Freakonomics @ IOD: Examining Data Ain’t No Monkey Business

Apologies in advance if you had no incentive to show up at the Freakonomics keynote session earlier this morning at Information on Demand, because it was, without question, the highlight of my week here in Las Vegas (aside from the Bengal tiger I discovered hiding in my hotel bathroom).

Freakonomics co-authors Steven Levitt and Stephen Dubner expound on sex, lies, economics and monkey business in their hilarious Information on Demand 2010 keynote session.

Just as with Malcolm Gladwell last year, author Stephen Dubner and economist Steven Levitt artfully integrated some of the themes of the event into their two-man show, and in the process perhaps nearly stole the whole show.

Dubner spoke first, asking the audience to “raise your hand if you’re a genius,” then recognizing the power of his own incentives, warned us away from stealing Levitt: “Find your own, he’s mine.”

Two best-selling books and a documentary movie later, I can’t say as I blame him.  Dubner kicked the session off explaining how he and Levitt came into one another’s orbit, arguing that he was fascinated Levitt was using data to find out what was going on in “the real world.”

Levitt, on the other hand, explained how he eventually became the accidental economist who was abysmal at math and clueless when it came to different varieties of derivatives, but was still able to muscle through at the encouragement of his father, who had found his own niche as a medical researcher on “intestinal gas.”

“The king of farts,” went the GQ profile headline about his father, joked Levitt, before Dubner returned to the stage and kidded that that made Levitt “the prince of farts.”

All hot air aside, Levitt explained his niche became the study of the nichest, yet fascinating, realms of data, and the people who helped unravel them.  Ultimately, though, Levitt was studying the power of incentives, and how they motivated — or didn’t — people across all walks of life.

Like the guy at the IRS who realized there weren’t really 7 million people named “Fluffy,” and how, almost overnight, 7 million people suddenly disappeared from U.S. tax rolls when the Social Security # started being required by filers in 1987 and they could no longer file their ghostly dependents!

Levitt went on to explain he wanted to become the kind of “real economist” who, when he made a mistake, could throw world markets “into convulsions.”  But of course, to be a real economist, he’d have to be good at math, so instead focused on problem sets that nobody else was interested in.

Dubner returned to the fore to explain one of those scenarios, a Yale researcher named Keith Chen who wanted to understand the impact of money in a monkey economy.

That is to say, how capuchin monkeys would react to having money introduced into their milieu (in this case, a research cage at Yale).

The hilarity of the story that ensued couldn’t possibly be done total justice in my retelling here, but know that it had the makings of a great story which you can read more about here in a New York Times article by the authors.

The long and short of it is that monkeys don’t monkey around with money much, at least not how Chen the researcher thought they might, particularly when said money interferes with what the monkeys really wanted more of (food and sex), but they did find a novel way to fit money into their Yale cage monkey business.

As Dubner explained the lesson, economists are all about measuring preferences (revealed and declared), and that the monkeys started to buy more food when the prices of the things they liked to eat most went up, not unlike people.

Ultimately, it’s all about loss aversion, whether the loss be more food or sex.

Speaking of the latter, Levitt returned at this point to close out the session, using another anecdotal example that demonstrated the power of pricing in that most marginal of markets, prostitution.

Never one to shy away from the fringes, Levitt explained how he became acquainted with a high dollar escort in Chicago through a “mutual acquaintance” and who was interested in helping him with his research on the economics of street level escorts.

Turns out, the escort had a Palm Pilot filled with useful data for his investigation, but also came loaded with a background in computer programming and now street business savvy, and she was ultimately able to one-up Levitt when he asked her to lecture to one of his classes, charging a full $100 more per hour than her standard hourly rate, but apparently giving one of the best lectures at the University of Chicago that his students had had in their entire four year tenure.

Though it may not have said much about he and his colleagues’ teaching abilities, the story did reveal to the global IOD audience that Levitt and Dubner continue to unearth powerful data where seemingly none exist, and to relate the revealing insights behind that data in a way that gives testament to the truths and lies of the human condition.

The Hidden Side of Everything

Okay, it’s Monday, and I want to welcome you back to the Turbo Monday edition of “Guess Who’s That Keynoter?”

For this particular edition, we’re going to jump ahead to the Information on Demand event being held in Viva Las Vegas, Nevada, in late October.

All our IBM conferences tend to be smokin’ hot good (and, I’ll even dare say it, fun), but the Information on Demand event holds a special place in my heart.

First, I’ve been attending and blogging at IOD since 2006.  There, I’ve had the opportunity to interview some of the coolest, smartest speakers and authors from across the landscape.

More importantly, I get to talk to so many of you, our customers.

This year’s not going to be any different.

But before we get to the keynote build up, let me tell you a few things about this year’s event.

First, we’re expecting some 9,000+ attendees.  Yes, IOD has gotten that big, but in this case, bigger is better, because we’re rolling our Business Analytics event (which Cognos once sponsored) under the IOD tent this year.

Second, this year we’ll be looking more holistically at what IBM and its partners bring to the Information on Demand table, including hardware, software, and services.

We also expect to have over 600 tech sessions, 160 Cognos and SPSS sessions, 11 industry-focused business and IT leadership sessions, 128 hands on labs, 300 customer speakers, and IBM’s largest exposition from all its events around the globe.

For 2010, we’ll also have two full days of business partner programs, and we’ll have our regular standard fare that you’ve asked to continue, including networking opportunities and 1-1s with IBM execs.

Why Suicide Bombers Should Buy Life Insurance

Now, back to the spotlight on our featured speakers.  They not only think out of the box — they don’t even know the box exists.  Because to acknowledge the box would be to acknowledge its limitations.

Like any good business analytics experts, they view the world through a very different lens by pointing out how numbers don’t lie, and, when carefully considered, can speak volumes to actual truths on the ground.

Do you know who they are yet?

If not, know their first unlikely collaboration resulted in an international bestseller. Its premise: If morality represents how we would like the world to work, then economics represents how it actually does work…this book will literally redefine the way we view the modern world.

Anybody?

They went on to publish another best seller, and also to produce a podcast series on iTunes as well as a blog on The New York Times.

Okay, I’ll spare you the drum roll.  But I’m talking about Steven and Stephen, of course.

Steven D. Levitt, the professor of economics at the University of Chicago, and Stephen J. Dubner, an author and journalist living and working in New York City.

In their first tome, Freakonomics: A Rogue Economics Explores the Hidden Side of Everything, these two gentlemen delivered story after story that addressed ways to create behavior change and demonstrate what incentives work and what didn’t — with the research and data to back up their often controversial claims.

Hailed by critics and readers alike, the book went on to spend more than two years on The New York Times bestseller list, and has sold more than 4 million copies around the world in more than 30 languages.

Those are the kind of numbers that simply don’t lie.

This past October, they came out with their second book, Superfreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance.

You can hear Steven and Stephen speak at Information on Demand, IBM’s Premier Forum for Information & Analytics, at the Mandalay Bay Hotel and Convention Center this October 24-28 in Las Vegas.  Visit here to get all the details and to register.

Meanwhile, whet your appetite for more from the Freakonomics guys by reading their blog.