149. Stanford’s President Knows He Can’t Make Everyone Happy

Summary

People I (Mostly) Admire - Episode 149: Stanford’s President Knows He Can’t Make Everyone Happy

In this compelling episode of People I (Mostly) Admire, Steve Levitt engages in an insightful conversation with Jonathan Levin, the esteemed President of Stanford University. The dialogue delves deep into Levin’s impressive career trajectory, his academic contributions, leadership philosophy, and his perspectives on pressing issues in higher education today. This summary encapsulates the key discussions, notable insights, and significant conclusions drawn during their conversation.

---

1. Introduction to Jonathan Levin’s Academic Journey (00:52 - 04:35)

Steve Levitt begins by introducing Jonathan Levin, highlighting his rise from an assistant professor at Stanford to the university’s president. Levitt draws parallels between Levin and his father, Richard Levin, who served as president of Yale for two decades. Recalling Levin’s participation in a remarkable MIT Economics PhD class alongside future Nobel laureates like Esther Duflo and Emmanuel Saez, Levitt underscores the exceptional caliber of Levin’s academic peers.

Jonathan Levin reflects on his formative years at MIT, emphasizing the stimulating environment fueled by brilliant minds such as Daron Acemoglu and Abhijit Banerjee. He acknowledges the challenges of feeling inadequate amidst such high-achieving peers but credits his passion for economic theory and game theory for his academic focus.

"I was more familiar with that. And I just fell in love with economic theory and game theory. I read David Kreps microeconomics book my first year at Oxford, and it just captured my imagination." (04:00)

---

2. The University of Chicago Recruitment Saga (05:54 - 09:48)

Levitt transitions to an anecdote about Levin’s job market phase, revealing an aggressive recruitment effort by the University of Chicago. Despite compelling offers, Levin ultimately chose Stanford, a decision that Levitt humorously attributes to Levin’s exceptional interpersonal skills.

Levin recounts the intense and intellectually rigorous environment at the University of Chicago, which made his decision particularly challenging. He praises the university’s atmosphere but expresses no regrets about his choice to remain at Stanford.

Levitt shares a playful behind-the-scenes look at how he initially enticed Levin with a unique offer that included a substantial bonus for leaving if Levin chose to join Chicago. This unconventional tactic exemplifies the competitive nature of top-tier academic institutions.

---

3. Bridging Economic Theory and Practical Applications (09:48 - 24:56)

John Levitt commends Levin’s rare ability to excel in both economic theory and empirical research—a combination seldom seen due to the differing skills and status within the economics hierarchy.

Levin traces his transition from theoretical economics to empirical work, driven by his interest in testing game theory models with real-world data. He discusses the pivotal moment when the data revolution in economics opened new avenues for research, enabling him to explore diverse areas like internet marketplaces and health insurance.

"When you open them up and you could look at them in an Excel spreadsheet and look at, observation by observation... We had all of a sudden, tens of millions or hundreds of millions of data points on consumer behavior." (12:00)

Levitt highlights Levin’s influential paper, "Winning Play in Spectrum Auctions," as one of his personal favorites and a testament to the practical impact of economic theories. Levin narrates the story behind the paper, detailing how he and his colleagues devised a strategy that saved Comcast approximately a billion dollars in a radio spectrum auction—a real-world application showcasing the tangible value of academic economics.

"We have a budget in this auction, and every round we're bidding for as many things as we can, right up to our budget... We think we can assemble this collection of little licenses for this budget." (20:00)

Levitt expresses admiration for how Levin’s work transformed theoretical concepts into actionable strategies that significantly benefited a major telecommunications company.

---

4. Leadership Philosophy as Stanford’s President (26:31 - 35:07)

Transitioning to Levin’s role as Stanford’s president, the conversation explores the multifaceted responsibilities and the intrinsic rewards of leading a prestigious academic institution.

Levin shares his deep appreciation for Stanford’s unique blend of top-tier scholars and bright students from diverse disciplines. He emphasizes the joy derived from fostering an environment where faculty and students can pursue extraordinary achievements and engage in meaningful collaboration.

"Your job is first and foremost to gather those people and then ensure that they have the freedom and the resources to accomplish really extraordinary things." (28:00)

Levitt probes into the challenges of balancing research and education, a core tension in elite universities. Levin acknowledges this dichotomy, explaining how Stanford merges the German research university model with the British liberal arts education system, creating a dynamic yet sometimes conflicting environment.

---

5. Addressing Social Mobility and Educational Equity (35:07 - 39:02)

A critical segment of the discussion focuses on social mobility and the disproportionate representation of high-income families in elite institutions. Referencing a seminal paper by Raj Chetty and colleagues, Levitt presents sobering statistics about the low enrollment of students from the bottom socioeconomic quintiles at universities like Stanford.

Levin responds by lauding Chetty’s research and highlighting Stanford’s efforts to increase first-generation college students, now comprising 20% of the freshman class—a significant rise over the past decade. He underscores the systemic issues in K-12 education that perpetuate educational inequities, advocating for strengthened support and funding for large public universities that play a crucial role in societal mobility due to their broader student bases.

"If you look at our current freshman class, 20% are the first in their families to go to college." (38:00)

Levitt concurs, touching upon the inadequacies in public high school systems that hinder low-SES students from preparing effectively for elite institutions.

---

6. Upholding Free Speech on Campus (40:59 - 46:14)

The conversation shifts to the contentious issue of free speech on college campuses, particularly in the context of recent events surrounding Israel and Palestine.

Levin articulates Stanford's dual commitment to robust free speech and maintaining a respectful, disruptive-free academic environment. He emphasizes the importance of protecting diverse viewpoints to foster intellectual growth and argues that clear rules and a positive campus culture can harmonize free expression with community respect.

"Students have really respected that. There's been a lot of dialogue and debate and discussion, even on hard issues." (42:30)

Levitt raises concerns about the slippery slope of defining hate speech, noting the complexities and potential for controversy. Levin responds by adhering to constitutional protections while advocating for a culture that encourages curiosity and respectful discourse, transcending mere rule enforcement.

"We use the Constitution of the United States and the First Amendment as our formal rules. The Constitution protects a lot of speech that is not necessarily what you'd want to have on a campus." (43:09)

---

7. The Human Element in Academic Leadership (45:09 - 48:58)

Levitt praises Levin’s thoughtful and humanistic approach to leadership, contrasting it with the often purely analytical mindset of economists. Levin attributes his leadership style to his upbringing, particularly learning from his father’s empathetic and respectful administration.

He acknowledges the inevitability of making unpopular decisions but stresses the importance of maintaining respect and openness. Levin believes that effective leadership balances firm decision-making with genuine respect for diverse perspectives.

