Chapter 1: What is discussed at the start of this section?
Welcome, welcome, welcome to Armchair Expert, Experts on Expert. I'm Dan Shepard and I'm joined by Lily Padman.
Hi.
Today we have Alvin E. Roth. He is a Nobel Prize winning economist and a Stanford professor. Ding, ding, ding, ding, ding.
My goodness.
His previous book is Who Gets What and Why? And his new book is called, This is Tasty, Moral Economics, From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work.
Really interesting.
Super, super interesting. We learn about the difference between repugnancy and disgust. He himself pioneered this kidney market that has saved millions Tens of thousands of lives. Yeah, really, really great topic. Please enjoy Alvin E. Roth.
He's an armchair expert.
You're visiting, I presume, from the Stanford area, yeah? I am. You're originally from Queens. Both parents were schoolteachers? Yes. And what was their specialty? Were they just generalists? They taught in high school, and they taught a discipline that no longer exists. It was called secretarial studies.
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Chapter 2: How did Alvin Roth's upbringing influence his career?
I did, yeah. What was the hurry? Was it just happening? It was mostly just happening. I wasn't in a hurry. But again, I wasn't a talented student. I liked being a student, but I was ready to also think about things on my own. Okay. How do we transition from operations to economics? It's a good question. I'm often asked that.
My story, which I'm sticking to, is that I didn't change what I did, but the disciplinary boundaries moved around me. So I studied game theory was the topic of my dissertation. And in the 1970s, it looked like operations research might be the natural home of game theory. But then economics adopted game theory, and doing game theory made you an economist, and there I was. Oh, okay.
Did you love Janusz von Neumann? He's a father of game theory. It would be delightful to have met him. He was a polymath and an unusual man. Most of the game theory we do today isn't very directly related to what he did. I'm fascinated with him. I read a great biography about him last year. He is the one who basically comes up with the concept of mutually assured nuclear annihilation, right?
This is what he models out. So he didn't ever talk about things like that. He may have thought about it or talked about it, but not written in his game theory book. But you might be thinking of Thomas Schelling, who was a game theorist who also shared a Nobel Prize in economics with Bob Oman.
And he worked in the Rand Corporation and thought a lot about nuclear disarmament and armament and mutually assured destruction. But that is based on the shoulders of game theory, no? No. Yeah. You have a lot of long stints. You do University of Illinois for seven years? Eight years. Eight years? 74 to 82. And then you do University of Pittsburgh for a long time as well. 82 to 98.
Are you astounded when you look back that you've had kind of full careers at all these different places? Because you then also went to Harvard for 14 years. Like these are really long tenures at any one place. Well, you know, I'm old. We did different things at each place. I met my wife in Illinois. We had our children in Pittsburgh. We saw them off to college in Boston.
And then we moved to Stanford in 2012. Does academia inoculate you from this? Or do you feel like you were able to pick up the worldview of all these places you spent all this time in? I always think of myself as being from Detroit. And then I've been here for 30 years. And I definitely... downloaded a different worldview through being here. And I want more of those worldviews.
And I just wonder if you could feel that you absorb the culture and the points of view. I think I can absorb the culture of the different places. Partly, there's a lot in common about fancy economics departments wherever they are. People sometimes ask me, what's the difference between Harvard and Stanford? And in many ways, they're pretty similar.
If you're in the economics department, you're reading the same journals. You're seeing many of the same people. So 70%, 80% of it is pretty similar. The difference is at Harvard, when you look away from campus, what you see in the foreground is Wall Street and Washington. And at Stanford, when you look away from campus, you see Silicon Valley.
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Chapter 3: What defines a market according to Alvin Roth?
We've just recently, in very recent years, started to make progress on reimbursing the cost that donors pay in becoming donors. That is, if you wanted to give me a kidney, if I had kidney failure, I'd probably be in a hospital up in the Bay Area, and you would have to come and get a hotel room, and you'd have costs. And it would have been illegal for you to reimburse me for those?
It wasn't clear whether it was illegal, but it certainly was impractical. So mostly there was little or no reimbursement.
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You're in good hands with Allstate. Potential savings vary subject to terms, conditions, and availability. Allstate North American Insurance Co. and affiliates, Northbrook, Illinois. Yeah, your insurance is not going to pay for you to donate a kidney. Well, my insurance would pay for the surgeries yours and mine needed for you to donate a kidney to me. Oh, okay, okay.
But they wouldn't pay for the childcare that you needed while you were in Palo Alto.
Travel, all that.
