#5/25: How will you measure your Life?

The only way to be truly satisfied is to do what you believe is great work. And the only way to do great work is to love what you do. If you haven’t found it yet, keep looking. Don’t settle. As with all matters of the heart, you’ll know you find it. — Steve Jobs

This will be another book commentary, because there are just so great things in this book, that I don’t have to reconstruct because it’s already written quite concise.

Too many of us who start down the path of compromise will never make it back. Considering the fact that you’ll likely spend more of your walking hours at your job than in any other part of your life, it’s a compromise that will always eat away at you.

I probably said it before, but if you want to do something, do it now, not in two years or ten years or after you married. You probably won’t do it in the future. If you want to start a company, do it now. If you want to work in a foreign country, do it now. If you want to work in a NPO, do it now.

By that’s not what I saw at the moment. Instead, I was impressed by the love Diana and her husband clearly shared with their two children. Seeing her there, I began to gain a perspective of Diana in the full context of her life. She wasn’t just a scientist. She was a mother and a wife, whose mood, whose happiness, and whose sense of self-worth had a huge impact on her family.

I studied economics and some portion of my fellow students pretty much had a view that people only react to money and that is everything there is at the job. Research have refuted this view since a long time but some people still don’t want to accept this. Interestingly, some organizations think everything can be solved with enough money; another fallacy.

Frederick Herzberg: This theory distinguishes between two different types of factors: hygiene factors and motivation factors. On one side of the equation, there are the elements of work that, if not done right, will cause us to be dissatisfied. These are called hygiene factors. Hygiene factors are things like status, compensation, job security, work conditions, company policies, and supervisory practices.
[…]
Compensation is a hygiene factor. You need to get it right. But all you can aspire to is that employees will not be mad at each other and the company because of compensation.
This is an important insight from Herzberg’s research: if you instantly improve the hygiene factors of your job, you’re not going to suddenly love it. At best, you just won’t hate it anymore.
[…]
Motivation factors include challenging work, recognition, responsibility, and personal growth. Feelings that you are making a meaningful contribution to work arise from intrinsic conditions of the work itself.

This connects to the last quote and Punished by Rewards by Alfie Kohn. The salary should be enough, so that people don’t have to think about it but it doesn’t help to motivate. Kohn quotes some studies that investigated whether commission helps to motivate sales persons to sell more and the studies concluded that it didn’t help at all and sometimes even had a adverse effect.
These motivational factors will become more important in the next years because Gen Y is entering the work force and they value these factors way more than the previous generation.

But after it [playhouse] was finished, I rarely saw the children in it. The truth was that having the house wasn’t what really motivated them. It was the building of it, and how they felt about their own contribution, that they found satisfying.

This is a fundamental insight. Firstly, this mindset doesn’t apply to everybody. I know some people who find results more important than the process. Secondly, at least I know a lot of hackers and crackers have this mindset. A proof of concept (PoC) is often enough to feel accomplished. You’ve shown that you can do it.
In startups, there’s often a similar mix of mindsets. The founders are often people, that look for a proof of concept. Getting the first profit, afterwards they aren’t so much interested in scaling the company. However, there are people who love to build on something and scale it up.
In conclusion, it depends on the job and the state which person you want to hire or which job you want to take.

There’s an old saying: find a job that you love and you’ll never work a day in your life. People who truly love what they do and who think their work is meaningful have a distinct advantage when they arrive at work every day. […]

Is this work meaningful to me?
Is this job going to give me a chance to develop?
Am I going to learn new things?
Will I have an opportunity for recognition and achievement?
Am I going to learn new things?
Will I have an opportunity for recognition and achievement?
Am I going to be given responsibility?
These are the things that will truly motivate you. Once you get this right, the more measurable aspects of your job will fade in importance.

These questions are a great summary of the findings in this chapter. Just work them through.

When the company’s leaders made a clear decision to pursue the new direction, the emergent strategy became the new deliberate strategy. […] Strategy almost always emerges from a combination of deliberate and unanticipated opportunities. What’s important is to get out there and try stuff until you learn where your talents, interests, and priorities begin to pay off. When you find out what really works for you, then it’s time to flip from an emergent strategy to a deliberate one.