"You cannot make everyone happy. Every possible decision, you are going to have people who agree with you, who disagree with you, who vehemently disagree with you." (48:00)

---

8. Listener Question: The Economics of a Pokémon Card Decision (51:47 - 58:00)

In an engaging segment, Levitt and Levin tackle a listener’s dilemma involving the potential opening of a rare Pokémon card pack. The card could potentially be worth a substantial amount, but opening it introduces the risk of lowering its overall value.

Levin applies economic principles to advise against opening the pack, citing sunk cost fallacy and risk aversion. He explains that the initial purchase price is irrelevant to the current decision and emphasizes maximizing expected value by minimizing uncertainty.

"It comes down to two things. The first is risk tolerance... argues against opening the pack..." (55:02)

However, he also acknowledges the intrinsic human enjoyment Tyler (the listener) might derive from the excitement of opening the pack, suggesting a balance between economic rationality and personal fulfillment.

---

9. Closing Remarks and Future Episodes (58:20 - End)

The episode concludes with promotional segments and a teaser for the next episode featuring Hank Green. Both Levitt and Levin express gratitude to the listeners, wrapping up the conversation on a positive note.

---

Key Takeaways

• Interdisciplinary Excellence: Jonathan Levin exemplifies the synergy between economic theory and empirical research, demonstrating the profound real-world impact that rigorous academic work can achieve.

• Leadership with Empathy: Levin’s approach as Stanford’s president is rooted in respect, active listening, and fostering an environment where both faculty and students can thrive academically and personally.

• Commitment to Social Mobility: Acknowledging systemic educational inequities, Levin emphasizes the role of elite and public universities in enhancing social mobility, advocating for policies that support first-generation and low-SES students.

• Navigating Free Speech: Maintaining a balance between protecting free expression and ensuring a respectful, inclusive academic environment is a delicate yet essential aspect of modern university leadership.

• Economic Reasoning in Everyday Decisions: The listener question segment illustrates how fundamental economic principles can guide personal decision-making, albeit with consideration for human emotions and preferences.

---

This episode offers a profound exploration of the intersection between high-level academic leadership and practical economic application, providing listeners with both intellectual stimulation and practical insights into the functioning of elite educational institutions.

Transcript

[Steve Levitt]

This episode is sponsored by Nordstrom. The Nordstrom anniversary sale is on now. It's a big deal with new arrivals.

[Jonathan Levin]

On sale for a limited time.

[Steve Levitt]

Save up to 33% on brands like.

[Jonathan Levin]

Ugg, All Saints, Charlotte Tilbury, Steve Madden, Bobby Brown and more.

[Steve Levitt]

Plus stock up on once a year beauty exclusives from winning brands. The best deals go fast in stores [e-mail] prices go up.

[Jonathan Levin]

August 4 Gator Lite from the makers of Gatorade. With a specialized blend of five electrolytes and lower sugar, Gatorlight hydrates fast to replace the electrolytes you lose in sweat. Gatorlight made for rapid rehydration.

[John Levitt]

I tend to forget how old I am. I've been fortunate to have good health, and between having young kids and not looking in the mirror very often, I still feel young. One thing, though, that always makes me feel old is when people I know who are a lot younger than me rise to positions of power. In that regard, nobody makes me feel older than my guest today, Jonathan Levin. I had already finished graduate school before he even arrived. I still think of him as a kid, but they do not appoint a kid to be the president of Stanford, perhaps most influential and impactful job in all of higher education.

[Jonathan Levin]

So much of what drives behavior at a university and drives the quality of dialogue and discourse is just people's thinking about why am I here, what am I fundamentally involved in. Campuses should be places with deep curiosity about ideas, and they should be places where you can take chances and test things out.

[Steve Levitt]

Welcome to people I mostly admire with Steve Levitt.

[John Levitt]

John Levitt started his career as an assistant professor at Stanford before making his way up the ranks of academic leadership. And in that regard, he's following in the footsteps of his father, Richard Levin, who is also an economist and who served as president of Yale for 20 years. But I met John way back in grad school when he was part of a class in the MIT Economics PhD program that may turn out to be the Best Best Economics PhD class of all time. In addition to John, it included Esther Duflo and Emmanuel Saez. All three of them have won the John Bates Clark Medal that's given annually to the most influential economist in America under the age of 40. Esther, in addition, has already won the economics Nobel Prize, the youngest person ever to do so. So I started my conversation with John by asking him whether he realized as a graduate student, just how special his cohort was.

[Jonathan Levin]

When I arrived, it was in the fall of 1996 at MIT, I guess just after you had Graduated, I had just left. Yep, I had an incredible set of peers in the graduate program, like you said. Emmanuel Saez and Esther were in my graduate class. Alberto Abedie, Amy Finkelstein was behind me. Sindhal Malenathan was a postdoc my last year. And then the young faculty at MIT at that time, Daron Acemoglu and Abhijit Banerjee and Josh Angrist and Michael Kramer.

[John Levitt]

Nobel prize winners all around.

[Jonathan Levin]

Right. It was incredibly exciting and stimulating time to be at mit. As you know, it was the tail end of the great theoretical boom of the 70s and 80s and the rise of empirical economics. And I was so miscalibrated on what the normal path for a junior faculty member was. And I kept benchmarking myself against all these people who were so terrific and so productive and doing such amazing work. And I felt like I was failing the whole time I was in graduate school.

[John Levitt]

As a result, you were succeeding along the more traditional lines. You were doing really hard economic theory, the kind of economics that was valued very high status. Was that a conscious decision on your part? Did you come to MIT and say, hey, I want to compete with the big boys and the big girls and be an economic theorist?

[Jonathan Levin]

Steve, maybe I didn't have your spark of creativity and risk taking. So I went into somewhat more established areas like economic theory for my dissertation. But part of that was just I really loved it when I started doing economics. I was a English and math major in college.

[John Levitt]

Let me just interrupt you there and say, are you the only double English math major who's ever existed in the history of mankind? It's really interesting combination. It's almost what we think is being antithetical.

[Jonathan Levin]

Well, I loved it because I loved mathematics and I enjoyed it. And I also found it very hard. And so I needed to have some freedom to just read and think. It's a good combination because you learn how to think and how to write, and those are great skills to carry you through your life. When I went and started doing economics, which was in graduate school, first at Oxford and then at mit, the math part, I was more familiar with that. And I just fell in love with economic theory and game theory. I read David Kreps microeconomics book my first year at Oxford, and it just captured my imagination. And so that really carried me through. And then of course, because it was a time and you were a little bit even more on the leading edge of this, but because it was a time when data was coming into economics and these opportunities started to open up to get new data sets and to think about testing the implications of economic theory and thinking about tests of incentives or information or economic systems. That horizon just opened up, and I was fortunate to arrive in economics at a time when there were just all kinds of exciting things to work on. And that really is how my career then evolved over the next 15 or 20 years.

