00:13:36,716 --> 00:13:40,940 but, but the, the basic perception is that once you've finished the outside 202 00:13:40,940 --> 00:13:44,866 investment. the pro-, the, the distribution cost is 203 00:13:44,866 --> 00:13:49,564 zero and another student joining us doesn't take any of our cost. 204 00:13:49,564 --> 00:13:54,799 So, the marginal cost is zero. So, so, when marginal cost is zero. 205 00:13:54,799 --> 00:13:58,130 People don't feel guilty about not paying. 206 00:13:58,130 --> 00:14:00,830 So imagine two models. One is that we go to the students. 207 00:14:00,830 --> 00:14:02,660 And we say hey, we're going to do this class. 208 00:14:02,660 --> 00:14:05,850 But we need x amount of money to cover the cost. 209 00:14:05,850 --> 00:14:07,940 Only if you pay us up front we will do it. 210 00:14:07,940 --> 00:14:10,941 So if they kick start a model in which you pay up front. 211 00:14:10,941 --> 00:14:14,545 I think that way actually people would understand what the contribution would be 212 00:14:14,545 --> 00:14:17,554 translated. Whereas if it was after the fact and the 213 00:14:17,554 --> 00:14:21,630 class has been created I don't think people would feel the same way. 214 00:14:21,630 --> 00:14:25,590 So one version for Coursera is to do a up front investment for Coursera to come to 215 00:14:25,590 --> 00:14:29,490 the community, and say look, we're giving this platform, here the real cost of 216 00:14:29,490 --> 00:14:34,636 class. If you're willing to support it in 217 00:14:34,636 --> 00:14:37,030 advanced. Good we'll do it, if you're not we're 218 00:14:37,030 --> 00:14:39,076 not. And this way I think people will 219 00:14:39,076 --> 00:14:41,814 contribute more. I think the model in which people 220 00:14:41,814 --> 00:14:46,070 contribute after, pay what you want, is going to be a bit, a bit tougher. 221 00:14:46,070 --> 00:14:49,064 Philanthropy is possible and then there's advertising. 222 00:14:49,064 --> 00:14:51,005 And, you know we can ask our self whether we want. 223 00:14:51,005 --> 00:14:54,330 The classes to be supported by advertising. 224 00:14:54,330 --> 00:14:56,120 I saw a few classes already. >> Really? 225 00:14:56,120 --> 00:14:58,940 >> Are sponsored by, they have sponsors. 226 00:14:58,940 --> 00:15:01,066 On the sign up for. >> On Coursera. 227 00:15:01,066 --> 00:15:03,694 >> On Coursera. Yeah, and these are some of the classes 228 00:15:03,694 --> 00:15:05,928 I've registered for and haven't taken yet. 229 00:15:05,928 --> 00:15:08,536 >> [LAUGH] Which you shouldn't do, by the way. 230 00:15:08,536 --> 00:15:13,307 >> [LAUGH] Don't do it. [LAUGH] But, but I think this is a, you 231 00:15:13,307 --> 00:15:18,600 know, we need to ask ourselves what, do we want it? 232 00:15:18,600 --> 00:15:21,170 Do we want that model? Do we want the site of the videos to be 233 00:15:21,170 --> 00:15:24,382 for? At, at the end of the day, some money has 234 00:15:24,382 --> 00:15:27,753 to change hands. >> Someone has to pay for it, yes. 235 00:15:27,753 --> 00:15:30,534 >> Somebody has to pay for something and the question is how do we want it? 236 00:15:30,534 --> 00:15:34,255 And, I think it's kind of a precious social commodity that we have that you 237 00:15:34,255 --> 00:15:38,978 know not we or I have created. But, people have created this amazing 238 00:15:38,978 --> 00:15:43,187 space for professors and students to get together and, and create material for 239 00:15:43,187 --> 00:15:47,035 education have discussion learn something. 240 00:15:47,035 --> 00:15:50,455 And we need to think about, how do we want to think of it as a, as a social 241 00:15:50,455 --> 00:15:53,354 good. And if we each just shirk from our 242 00:15:53,354 --> 00:15:57,909 responsibility, the odds are that things like advertising will have to happen. 243 00:15:57,909 --> 00:16:00,230 But is that really how we want this to work? 244 00:16:00,230 --> 00:16:02,662 I don't think so. So I would like us to be a bit more 245 00:16:02,662 --> 00:16:05,764 proactive in figuring out another approach for payment. 246 00:16:05,764 --> 00:16:08,890 >> Yeah. And what about after the fact? 247 00:16:08,890 --> 00:16:12,590 If you made the costs more salient. How could we do that now since we have 248 00:16:12,590 --> 00:16:16,410 already created this thing? >> Yeah so, so if we have tried to, to 249 00:16:16,410 --> 00:16:20,698 create it I think if we basically took your salary eh. 250 00:16:20,698 --> 00:16:24,923 And we made it salient for the students that unless they pay you're not going to 251 00:16:24,923 --> 00:16:28,370 get it. So said here's Aline, here's how much 252 00:16:28,370 --> 00:16:32,408 work she's put into it. And by the way, you know, she hasn't been 253 00:16:32,408 --> 00:16:36,590 eaten I think for, for a while >> I haven't been eating. 254 00:16:36,590 --> 00:16:38,447 That's true. >> If you wanted to eat here is, here 255 00:16:38,447 --> 00:16:41,406 is the cost. I think, you know, the chances that the 256 00:16:41,406 --> 00:16:45,118 students would have kind of overall emotional connection with Coursera is a 257 00:16:45,118 --> 00:16:48,916 little lower. I think the chances the students will 258 00:16:48,916 --> 00:16:52,751 have an emotional connection with the particular people who are helping them 259 00:16:52,751 --> 00:16:57,021 out is a little higher. So I think that if we put, and, and I 260 00:16:57,021 --> 00:17:01,161 don't think people want to pay for things like overheads and cameras and buildings 261 00:17:01,161 --> 00:17:05,037 of Duke. But I think paying for salaries of the 262 00:17:05,037 --> 00:17:09,002 individuals who are putting their time and effort and so on, those will be more 263 00:17:09,002 --> 00:17:13,459 palatable. So maybe we can --[LAUGH] we can try -- 264 00:17:13,459 --> 00:17:16,975 >> Pay for my dinner, guys. >> If you do a particular job, maybe 265 00:17:16,975 --> 00:17:20,850 you'll get a drink as well. >> Oh, excellent! 266 00:17:20,850 --> 00:17:23,970 Look forward to that! OK. 267 00:17:23,970 --> 00:17:29,076 So, you talked a little bit about why you're doing this but it seems unlikely 268 00:17:29,076 --> 00:17:33,589 that it's just pure altruism. Yeah I know. 269 00:17:33,589 --> 00:17:37,252 >> Unlikely why? Because you know me to well? 270 00:17:37,252 --> 00:17:40,464 >> So this is from the students, not me. 271 00:17:40,464 --> 00:17:47,720 yeah, why, why are you investing so much time and resources into this thing? 272 00:17:47,720 --> 00:17:52,712 Why is this important? >> So, just, I spent a ton of time 273 00:17:52,712 --> 00:18:00,024 trying to, spread the world, the word out. 274 00:18:00,024 --> 00:18:04,184 I do we do lots of research on irrationality and I want people to know 275 00:18:04,184 --> 00:18:07,910 about it. I want people to make better decisions. 276 00:18:07,910 --> 00:18:09,590 I want organizations to make better decisions. 277 00:18:09,590 --> 00:18:11,690 I want government to make better decisions. 278 00:18:11,690 --> 00:18:14,455 And this is just one other way to try and get the word. 279 00:18:14,455 --> 00:18:17,605 The word out and you can think of it as altruistic but also you can think about 280 00:18:17,605 --> 00:18:21,028 it as selfish. I spend so much time doing the research I 281 00:18:21,028 --> 00:18:25,928 wanted to have some outcome. I think about each research papers like a 282 00:18:25,928 --> 00:18:28,458 kids. Something I spend lots of time and 283 00:18:28,458 --> 00:18:31,773 thought and consideration and there's a particular finding in an inside and I 284 00:18:31,773 --> 00:18:36,490 want that. Kids it's paper to have, to have a life. 285 00:18:36,490 --> 00:18:40,269 This finding to have a, an existence. And, you know, maybe, maybe it's 286 00:18:40,269 --> 00:18:42,314 altruistic. Maybe it's selfish. 