Trial and Error

Tim Harford has written a new book called “Adapt” .  I haven’t read it but this NY Times blog piece has a suggestive quote; “You’re saying, in essence, that society doesn’t do enough trial and error.”   The economics of “adapting” is pretty straightforward.   If you enjoy a secure monopoly niche, then you face no competition and you don’t need to learn and experiment.  You can be lazy and stick with the status quo.  If you don’t face an expected threat (whether it is climate change or resource scarcity or war or Google entering your product market), then you are unlikely to change your game.   In the late 1970s, General Motors and Ford learned a hard lesson about the need to continuously improve their core products and to avoid complacency.   Universities could learn this lesson as well.  Today, China’s exports are nudging Western economies to continue to adapt.   I’m a big fan of this paper investigating how Western European firms have adapted to the threat of Chinese import competition.  

I argue in my Climatopolis that individual and firm level adaptation to climate change will help to protect urbanites from this emerging threat.    Matthew Kotchen’s thoughtful review of my book is posted here.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

3 thoughts on “Trial and Error”

  1. Dean Baker suggests half tongue-in-cheek that American senior citizens be allowed to spend their RyanCare vouchers in the French and German healthcare systems.

  2. Some companies, even with more or less secure markets, are still driven to adapt and improve. Perhaps it’s not so much about the external threat as about the culture. And of course a big part of enabling trial and error is to make sure that the cost of error is high but not too high. Otherwise simple survival instincts will force risk-aversion.

  3. I vividly recall Harford’s tenure at, for all the wrong reasons. I’m not sure if he was trying to capture the Freakonomics buzz, but as a popularizer of economics, he was off-the-charts terrible: bombastic, thin-skinned, fond of grand generalizations, and occasionally utterly uninformed about the industry he was writing about. (For example, he once wrote an entire article critiquing Microsoft’s pricing strategy for the Xbox 360, apparently without knowing that Sony and Nintendo were both releasing their next-generation consoles within the following few months–then wrote an entire follow-up article castigating commenters who pointed out this and other problems with his first article.)

    Part of the problem may have been that he was trying to recreate the “gee whiz” moments of a good Micro 101 survey, where the professor shows how the “right” choice is sometimes deeply counterintuitive, or how simple decisions are actually extremely complex. That’s fine, but if you don’t actually do the hard work of explaining the “trick,” you’ve more or less punted on the whole point of writing an economics column. I think it’s probably a lot easier to do in the classroom than in a column, but for as many columns of his as I gritted my teeth through (he, or his editor, was very seductive in his choices of headlines!) I never got the sense that he was interested in that part.

    Anyway, my question is this, for anyone familiar with his other work: does he do better in other forms? Obviously I hope he does, since he writes on subjects I tend to be interested in, and he wouldn’t be the first person to find out one way or the other that short-form and/or large-audience writing is harder than it looks.

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