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The very first class I ever took in
college was an economics class.
I learned so much, and I learned
how little I knew about economics.
Today I look forward to continuing
that education.
I'm Matt Abrahams, and I teach
strategic communication at Stanford
Graduate School of Business.
Welcome to Think Fast, Talk Smart,
The Podcast.
Today I'm excited to be joined by
Paul Oyer.
He is the merry, and ranking, and
entrepreneurial professor, and
professor of economics.
Additionally, Paul
is Senior Associate Dean for
Academic Affairs at the GSB.
He studies the economics
of organizations and
human resource practices.
Paul also has a unique research
approach, he drove for Uber,
studied online dating, and
he explores the sports world in his
newest book,
an Economist Goes to the Game.
How to Throw Away $580 Million
and Other Surprising Insights from
the Economics of Sports.
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Hey Paul, welcome to the podcast, I
am super excited to have you here.
>> I am super excited to be here,
thanks Matt.
>> Awesome, let's get started.
First congratulations on your
new book, in this book like your
previous book Roadside MBA,
you teach us important often
unexpected economic lessons.
I'm curious what motivates your
research and approach?
And do you have any favorite
notions or ideas that stick out
from your writing and research?
>> Yeah, I just think the main
thing that I try to get across is
that economics is everywhere,
it's an incredibly powerful lens to
analyze almost anything in
the real world.
And I think a lot of listeners
might think economics that's very
abstract and dry, remembering
some class they took in college.
But I see it very differently,
everywhere you look, economics is
guiding what's going on.
So you mentioned the book
Roadside MBA, which I wrote with
a couple of other economists.
And in that book,
it was a strategy book for
small business people.
There were no numbers and
equations, none of that,
it was just taking simple, economic
ideas and seeing how small business
owners could put them into action.
So for example, in that book,
we talked to a bowling alley owner
in Kansas.
And this guy was very interesting
and he had the problem of too many
people applying for every job.
And so, he would put a job listing
in the paper and so
many people come down.
And he wanted to separate the sort
of serious people from the not so
serious people, and he said,
I remember him telling us he
definitely ruled out the people who
showed up in their pajamas,
which >> [LAUGH] >> I was surprised
was an issue.
But the other lesson he told
us was, he said look I learned
at some point put in the ad,
bring a pencil, so
you can fill in the application.
And it was that little
test of whether you cared
enough to notice that and bring it.
That sounds so simple, but
it really is a classic economic
model from Mike Spence the former
dean of the GSB, that kind of,
can't explain that behavior.
I'm not saying that the bowling
alley guy had read Mike Spence's
paper, I'm afraid that probably was
not true.
But Mike Spence was able to
capture through an economic model
an idea that was very powerful in
the real world.
The same goes, I wrote a book where
I talked about economics and how
you can understand online dating.
Again, the first chapter of that
book is taking this Nobel Prize
winning idea,
I didn't win the Nobel Prize.
A couple of people including labor
economist named Dale Mortensen did
for what's known as search theory.
And if you take their ideas, that
model explains what we think of as
settling in the dating market.
So people are very afraid of
settling in the dating market, and
it's really, believe it or not,
that's an economic concept.
And then the final example I
give you is out of a new book,
there's so many great sports things
about economics, but
one of my favorites in the new book
is Korean women golfers completely
dominate the sport.
That goes down to some basic
underlying things,
such as the savings rate in Korea,
the way schools are set up, and
then the gender pay gap
in the Korean labor market.
So again, the context that runs
through all of those is economics
is a powerful lens by which to
understand the world we live in.
>> So by understanding economics,
we can have a better understanding
of the world.
And the take home message here,
don't wear pajamas to interviews.
>> [LAUGH] >> And make sure that
you have a pencil when you show up,
very good.
As you know this podcast focuses
on communication,
can you share a lesson or two from
your research that provides some
insight into communication?
>> Sure, I study what's known as
personnel or
organizational economics, which is
the economics within firms.
And it's not just in that setting,
but in many settings,
economist focus on the importance
of credibility.
So it's not the way, you and
I would think about like how
do you speak?
How does Obama or
somebody who's really good come
across as credible?
