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Looking for the Next Big Thing

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books and culture

Looking for the Next Big Thing

A new book offers good tips for businesses looking to scale up products, but a close reading raises questions about doing the same for public policy. June 8, 2022
Economy, finance, and budgets
Politics and law

The Voltage Effect: How to Make Good Ideas Great and Great Ideas Scale, by John A. List (Currency, 288 pp., $28)

Does behavioral economics hold the key for scalable policymaking?

Whether in industry or the public sector, policymaking too often rests on hunches and intention and not on a careful examination of data, John List has observed. And he should know. An academic economist, he has held positions at the heights of both industry and public policymaking, having served on the Council of Economic Advisers under George W. Bush and as chief economist for Uber, Lyft, and Walmart.

To improve policymaking, List has turned his attention of late to the science of using science to identify and implement promising ideas. The Voltage Effect captures the results of this recent work. Reflecting the optimism of modern science, the book promises to give readers the keys to identifying which ideas can succeed at scale—because “you can only change the world at scale.”

The Kenneth C. Griffin Professor of Economics at the University of Chicago, List revolutionized the field of economics with innovative field experiments that revealed how humans behave in the real world, not in a lab. His pathbreaking work vaulted him to the top of his field; he has won numerous prestigious awards and is on many short lists for the Nobel Prize.

In The Voltage Effect, List identifies five common reasons—the “Five Vital Signs”—why desirable results don’t replicate when a policy scales: false positives; failure to know one’s audience; scarce ingredients; spillover effects; and cost of sustaining at scale. Once an idea passes the Vital Signs test, The Voltage Effect offers insights from the field of economics to ensure its success at scale: from experimenting on the margins to setting up the right kind of incentives (hint: we are loss averse) to creating a healthy culture.

The Voltage Effect is filled with good stories about List’s experiences with Uber in the last years of Travis Kalanick’s tenure (2009–2019). We learn some of the backstory behind Uber’s introduction of tipping in 2017—and why it didn’t end up helping drivers (it has to do with spillover effects). The book also details creative experiments List spearheaded that delivered significant results: an additional $100 million in tax revenue for the Dominican Republic and $5 million in savings for Virgin Atlantic by encouraging more fuel-efficient behavior among its pilots, to name just two.

It’s clear the experiment closest to List’s heart is one found far from the glamour of Silicon Valley: since 2010, he and a few other economists—among them Steven Levitt and Roland Fryer—have been conducting a field experiment in early childhood education. With seed funding from the Kenneth and Anne Griffin Foundation, this experiment involved setting up a preschool in an impoverished neighborhood outside of Chicago that applied novel methods to develop students’ cognitive and noncognitive skills. The program used cash incentives to coax greater parent involvement. The school is a model of a scalable experiment: it wasn’t populated with the very best teachers, but with a representative sampling of local public-school teachers.

The school’s results to date are notable for two reasons: researchers have observed significant gains, but only for a subgroup of the students. Finding improvements only among students from Hispanic families, List and his co-investigators concluded that the multi-generational family unit was essential for success in the context of their experiment.

That an experiment that carefully applied the latest social science data proved successful for one group but not for others reveals something about the book’s core goal. While The Voltage Effect purports to explain “how to make good ideas great and great ideas scale,” it is not a stretch to conclude from the book’s discussions that the proper attitude when it comes to public policy ought to be one of modesty, and that it would be prudent to aim for local and flexible implementation. In other words, “scaling” public policy programs seems to be a misplaced goal give that success so often depends on a myriad of non-universal variables.

The book discusses two other prominent public policy programs that follow a similar storyline. Nancy Reagan’s D.A.R.E. (Drug Abuse Resistance Education) program, which reached 43 million children during its 24-year run, not only failed in its goal; one study found it actually increased the likelihood of drug use. What worked for a small group of students in Honolulu didn’t work for the population at large. Likewise, Early Head Start saw great initial success but met with failure when scaled. Its home visits couldn’t do much for families that were lacking in basic levels of stability.

List’s first-hand experiences with the “slow-moving” bureaucracy of the federal government do little to increase the reader’s confidence in the potential of government programs. While at the Council of Economic Advisers, List found that agencies prioritized their own interests over recommendations derived from careful scientific reasoning. “By its very nature, each agency is concerned only with its own survival, and that survival depends on the level of its funding. The result is a culture where efficiency . . . is secondary to political self-preservation.”

The Voltage Effect is optimistic that the tools and observations from the field of economics can make decision-making more scientific and therefore more effective. Many of the book’s insights can surely help an organization achieve clearly delineated objectives. But when it comes to its discussion of public policy programs, The Voltage Effect might more aptly be named: “Why most ideas fail.” The ideas most likely to succeed seem to be narrow in scope and tailored to particular contexts. One comes away less optimistic about identifying scalable solutions to our most pressing social problems. If one size indeed does not fit all, then perhaps we should aim for local discretion in implementation—which, in everything from teaching to early childhood intervention, might be equal parts art and science.

Photo: tostphoto/iStock

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