So there were lots of things that they wouldn't pay for. I was on the board for a number of years of a federally funded organization called NALDAC, the National Living Donor Assistance Center, which had permission to pay certain expenses of... Means-tested donors, donors who were poor enough, and that's been liberalized what can be paid for over the years.
But it's still the case that it's flatly against the law to pay for a kidney, and that's one of the reasons why there's a terrible shortage of kidneys. What was the number before you came up with this algorithm that could match two different couples wanting to, or maybe it was even, I don't know how big it can fan out. So there was hardly any kidney exchange.
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Chapter 4: How do repugnant transactions challenge societal norms?
But let's talk about prohibition. So what happens in 19... 20s and 30s. Yeah, yeah, yeah. We prohibited most sales of alcohol, not sales for religious purposes, not sales for certain kinds of medicinal purposes. But by and large, we prohibited the sale of alcohol. In the Volstead Act, you could brew in your home. So there was a big upsurge in the sale of wine grapes. Synagogue membership.
Membership in synagogues.
Oh, wow. Oh, that's really funny.
Yeah, yeah, yeah, yeah. I taught for many years at the University of Pittsburgh and... The state of Pennsylvania had, and I think still has, a liquor monopoly. It's only sold in state stores. And state stores are closed on Sunday. But the store that sold Judaica, Jewish things, and they could sell kosher wine even on Sundays.
Oh, really?
They went from no business? And you had to scribble something that was supposed to be what shul you went to, what synagogue you belonged to. But you could have gone in and scribbled something. They weren't interested in your scribbles. Wow.
Yeah.
Kind of like the medical marijuana card. Yeah, I remember how- Yeah, there was a great comedian that said he went to get his medical marijuana card and they said, are you having trouble sleeping 12 hours a night?
Yeah, exactly.
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Chapter 5: What personal experiences influenced your thoughts on economics?
I don't want to be.
I know. You even put your shoes on the bed.
Don't say that.
I've seen it. I've seen it. It's always when you are wearing those because like probably you just don't feel like taking your shoes off.
Yeah, I would kick off normal shoes. But I got to bend over.
But you don't wear enough loafers for someone who likes to slip on.
Well, but I have slip-on vans, and I have my low-top converse loose enough that I can slide in and out of them.
But you've never tried out a loafer?
I hate loafers. I've tried many times. Why? They look great on you, and everyone should wear loafers. They look great on everyone. On me, they look preposterous. If anything is, like, outside of my vibe, I really think a loafer is where the rubber meets the road.
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Chapter 6: How do societal norms affect personal interactions?
Mm-hmm. That's in massive rotation.
Yeah, that's a great one.
Just wore the green row one recently.
Yeah, great one you could wear. Definitely wear that with a loaf.
No.
Monica, I know you, like, you're picturing it seems organic, but I promise if you saw me in a loafer, you'd be like, hold on, what's going on? Because then I got to wear a dress pant.
No.
Loafers and jeans is a very specific dude, and I'm not that dude. That's a Connecticut, went to Harvard.
No, no, you have, see, you have an old school, like, you have an old school mentality.
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Chapter 7: What are the implications of naming conventions in economics?
So I was at a restaurant with Jess that I frequent a lot.
Okay.
And that we frequent a lot, him and I. And the server said, you know, I just want to flag for you guys that on our system, and I think a lot of systems, on our system, it just shows the last three digits of the credit card. And him and I have the exact same last three digits of our credit card.
Serendipity.
Isn't that crazy?
Kismet.
Which is like, I was like, oh my God, like I thought that was so cool.
Yeah.
And then it's immediately scared Jess.
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Chapter 8: What unique insights does Alvin E. Roth share about market behaviors?
Yeah. I still don't understand what the issue is. Because you're going to hand them the credit card every single time, right? You don't have an account or a tab at these places.
No, we don't. But maybe they swipe it.
Throw it on 682. That would be a problem.
Okay. Maybe they swipe it and type in the amount. Because with tip, it's like with tip and stuff. Like if I'm tipping... Maybe they type that in the back of the credit or like they're like, oh, this is the credit card that gets $50 tip. This credit card gets $100. It was obviously enough of a thing in their system for him to have brought it up.
Yeah, I just wish I understood how it could go wrong.
He says it shows up F and then the last three digits. And ours are the same. Isn't that crazy of all the numbers in the world?
Yes, that part's very exciting that you guys have the last three numbers. And isn't it the last four? Everywhere my credit card is.
That's why. The last four is not.
They don't match.
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