This last few sentences are important. Really, just try stuff. Try it, if it works and you have fun, great. If it doesn’t, just do something else. This applies for a career, a company or your life in general.

Discovery-driven planning by Ian MacMillian and Ria McGrath: Ask yourself what assumptions have to prove true for you to be happy in the choice you are contemplating. Are you basing your position on extrinsic or intrinsic motivators? Why do you think this is going to be something you enjoy doing? What evidence do you have?

Pretty much same approach was used in Running Lean. Create hypotheses and test them. If you can reject them, then you know at least that the current project/job isn’t the right one.

You can talk all you want about having a strategy for your life, understanding motivation, and balancing aspirations with unanticipated opportunities. But ultimately, this means nothing if you do not align those with where you actually expend your time, money and energy.

Just do it.

Often even more perplexing, however, is when these problems arise within the mind of the same person: when the right decision for the long term makes no sense for the short term; when the wrong customer to call on is actually the right customer to call on; and when the most important product to sell makes little sense to sell at all. […]
In baseball terms, however, instead of exciting new “home run” products, its innovators often produce instead bunts and singles — year after year. Why? After studying their efforts for over a decade, I concluded that the reason is that Unilever (and many corporations like them) inadvertently teach their best employees to hit only bunts and singles. […]
The system rewards tomorrow’s senior executives for being decidedly focused on on the short term — inadvertently undermining the company’s goals. Misaligned incentives are pervasive. […]
They prioritized things that gave them immediate returns — such as a promotion, a raise, or a bonus — rather than the things that require long-term work, the things that you won’t see a return on for decades, like raising good children.

This is actually a field economics helps a lot, understanding incentives. Every structure generates incentives, often a lot of unintended ones. In this company it was probably an unintended incentive and a resulting consequence. But this happens more often that you may think.

Professor Amar Bhide showed in his Origin and Evolution of New Business that 93 percent of all companies that ultimately become successful had to abandon their original strategy — because the original plan proved not to be viable.

The latest (?) hype term was pivoting, that is exactly was Amar Bhide described. Mind you, that book was written in 2000. However, probably somebody saw this even earlier.

The theory of good money and bad money essentially frames Bhide’s work as a simple assertion. When the winning strategy is not yet clear in the initial stages of a new business, good money from investors needs to be patient for growth but impatient for profit. It demands that a new company figures out a viable strategy as fast as and with as little investment as possible — so that the entrepreneurs don’t spend a lot of money in pursuit of the wrong strategy.

Financial restriction can be a lot more healthy for a company if it has to generate profits. A friend of mine and I talked about it and I think that you could probably get more innovation if decrease rather than increase the budget for “R&D”. You can probably increase the effect if you create an extra company just for a new product idea.

There’s significant research emerging that demonstrates just how important the earliest months of life are to the development of intellectual capacity. […] Todd Risley and Betty Hart, studied the effects of how parents talk to a child during the first two and a half years of life. After meticulously observing and recording all of the interactions between parent and child, they noticed that on average, parents speak 1,500 words per hour to their infant children. “Talkative” parents spoke 2,100 words to their child, on average. By contrast, parents from less verbal backgrounds spoke only 600 per hour, on average.
[..]
And it didn’t matter that just any words were spoken to a child — the way a parent spoke to a child had significant effect. The researchers observed two different types of conversations between parents and infants. One type they dubbed “business language” — such as, “Time for a nap”, “Let’s go for a ride”, and “Finish your milk.” Such conversations were simple and direct, not rich and complex.
[…]
In contrast, when parents engaged in face-to-face conversation with the child — speaking in fully adult, sophisticated language as if the child could be part of a chatty, grown-up conversation — the impact on cognitive development was enormous. These richer interactions they called “language dancing”. Language dancing is being chatty, thinking aloud, and commenting on what the child is doing and what the parent is doing or planning to do. “Do you want to wear the blue shirt or the red shirt today?” “Do you think it will rain today?” “Do you remember the time I put your bottle in the oven by mistake?” and so on.
Language dancing involves talking to the child about “what if” and “do you remember” and “wouldn’t it be nice if” – questions that invite the child to think deeply about what is happening around him.