[John Levitt]

So even in that very special class you were part of, you already stood out. And I know that because I was in charge of recruiting new faculty to the University of Chicago Economics Department that year that you went on the job market. And I'm happy to be able to say that I aggressively recruited you and Emmanuel Saez and Esther Duflo, although sadly, none of you accepted the University of Chicago, Harvard. Do you remember my efforts to recruit you?

[Jonathan Levin]

Oh, I absolutely do. So going out on the economics job market, you go around and you give job talks at the different schools. And that was very memorable because you're meeting all of these iconic people. You've been reading their papers for years and years, and now they've read yours and you're talking to them, and it's scary, but also incredibly invigorating. I remember going to Chicago to do my interview. And the tremendous thing about the University of Chicago in economics is it is the most intellectually challenging and rigorous environment. And the intensity of the discussions, it was so fun. And it was true every time I went back for a seminar for years and years. What a special and unique environment. And so that was very appealing. And you did make my decision very hard.

[John Levitt]

Oh, that's not. I know that's not true, but let me tell people what I did, because I can't believe that I actually pulled it up. You, of course, had amazing offers, including Stanford, which is the one you take. But because you were exceptionally nice and socially adept compared to the typical economist, I think you pretended like Chicago was really an option, and I ran with that. So I convinced the administration to make you a very unique offer. And that offer had an extra clause added into your contract, which said if John comes to the University of Chicago and he leaves within two years, we will pay him an extra. I think it was a big number, like $200,000, which was roughly a year or two's worth of salary as a bonus for leaving, which of course sounds completely crazy. Like, why would you want to give someone a contract that encourages them to leave? But, of course, you've already mentioned your love of game theory, and we wanted to convey to you that we had a lot of information that was private to Chicago and We believed that if you came, you would love it, and you would love it so much that you'd be willing to forego that $200,000 that we'd pay you to leave just so you could stay. And I think that must have made your life miserable because you're such a nice guy and that was such a generous kind of contract to write. But you still had to tell us you had no interest in coming to Chicago.

[Jonathan Levin]

It's always interesting to consider the different paths you could have gone down in your career. And I'm sure if Amy and I had come out to Chicago back then, we wouldn't have left because we would have fallen in love with the people there. And what a great environment it was. And certainly it's continued to be a truly incredible place for economics. I'm not sorry I came to Stanford, though.

[John Levitt]

Honestly. What's interesting about that contract is I was taking economics really seriously. I didn't understand human nature very well at that point. But I do appreciate that even all these years later, you're still pretending like you might have been close to taking that Chicago offer.

[Jonathan Levin]

The offer is a great example of a successful, costly signal, though. So it is. You definitely got the Spence model of signaling Right. And thinking through that offer.

[John Levitt]

I'm curious, as the president of Stanford, would you ever consider making an offer.

[Jonathan Levin]

Like that today, including a clause that we would pay someone extra if they left? I would be incredibly dubious of making an offer like that. Partly because you'd hate to write the check when the person was on their way out the door.

[John Levitt]

You'd have a lot of explaining to do.

[Jonathan Levin]

That would be a tough one. Yeah.

[John Levitt]

All right, we'll come back to your role as president of Stanford, but I want to talk about your own academic research first. You are a very rare example of someone who started out doing economic theory and had unbelievable success in that regard. And then over time, you made really exceptional contributions to empirical economics as well. And that is rare, I think, both because the two types of economics require very different skills and few people can do both. But also, within the hierarchy of economics, theorists tend to have higher status. Many empirical economists, myself included, wished that they could have been theorists, but we just didn't have the talent to do it. So did you, from the very beginning understand that you wanted to analyze data, or was there some specific moment that pushed you in that direction?

[Jonathan Levin]

Right when I started, even from the start of graduate school, I got very interested in thinking about testing models of game theory and strategic behavior. And I started looking at data from Auctions. And one of the first papers I wrote in graduate school was a paper about bidding for timber on the National Forest with Susan Athey. We have this beautiful body of economic theory, game theory, mechanism design, built up to think about strategic interaction, think about interaction in markets, auctions in particular, and the chance to take that to data and see how well the data matched up with the very sharp predictors of economic theory. I just found that very interesting. And it turned out that the data matched up very nicely in many cases with the predictions of the theory. And I worked on that for a number of years. And then later, after I moved out to Stanford, we had basically the data revolution in economics, where all of a sudden, instead of having data sets that you and I worked on in graduate school, where you could open them up and you could look at them in an Excel spreadsheet and look, observation by observation. We had personnel records from companies, we had administrative data from the federal government, we had transaction data from markets. We had all of a sudden, tens of millions or hundreds of millions of data points on consumer behavior, on the labor force, on decision making, on trade, all kinds of variables. And the whole field just changed. And seeing that happen and seeing the opportunities to come up that then got me interested in looking at Internet marketplaces and health insurance and consumer credit, a whole range of other areas. The whole field of economics also changed in the way we work and went from economic theory, which is very solitary, maybe you have one collaborator, to working with a set of graduate students, with a team of researchers on a large data set. And I found the collaboration also very enjoyable. I enjoyed being around other people and talking ideas through. Not that I didn't enjoy sitting in front of my computer and coding or doing mathematical models. I enjoyed that, too. But I really enjoyed working with other people and working in a more collaborative environment.

[John Levitt]

You have many papers with lots of academic citations, but my favorite paper of yours, and one of my favorite economic papers of all times, is only your 37th most cited paper. It's a paper called Winning Play in Spectrum Auctions.

[Jonathan Levin]

The paper is really a story of a consulting project that I did the summer after I got tenure at Stanford. Paul Milgram, who was one of my colleagues, came into my office and he said, how would you like to work on a consulting project this summer? I hadn't really done that. I needed to make some money because we had just bought a house.

[John Levitt]

It's very expensive around Stanford, very expensive.

[Jonathan Levin]

To buy a house in California. And I was trying to think about, how are we going to afford this. This is exactly what I should do this summer. I should do a consulting with Paul and Jeremy Bulow, another Stanford economist. Comcast hired us to help run their bidding in an auction for radio spectrum licenses. And Comcast crosses the cable company. But they wanted to buy a national collection of licenses so they could, in principle, get into wireless broadband service. And in this auction, which was run by the Federal Communications Commission, there were large licenses that covered big geographic areas of the country and small licenses, which were metro areas. We were given a budget, and we were told, try to buy a patchwork quilt of licenses that will cover the whole country. And if you can't get the whole country, we don't want to buy the licenses. It really is important to get a national coverage here.

