Behavioral economics

Billionaires Are People, Too!

Billionaires Are People, Too!

Last January, the Wall Street Journal published a spectacularly hyperbolic letter. Written by billionaire venture capitalist Tom Perkins, it likened today’s “rich” to Jewish Germans living in the shadow of the Nazis, defended novelist Danielle Steel (Perkins’ ex-wife) against allegations of snobbery, and warned of “a rising tide of hatred of the successful one percent” that is bound to culminate in a “progressive” Kristallnacht. As this fretful piece made the rounds, it was ridiculedpartially recantedawkwardly defended, and, as is par for the course, made worse in the retelling.

The Boy Who Cried Wolf (When It Suited Him)

The Boy Who Cried Wolf (When It Suited Him)

There’s a good chance that you’re familiar with the Homeland Security Advisory System (HSAS), even if you don’t know it by name. Replaced in 2011 by the National Terrorism Advisory System, it was that color-coded notification system developed in the wake of 9/11 that ostensibly functioned to alert the public of a probable terrorist threat to the United States. Green indicated a low risk of attack; blue, a general risk; yellow, an elevated risk; orange, a high risk; and red, a severe risk. In spite of the supposed “generality” of the blue level, the advisory had not once been lower than an “elevated” yellow in its nine years of existence. Instead, it vacillated between yellow and orange for the most part, though it did strike red in 2006.

It's the Animal Spirits, Stupid!

It's the Animal Spirits, Stupid!

In the midst of the financial panic sparked by the fall of Lehman Brothers, Alan Greenspan, chairman of the Federal Reserve from mid-1987 to 2006, shocked the American public. Testifying before the House Committee on Oversight and Government Reform on October 23, 2008, Greenspan had this extraordinary exchange with Representative Henry Waxman...