Great to know. I will probably read some books about this topic in the future. This is just an appetizer.

[..] my colleagues and I have developed a theory about this approach to marketing and product development, which we call “the job to be done.” The insight behind this way of thinking is that what causes us to buy a product or service is that we actually hire products to do jobs for us. […]
IKEA doesn’t focus on selling a particular type of furniture to any particular demographically defined group of consumers. Rather, it focuses on a job that many consumers confront quite often as they establish themselves and their families in new surroundings: I’ve got to get this place furnished tomorrow, because the next day I have to show up at work.

You’ve probably heard about this theory before and I find it pretty good. As a company, it is important why people use your products/service. This works on a deeper level. Why do people use your website, which job are they going to get done? And it hasn’t just to be one job, it could depend on time, location or other factors.

The chief executive of BIG, Mike Collins, didn’t think the game would sell. But instead of sending the inventor packing, he asked him, “What caused you to develop this game?” […]
If someone develops a product that is interesting, but which doesn’t intuitively map in customers’ mind on a job that they are trying to do, that product will struggle to succeed — unless the product is adapted and repositioned on an important job.

A bit more on new product development / startups. It’s a very economic question: “How does this product decrease effort / cost or increase profit?” – however, thanks to loss aversion decrease of costs its about two times higher valued that increase in profit at a personal level. In the B2B market, it’s probably more 1:1.

The two fundamental jobs that children need to do are to feel successful and to have friends — every day.

This is their explanation why school does such a poor job. Do kids feel successful if they get bad grades? No. Do kids have friends, if they are the nerds/dorks? Probably no.

The first of the factors that determine what a child can and cannot do is his resources.

The second group of factors that determine a child’s capabilities are processes. Processes are what your child does with the resources he has, to accomplish and create new things for himself.

The final capability is the child’s personal priorities.

This is the three factor model applied on a person instead of a company. They attribute that the last two are the most important.

Parents seem to be carting their children around to an endless array of activities in which the kids are not truly engaged, it should start to raise red flags. Are the children developing from these experiences the deep, important processes such as teamwork, entrepreneurship, and learning the value of preparation? Or are they just going along for the ride?

Self-esteem — the sane that “I’m not afraid to confront this problem and I think I can solve it” — doesn’t come from abundant resources. Rather, self-esteem comes from achieving something important when it’s hard to do.

Interesting enough, Nathaniel Branden which is quite famous for his work on self-esteem, emphasized that self-esteem can only come from within and goes along with accomplishment. However, like so many great theories, it got dumbed-down to “give medals to everybody!”.

Children learn when they are reading to learn.

The idea that some people have innate talents that just need to be identified has proved to be an unreliable predictor of success in business. […]
A challenging job, a failure in leading a project, an assignment in a new area of the company — all those things become “courses” in the school of experience. […]
Or, in other words, he had the right processes to do the job. In expressing a preference for t he more polished candidate, we biased ourselves toward resources over the processes. It is what I described in the previous chapter as something parents do, and it’s an easy mistake to make.

The underlying theory is, that solving the right problems helps you solving the same problems later, not general aptitude. Rework communicated that before. Don’t hire a quantum mechanics PhD for web design, hire somebody who designed websites before. They will have more fun, more challenging work and be happier than the quantum mechanics PhD in the same job.

He’ll think, my parents will be there to solve hard problems for me. I won’t have to figure it out on my own. Good grades are what matters, much more than doing the work.

I agree with such a lot in this book, it’s terrifying. I heard about some teachers, that expect that parents will help kids on their assignments. It’s crazy. Where’s the accomplishment, if you haven’t accomplished anything?

Like in the example with our hiring mangers at the start of this chapter, it’s tempting to judge success by a resume — by looking at the scoreboard of what our children have achieved. But much more important in the long run is what courses our kids have taken as they’ve gone through the various schools of experience. More than any award or trophy, this is the best way to equip them for success as they venture out into the world.