[John Levitt]

So it's all or nothing, right?

[Jonathan Levin]

It's all or nothing. But in this auction, the prices are going up, and you're bidding and bidding. So you have what's called an exposure problem, because you might end up winning some of them, and then the prices go over your budget, and you failed in the auction. So we didn't want that.

[John Levitt]

You said you had a budget. This is not a small budget. I've read the paper recently. In the end, you spent less than $2.4 billion, but I bet you had a much higher budget than that.

[Jonathan Levin]

We spent pretty close to our whole budget at the end of this story. So we had maybe a budget of about two and a half or a little more.

[John Levitt]

So this is what's called a spectrum auction. Can you just explain in really simple terms what we even mean when we say a spectrum auction?

[Jonathan Levin]

Okay, so let me go back a little bit. The Federal Communications Commission allocates the rights to use the radio spectrum and gives television stations the right to use a certain portion of the spectrum in a certain geographic area.

[John Levitt]

An important part of this is that the spectrum is not unlimited. Only a handful of people have the rights to use it at any time. It's really a scarce resource that's being allocated somehow by the federal government.

[Jonathan Levin]

And the finiteness comes because of interference. So if I'm using a radio and I'm trying to use the same bandwidth that someone was doing, broadcast tv, the broadcast TV is a very powerful signal. It would create interference. And I couldn't use the radio in that range of the spectrum. Cell phones are weak radios, at least if you're transmitting from your iPhone. And so you need to have some protection. You need to have a designated bandwidth within a given area. Historically, the FCC had just assigned the spectrum to people who wanted It. And when the cellular telephone industry was on the cusp of taking off in the early 1990s, the FCC looked around and they thought, who should get the rights to be able to use the spectrum? And they thought about different approaches to doing that. And they decided we could set up a competitive auction and sell the rights to use the spectrum to the highest bidder.

[John Levitt]

Because up until then it was allocated, given away for free through an administrative process.

[Jonathan Levin]

Through an administrative process. It wasn't a market based process. The benefit of the auction approach is that it would then go to the companies that believed they could have the most successful economic models, which meant they would sign up a lot of subscribers, they would make the investment to build out the network and use the power of markets to jumpstart an industry. And in the early 1990s, three economists, Paul Milgram at Stanford and Bob Wilson and Preston McAfee, came up with a design for an auction that the FCC could run. And they came up with a very clever auction design at the time, which was the FCC said, we're going to sell hundreds or thousands of licenses at a time. We're going to divide the country up into metro areas. We might sell six licenses in New York and six licenses in Boston, six licenses in Chicago, six licenses in Atlanta. And to run that, they took a page from a playbook used in charity auctions, which is where you might have many items lying around on tables and you can go in and scratch someone's name off and put a higher bid in, and then the prices go up till people stop raising the price. It's an ascending auction, but it could be tens or hundreds or even thousands of items on sale at once. And every round you can raise your bid for some set of the items for sale. And that was used all through the 1990s in the US and it was a tremendous success. It raised a lot of revenue for the federal government and it set the foundation for the explosion of wireless telephony and then broadband Internet that we've continued to use today.

[John Levitt]

That brings us back to this paper I was talking about in your consulting project. So you got hired by Comcast.

[Jonathan Levin]

Yeah. The FCC has allocated a new band of spectrum and they divided up the country geographically. Comcast wants to be a new entrant. They want to get some radio spectrum to have some strategic optionality. And of course, the other firms AT&T and Verizon and so forth are trying to buy more. What was different about this auction relative to some of the others is in certain bands of the spectrum, they had divided the country up into big regional blocks so you could bid for the Southeast or the Northeast. And they'd taken some of the bands and divided them up into these small metro areas to create a patchwork quilt over the country.

[John Levitt]

You are charged with getting coverage of the entire country. And the obvious thing to do, if you need to do that, is to focus on these really big chunks, right, the Southeast and the Northeast, and to forget about going after the little pieces, which is obviously a much harder, harder puzzle to put together, because you need many more. And that's what regular people would probably try to do. But you were economists and you were thinking about this strategically, and that's not what you thought you should do.

[Jonathan Levin]

Well, we started that auction doing exactly what you said, and so did everybody else. This auction goes on over a month and a half in the summer, so the prices are going up and up, and we're getting pretty pessimistic about our chances because we've got a fixed budget, and it looks like it's going to be too expensive. And then one day, we're on a call with everyone who's involved on the bidding team, and Jeremy Bulow has this idea where he says, you know, we have a budget in this auction, and every round we're bidding for as many things as we can, right up to our budget. And he says, probably everyone else is doing the same thing. So let's add up the total amount of all the bids, and that's going to tell us how much money's in this auction. So we did that, and then we did the second calculation. We said, look how expensive these big licenses are. If you add up what it's going to cost to buy them and someone's going to buy them, there's not going to be very much money left to compete for these little licenses that people are going to start bidding for soon. Maybe we can just put together a collection of all these little licenses and we can get the same thing in a different way. And we did a little more calculation, and then we said to the Comcast folks, who of course, had to make all the decisions and put the money at risk, we said, we've got this budget. We think we can assemble this collection of little licenses for this budget. It's probably going to be a extra billion to do it with the big licenses. We don't have that, but maybe we can do it with these small licenses. And to their credit, they said, all right, let's go for it. Let's try it. And so we start bidding for These little licenses. And every day the prices go up and we keep bidding and they go up and we're keeping track of where the prices are in our budget. And then, sure enough, just as Jeremy's simple model of budgets had predicted, the bidding starts to slow down and then it ends with all the money that we thought was in the auction being spent. And we get a collection of little licenses and the other folks get collections of big licenses. And our collection of little licenses, which is functionally the same, is about a billion doll less than the collections of the big licenses.

[John Levitt]

Somehow we got to talking about this and you in some offhand way mentioned this and it blew my mind. I love this so much because honestly, I've always really thought of economic theory. It's just messing around and not very practical. And your paper was the first time that I ever had to really sit back and say, wow, really sensible economics applied in the real world can matter. Here's these three economists who spent their summer and their efforts created a billion dollars in value for this company. They got a deal that was a billion dollars cheaper. I had never seen academic economics matter as much as it did there. And you described this paper as a story. And to me it was such a beautiful divergence from the typical academic paper, which was sterile and unintere and abstract and unimportant. And I felt like, wow, this is something I can point to. I can show this to students and say, hey, this is a reason to study economics.