287 00:18:42,314 --> 00:18:47,222 you could, you could do both. the second thing is that I, I'm an 288 00:18:47,222 --> 00:18:53,350 experimentalist in both eh, prac-, in, kind of what I do in for life. 289 00:18:53,350 --> 00:18:57,780 But also in my, in my nature. And this was kind of a new opportunity to 290 00:18:57,780 --> 00:19:04,202 try and learn something new in a new way. and I'm just curious about the answer. 291 00:19:04,202 --> 00:19:07,668 So, part of it is that this, this for me is an experiment. 292 00:19:07,668 --> 00:19:11,800 it's, it's a new experience. It's trying to figure out how will it 293 00:19:11,800 --> 00:19:15,815 work for me, and how would it look like, and how would people react? 294 00:19:15,815 --> 00:19:18,831 And what are some of the unexpected things that would come out of it and 295 00:19:18,831 --> 00:19:22,394 there's a lot of unexpected things coming out of it. 296 00:19:22,394 --> 00:19:22,730 >> [LAUGH] Right. Right. 297 00:19:22,730 --> 00:19:24,630 It's not a very controlled experiment but[LAUGH] Yeah. 298 00:19:24,630 --> 00:19:26,834 >> It's not. It's, it's a controlled, it's a 299 00:19:26,834 --> 00:19:31,100 non-controlled experience. Maybe experiment is not right. 300 00:19:31,100 --> 00:19:33,860 It's a colloquial world in way of using experiment. 301 00:19:33,860 --> 00:19:38,530 But it's a, it's a new experience that i'm learning a lot from. 302 00:19:38,530 --> 00:19:43,131 And learning some of the challenges, and some of the great things about it. 303 00:19:43,131 --> 00:19:46,358 >> Cool. Yes, I agree. 304 00:19:46,358 --> 00:19:51,967 so, in terms of opportunity cost, since we're talking about online education 305 00:19:51,967 --> 00:19:58,799 versus you know, a, a Duke education or some other higher education. 306 00:19:58,799 --> 00:20:03,934 Do you think that spending $50,000 or around that much a year is actually worth 307 00:20:03,934 --> 00:20:07,776 it to students? >> So first of all, I mean, worth it 308 00:20:07,776 --> 00:20:13,686 depends on what your opportunity cost is. So, so if you have no money for anything 309 00:20:13,686 --> 00:20:18,340 that wouldn't be. Number one priority. 310 00:20:18,340 --> 00:20:25,688 And so I grew up in Israel and I did my BA, my first degree, in Isreal. 311 00:20:25,688 --> 00:20:29,730 And Isreal is very different in terms of education from the US. 312 00:20:29,730 --> 00:20:33,045 First of all, people go to the army for two or three years first so everybody's a 313 00:20:33,045 --> 00:20:37,040 little older and there's also no, almost no dorms. 314 00:20:37,040 --> 00:20:41,170 So people are older, everybody lives in town, and people come to, to the 315 00:20:41,170 --> 00:20:46,148 university a little bit like work. They come for the classes and then 316 00:20:46,148 --> 00:20:49,560 everybody because also their older, they have a job. 317 00:20:49,560 --> 00:20:53,572 So there's a real job that you make money on and then there's your part-time job 318 00:20:53,572 --> 00:20:58,244 where you're being a student. And, coming to the the US, there's some 319 00:20:58,244 --> 00:21:03,393 incredibly interesting about, being in an academic environment, all the time. 320 00:21:03,393 --> 00:21:08,400 living with your fellow students. Being with it all the time. 321 00:21:08,400 --> 00:21:12,708 Living in this, in this world. And I believe it is a incredibly 322 00:21:12,708 --> 00:21:17,398 precious. institution that have been created mostly 323 00:21:17,398 --> 00:21:23,374 in the originally in, I think, mostly I mean the British in, in the US have the 324 00:21:23,374 --> 00:21:29,337 some of the best. Structured around this where life is 325 00:21:29,337 --> 00:21:34,074 really all about academia. And if I think back on my BA, when I had 326 00:21:34,074 --> 00:21:39,308 to juggle working and University. And how much time do they really have for 327 00:21:39,308 --> 00:21:42,378 discussions around things. And meeting the people I studied with and 328 00:21:42,378 --> 00:21:45,058 so on. I, I feel I kind of gotten eh, the short 329 00:21:45,058 --> 00:21:48,617 stick of it. And if you think about 4 years in a life 330 00:21:48,617 --> 00:21:52,792 that lasts maybe 80, and most of it is after school. 331 00:21:52,792 --> 00:21:56,036 And I, I think it's an amazing investment. 332 00:21:56,036 --> 00:22:00,712 Now, is it an investment that everybody will know what they got from it? 333 00:22:00,712 --> 00:22:03,243 No. is it an investment that you would be 334 00:22:03,243 --> 00:22:08,174 able to, will be useful for everybody? Probably not for everybody. 335 00:22:08,174 --> 00:22:12,749 But what is the value of one good idea, what is the value of delving a little 336 00:22:12,749 --> 00:22:19,139 deeper into something? I, I think it has tremendous value I, I 337 00:22:19,139 --> 00:22:24,599 remember taking my fourth class in statistics in, in grad school, and it 338 00:22:24,599 --> 00:22:30,920 was, so I took a few classes as an undergrad. 339 00:22:30,920 --> 00:22:36,130 And then I, I took a lot of classes in, in gradschool. 340 00:22:36,130 --> 00:22:39,650 And there were lots of material that we went over before, and there was lots of 341 00:22:39,650 --> 00:22:43,296 material I knew. But never the less every time the 342 00:22:43,296 --> 00:22:47,512 professor said like one sentence, that stayed with me for now 20 some, some 343 00:22:47,512 --> 00:22:51,558 years now. I think of this as the difference between 344 00:22:51,558 --> 00:22:55,857 being an amateur and a professional. And you know, I sat in these three hour 345 00:22:55,857 --> 00:22:59,391 lectures of statistics and maybe two hours and forty minutes were not very 346 00:22:59,391 --> 00:23:04,520 useful and twenty minutes I learned something incredibly important. 347 00:23:04,520 --> 00:23:10,695 But some of those stayed with me for 20 years and shaped my understanding about 348 00:23:10,695 --> 00:23:15,822 statistics. so i think being kind of immersed in 349 00:23:15,822 --> 00:23:21,790 academic environment, gives you more chances for that to happen. 350 00:23:21,790 --> 00:23:24,430 Now can you count on it, can you plan on it? 351 00:23:24,430 --> 00:23:27,790 I think I think that's tough, but if you try to juggle work, like I imagine 352 00:23:27,790 --> 00:23:32,490 somebody watched the Coursera videos and just fast forward things. 353 00:23:32,490 --> 00:23:34,199 >> [LAUGH]. >> Just to make it as fast as possible 354 00:23:34,199 --> 00:23:37,774 as efficient as possible. I think the chances of having a real 355 00:23:37,774 --> 00:23:42,960 insight, and a real moment that will change what you do is much lower. 356 00:23:42,960 --> 00:23:47,705 You really need the time and space and the camaraderie to think, stop, reflect 357 00:23:47,705 --> 00:23:51,757 and so on. So, all our education is a great one 358 00:23:51,757 --> 00:23:55,784 step. But I think that what people can get from 359 00:23:55,784 --> 00:24:01,528 being immersed from four years in a good academic environment all the time. 360 00:24:01,528 --> 00:24:05,040 Sleeping, eating, talking, going to classes, complaining. 361 00:24:05,040 --> 00:24:06,534 I mean whatever it is I, I wish I got I got, I got a chance. 362 00:24:06,534 --> 00:24:11,726 I get a little bit of it, 'cuz I get to be a professor and I get to talk to the 363 00:24:11,726 --> 00:24:19,140 students and so on, but I would have loved to live on campus. 364 00:24:19,140 --> 00:24:23,100 I would have loved to have the rest of my life around this for at least a few 365 00:24:23,100 --> 00:24:26,850 years. >> And what if we could build real-life 366 00:24:26,850 --> 00:24:31,445 communities sort of around this class, all around the world? 