As the emperors watched the chariot go over the hill — knowing full well they would not see their associate again for years — they needed to know that their understudy’s priorities were consistent with their own, and that he would use proven, accepted methods to solve problems. Culture was the only way to make sure this happened. […]
In the case of a company, it’s common to describe culture as the visible elements of a working environment […]. But as MIT’s Edgar Schein explains, those things don’t define a culture. They’re just artifacts of it.

Definition:

Culture is a way of working together toward common goals that have been followed so frequently and so successfully that people don’t even think about trying to do things another way. If y culture has formed, people will autonomously do what they need to do the be successful. — Edgar Schein

I really like this definition because it’s neutral. A culture could be pretty bad because people stop improving or criticizing the status-quo. But, nonetheless it’s a culture.

What’s also important is that: A culture happens, whether you want it to or not. Tony Hsieh written a ton about creating and sustaining a culture in Delivering Happiness. I would recommend that to you, if you want a non-academic introduction into this field.

It starts with defining a problem — one that recurs again and again. Next, they must ask a group to figure out how to solve that problem. IF they fail, ask them to find a better way to solve it. Once they’ve succeeded, however, the managers need to ask the same team to solve the problem every time it recurs — over and over again. The more often they solve the problem successfully, the more instinctive it becomes to do in the way that they designed. Culture in any organization is formed through repetition.

This is an other important point about culture. It’s created through repetition. Better, repetition and consistency.

Famous examples abound — Enron had a “Vision and Values” statement. IT aimed to conduct itself in line with four Values: Respect, Integrity, Communcation, and Excellence.

There’s a nice game I played with a friend a while. Go to a random company site, look for the mission/values statement. Check how many of these points are really implemented.
More often than not, only a few points are really into their culture. Mostly, they just write what they think would be great but it’s not true and of no value.

I personally don’t care about what people/companies promise. Show me what you do, that’s what I want to see.

Everybody agreed this was a promising plan [steel mills like Nucor had to undercut their price] … everybody expect the chief financial officer. When he saw that the plan involved spending money to build new mills, he put the brakes on. “Why should we build a new mill? We have 30 percent excess capacity in our existing mills. IF you want to sell a extra ton of steel, make it our existing mills. The marginal cost of producing an additional ton in our existing mills is so low that the marginal profit is four times greater than if we build a completely new mini-mill.”
The CFO made the marginal-thinking mistake. He didn’t see that by utilizing the existing plant, they were not changing their fundamental cost o making steel at all. Building a completely new mill would have had an up-front cost, but then given the company a new and important capability for the future. […]
Why is it that the big, established companies that have so much capital find these initiatives to be so costly? And why do the small entrants with much less capital find them to be straightforward?
The answer is in the theory of marginal versus full costs.

This is a rather common scenario. Sometimes but it’s clear where this comes from. Try to avoid such situations and try to think in a bigger picture.

The last part talks about purpose which consists of likeness, commitment and metrics. That is:

What do you want to be like?
How do you become committed?
How do you measure your success?

You can ask yourself, which purpose you are currently following.

All in all, I really liked this book. It’s well written, the idea of applying business frameworks on one’s own life is great and the observations are head-on. Recommendation!

#3/25: Explaining Social Behavior

The first chapter is generally about explanations in science and more particularly in the social sciences. Elster emphasizes that just-so stories are often not enough. Imagine a story where someone didn’t go to college because he didn’t knew that he could. Does this explain why? No, we should ask why he didn’t knew that he could go to college. The author presents different theories about social science and comes back to them later.
Often mechanisms are used to explain behavior, he argues that outcomes are more important than the internal mechanism. E.g. if people behave with bounded rationality then this doesn’t mean that they calculate utilities for each choice but that they behave in a way that is similar to the prediction made by the mechanism of bounded rationality. There are several other mechanisms, like cognitive dissonance, loss-aversion, reference dependence, etc. The field of behavioral economics covers them mostly today.
The last chapter of the first part talks about interpretation and explanation. Elster argues that the basically the same. E.g. in interpreting a text, one explains its intent or the behavior.