[Jonathan Levin]

You were the biggest fan of the paper. We did actually submit the paper to the American Economic Review and we got two reports back on it. One of them said, this is really creative and interesting, you should publish this paper. And the other one said, this sounds like a story of what these guys did in their summer vacation. And the paper didn't get published in the American Economic Review. The reason I tell that story is I do think economics changed in the last 20 years or so, where academic economists in their research got much more interested in solving really practical hands on problems. And there's so many areas in development. Economics with randomized control trials in education, economics with different interventions in market design. The field that I worked in, the boundary between academic research, which is conceptual and theoretical and real world applied economics, which is messy and practical and sometimes creates a lot of value, became more blurred, that boundary eroded. You can have concerns about that in various ways, but it was also very exciting to feel that you had learned all these skills and invested in them and they had practical application. I mean, I know that's something that you also embraced as your career went on?

[John Levitt]

Yeah, for sure. And I assume that you had the confidence and the business savvy to negotiate a deal with Comcast where you got something like say 20% of the value created. Is that the kind of contract that you had with them?

[Jonathan Levin]

I needed you as my agent, Steve, because you were already doing clever contract design. But we just got paid by the hour, didn't study quite enough economics to work that.

[John Levitt]

We'll be right back with more of my conversation with Stanford President Jonathan Levin after this short break. People I mostly admire is sponsored by Constant Contact Running your own business today means facing constant disruption. From rapidly evolving AI technology to inflation and unpredictable political shifts. This instability can make even short term planning feel uncertain, leaving business owners feeling reactive instead of proactive. That's why growth is more important than ever and Constant Contact helps make it simple and steady. With their all in one platform, you can create and manage attention grabbing campaigns in just a few clicks. Email, text, social media events, landing pages, you name it, it's all in one place. Constant Contact's AI Content Generator helps you turn a rough idea into a ready to go message faster than ever. And with hundreds of customizable templates, it's easy to make something that looks and reads like your brand. You also get automated sending, real time reporting and tools that actually help drive sales. So you're not just marketing your business, you're growing it. Get a free 30 day trial when you go to constant contact.com try constant contact free for 30 days at constant contact.com constant contact.com it's over for Dirty Toilet Brush bristles because Clorox Toilet Wand makes cleaning your toilet so satisfying that it might become your favorite chore. The all in one toilet cleaning system is so surprisingly easy, it's no wonder they call it a wand.

[Jonathan Levin]

This thing cleans like magic.

[John Levitt]

The Clorox Toilet Wand comes comes with six scrubbing pads preloaded with disinfecting toilet cleaner. Just click, swish and toss for a surprisingly easy clean. It's time to simplify house cleaning. Visit Amazon to purchase your Clorox Toilet Wand today. Use as directed.

[Jonathan Levin]

Are you ready to get spicy? These Doritos Golden Sriracha aren't that spicy. Maybe it's time to turn up the heat. Or turn it down.

[John Levitt]

It's time for something that's not too spicy.

[Jonathan Levin]

Try Doritos Golden Sriracha. Spicy but not too spicy.

[John Levitt]

In the abstract, being the president of perhaps the most important and influential university in the world, Stanford University, sounds like it would be fun, but the actual tasks that I imagine you do on a daily basis, those don't sound at all fun to me. Trying to please a dozen different constituencies, fundraising, making difficult budget decisions, saying no on tenure cases. You're probably working 70 hours a week doing these things. Do you actually enjoy your job?

[Jonathan Levin]

I love my job. The opportunity to lead a great academic institution like Stanford, it's an incredible honor, It's a big responsibility, but it's mostly just an extraordinary opportunity and pleasure. And that's because, look around the world, there's just very few places on the planet that assemble the collection of people and talent and brilliant scholars, students across so many disciplines that you have on a campus like this. And your job is first and foremost to gather those people and then ensure that they have the freedom and the resources to accomplish really extraordinary things. That's a great job to have. There's just so much to take pride in terms of what people are doing and to see their success. And, of course, there's strategic elements. What should the university be investing in and direction. And there's some challenges, too, and they're certainly legion at the moment. When it comes to higher education, One of the things I discovered in my career, which was serendipity, was I loved being an economist and a faculty member and a researcher. You could more or less spend your time thinking about any problem that you're interested in. What job gives you that kind of freedom to explore and be curious and be creative and engage in problems and have collaborators to do it with? Maybe 15 years ago, I became a department chair, and I realized being a faculty member is a very entrepreneurial thing. It's you, your graduate students, a few collaborators, you get grants, you kind of run your own ship with a lot of freedom and autonomy. And I really enjoyed when things went well, whether it was hiring colleagues or seeing people get tenure or success in student programs, the collective feeling of success, that kind of got me hooked on academic leadership, and it ended up taking my career in a little bit different direction. And of course, at the scale of a university like Stanford, it's a great feeling to have an institution that you care about and deeply want to succeed, and you have a whole set of people who want the same thing. And to feel that if you can articulate a compelling vision for the future and bring people along and empower them, great things happen. And many, many people can take pride in the success of a great university who wouldn't love to be in that position. And I feel fortunate to be in it.

[John Levitt]

So A real cost of being in your job is that you have to watch every word you say. You represent the institution and all sorts of people who don't like you or don't like Stanford. They're waiting to pounce on anything you say that might create controversy. And it's really interesting, as I listened to you talk about the spectrum auction, the rate at which words came out of your mouth and the ease and the kind of joy in it, it's actually very different than how you talk when you talk about being president. Are you conscious of the fact that you're under that kind of scrutiny and you have to have an internal filter to make sure that you don't blow it?

[Jonathan Levin]

Oh, that's such an interesting question that you're asking. And I'm thinking through exactly how to think about that. I mean, one thing is even in a leadership role, you have to say what you think about things and try to be direct. And at the same time, of course, when you're talking about a paper that you wrote with two graduate students or with two colleagues, you're not speaking on behalf of a lot of people. And when you're speaking as the leader of an institution, you are representing a lot of people who care about the institution. For example, one of the joys of being in an academic seminar is you can throw out all kinds of interesting hypotheticals or things you haven't really thought through and just toss things out there and it's fine. Maybe it'll actually spark someone to go. Think about it. If you're running an organization and you have the staff of the organization and you throw out some hypothetical, you might get a lot of people who just derail the next several months of their life to try to think that through. My chief of staff had a metaphor about a leadership role of an organization. Her metaphor was, you can be a little bit like a Tyrannosaurus rex. You have very small hands in terms of getting things done, but when you turn in one direction, your tail can wipe out the time of a lot of people.

[John Levitt]

I love that.

[Jonathan Levin]

So you do have to be thoughtful, of course, but you also want to take some risk and push ideas that are not baked and are not thought through and just really stimulate ideas.