367 00:24:31,445 --> 00:24:36,878 it's not in the university itself, but it's, it's about the class. 368 00:24:36,878 --> 00:24:41,550 >> I, I think something where the class doesn't end, but carries over to the rest 369 00:24:41,550 --> 00:24:46,003 of life would have been incredibly useful, particularly for topics like 370 00:24:46,003 --> 00:24:50,696 this. So if you think about it, you're learning 371 00:24:50,696 --> 00:24:53,512 a little bit about human psychology and there's the question of where does it 372 00:24:53,512 --> 00:24:57,290 benefit you life or what can it benefit other people in life. 373 00:24:57,290 --> 00:25:02,062 How do you understand things better? And so I can imagine some classes where 374 00:25:02,062 --> 00:25:05,758 it's about the class itself and you're learning and it might have little less to 375 00:25:05,758 --> 00:25:11,360 do with your regular life. But to the extent that it can carry over. 376 00:25:11,360 --> 00:25:15,195 I think it would be incredibly useful to have the way to experience the class in 377 00:25:15,195 --> 00:25:18,494 other places. So, you go to work, and you get to 378 00:25:18,494 --> 00:25:22,214 reflect about how some of the notions about labor and how the notions about 379 00:25:22,214 --> 00:25:26,570 altruism reflect on what you're doing right now. 380 00:25:26,570 --> 00:25:29,450 And basically you stop, and you say, so how is that concept related to what I'm 381 00:25:29,450 --> 00:25:32,257 experiencing. Something here, is there something I 382 00:25:32,257 --> 00:25:34,618 could improve, understand better and so on. 383 00:25:34,618 --> 00:25:38,118 I, I, particularly for classes like this I think it would be incredibly use I just 384 00:25:38,118 --> 00:25:42,030 don't know how to do it. >> [LAUGH] Yeah, well we can try. 385 00:25:42,030 --> 00:25:46,624 We can definitely keep trying. so you mentioned a little bit that 386 00:25:46,624 --> 00:25:51,295 opportunity cost is going to depend on how much money you have in your wallet. 387 00:25:51,295 --> 00:25:56,125 How, how is there any research showing whether people with less wealth think 388 00:25:56,125 --> 00:26:00,706 differently about opportunity cost? >> Yeah. 389 00:26:00,706 --> 00:26:05,458 So, so this is perhaps one of the the saddest papers I know that came in the 390 00:26:05,458 --> 00:26:10,110 last year. And this is a paper that combined two 391 00:26:10,110 --> 00:26:13,192 things. It combines the notion of depletion and 392 00:26:13,192 --> 00:26:18,576 the notion of opportunity cost. [UNKNOWN] gives this very nice metaphor 393 00:26:18,576 --> 00:26:22,106 of a suitcase. He says if you're a wealthy person it's 394 00:26:22,106 --> 00:26:25,654 as if you have a big suitcase. You pack for the weekend you can throw 395 00:26:25,654 --> 00:26:28,560 things in you can take things out no problem. 396 00:26:28,560 --> 00:26:32,144 If you're poor you have a small suitcase to start with you don't have space for 397 00:26:32,144 --> 00:26:36,428 everything you need. And then every time you change your mind, 398 00:26:36,428 --> 00:26:40,144 something has to come out. And maybe you have to rearrange 399 00:26:40,144 --> 00:26:45,073 everything in the suitcase. So in that particular research project, 400 00:26:45,073 --> 00:26:50,050 what they've done is they got people to have lots of tradeoffs between their 401 00:26:50,050 --> 00:26:53,970 decisions. And what they saw was that the more 402 00:26:53,970 --> 00:26:58,020 tradeoffs you have, the more difficult it is to make the right decision. 403 00:26:58,020 --> 00:27:02,360 People basically become tired, exhausted, depleted, and it's harder and harder to 404 00:27:02,360 --> 00:27:06,410 make the right decisions. And sadly, they show that even if you 405 00:27:06,410 --> 00:27:11,030 give people the opportunity to borrow money, what do you think that does? 406 00:27:11,030 --> 00:27:14,117 Ideally if you can borrow money it increases your flexibility, allow you to 407 00:27:14,117 --> 00:27:18,155 make better decisions. But it actually makes people work, make 408 00:27:18,155 --> 00:27:20,050 worse decisions. Why? 409 00:27:20,050 --> 00:27:23,000 Because if you're thinking about the tradeoffs you're making. 410 00:27:23,000 --> 00:27:26,168 But now you also have tradeoffs between now and later, because you could borrow 411 00:27:26,168 --> 00:27:31,222 money to have interest rates and so on. That actually increased the cognitive 412 00:27:31,222 --> 00:27:34,354 load. So, so the finding is, that people who 413 00:27:34,354 --> 00:27:39,300 are poor are much more aware of their opportunity costs. 414 00:27:39,300 --> 00:27:42,350 Because if you take the bus you can't buy coffee. 415 00:27:42,350 --> 00:27:44,950 If you buy sandwich you can't buy something else. 416 00:27:44,950 --> 00:27:48,622 These trade offs are much more clear but those trade offs are much more exhausting 417 00:27:48,622 --> 00:27:52,578 for them mentally. And as they make more and more of these 418 00:27:52,578 --> 00:27:57,066 decisions it's harder for them to resist temptation and to fall for all kinds of 419 00:27:57,066 --> 00:28:01,859 mistake. So, realizing opportunity cost sadly has 420 00:28:01,859 --> 00:28:07,133 this element of burden of choice. Which means that you have to make these 421 00:28:07,133 --> 00:28:13,014 trade-offs and then all decisions just become that much more difficult. 422 00:28:13,014 --> 00:28:17,730 So, so, I think that's a very sad thing. on. 423 00:28:17,730 --> 00:28:21,630 There's another kind of positive side, and this is just kind of personal 424 00:28:21,630 --> 00:28:25,660 observation, is that when I talk to people who make money by the hour but can 425 00:28:25,660 --> 00:28:32,230 also control how many hours they work. For example, imagine that you're, a 426 00:28:32,230 --> 00:28:38,150 carpenter and can decide how many hours to work and you charge by the hour. 427 00:28:38,150 --> 00:28:41,230 And those people have a different way to think about opportunity cost. 428 00:28:41,230 --> 00:28:45,070 You can say to yourself should I work another three hours in order to go for 429 00:28:45,070 --> 00:28:48,056 dinner? Or should I work another 30 hours to get 430 00:28:48,056 --> 00:28:51,828 a new bicycle or something like that. Those people don't use money as 431 00:28:51,828 --> 00:28:54,620 opportunity cost, they use hours of labor. 432 00:28:54,620 --> 00:28:58,712 And that seems to help them make more rational tradeoffs between, between 433 00:28:58,712 --> 00:29:01,520 things. >> Very interesting. 434 00:29:01,520 --> 00:29:05,572 All right, let's switch topics. Enough of that. 435 00:29:05,572 --> 00:29:10,682 a few people have asked about animals and, their similarities or differences to 436 00:29:10,682 --> 00:29:14,232 us. Do we find irrational behavior, in 437 00:29:14,232 --> 00:29:19,203 animals? Yes, so[COUGH] so animals do show some 438 00:29:19,203 --> 00:29:24,776 irrational behaviors. For example, there's some research on, 439 00:29:24,776 --> 00:29:29,008 Context effect, both in some birds and also in bees. 440 00:29:29,008 --> 00:29:32,928 and if you remember this story about the asymmetric dominance, the question is, 441 00:29:32,928 --> 00:29:36,300 how do you make choices between two options? 442 00:29:36,300 --> 00:29:40,790 And what happens when one option has a similar dominated option next to it. 443 00:29:40,790 --> 00:29:45,279 Making the contrast between them seems more salient animals make sim-, similar 444 00:29:45,279 --> 00:29:48,851 mistakes. So, you add the decoy option in animal 445 00:29:48,851 --> 00:29:53,379 show off with that. animals don't make all mistakes that we, 446 00:29:53,379 --> 00:29:57,006 that we make. For example, if you think about 447 00:29:57,006 --> 00:30:04,430 dishonesty we all have a tendency to fib a little bit, to tell white lies and so. 448 00:30:04,430 --> 00:30:08,984 Animals don't have white lies they also don't have guilt in the same, in the same 449 00:30:08,984 --> 00:30:14,134 way that we, that we do. Lori Santos has actually shown very 450 00:30:14,134 --> 00:30:18,988 nicely that even monkeys are influenced by advertising. 