How can an evolutionary lens change the way we think about taxation, regulation and collective action? Is it possible to reduce inequality and increase public investment without making the rich any worse off...and maybe even happier? In addition to teaching at Cornell, Robert Frank worked with Nobel Prize winner Richard Thaler in pioneering behavioral economics, is a former New York Times columnist and has written books translated into 23 languages. One of those books, The Darwin Economy, sparked my own interest in bringing evolutionary principles to business and I can trace countless ideas from my forthcoming book "For The EVOLution of Business" to seeds planted while reading Professor Frank's work. In this episode, we discuss his earlier work, especially "The Darwin Economy" and "Success & Luck" and in Part 2 of our conversation, we'll discuss his newly-released book "Under The Influence." Professor Frank is the Henrietta Johnson Louis Professor of Management and Professor of Economics at Cornell's Johnson Graduate School of Management and a Distinguished Senior Fellow at Demos. For more than a decade, his "Economic View" column appeared monthly in The New York Times. He received his BS in mathematics from Georgia Tech, and then taught math and science for two years as a Peace Corps Volunteer in rural Nepal. He holds an MA in statistics and a PhD in economics, both from the University of California at Berkeley. His papers have appeared in the American Economic Review, Econometrica, Journal of Political Economy, and other leading professional journals. His books have been translated into 23 languages, including Choosing the Right Pond, Passions Within Reason, Microeconomics and Behavior, Principles of Economics (with Ben Bernanke), Luxury Fever, What Price the Moral High Ground?, Falling Behind, The Economic Naturalist, The Darwin Economy, and Success and Luck. The Winner-Take-All Society, co-authored with Philip Cook, received a Critic's Choice Award, was named a Notable Book of the Year by The New York Times, and was included in Business Week's list of the ten best books of 1995. Frank is a co-recipient of the 2004 Leontief Prize for Advancing the Frontiers of Economic Thought. He was awarded the Johnson School's Stephen Russell Distinguished teaching award in 2004, 2010, and 2012, and its Apple Distinguished Teaching Award in 2005.
[3:00] Pioneering the field of behavioral economics - when individual rationality leads to collective irrationality
[8:45] How the cognitive biases of "irrational" behavior make sense when viewed through the lens of evolutionary psychology
[12:00] "Darwin's Wedge" between the best interests of individuals and groups - How Charles Darwin's concept of "relative fitness" adds nuance to Adam Smith's invisible hand
[19:00] Why regulation can sometimes be in everyone's best interest
[24:00] Requiring bike helmets only for kids, even though adults are subject to the same cognitive biases
[28:00] Why the private sector might have more waste than the public sector
[31:45] How a progressive consumption tax could reduce inequality and generate funds for needed investments, without making the rich any worse off
[35:45] "The Mother of All Cognitive Illusions" - Why reducing income across the board won't impact anyone's relative bidding power
[39:00] Why we underestimate the importance of luck and how appreciating luck makes us more generous
[46:30] How the stories we tell and the types of jobs we celebrate lead us to a misallocation of talent
[50:30] The benefits of network effects and when that power goes too far
[53:00} Not to tax is not an option, "the only interesting questions are what to tax and how much to tax"
[57:00] Creating pride in efficient government at the Ithaca DMV
[1:00:00] Appreciating our luck and privileges makes us more grateful and more likely to give back
[1:06:00] Mariana Mazzucato and appreciating the role of the government in our collective success
Check out Robert Frank's books "The Darwin Economy" and "Success & Luck" discussed during this episode and stay tuned for Part 2 on his just-released book "Under The Influence"