[John Levitt]

So one of the challenges I see that elite institutions like Stanford face is that there's a real tension between two largely contradictory objectives that the university has. First, you want to be doing path breaking research, and second, you want to provide a great education to students. If you are tasked with doing only one or the other as an institution. My sense is you could do it much better than we do either one of them right now. Now, I know you're probably not allowed to say, yeah, I agree with you. But let me ask you, do you agree with me that trying to both do research and do outstanding teaching and education puts us into a real bind for how to do both.

[Jonathan Levin]

The history of US Research universities is a marriage of two ideas that existed before and then were brought together in a way that was actually novel and innovative in the United States. When the institutions like Stanford were formed, which was in the second half of the 19th century. The model that was adopted was to bring together the idea of a research institution that was really focused on scholarship, that was the German university model and a model focused around undergraduate education, of liberal arts education, which was the British model. And to marry those two things, you're trying on one campus to assemble the greatest scholars of today who are at the forefront of their fields and pushing out the boundary and the brightest minds of tomorrow who you're educating. For the faculty, the excitement and enthusiasm of being in classrooms and getting asked questions and going back and forth with undergraduate students is stimulating for ideas and for the undergraduate, gives them a chance to be exposed to great scholars. I do think it's the reason that other places around the world have now copied the US Model and tried to pursue it. Not everywhere, but many places have. But it's a model that has, just as you point out, it has deep tensions that are embedded in it. Because there's a difference between trying to push the frontier of research and trying to provide a liberal arts education. And part of the challenge of running the universities effectively and having that model work is to try to make sure that friction between the great scholars and 18 year olds, you generate light rather than heat.

[John Levitt]

Some of the most powerful economic research that I've read in the last 10 years is the work of Raj Chetty and your old classmate Emmanuel Saez and other co authors. They published a paper in 2020 showing that a household's socioeconomic status is an extremely strong predictor of academic achievement nowadays in the usa. So according to their data, there are more students at top universities like Stanford that come from the top 1% of the income distribution than there are from the entire bottom half of the income distribution. If you look at the bottom 20% of people, the bottom quintile of people, less than 4% of the students at elite universities are coming from the bottom 20%. So putting those numbers together, the richest 1% of families are 77 times more likely to go to a school like Stanford than kids in the bottom quintile. Now, that's not necessarily Stanford's fault, but it is worrisome because a Stanford degree is worth a ton. So the education system in the U.S. it really seems, is working against the American dream and this idea of social mobility. So, two questions. First, do you agree with the data findings in that paper? And secondly, what, if anything, should we be doing about it?

[Jonathan Levin]

So I'm a huge admirer of Raj Chetty's work and in fact hired him to come to Stanford for a period, although we weren't able to keep him and he sadly went back to Harvard. I think there's a couple of really important things in the work he's done on education as it relates to social mobility. One of the observations that he's made is just how important higher education is as a path of social mobility in the United States and to document how different institutions succeed in that goal. So a very positive thing, for example, about Stanford and many of the Ivy League peers is that if you look at, for example, the average income that students make after they leave these universities, it's just as high for students who come from lower income backgrounds as from higher income backgrounds, showing that the university can help be a launching pad for students who come from lower income backgrounds. Now, it's also the case that from an overall societal perspective, the large public institutions in the country in a way play a bigger role in overall social mobility because they educate so many more students. The Ivy leagues might have 1500 students in a class, but you might have 10,000 or more in a large public university. We shouldn't lose sight of that. Actually, it's really important. And think about how we fund and support our large public universities.

[John Levitt]

No, it's true. I had never understood just how little success the lower SES or socioeconomic status families were having in navigating their way through the public institutions. I mean, people who want to make Stanford out to be the devil, I'm sure they're saying, well, why doesn't Stanford just let in a bunch of low SES people? I think the answer has got to be, without knowing the data, that our high school system, our public high school system, does such a terrible job of preparing people for Stanford that you just don't really have a choice. I know that must be the answer, right?

[Jonathan Levin]

One thing to note about Chetty and his co authors, they observe that there's a disproportionately high number of students who come from the top 1 or 2% of family income backgrounds less from the lower income deciles. In the last decade, Stanford and peer institutions, I believe, have made a very big effort to increase the number of students from lower SES backgrounds. This is not a perfect correlation, but if you look at our current freshman class, 20% are the first in their families to go to college.

[John Levitt]

That's great. Yeah, that's surprising.

[Jonathan Levin]

And that number has gone up dramatically in the last decade. However, our entire primary education system is not equitable. Lower income families don't have the opportunity to attend K12 schools that are as high quality. That's true in many, many parts of the country. So that's an advantage for students who come from higher income backgrounds. They have more opportunity to, as Rajnik authors document, to craft effective college applications. They're able to perhaps present themselves better as applicants. And that's something that, you know, deserves some thought is how should we think about that in college admissions?

[Steve Levitt]

You're listening to people I mostly admire with Steve Levitt and his conversation with Jonathan Levin, the president of Stanford University. After this short break, he'll return to talk about free speech on college campus purposes. McCormick knows unbeatable flavor starts with the right spices. It's why we created Flavour Sealed.

[Jonathan Levin]

So anytime you peel back the seal.

[Steve Levitt]

Of McCormick herbs and spices, you can.

[Jonathan Levin]

Be confident they will pack the same.

[Steve Levitt]

Amount of flavor as the day they were packed.

[Jonathan Levin]

The kind of flavor that brings out.

[Steve Levitt]

The best of your favorite recipes and keeps everyone coming back for seconds or maybe even thirds. McCormick flavor sealed for unbeatable flavor.

[John Levitt]

Freedom of speech and expression became such an explosive issue on campuses last year, especially around the issue of Israel and Palestine. Many university presidents have struggled to find the right balance. I asked John about his stance on this really difficult topic.

[Jonathan Levin]

So to me, the principles are not very complicated. At a university like Stanford, we give the faculty and the students extraordinary freedom to choose what they're going to think about, what they're going to write about, what they're going to say. And there's a reason for that, which is that's part of the freedom, the underlying freedom that gives rise to great research. You take chances, you can question orthodoxy and also is important for education because it tests ideas and it gets people into dialogue and debate and sometimes even into sharp disagreement. So that's the first principle to provide a great deal of freedom around speech. And the second principle is you have to have some set of rules that will protect the freedom of the other students and faculty to study and to learn and to conduct the essential business of the University. And I think last year on campuses, one of the challenges was just those things were coming into conflict in different ways. When we started this year at Stanford, we tried at the beginning of the year to really articulate both the very strong protections we have for speech and very clear rules around things like disruptions and protests. And we've been pretty fortunate this year that the students have really respected that. There's been a lot of dialogue and debate and discussion, even on hard issues, and a lot less of the contention that last year was so challenging for a lot of universities. I hope we can continue with that.