451 00:30:18,988 --> 00:30:23,204 she basically created advertising in which she paired particular foods with 452 00:30:23,204 --> 00:30:26,284 advertisment. And she showed it after awhile of 453 00:30:26,284 --> 00:30:30,079 advertising exposed, being exposed to this advertising the animals were willing 454 00:30:30,079 --> 00:30:36,529 to exert more effort to get that. in very, very general terms there's lot 455 00:30:36,529 --> 00:30:42,011 of different nuances. I would say that decisions that are based 456 00:30:42,011 --> 00:30:49,020 on emotion, very primitive basic and so on, are irrationalities are similar. 457 00:30:49,020 --> 00:30:52,550 To the irrationalities of the animals. But things that depend on the neural 458 00:30:52,550 --> 00:30:56,027 cortex, things that depend on our incredible ability to think, as some of 459 00:30:56,027 --> 00:30:59,561 those will make more decisions, mistakes, and some of those will make less 460 00:30:59,561 --> 00:31:03,960 mistakes. For example, the fact that we have really 461 00:31:03,960 --> 00:31:07,069 good memory to things that happened in the past. 462 00:31:07,069 --> 00:31:11,325 Mean that if we made one wrong decision in the past, we could remember that. 463 00:31:11,325 --> 00:31:14,914 Let's say we don't think of it as wrong. We just remember making a decision and we 464 00:31:14,914 --> 00:31:18,916 can reply time after time after time. But if we didn't have such a good memory 465 00:31:18,916 --> 00:31:23,678 we would not remember the decision. We would have a follow up effect on our 466 00:31:23,678 --> 00:31:27,020 behavior. So, it's a mixed blessing. 467 00:31:27,020 --> 00:31:29,320 I think there's some things we're more rational. 468 00:31:29,320 --> 00:31:34,160 Some things we're less rational. In animals I think there's a great, set 469 00:31:34,160 --> 00:31:37,270 of topics there. Maybe we'll explore it more, in more 470 00:31:37,270 --> 00:31:40,264 depth one day. >> Sounds good, sounds good. 471 00:31:40,264 --> 00:31:43,280 Now, I have another animal-related question to you. 472 00:31:43,280 --> 00:31:44,610 >> Animal-related, okay. >> Animal-related, yeah. 473 00:31:44,610 --> 00:31:49,006 No peeking. [LAUGH] Would you rather fight a hundred 474 00:31:49,006 --> 00:31:54,258 duck-sized horses or one horse-sized duck. 475 00:31:54,258 --> 00:31:57,220 >> A hundred little horses? >> Little mini horses. 476 00:31:57,220 --> 00:31:58,640 >> Little mini horses. >> Well not that many, but the size of 477 00:31:58,640 --> 00:32:00,060 a duck. >> OK the size of a duck. 478 00:32:00,060 --> 00:32:07,446 >> Or one huge. >> One huge horse-sized duck. 479 00:32:07,446 --> 00:32:10,050 >> So. >> It's a really big topic these days. 480 00:32:10,050 --> 00:32:12,390 >> A big topic, really? >> Yeah, actually a couple students 481 00:32:12,390 --> 00:32:14,750 submitted this same questions. >> Wow. 482 00:32:14,750 --> 00:32:18,259 So, so I think I would go for the one big one. 483 00:32:18,259 --> 00:32:22,841 And in my, my reason is that I, I think that my skills are not really in my 484 00:32:22,841 --> 00:32:27,818 technical ability, like I think cordination, like fighting lots of things 485 00:32:27,818 --> 00:32:33,000 that coming around. I think I would get confused. 486 00:32:33,000 --> 00:32:36,392 I think my attention, my ability to spread attention around, all kinds of 487 00:32:36,392 --> 00:32:39,904 option is not a tie. So I think if I would be attacked by all 488 00:32:39,904 --> 00:32:43,200 kinds of[UNKNOWN] I don't think that's my strength. 489 00:32:43,200 --> 00:32:47,318 I think I would be better, just me personally, I think I would be better 490 00:32:47,318 --> 00:32:52,740 thinking about one particular enemy and try to outsmart them. 491 00:32:52,740 --> 00:33:00,234 So I think that given my. With your co-coordination, but my general 492 00:33:00,234 --> 00:33:05,526 overconfidence about my intellectual ability may be one big duck is better 493 00:33:05,526 --> 00:33:11,601 approach fighting one things. also I think, you know, given my 494 00:33:11,601 --> 00:33:15,948 attention isssues, I think 100 little things running around, that would be 495 00:33:15,948 --> 00:33:20,520 really tough. >> Do you have attention issues? 496 00:33:20,520 --> 00:33:24,358 >> What did you say? >> Oh God. 497 00:33:24,358 --> 00:33:29,260 Next question. Let's talk about anchoring. 498 00:33:29,260 --> 00:33:33,270 one person is wondering how discounts work in terms of anchoring. 499 00:33:33,270 --> 00:33:36,790 So let's say you see something that's on sale it's severely discounted do you 500 00:33:36,790 --> 00:33:40,722 anchor to that sale price. And the next time you go to purchase the 501 00:33:40,722 --> 00:33:44,124 same thing you are not willing to pay full price when it's no longer in sale or 502 00:33:44,124 --> 00:33:48,454 how does that work? >> So this calls generally work on, on 503 00:33:48,454 --> 00:33:52,422 this principle so you logic is to anchor on the original price and you see that 504 00:33:52,422 --> 00:33:57,270 discount is something beneficial you know. 505 00:33:57,270 --> 00:34:00,620 From a rational perspective, why would you care that somebody, something is on a 506 00:34:00,620 --> 00:34:02,470 sale. Right? 507 00:34:02,470 --> 00:34:05,915 When something is on sale, it tells you it used to cost a different amount in the 508 00:34:05,915 --> 00:34:08,660 past. Why could you possibly care, the only 509 00:34:08,660 --> 00:34:11,370 reason you care, it gives you a relative price. 510 00:34:11,370 --> 00:34:14,359 You say, oh, I don't know if this is a good price or not, but relative to this 511 00:34:14,359 --> 00:34:17,495 price that happened to be in the past, irrelevant as it is, this is a good, this 512 00:34:17,495 --> 00:34:22,610 is a good price. and in general, people keep on having the 513 00:34:22,610 --> 00:34:28,070 old price as an anchor and the new price is just a deviation from that. 514 00:34:28,070 --> 00:34:31,724 And if you get people to believe that this discount is temporary due to their 515 00:34:31,724 --> 00:34:36,069 particular skill, due to some coupon due to something else. 516 00:34:36,069 --> 00:34:39,050 That doesn't make the new discounted price the anchor. 517 00:34:39,050 --> 00:34:42,708 But if you keep on doing it all the time, then there's a chance that this will 518 00:34:42,708 --> 00:34:46,010 happen. And people would expect at least that 519 00:34:46,010 --> 00:34:48,642 discount. And that's actually a lot of what happens 520 00:34:48,642 --> 00:34:53,067 in the fashion industry. During the financial crisis, so a lot of 521 00:34:53,067 --> 00:34:56,489 the people in the fashion industry discounted heavily and kept those 522 00:34:56,489 --> 00:35:00,734 discounts just to keep people coming in the stores. 523 00:35:00,734 --> 00:35:03,780 And now it's really hard for them to get over that. 524 00:35:03,780 --> 00:35:09,200 So if you want to have a discount, the discount can't be permanent. 525 00:35:09,200 --> 00:35:12,073 For, for the anchoring. And you have to, you want to try to give 526 00:35:12,073 --> 00:35:17,118 people a reason why this discount is just for them or just temporary. 527 00:35:17,118 --> 00:35:21,890 And therefore you could actually delay the condition will become permanent. 528 00:35:21,890 --> 00:35:24,894 But at some point it can become permanent. 