Why Suicide Bombers Should Buy Life Insurance

Let me tell you a story – was how a talk this lunchtime by Prof. Steven Levitt started as he gave a talk about economics and some of the weird but true facts he has come across in his research.

bookpicHe is noted for being the co-author, along with Stephen Dubner of best selling book, Freakonomics and is in the UK promoting the suitably titled sequel, Superfreakonomics.

A quick run though of some of the more interesting or plain funny anecdotes started with the tale of John Szilagyi.

Mr Szilagyi, who worked at the US tax office wondered why American children were being given increasingly weird names and had a suspicion. After some effort, the tax returns form was changed to require a social security number to be placed alongside each child being reported by parents when claiming their $250 child’s tax credit.

In 1986, some 7 million children “vanished” from the USA, including as it later transpired, a non-existent brother and sister to Prof. Levitt. The moral was that if you create an incentive, then people will find a way to abuse it.

The purpose of the talk, and the book, is to expand on how simple insights into information and human behaviour can lead to surprising outcomes.

For example, the oft-cited, but not acted upon finding from studying the data that special seats for children in cars make no difference to fatality rates in car accidents when the child is more than 2 years old.

Unfortunately, the politicians felt the facts disagreed with their political policy and not only disregarded the findings, but actually attacked them. Although the talk was being given in a House of Commons Committee Room, no mention was made of a more recent episode of politicians and facts conflicting – this time the recent Nutt sacking over drugs policy.

A more recent bit of work he has been engaged in lead to the title of this blog post – and that was the analysis of bank account activity (with necessary privacy issues dealt with). Not the big stuff that governments like to worry about, and pass silly laws on – such as money laundering etc.

How about monitoring when a person uses a cashpoint machine? If they never ever use one on Friday evenings, is there a chance that they are Jewish or Muslim? What if they lack life insurance or other long term financial plans?

It’s a lot more sophisticated than that – but out of 10 million accounts enough data existed to identify around 30 accounts that had particularly unusual behaviour.

He said that any suicide bomber seeking to evade detection prior to their crime should simply take out a life assurance policy. You can bet the security services have a few other key items they are watching that haven’t been put into books though. Indeed, they might be watching for a spike in people who never use ATM’s on Friday evenings suddenly taking out life assurance policies!

During the Q&A session, much time was spent dealing with their fairly controversial views on climate change – but if you get away from the tabloid media hype, their views are not actually that weird and indeed make a lot of sense.

In essence, it will cost a fortune to reduce CO2 emissions, and whatever we do will take 50+ years to have an effect. Or, we could spend a comparatively tiny amount on geo-engineering which can have an effect almost immediately and if it doesn’t work, we haven’t really wasted any time.

He is arguing that we should look at mitigating CO2 in the short term, and spend the money saved on developing the low-carbon economy that we will need in the future.

Hardly controversial, but the way some in the green-lobby have reacted you would think he was one of the climate change deniers. He isn’t – he just thinks that spending $1 trillion per year on reducing CO2, when alternatives costing maybe $200 million are available seems a bit odd.

His metaphor was that of an approaching asteroid.

One team of scientists come up with a plan that costs $1 trillion, takes 50 years to work and requires every human on the planet to be involved.

Another team comes up with a plan costing $200 million, can be tested in just one year and involves a few thousand people.

Lacking a Bruce Willis to save us, which option would you try first?

If you want to know more, then the duo are giving another talk, this time tomorrow at the RSA, and they will be broadcasting it over the internet.

Tune in, it will be entertaining (especially if he includes the potty training story), and quite possibly enlightening.

Thanks to the Henry Jackson Society for the invite to the event.