[John Levitt]

Where a lot of universities got into a kind of trouble was in trying to define hate speech. As you say, look, it's pretty easy to say that will put restrictions on activities like blockading classrooms or shouting down invited lecturers because those are interfering with other people's activities. But my impression is that this slippery slope came around this idea of hate speech. And hate speech is hard to define because somebody's got to draw a line someplace, and people won't necessarily agree where that line is. Do you see that definition of hate speech as being fundamentally challenging for what.

[Jonathan Levin]

You do at Stanford? The boundary for what speech is permissible and at what point it crosses the boundary into discrimination or harassment is we protect constitutionally protected speech. So we use the Constitution of the United States and the First Amendment as our formal rules. The Constitution protects a lot of speech that is not necessarily what you'd want to have on a campus. It's not necessarily productive and conducive to discovery and learning, which is what we're here to do. Some of that is having rules, but a lot of that is culture. So much of what drives behavior at a university and drives the quality of dialogue and discourse is just people's thinking about, why am I here, what am I fundamentally involved in? Campuses should be places with deep curiosity about ideas, and they should be places where you can take chances and test things out. And your research is a great example of this. Steve, you've done some research that was very controversial on issues that got people quite upset because you were pushing and testing ideas that went against the grain of how people necessarily wanted to think about things. And having a university that protects that kind of activity is so important because it might be right and it might change the way people think. So you want people to come in to a university to help them understand that about a campus and tell them, this is a place to be curious. This is a place to have an open mind. This is a place to Try to engage with people who don't think about things in the same way, to ask them questions. And so important for the faculty to set that example in the classroom. And rules can get you so far there. But really that's about culture. That's about people's expectations of what does it mean to be a constructive member of this institution and be here and contribute to the learning of others. There's an important role there for university leadership, and there's a very important role there for the faculty, and there's a very important role there for actually everyone who's on the campus.

[John Levitt]

It's interesting to hear you talk because for an economist, you are so thoughtful. I can recognize elements of economic thinking in there, but it also has this humanistic feeling to it that is, I think, very necessary and often missing when economists are put into positions of power.

[Jonathan Levin]

Steve, isn't that part of what the university is about? That's why we have the science and the humanities together. At some level, you can get so far with rational thought and data and modeling of the kind we do in economics. And there's boundaries to that, like what it means fundamentally to be human or to be a citizen of a campus or a democracy. These are deeply humanistic questions. And that's why in a great research university campus, it's so valuable to have people who span the spectrum and come at things in different ways. That's an incredible power. You just don't get that almost anywhere else in the world. Coming back to why I like my job, that's one of the things I like about it. It's a rare opportunity in that sense, I can say.

[John Levitt]

Although those opportunities to talk to people from other disciplines existed, and they were extremely available at the University of Chicago, I have to say, for most of the faculty, most of the time, we avoided those conversations. We were quite content, unfortunately, to talk amongst one another. And indeed, for me, I think eventually I realized the limitations of economics along with the strengths. And I've changed dramatically in the way I think is I've allowed myself to be more influenced by ideas.

[Jonathan Levin]

What triggered it for you?

[John Levitt]

It was just the growing realization that economics models by necessity were simplified. And I'd always believed when I was young that we had kept the important stuff and we abandoned the unimportant stuff. But the more I experienced the world, the more I realized that unfortunately, much of what really mattered that got left out of economics, and we needed to leave it out to solve our mathematical models. But it was really, really important. I just came to really appreciate a Much more holistic view of the world than we typically have. At least the true believers within economics. So as I've watched your career and as I listened to you talk today, I am struck by the sense that there are a few people in this world who are exactly where they're meant to be. And you really seem like one of those people. Do you agree?

[Jonathan Levin]

Well, it's nice of you to say that probably the same is true for you. But the way I went through my career, I never really had a sense of exactly what was going to come next. There was only so much intentionality in the way my career evolved. You started this by talking about how extraordinary a place MIT was back in the 1990s. I was incredibly fortunate to show up in Economics at a time when it was so exciting and with all these brilliant people around and fortunate to end up at Stanford on the faculty and, and now to get a chance to lead this institution that I came to for the first time when I was 17 years old. It completely shaped my whole life and things that I care about. I've always felt that getting in a position of opportunity, sometimes it's some of the things you do right, but a lot of it is just luck and good fortune. And when you have some luck and good fortune, it's really incumbent on you to try to make the most of it and to do some good for other people. And there's probably no job that gives you an opportunity to do good for other people and give them opportunities like getting to lead a great university like this one.

[John Levitt]

Okay, last question. I suspect you will be an amazing president. If you aren't, I think it will be because you're just too nice. Do you worry about being too nice to be a president?

[Jonathan Levin]

You know, Steve, you once wrote something about me after I won the Clark Medal in Economics. And you wrote a little column about me which was really lovely of you. You said that I was one of the few economists that no one said nasty things about. Shortly thereafter, I became a business school dean and that period of my life ended. And here's what I would say about it. Personally, my style of leadership is I like to listen to people and I try to treat people in a way that's respectful. And that's something I learned, actually, watching my dad run a University for 20 years. He was extremely good at being a listener and at taking seriously everyone he interacted with. That set a real model for me. And at the same time, you just cannot make everyone happy. Every possible decision, you are going to have people who agree with you, who disagree with you, who vehemently disagree with you, who are upset about the decisions you made. That's just the way it is. There's just too many hard issues facing universities right now where there's not a right answer. People have different values, they come into conflict, they have compelling ways of thinking about it, and they're at odds. And that came into stark relief last year. But it's true on many, many things we faced around admissions, which you brought up, around the role of universities. I think it's possible to be nice to people, to show them respect, but to be successful in any leadership role, you have to also just have a sense of, this is the North Star that we're aiming for, but still try to preserve being respectful to people and listening to them. I think it helps make good decisions and be effective.

[John Levitt]

There's an old story they tell about the University of Chicago Economics Department. The tenured faculty were in a meeting discussing whether to make an offer to a scholar at another university. After a spirited discussion of that economist research, it was unclear how the faculty would vote. Just before the vote was to be taken, one of the faculty members said, I think it's important to point out that I know the scholar well and he is extremely argumentative, a bully, and overall has a very disagreeable personality. One of the longest tenured and most eminent economists in the room is said to have replied, those qualities alone are not enough to justify making him an offer. His research still needs to be up to our standards. Standards. It's probably a good thing that John Levin turned down our University of Chicago offer all those years back. Certainly his career could hardly have turned out better than it did. Being a university president is a tough job, but I'd be willing to bet that billion dollars he saved the telecom company that John Levin will do a phenomenal job at it. This is the point in the show where we take a listener question and I invite my producer Morgan on to help with that.