529 00:35:24,894 --> 00:35:28,646 And cars in the US, for a long time American cars used to give people a 530 00:35:28,646 --> 00:35:32,775 rebate. the Japanese car never, never did, and 531 00:35:32,775 --> 00:35:35,784 what happened was that people just stopped buying cars unless they had 532 00:35:35,784 --> 00:35:40,620 rebates, just the American companies. It was not a discount anymore. 533 00:35:40,620 --> 00:35:43,665 This was the price. You expected a particular rebate, people 534 00:35:43,665 --> 00:35:47,618 just be, became the standard, and I think it's, it's importnat when people think 535 00:35:47,618 --> 00:35:51,512 about pricing to say, okay, is this a new price I want to establish for a long time 536 00:35:51,512 --> 00:35:57,833 or just something for the short time. And if it's for the short term think 537 00:35:57,833 --> 00:36:02,374 about this anchoring very differently. >> Right, okay. 538 00:36:02,374 --> 00:36:08,844 Now let's talk bout the pain of paying. So how do you think that using a, 539 00:36:08,844 --> 00:36:13,205 different country, a different country that you're not from. 540 00:36:13,205 --> 00:36:17,545 Like when you're traveling for example, a cash currency there might affect your 541 00:36:17,545 --> 00:36:21,796 pain of paying. So does it matter whether the exchange 542 00:36:21,796 --> 00:36:26,694 rate is high or low? Or is it the fact that it almost feels 543 00:36:26,694 --> 00:36:31,698 like token because it's a, it's a different form. 544 00:36:31,698 --> 00:36:33,870 >> So, so I think both of them are true. 545 00:36:33,870 --> 00:36:37,066 So I think the moment you change your money to something that looks funny, like 546 00:36:37,066 --> 00:36:41,665 Monopoly money ,it feels very different. In fact, that's, that's how casinos work, 547 00:36:41,665 --> 00:36:43,560 right? So when you come to a casino what they 548 00:36:43,560 --> 00:36:46,010 want you to do is to take a big pile of cash. 549 00:36:46,010 --> 00:36:49,344 Give it to them, or credit card even better, and then you get tokens. 550 00:36:49,344 --> 00:36:52,400 Why, why with tokens? Because it separates you from the money. 551 00:36:52,400 --> 00:36:56,890 You basically said, I've decided to lose all of that money that I'm giving you. 552 00:36:56,890 --> 00:37:00,388 Now all this money has been allocated to this category of losing, and now let me, 553 00:37:00,388 --> 00:37:03,790 let me do that. So I think when foreign countries are 554 00:37:03,790 --> 00:37:06,817 basically like casinos. And if you use the same procedures in 555 00:37:06,817 --> 00:37:10,002 casinos if you come in and you give them a lot of money you get back funny colored 556 00:37:10,002 --> 00:37:14,265 money and then you use it. And then if it has crazy numbers and you 557 00:37:14,265 --> 00:37:17,784 don't think about the conversion like you know, 100,000 viewers or something like 558 00:37:17,784 --> 00:37:20,779 that. If you don't think about the conversion 559 00:37:20,779 --> 00:37:24,013 or it's difficult mentally to think about it just feel like you're spending and 560 00:37:24,013 --> 00:37:28,650 spending and spending and you don't feel the pain of pain. 561 00:37:28,650 --> 00:37:32,676 And again this is just subjective, but my students when I ask them tell me that as 562 00:37:32,676 --> 00:37:35,714 well. When you get back to the airport, flying 563 00:37:35,714 --> 00:37:38,532 to the US, for example, to your country of origin. 564 00:37:38,532 --> 00:37:41,700 And you have some of the local currency left, people feel very comfortable just 565 00:37:41,700 --> 00:37:45,830 spending it, buying all kinds of things that they wouldn't buy. 566 00:37:45,830 --> 00:37:49,542 Otherwise, and of course you can go back to your home country you can change it 567 00:37:49,542 --> 00:37:53,717 back to whatever your currency so dollars in our case. 568 00:37:53,717 --> 00:37:56,957 But, but you don't feel like that's needed because that money is a social 569 00:37:56,957 --> 00:38:02,182 with that country is connected to that and spending it feels, feels much easier. 570 00:38:02,182 --> 00:38:07,292 Now one thing you could try to counteract it by using a credit card which keeps you 571 00:38:07,292 --> 00:38:14,666 connected to your regular procedure or translate everything to current money. 572 00:38:14,666 --> 00:38:17,828 But, you know, you can ask yourself whether this is one of those cases where 573 00:38:17,828 --> 00:38:20,820 you want to feel the pain of paying or not. 574 00:38:20,820 --> 00:38:23,130 If you want to feel the pain of paying then do those things. 575 00:38:23,130 --> 00:38:25,160 You'll feel worse and you woldn't spend as much. 576 00:38:25,160 --> 00:38:28,436 But if you want from time to time to let loose and relax and just send money and 577 00:38:28,436 --> 00:38:33,820 enjoy your vacation maybe you. Should use the casino approach. 578 00:38:33,820 --> 00:38:40,600 >> [LAUGH] Sounds good. How do you feel about greed? 579 00:38:40,600 --> 00:38:43,714 Is greed good? >> Is greed good? 580 00:38:43,714 --> 00:38:44,824 No. so. 581 00:38:44,824 --> 00:38:47,588 >> Elaborate. >> Elaborate. 582 00:38:47,588 --> 00:38:51,788 Okay, so, so I think when people say greed is good I think what they mean is 583 00:38:51,788 --> 00:38:56,560 motivation is good. They mean that you want people to work 584 00:38:56,560 --> 00:39:01,871 hard they want people to strive. And they think that the motivation toward 585 00:39:01,871 --> 00:39:06,726 money is the perfect motivation to optimize the social goods. 586 00:39:06,726 --> 00:39:10,355 So, this a I a very simplistic way of fly if it says. 587 00:39:10,355 --> 00:39:15,749 >> If I design your incentive structure such that you wanting to make the most 588 00:39:15,749 --> 00:39:21,404 amount of money would align your efforts to being the best with what I want to do 589 00:39:21,404 --> 00:39:27,859 then greed is good. So imagine I took your salary and 590 00:39:27,859 --> 00:39:31,800 imagine... >> There's a lot of focus on my salary. 591 00:39:31,800 --> 00:39:35,512 >> [INAUDIBLE] But imagine if we took your salary and we basically connected it 592 00:39:35,512 --> 00:39:39,768 to all kinds of outcomes. How do the Coursera class look like and 593 00:39:39,768 --> 00:39:43,987 how is our research going and how is the lab being managed and so on. 594 00:39:43,987 --> 00:39:47,586 The idea of greed is good is that you will now be motivated to maximize your 595 00:39:47,586 --> 00:39:51,421 money and because moeny is connected to all those things that are part of your, 596 00:39:51,421 --> 00:39:56,234 your, your job. You will maximize that, and, and that's 597 00:39:56,234 --> 00:39:59,650 really what people mean. What people mean is that ideally we would 598 00:39:59,650 --> 00:40:02,440 want you to be motivated to do those things because they give you intrinsic 599 00:40:02,440 --> 00:40:05,807 pleasure and so on. They don't but if you want money and we 600 00:40:05,807 --> 00:40:08,960 can align your goals with money everything would be good. 601 00:40:08,960 --> 00:40:12,685 I think the problem is that we have never found a contract. 602 00:40:12,685 --> 00:40:17,005 We're maximizing the financial[UNKNOWN], maximizes what people actually want from 603 00:40:17,005 --> 00:40:20,362 you. So, if I wanted to write a contract that 604 00:40:20,362 --> 00:40:25,192 would maximize you're contribution to our research in the university and Coursera 605 00:40:25,192 --> 00:40:29,487 and so on. I don't even know how we would write 606 00:40:29,487 --> 00:40:31,570 that. I don't even know how we'd do it. 607 00:40:31,570 --> 00:40:35,848 And the problem is that every time I would write a particular contract, you 608 00:40:35,848 --> 00:40:40,333 might be able to maximize the terms of the contract without maximizing the 609 00:40:40,333 --> 00:40:44,720 actual goal. So let's just take Coursera for example. 