The second part talks about the mind. The authors distinguishes between two types of motivations. There is wanting something, i.e. with the aim to put effort into fulfilling the want and wishing something, i.e. without the aim to put effort into the wish. This is quite interesting and he uses this definitions to argue why people don’t achieve what they planned to achieve because they only wished it not wanted it. Furthermore, there are different kind of requirements of motivation, i.e. general interest, reasoning, e.g. I want a good job therefore I should learn things and passion.

The second part talks about self-interest and altruism. He discusses the view, that I take, that all action is based on self-interest, e.g. altruism is based on an internal want to feel good about oneself. Secondly, there is the great mechanism of reciprocity, i.e. if somebody helped you, you will probably help him in the future.

Myopia and foresight go into the process of motivation for longer time horizons. Planning is in important process which is often underestimated. The characteristic of discounted value or utility is important there. If somebody values the present much stronger than the future, they will be reluctant to give up present utility for future utility. Here comes the weakness of will into play. Elster argues that weakness of will can be explained either by wishful thinking or temporary change in motivation or change over time.

The second last chapter in this section talks about beliefs which are a important topic in behavioral economics. A interesting observation is that experts do often worse than simple statistical models in decision making. I wrote about Atul Gawande who introduced check lists into surgery with phenomenal results. Or I read about using decision charts for classifying deceases which also worked better than a group of experts.
Secondly, there is the big field of biases. Some biases are regression to the mean, i.e. over time a deviation to the mean will move toward the mean. One study which ignored this was about air pilots. The researchers tested if praise and punishment helps to learn better. They praised the pilots if they done well and punished them if they didn’t. Often pilots did worse after they were praised – the researchers thought that it was because of the praises but it was just the regression to the mean, i.e. naturally the couldn’t do well every time.
An other biases is the availability bias, i.e. people see things that just happened as more important. You can see this for example that after a flood more people will buy a insurance and it will slowly decay over time. There are tons of different biases. The RSOAP created a neat file which includes lots of different cognitive biases.
Other belief mechanisms are magical thinking, i.e. you act as if you can influence the outcome but you can’t and rationalization, i.e. you make up a story to explain your behavior ex-post.

The last chapter in this part covers emotions. Generally, emotions influence actions but they decay quite fast. I.e. emotional behavior, e.g. attacking someone because of rage can be controlled if you just take the time to calm down.
An interesting aspect is rationalization of emotions. Elster presents the following example: Somebody envies his neighbors’ car, but he learned that envy isn’t good. Therefore he rationalizes that his neighbor got his wealth/car by immoral means because if he wouldn’t he would realize that he could have got the car if he learned more or worked harder but so he hasn’t to.
An other interesting, and quite famous fallacy in economics, is the sunk-cost fallacy. That is, somebody continues a unprofitable activity instead of accepting failure and doing something profitable. You probably heard it lots of time, e.g. “we invested $20m into this project, we can’t just let it die” or people who are continuing their career although they rather would do something else. The interesting trait of this fallacy is that it becomes worse in time.

The third part talks about actions. Elster defines action as intentional behavior or goal-oriented behavior, i.e. reflexes aren’t action. Action is framed by external and internal filter, e.g. legal or economic restriction or internal filters like beliefs. Furthermore, action depends on desire and opportunities.

Action is also often depended on situations. E.g. people can be talkative at work but be rather silent at home. Elster takes this to explain why kids are often so different at school and at home. Furthermore, he takes the stance that character is often more local than global, i.e. response is situational.
The next chapters talk about rational choice and rationality. Generally, rationality is subjective, i.e. each one’s utility is composed of different parts but we are constrained by costs, i.e. search cost or more general transaction costs and opportunity costs.
He talks about some paradoxes, e.g. voting or the lawn-mowing paradox. That is, that a person would let his lawn mowed by someone else for $x, but also wouldn’t mow an other’s lawn for more than $x. This can generally attributed to loss aversion.

The last chapter talks methods that help dealing with this irrationality. One is adding penalty a priori, e.g. if you eat more than two bars of chocolate you aren’t allowed to watch TV. Empirically, this doesn’t work so well. An other is adding premiums a priori which is just the other side of the coin.
One interesting method is eliminating choice, i.e. just buying one chocolate bar.