[Steve Levitt]

Hi, Steve. We have a question from a listener named Aaron. So Erin sent us an Instagram video from a user named Tyler Thrasher. And Tyler has a dilemma. Tyler has a pack of Pokemon cards. It's an unopened pack that he bought for $4 as a kid, and that specific pack is now selling for $350 on eBay if it's unopened, like his is. However, there's a twist with a lot of these retro toys, as there often is. Some of the cards in the packs had printing irregularities. Not all, but some. And if his pack has cards with printing irregularities. It could mean that the pack's worth a lot more. Some of these cards could be worth thousands of dollars. There's even one card that has the potential to be worth $300,000. However, he'd have to open the pack to find out if it has one of these printing irregularities or several of these printing irregularities. His question is, should he open the pack or not? He can make $350 today without opening the pack, but has the potential of making many thousands more if he does open the pack and finds one of these special cards. So Erin sent us this video because she felt, and I think she's right, that there's a very logical way to think about this problem, and she wants you to walk her through what the logical solution is.

[John Levitt]

Okay, so let's start with the first thing Tyler says over and over. I only paid $4 for the pack. Okay. But let's be clear. From an economic perspective, I don't care whether Tyler paid $4 or a million dollars. What he does next, it doesn't matter. That's what we call a sunk cost. And one of the biggest mistakes that regular people make who don't think about economics is that they factor in details that are irrelevant to the current decision.

[Steve Levitt]

No matter what he paid, he's still in the same position today.

[John Levitt]

Exactly. Yes. His only problem now is how is he going to maximize the value of what he gets out of this pack? One thing to point out here is that Tyler doesn't really know all that much about the value of these cards. He learned about these expensive cards by doing online research. So in general, when you don't know so much, you run the risk when selling something that you're going to sell it to someone who knows much more than you. And so that's what we call asymmetric information in the economic world. Here's an example. It's possible. Not likely, but possible, that somehow printed in all those different random digits on the outside of this pack, and they're in Japanese. So Tyler has no idea what these things mean. Something signals whether it contains one of these special cards. And so the biggest risk I think Tyler has is that he's going to sell this to someone who's way more informed than him that knows that there's a much better chance it has a good card than he does. Okay, so how do you get around that? Well, that would be a reason to open it, because once you've opened it, you know whether you have the good cards or not. But in general, I think if he sells it at auction on ebay and there are a lot of people who are informed, then he doesn't really even need to worry about this, because as long as there are two or three people who are able to read the outside of the package and know if there's anything special that it says, then he'll get a fair price for it either way.

[Steve Levitt]

Because they'll bid up the price.

[John Levitt]

Yeah. Market competition will take care of it. More fundamentally, thinking about decisions like this, ultimately it comes down to two things. The first is risk tolerance. Unopened, he knows exactly the value. He knows he can get about $350. There's no risk associated with selling it unopened. If he opens it now, it could be worth a ton, but most likely it's not worth very much at all because everyone is risk averse. And I assume Tyler fits into that category as well. That argues against opening the pack, because once he opens the pack, he opens himself up to all sorts of risk that he doesn't have that good card. Does that make sense?

[Steve Levitt]

It does. He's guaranteed to get $350 right now, but if he opens the pack, he could walk away with nothing.

[John Levitt]

Exactly. And in general, if you offer people a fair bet and you say, hey, either I'll give you $350 or let's flip a coin, and if it's heads, you get 700, and if it's tails, you get zero, most people will not take that bet. So that's essentially what Tyler's looking at here. But let's not be too economic about this, because we also have to realize we're human beings, and a huge part of this whole thing is fun. Right. People are willing to pay $350 for it because it is exciting. If you collect Pokemon cards, the visceral feeling of opening that deck and going card by card with the hope that you hit the jackpot, that's a lot of fun. And I don't want to discount that. That's real. Now, here's the thing. Tyler has had an unopened deck of Pokemon cards for 20 years. I don't think Tyler will have as much fun opening this deck as the people who will buy it from him. And that's another reason not to open the deck, is because nothing in the video makes me think that Tyler is dying to open this deck. As I listen to Tyler, I think that he should not open the deck. That would be my view on it. Don't open the deck, Tyler.

[Steve Levitt]

Sell the deck at $350?

[John Levitt]

Oh no, that's a different question. A much tougher question is whether he should sell the deck now or hold onto it because the value might increase. That is a prediction problem, and that's beyond really what economics can do. Well, it's hard to know whether the value of this deck is going to go up or down.

[Steve Levitt]

So, final answer.

[John Levitt]

If I were Tyler, I would sell the deck unopened and I would make a deal with the person who buys it that Tyler's allowed to do a video around the opening of the deck so that if indeed there's some magical card in there, Tyler can bemoan his fate and get credit for it on Instagram. And if there's nothing good in there, he can jump around and make a big deal out of it and celebrate the fact that he made the right decision.

[Steve Levitt]

Aaron, thanks so much for sending this puzzle our way. If you have a question or comment or puzzle for us, Our email is pimaeeconomics.com that's P I M A rekonomics.com we read every email that's sent. We look forward to reading yours.

[John Levitt]

In two weeks. We're back with a brand new episode featuring Hank Green. He is the brother of John Green who has been our guest on this show and he is an Internet phenomenon. He puts out some of the best content you will ever find on YouTube and TikTok. As always, thanks for listening and we'll see you back soon.

[Steve Levitt]

People I mostly admire is part of the Freakonomics Radio Network, which also includes Freakonomics Radio and the Economics of Everyday Things. All our shows are produced produced by Stitcher and Renbud Radio. This episode was produced by Morgan Levy with help from Lyric Bowdich and mixed by Jason Gambrell. We had research assistance from Daniel Moritz Rabson. Our theme music was composed by Luis Guerra. We can be [e-mail] that's P I M A reconomics.com thanks for listening.

[Jonathan Levin]

Do you need me to say I'm John Levitt or anything like that for your intro? You do not. Okay, there we go.

[Steve Levitt]

The Freakonomics Radio Network the Hidden side of Everything Stitcher.

[John Levitt]

The day begins at the Chase Sapphire Lounge by the club at Boston Logan Airport. You get the clam chowder in San Diego. It's Tostadas New York. Espresso martini. It's 10am why not? It's the quiet before your next flight. The shower that resets your day. The menu that lets you know where you are. This is access to over 1300 airport lounges and every Sapphire lounge by the club. And one card that gets you in Chase Sapphire Reserve the most rewarding card. Learn [e-mail] Sapphire Reserve cards issued by.

[Jonathan Levin]

JP Morgan, Chase bank and a member FDIC, subject to credit approval.