610 00:40:44,720 --> 00:40:48,425 If I paid you based on how many students took the class, you would probably find 611 00:40:48,425 --> 00:40:52,130 lots of tricks to get more people to sign in the class but in no way improve their 612 00:40:52,130 --> 00:40:57,100 education. So, so, I think that when people say 613 00:40:57,100 --> 00:41:02,060 greed is good, I, I think they stick to a very simplistic notion of economic 614 00:41:02,060 --> 00:41:06,470 behavior. For example, if you're had a very, very 615 00:41:06,470 --> 00:41:09,990 simple job, like layering bricks, and I say, I can pay you by the hour and by the 616 00:41:09,990 --> 00:41:15,300 structure and so on and I could define exactly the work. 617 00:41:15,300 --> 00:41:18,655 You wanting to get the most money could actually get you to lay more bricks 618 00:41:18,655 --> 00:41:22,410 correctly. But when you deal in the complex work 619 00:41:22,410 --> 00:41:27,030 setting when people have complex difficult questions and what exactly 620 00:41:27,030 --> 00:41:32,542 needs to be maximized is hard to write in a contract. 621 00:41:32,542 --> 00:41:36,495 I think what he does Is it focuses people on the part of the contract that 622 00:41:36,495 --> 00:41:41,696 maximizes their money but not necessarily the, the benefits. 623 00:41:41,696 --> 00:41:45,984 And there's, there's this example that Barry Schwartz gave, which I love, he 624 00:41:45,984 --> 00:41:52,409 said, if you wrote a job description for a janitor, what would those things have? 625 00:41:54,419 --> 00:41:57,896 And what he basically says is that you would try things like taking out the 626 00:41:57,896 --> 00:42:02,539 trash and cleaning rooms and so on. You will never find something that says 627 00:42:02,539 --> 00:42:05,931 if you found something that the light bulb is broken you would get somebody to 628 00:42:05,931 --> 00:42:08,705 fix it. Or if you found a, a patient who's 629 00:42:08,705 --> 00:42:11,810 screaming for, screaming from pain you would tell the nurse. 630 00:42:11,810 --> 00:42:15,299 Or if you found somebody who fell from their bed you would help them. 631 00:42:15,299 --> 00:42:18,947 And this I think is, is one of the things that when we think about labor, we have 632 00:42:18,947 --> 00:42:24,470 this incredible simplistic notion of people in the labor, in the marketplace. 633 00:42:24,470 --> 00:42:27,722 But when we stop and we think, what do we really want? 634 00:42:27,722 --> 00:42:32,408 So, so again, taking you, if you thought about a research lab and you say, what is 635 00:42:32,408 --> 00:42:36,313 the mission of the lab, and how do I maximize it, and how do I help the 636 00:42:36,313 --> 00:42:41,465 initiative. You would probably be able to say both in 637 00:42:41,465 --> 00:42:46,480 advance and every day what would be the things that would actually help the lab. 638 00:42:46,480 --> 00:42:50,882 But if I try to create a contract for that, and you adjust for the contract, I 639 00:42:50,882 --> 00:42:55,426 have a very hard imagining that that would in any way improve the functioning 640 00:42:55,426 --> 00:43:03,090 of the lab or improve our reseach output, educational output and so on. 641 00:43:03,090 --> 00:43:05,108 So I, anyway, did I answer this more or less? 642 00:43:05,108 --> 00:43:06,800 >> Yeah, no, I. >> Multiple times? 643 00:43:06,800 --> 00:43:09,120 >> Over and over. No, it makes a lot of sense. 644 00:43:09,120 --> 00:43:13,486 Who's going to go above and beyond when you're being measured by doing the 645 00:43:13,486 --> 00:43:16,806 basics. >> One particular thing. 646 00:43:16,806 --> 00:43:19,673 >> Exactly. >> So thank you for that response Mr 647 00:43:19,673 --> 00:43:21,507 Dan. Now 648 00:43:21,507 --> 00:43:23,722 >> Professor. >> 649 00:43:23,722 --> 00:43:27,360 [LAUGH] No. [LAUGH] Technically. 650 00:43:27,360 --> 00:43:30,844 When does delaying an experience bring more or less satisfaction? 651 00:43:30,844 --> 00:43:35,332 So, someone provided the example of I am really looking forward to eating this ice 652 00:43:35,332 --> 00:43:39,151 cream cone. And, and I'm also getting some pleasure 653 00:43:39,151 --> 00:43:41,764 out of the expectation of that >> Yup. 654 00:43:41,764 --> 00:43:44,962 >> Ice cream cone. and how is that different between things 655 00:43:44,962 --> 00:43:48,892 that we're not looking forward to? Things we want to get out of the way. 656 00:43:48,892 --> 00:43:51,896 >> Yup. So this is about eh, dread. 657 00:43:51,896 --> 00:43:55,284 And anticipation. And actual experience. 658 00:43:55,284 --> 00:43:58,314 So, so imagine experience. Eh, usually we think about, you know, how 659 00:43:58,314 --> 00:44:00,500 much pleasure do we get from that experience? 660 00:44:00,500 --> 00:44:02,777 But we actually need to think about three parts. 661 00:44:02,777 --> 00:44:06,000 We just say, what happens before the experience? 662 00:44:06,000 --> 00:44:09,590 Either anticipation or dread. What happens during the experience, and 663 00:44:09,590 --> 00:44:13,870 what happens after the experience? And to try to think about what kind of 664 00:44:13,870 --> 00:44:17,590 things would actually maximize our happiness with life, we really have to 665 00:44:17,590 --> 00:44:24,072 think about these three periods. So George Lawthorne gives his example of 666 00:44:24,072 --> 00:44:28,830 a kiss from a movie star. And he says, imagine if you have your 667 00:44:28,830 --> 00:44:33,887 favorite star and you can get a kiss from them right now or in 2 weeks. 668 00:44:33,887 --> 00:44:36,509 The kiss is the kiss, the kiss is probably going to be a kiss just like a 669 00:44:36,509 --> 00:44:40,305 kiss that you would get from anybody else that you don't know. 670 00:44:40,305 --> 00:44:44,160 But in one case you get to have anticipation, in the other one you don't. 671 00:44:44,160 --> 00:44:47,404 Which one is better? And I think this illustrates quite 672 00:44:47,404 --> 00:44:51,044 clearly that there are some things we should actually pay to delay because the 673 00:44:51,044 --> 00:44:55,910 anticipation will be higher. >> So people do prefer to wait? 674 00:44:55,910 --> 00:44:57,920 >> People do prefer to wait. They recognize it. 675 00:44:57,920 --> 00:45:01,310 What's also interesting is that people have a hard time paying for it. 676 00:45:01,310 --> 00:45:04,544 They just don't think it's right to pay for a delay even though it would increase 677 00:45:04,544 --> 00:45:08,774 your enjoyment. And then there's the period of time after 678 00:45:08,774 --> 00:45:12,106 the offense. And when you think about it, we all have 679 00:45:12,106 --> 00:45:16,458 experiences that we didn't enjoy at the moment but we reflect back on them and 680 00:45:16,458 --> 00:45:21,140 say these were defnining moments of my life. 681 00:45:21,140 --> 00:45:24,166 Some vacations are like that. At the moment they were not that much fun 682 00:45:24,166 --> 00:45:27,742 but you've learned a lot or you reflected on things and so on. 683 00:45:27,742 --> 00:45:32,978 and those, and those are great great moments. 684 00:45:32,978 --> 00:45:37,203 So, so as we plan our lives it's actually important to think about both of those 685 00:45:37,203 --> 00:45:42,424 elements and perhaps even the least about the actual experience. 686 00:45:42,424 --> 00:45:45,230 'Cuz imagine you get to anticipate something for two months. 687 00:45:45,230 --> 00:45:48,220 You get to experience it for two or three days and then you get to think about for 688 00:45:48,220 --> 00:45:51,820 the rest of your life, maybe thirty years afterwards. 