The second to last part talks about links between behavior and evidence from natural sciences.
Elster talks about experiments where animals got rewarded a treat for different behavior. In one case the animal got one treat after X times pushing a trigger and the alternative was a machine where you got randomly treats. Interesting enough, the mice favored the latter and it was harder to unlearn. He argues that people and animals try to find patterns and people often think that they see patterns and try to activate a trigger although it was purely random.
An interesting application was natural selection as a mechanism for providing rationality. One example would be competing firms in a market. In the long run only the rational firms will survive, i.e. the mechanism indirectly filters the outcome.

The last part talks about interactions. Elster takes a whole chapter about unintended consequences which is easily one of my favorites topics. I wrote a bit about the topic so I will just talk about the hog effect which, at least, I observe quite often. The hog effect is that future change isn’t anticipated in forecasts. One example is the increase of cigarette taxes in 1993 in Germany. The gov forecast that the tax increase will increase overall tax dramatically. Instead the consumers smoked less, switched to other products which weren’t affected by the tax and some companies created cigarette-like products which didn’t fall under this tax. In the end, the tax increase dramatically lowered the overall tax income.

An other interesting topic is that of trust. Generally, trust is incredible important in human interaction. He talked about the interesting case of diamond merchants which is a quite small community and they are relying heavily on trust. E.g. for them a verbal agreement is as good or better than a written one.
If trust is broken, then in general and of course in the diamond merchant community, ostracism will follow.

Elster points out that social norms are often not rational and can be harmful. One example is the need for mediocrity in some communities which destroys success of people. Or the mistreatment of homosexuals in the past and in some communities today.

The last chapter talks about collective belief formation which is quite interesting. One rather well-known study analyzed the drinking behavior of college students and found that most students drink more than they would like because they think others want to drink more. That leads so a too high level of drinking, also each one individually would drink far less. This is called pluralistic ignorance and basically says that nobody believes in X but everybody thinks that all other people belief in X.
Therefore, you can often see snowballing of non-conformism. That is, if enough people are non-conform than other non-conformists aren’t afraid anymore and present themselves also as non-conformists.

All in all, I really enjoyed this book. It’s a bit lengthy in parts but utterly interesting. I especially liked that Elster uses
proverbs and excerpts of novels to explain behavior which makes it more lively. I think it’s a must-read if you want to learn more about social behavior and is great if you (want to) work as a economists, social scientists or similar.

#2/25: The Economics of Organised Crime

This book is a collection of different papers about organized crime. I try to summarize some of the main points.

You can see organized crime as a state or a firm. There’s evidence for both analogies.
It offers state functions. One is the provision of public goods, like defense and law enforcement. Furthermore, often its industries are regulated to make it harder for new competitors to enter the industry. Also, one goal is to extract rents from its protégées. And of course the monopoly over coercion.
However, you can also look at organized crime as a firm or often better as a conglomerate. It’s mainly focused on the production side, e.g. the production of drugs or the trade of other things.

Besides these activities, organized crime also act in semi-legal markets. One of the biggest income sources are collusions between the crime organization and the government. Mainly by using subsidies or securing public procurement projects.
One author wrote that criminal organization often provide a framework for companies to form a cartel and then bid on public projects. The fixed price however will be higher than the market price. One paper stated that there’s no big public project where the mafia isn’t involved.

The origin of organized crime is quite interesting. The most important actor is the state. Firstly, it defines illegal markets, i.e. provides opportunities for organized crime. Secondly, it misses its chances to coercive in areas, e.g. slums where other coercive organizations overtake the monopoly of force.
Lastly, see above, it provides possibilities for rent extraction with subsidies and public interventions.
If we talk about the origin, we can also talk about the termination. Interesting enough, if markets are legalized, mafias don’t look for new business opportunities but mostly change into legal markets. Especially in families it’s outstanding how the career of the youngest generation changes from crime to legal activities.

The organizational form as a family has some nice characteristics. Firstly, it provides better control over the members which are one of the biggest source of danger for a criminal organization. This leads to high costs of exposure, i.e. high transaction costs which leads to smaller criminal organizations. Sometimes, they include outsiders to the organization but require investments like murder up front.