689 00:45:51,820 --> 00:45:55,270 What, which is more important? From a time perspective, you should 690 00:45:55,270 --> 00:45:58,930 probably think about the time after first because it's the longest, the 691 00:45:58,930 --> 00:46:03,038 anticipation next, and the experience the least. 692 00:46:03,038 --> 00:46:06,223 >[LAUGH] So if we could just wipe out our memories and replace them with better 693 00:46:06,223 --> 00:46:09,541 ones? >> Well that's, but, but, but if you 694 00:46:09,541 --> 00:46:14,833 have, the better memory you have, the more you should think about that, that 695 00:46:14,833 --> 00:46:18,310 period. [CROSSTALK] The period. 696 00:46:18,310 --> 00:46:21,534 The memory afterwards. And the better imagination you have, you 697 00:46:21,534 --> 00:46:25,414 probably should think about anticipation, >> [LAUGH] up front. 698 00:46:25,414 --> 00:46:28,038 by the way, one of the problems with anticipation is that reality doesn't 699 00:46:28,038 --> 00:46:32,070 always confront to our anticipation. And then you could create exaggerated 700 00:46:32,070 --> 00:46:35,217 expectations. So we need to worry about that because if 701 00:46:35,217 --> 00:46:39,117 you create very high expectations and reality is not fitting, that reality is 702 00:46:39,117 --> 00:46:43,550 actually going to be very, very disappointing. 703 00:46:43,550 --> 00:46:46,766 The good news is that even if reality is disappointing later on when you remember 704 00:46:46,766 --> 00:46:51,275 it you might reconstruct it, not to remember how disappointing reality was. 705 00:46:51,275 --> 00:46:54,242 >> That's nice. Some of us are very good at that too. 706 00:46:54,242 --> 00:46:55,908 [LAUGH] >> [LAUGH] Yeah. 707 00:46:55,908 --> 00:47:00,190 >> so Dan, what do you think about library book fines? 708 00:47:00,190 --> 00:47:04,712 Are, is this an effective way of getting people to return library books? 709 00:47:04,712 --> 00:47:08,184 >> Yes, so library books are kind of very good from their pain of paying 710 00:47:08,184 --> 00:47:11,880 perspective. You pay by the day. 711 00:47:11,880 --> 00:47:14,438 that you're late. It think it's very, very painful. 712 00:47:14,438 --> 00:47:17,402 in the olden days when there were video stores. 713 00:47:17,402 --> 00:47:21,230 lots of people would tell me and I did the same, that sometimes we could rent a 714 00:47:21,230 --> 00:47:26,760 video for two nights or sometimes for one night depending on the video store. 715 00:47:26,760 --> 00:47:31,113 And sometimes people, me too, would rent the video and didn't watch it. 716 00:47:31,113 --> 00:47:34,145 And then we would return the next day unwatched. 717 00:47:34,145 --> 00:47:35,743 [LAUGH] >> [LAUGH] You know, just not to pay 718 00:47:35,743 --> 00:47:38,111 the fine. Now at the end of the day, we would take 719 00:47:38,111 --> 00:47:39,754 it again. At some point. 720 00:47:39,754 --> 00:47:44,294 but, but kind of paying the fine. It seems unjust. 721 00:47:44,294 --> 00:47:47,958 And it seems our fault. So the pain of paying that is very, very 722 00:47:47,958 --> 00:47:51,395 high. So I, I think it's actually an effective 723 00:47:51,395 --> 00:47:55,206 mechanism. I think the size of the penalty doesn't 724 00:47:55,206 --> 00:47:59,749 have to be very high. Also on the days when Netflix had lots of 725 00:47:59,749 --> 00:48:06,218 DVD's Netflix would send DVDs and you could keep the DVD for a long, long time. 726 00:48:06,218 --> 00:48:09,290 Part of it was that you didn't see the opportunity cost so if you rented a video 727 00:48:09,290 --> 00:48:12,630 from a video store. And you rent for two nights. 728 00:48:12,630 --> 00:48:15,465 If you kept it for three days, you would know, well, my goodness, I'm wasting 729 00:48:15,465 --> 00:48:19,150 money for every day. But with the Netflix model, you pay a 730 00:48:19,150 --> 00:48:22,416 monthly fee. Now every day you kept a DVD, you gave up 731 00:48:22,416 --> 00:48:27,229 an opportunity cost of not watching another DVD, or not sending it back. 732 00:48:27,229 --> 00:48:31,540 But it was just not as salient, so people, people kept DVDs for a long time. 733 00:48:31,540 --> 00:48:34,888 Now, some people again, told me that after a while when they kept the DVD for 734 00:48:34,888 --> 00:48:37,988 so long. They would just mail it back unseen just 735 00:48:37,988 --> 00:48:42,120 because it just felt like this DVD was sitting here for three weeks. 736 00:48:42,120 --> 00:48:45,680 Watching it is just going to remind me of the wasted money I had. 737 00:48:45,680 --> 00:48:48,570 I don't want to see it. Maybe I'll get it another, another time. 738 00:48:48,570 --> 00:48:55,206 So there's lots of tricks like that, and If I would create the ultimate library. 739 00:48:55,206 --> 00:49:00,536 I think I would create, low penalties, that would come frequently, and people 740 00:49:00,536 --> 00:49:05,740 would, could not avoid paying attention to those. 741 00:49:05,740 --> 00:49:11,348 I think that would probably maximize. the return of library books. 742 00:49:11,348 --> 00:49:16,239 I met recently, by the way, the, the head of the library for Canada and I, I, had 743 00:49:16,239 --> 00:49:21,320 all kinds of suggestions of what to do with libraries. 744 00:49:21,320 --> 00:49:25,438 But among them, I told, I want to encourage people to write in the book, 745 00:49:25,438 --> 00:49:31,140 and she just thought that was, evil and stupid at the same time. 746 00:49:31,140 --> 00:49:35,361 but, but I think, you know, electronic books and, and physical books are very 747 00:49:35,361 --> 00:49:39,200 different in terms of the physical reaction. 748 00:49:39,200 --> 00:49:42,515 I'm not sure I want people to, you know, highlight and do stuff in the book, but I 749 00:49:42,515 --> 00:49:46,590 think as an artifact a book is an interesting thing, right. 750 00:49:46,590 --> 00:49:50,720 You say, who else have touched and how is it passed through the community. 751 00:49:50,720 --> 00:49:54,807 And we have actually with physical books we have a chance to be connected to other 752 00:49:54,807 --> 00:49:58,866 people in the community. Every time we borrow a book from the 753 00:49:58,866 --> 00:50:02,019 library it's a public good. It's not us against the library, it's 754 00:50:02,019 --> 00:50:05,861 something that the whole community. Is related, and I think that if people 755 00:50:05,861 --> 00:50:09,125 left some of their own marks in, in the book, and other people could reflect on 756 00:50:09,125 --> 00:50:12,744 that, that could have been quite, quite nice. 757 00:50:12,744 --> 00:50:16,965 So, the kindle, for example, you know every time you mark something in the, in 758 00:50:16,965 --> 00:50:21,630 the kindle, you can see what other people have marked. 759 00:50:21,630 --> 00:50:24,966 You can't see how, what individuals have marked, but you can see the collective. 760 00:50:24,966 --> 00:50:27,446 Group. And, and sometimes I go back and look at 761 00:50:27,446 --> 00:50:31,220 my books, and I'm really interested, like what have people marked? 762 00:50:31,220 --> 00:50:33,960 What have people underlined? What is the, the common wisdom? 763 00:50:33,960 --> 00:50:37,500 So in the same way I, I think that if we got people to write at the end of the 764 00:50:37,500 --> 00:50:43,020 book, like you know, you had, you had four pages at the end of the book. 765 00:50:43,020 --> 00:50:47,160 And you ask people to write what's the, an important point they got or something 766 00:50:47,160 --> 00:50:51,415 interesting or an observation. I think it would connect people to the 767 00:50:51,415 --> 00:50:54,295 other people who've read the book, and I think it might make the book reading a 768 00:50:54,295 --> 00:50:58,324 more interesting experience. But I don't think the Canadian library 769 00:50:58,324 --> 00:51:01,005 system is going to try this out. >> Yeah, maybe not. 770 00:51:01,005 --> 00:51:06,781 [LAUGH] So that idea of a social good is a perfect transition to my next question, 771 00:51:06,781 --> 00:51:11,772 which is about taxes and pro-social spending. 772 00:51:11,772 --> 00:51:16,119 Which you talked about and Mike Norton also gave a lecture on in this last 773 00:51:16,119 --> 00:51:21,544 week's guest lectures. So how do taxes fit into this whole idea 774 00:51:21,544 --> 00:51:26,472 of spending money on other people making you happy. 775 00:51:26,472 --> 00:51:32,770 Yeah, so I think taxes are interesting because, in principal taxes are just like 776 00:51:32,770 --> 00:51:36,342 charity. You're giving money, actually you know 777 00:51:36,342 --> 00:51:38,893 what? It's a kind of charity you get to benefit 778 00:51:38,893 --> 00:51:41,318 from. but, so it's, it's both you're helping 779 00:51:41,318 --> 00:51:43,610 other people, you're also helping yourself. 780 00:51:43,610 --> 00:51:47,006 It is also a collective action. There's lots of wonderful things about 781 00:51:47,006 --> 00:51:49,926 taxes. but I think there's a couple of things 782 00:51:49,926 --> 00:51:53,726 that make taxes different. One of them is that taxes feel like a 783 00:51:53,726 --> 00:51:59,026 fight between you and the government. So it's it's an adversarial relationship 784 00:51:59,026 --> 00:52:02,647 inherently. Which, which I think kind of diminishes 785 00:52:02,647 --> 00:52:06,114 from the value of taxes. the second thing is that you, at least in 786 00:52:06,114 --> 00:52:08,720 the US, you never know if you're doing things right or wrong. 787 00:52:08,720 --> 00:52:12,570 The tax laws are so obscure and difficult and so on. 788 00:52:12,570 --> 00:52:16,166 So when I, I sit there with the taxes, my, my concern is what's right, what's 789 00:52:16,166 --> 00:52:20,498 wrong and, and so on. And, that, that kind of changes the, the 790 00:52:20,498 --> 00:52:24,960 spirit of what, what taxes are all about and what contributions. 791 00:52:24,960 --> 00:52:28,323 I also think that over time the word, taxes has taken lots of negative 792 00:52:28,323 --> 00:52:32,132 connotation. And then there's also the, the issue of 793 00:52:32,132 --> 00:52:36,676 social coordination, that if, if other people are paylng less taxes, I don't 794 00:52:36,676 --> 00:52:41,892 think this is fair. So I want to pay the less, the same taxes 795 00:52:41,892 --> 00:52:46,554 they're paying as well. So I think taxes have the opportunity to 796 00:52:46,554 --> 00:52:51,314 actually get people to feel altruistic and contributing to society, contributing 797 00:52:51,314 --> 00:52:56,280 themselves, working togehter towards some goal. 798 00:52:56,280 --> 00:53:00,248 Sadly the way that we have done taxes in most countries has been kind of freely 799 00:53:00,248 --> 00:53:04,753 missing the mark. It's been about following very complex 800 00:53:04,753 --> 00:53:10,325 rules, not knowing what's right, worrying about relative social justice. 801 00:53:10,325 --> 00:53:14,861 Worrying about other people getting away with it and kind of hiding the true 802 00:53:14,861 --> 00:53:20,135 spirit of contributing to society. So Mike has one interesting, he has many 803 00:53:20,135 --> 00:53:23,710 interesting findings, but one of them is that the moment you let people decide 804 00:53:23,710 --> 00:53:28,765 about where some of their money would go. All of a sudden it gets people to 805 00:53:28,765 --> 00:53:33,830 remember, at least partially, what taxes are about, and they feel better about it. 806 00:53:33,830 --> 00:53:36,686 I think that simplifying the code, getting people to reflect on the 807 00:53:36,686 --> 00:53:39,797 government, getting people to reflect on society. 808 00:53:39,797 --> 00:53:42,480 Getting people to decide about some of the taxes. 809 00:53:42,480 --> 00:53:45,348 I think all of those would help a great deal. 810 00:53:45,348 --> 00:53:47,440 >> Like remembering where the money is going. 811 00:53:47,440 --> 00:53:50,081 How it benefits you. >> Yeah. 812 00:53:50,081 --> 00:53:53,100 So we did, we did a little funny study a long time ago. 813 00:53:53,100 --> 00:53:56,270 We went to a public library here in Chapel Hill. 814 00:53:56,270 --> 00:53:59,546 And we asked people when was the last time you benefited for tax pur, papers, 815 00:53:59,546 --> 00:54:03,860 pe, taxpayers money, and nobody remembered when was the last time. 816 00:54:03,860 --> 00:54:07,354 Now they were sitting in a public library which is funded by taxpayers money. 817 00:54:07,354 --> 00:54:11,386 But you know, you, you look at life and you say, where, where are things coming 818 00:54:11,386 --> 00:54:16,664 from taxes, really hard to recognize. Like imagine everything you do has a 819 00:54:16,664 --> 00:54:22,200 sign, that says paid by your, your taxes. By the way when there was the[COUGH], 820 00:54:22,200 --> 00:54:27,400 the, the, the Iraq war every year my father would send me a, a note telling me 821 00:54:27,400 --> 00:54:33,320 what my taxes what they paid for in terms of how many missiles and bullets and so 822 00:54:33,320 --> 00:54:39,504 on. That's, that was tough. 823 00:54:39,504 --> 00:54:43,713 you know, the other thing that is, that's with taxes is that there's no question 824 00:54:43,713 --> 00:54:48,911 that governments waste money. You know, the, that's not, it's not news 825 00:54:48,911 --> 00:54:53,270 and it's, it's probably unavoidable in, in some ways. 826 00:54:53,270 --> 00:54:57,930 and, and there are kind of two forces that work against each other. 827 00:54:57,930 --> 00:55:01,329 There's the force of waste, which is a terrible force. 828 00:55:01,329 --> 00:55:05,359 And there's the force of economy's of scale, which as things become bigger you 829 00:55:05,359 --> 00:55:10,330 can achieve much more and for some reason we focus on the waste. 830 00:55:10,330 --> 00:55:13,435 And I understand why, it is a terrible, terrible thing. 831 00:55:13,435 --> 00:55:16,567 And we don't focus enough on the magnitude, and the ability of the 832 00:55:16,567 --> 00:55:20,105 government to do things in scale that we couldn't do as individuals and we 833 00:55:20,105 --> 00:55:25,431 couldn't even do as, as companies. And so how do we kind of think about the 834 00:55:25,431 --> 00:55:28,330 positive aspect of the economies of scale. 835 00:55:28,330 --> 00:55:32,567 Every time a company acquires another company Wall Street rewards it. 836 00:55:32,567 --> 00:55:36,473 Because it's, you know, gets more economies of scale, bigger company and so 837 00:55:36,473 --> 00:55:38,844 on. We don't think, seem to be thinking like 838 00:55:38,844 --> 00:55:42,146 this about the government. But I think we, we should. 839 00:55:42,146 --> 00:55:45,714 >> Alright. And we will return to that topic on April 840 00:55:45,714 --> 00:55:50,096 15th with hang out with Dan. >> Okay, just taxes. 841 00:55:50,096 --> 00:55:51,758 >> And taxes. On taxes. 842 00:55:51,758 --> 00:55:54,719 >> Okay. >> So, get some questions ready. 843 00:55:54,719 --> 00:55:57,050 [LAUGH] >> On taxes and that's an important 844 00:55:57,050 --> 00:56:00,121 day, because it's tax day in the US. >> Yeah. 845 00:56:00,121 --> 00:56:02,830 >> By the way. [LAUGH] I guess that's worth mentioning. 846 00:56:02,830 --> 00:56:05,500 >> It is worth mentioning. Yeah, so we, we'll talk just about taxes? 847 00:56:05,500 --> 00:56:07,110 >> Just about taxes. >> Well, it's great. 848 00:56:07,110 --> 00:56:08,673 >> I mean, there's enough to say, right? 849 00:56:08,673 --> 00:56:10,511 >> we'll see. >> Okay, so. 850 00:56:10,511 --> 00:56:13,428 that's it for today. Thank you. 851 00:56:13,428 --> 00:56:18,235 see you later. 852 00:56:18,235 --> 00:56:35,947 [NOISE]