Besides illegal markets and public contracts, organized crime can also work in legitimate industries. Mostly, it helps to achieve oligopolies or does organized customer acquisition.
One example are ferries where members of the mafia provide each ferry company a quota of customers. In other highly competitive markets with low entry barriers, the mafia does the same thing, e.g. transportation, restaurants, etc.
One interesting aspect of mafia involvement is that firms in this industry accept that they have to pay the mafia, so that its business runs smoothly.

Generally, corruption happens more often when the distance between relationship is smaller. Especially in parts in south Italy this is prevalent. Relationships also become more important if people have great power. So you can expect more corruption with local politicians in small towns than let’s say with corner store owners in NYC.

In conclusion, I really liked the book besides of some papers which were just theoretical models and probably aimed at theoretical researchers. Otherwise, it delivers a great introduction in the economics of organized crime and is readable for people with basic economics knowledge, i.e. Econ 101, e.g. Mankiw’s Principles of Economics.

#110/111: Real Education

And an other book on education – mostly higher education but also K12. The book consists of two parts. In the first part he talks about the status of education in the US and in the second part he presents his recommendations.

A common dream of lots of American people is that everybody can be a superstar. They think that everybody should go to college and that schools are so bad that it’s not surprising that some people lag behind. Is that so?

Murray takes an interesting approach but not so surprising knowing his background. He takes the theory of intelligence, i.e. g in connection with multiple intelligences and talks about abilities. Most of you are somewhere below in an ability, maybe bodily-kinesthetic or musical. That’s pretty OK, but not everybody have to become a athlete or musician. However, if we talk about two other abilities: logical-mathematical and linguistic – lots of people think that everybody can become above average in them and there’s the first problem. (I will address possible solutions later)

The second problem, which is related to the first problem, is that too many people go to college. It is estimated that only 10-15% of the people have to ability to achieve B- or better in a classical liberal arts education, i.e. languages, maths, science, philosophy, history and psychology. Today, about 90% of all high school graduates want to go to college and 70% enroll.

The third problem has to do with the top 10%. These are often not challenged by school and college or miss important things besides their professional education. Murray says that these people learn to be nice but not to be good.

What could be done? The first and second problem are related and the answer is choice and individual learning. Murray gave an example of someone who had great dexterity (top 5%) but otherwise was in about the top 30% overall. He could either become a electrician with a median income of about $44k or a manager with a median income of about $88k. At first, the choice seem clear but he probably will be a superb electrician but a below average manager. And now a 25 percentile manager is making about $34k and a top electrician more than $90k. Furthermore, in economic stressful times a bad manager will rather lay off than a great electrician.

But how does this student find the alternative that he could be an electrician? Charles Murray got different parts of the solution.

The first is to discover and focus on abilities and strengths in school. If you realize that some people got strengths and not everyone is the same then you can start and cultivate them. Together with this discovery there’s a need for individual learning, that is students who are fast should go as fast as they want. There should be more flexibility in learning. I talked about all this stuff previously.

The last part is the stronger introduction of certifications instead of general college degrees. A favorite example of certifications proponents is the CPA which is acknowledge in the whole US and got a great deal of information about the ability of accountants. I personally think that certifications detached from college degrees are indeed some possibility for the future because knowledge will become more rapidly outdated and jobs will become more and more specialized.

The second part is about the liberal education in college. Some people think that liberal education have to wait till the college. This is pretty much arbitrary. Murray recommends that schools teach about history, science, literature, geography and economics in school, so that everybody will have a solid understanding of it.

The third problem goes in a different direction and Murray proposes that they learn especially about ethics. The main questions should be What is good? and How to live a Good life? It’s important because a part of these people will later influence the public as writers, public figures or politicians and they should understand these questions and not just be nice. The second characteristics that should be learned is humility. Lots of clever humanities students that think that they are infallible because they never reached their limits. People studying maths or natural sciences nearly always reach their limits and quite fast but there are lots of people who just rush through the humanities without much trouble.