It's how do my actions separate
things that I say that may or
may not be true from things that
are actual and true.
And I think understanding
the economic concept of repeated
games and how to make yourself
credible is really important for
communication.
>> Absolutely, we spend a lot of
time talking about credibility and
how to drive for congruence between
what you say and what you do, and
how others judge you based on that.
Credibility really is important and
I didn't realize that I was
also teaching economics while I was
teaching communication.
>> Everybody is teaching economics
>> I want to get back to
the serious stuff, Paul,
I want to go back to
your research on online dating.
Can you walk us through what cheap
talk is?
How it plays out in dating and
in business?
And how can we overcommit?
So we're perceived as meaning what
we say.
>> Often you can think about people
when they say something,
whether or not there's
any reason to believe them.
Cheap talk is something you
can say, where if it's true or
not true, there's no
obvious way to tell them apart.
So for example, when I wrote this
book about online dating.
The classic examples in there would
be, online dating profiles,
men tend to overstate their income,
and their height, for example.
So in a world of cheap talk, you
can lie and get away with it, but
you can't lie too big, because when
you actually go to meet the person.
At some point, if you say you're
6.2, if you're 6.1 or 6,
or 5.11 maybe, which then you have
an incentive to say you're 6 feet.
But if you're really 5.4,
that's not going to be a very good
strategy.
So again, it comes back to
where can you build credibility.
An example of this,
in the sports book is steroids.
Anytime you hear somebody say, I am
not using performance enhancing
drugs.
You really have no reason to
believe them because the person
who is and is not using them
have the incentive to say exactly
the same thing.
So, a good mechanism for getting
rid of cheap talk is one where you
can somehow find a way to separate
the cheaters from the non-cheaters,
or the liars from the non-liars,
however you want to look at it.
>> So beyond studying online
dating and cheap talk,
you also chose to drive an Uber.
What was that experience like, and
what did you learn from it except
how to get places better?
>> You don't learn how to get
places better because these days of
[LAUGH] ways can take you anywhere
you want to go, so that's not that
useful from that perspective.
So I'm a labor economist, and
in addition to writing these books
I write research papers,
I've studied lawyers, I've studied
the market for investment bankers,
and a bunch of other trades.
And boy, I wish I could try those
jobs for two weeks because you
learn so much that helps structure
your research questions.
When we started studying Uber,
and this was joint research with my
Stanford colleague, Rebecca Diamond
and a few other people.
We started studying Uber and
you can do that, the barriers to
entry to being an Uber driver
are so low that I just went and
registered my car and tried it.
And it was fascinating.
Now, the main benefits of it were
from the research study perspective
where I learned a lot about how to
think about the value of experience
in that context, which was really
important for what we're doing.
But it also just was fun, I don't
want to be an Uber driver for
my whole life, I'm very lucky
that I'm able to work at Stanford.
But, I really wish I could do it
both for the research side, but
also it was just interesting.
So at the same time as I was doing
that job my stepson was working at
Chipotle, and we were making about
the same amount of money.
And it was interesting because
there's a large set of people for
whom working at a job like working
at Chipotle is a much better fit,
because they like the camaraderie,
and they like being told be here
this hour and leave at this hour.
There's a larger set who need
the flexibility who like
the alone time.
And so, it's nice that there are
these various options out there.
And then there's just other really
interesting stuff that at least in
the short term makes driving for
Uber interesting.
For example, I was very lucky I
didn't do it for that long, I never
had a passenger who was nasty,
they were always pleasant,
interesting people.
Some of them were very quiet,
but some of them were interesting.
And then also you drive all around
the Bay Area and you see these
neighborhoods that you only pass on
the highway and it's like, wow,
what is that neighborhood like that
I've only seen on a 280 exit ramp,
>> Right, so I have a very personal
question for you.
What was your Uber rating when you
were done?
>> That's a great, I had 4.97 and I
brag about it a lot, I can tell you
and by the way, there was one other
economist who also drove for Uber.
His name is Josh Angrist, and
he won the Nobel Prize,
but I had a higher Uber rate.
So I call it a drop.
>> That's a drop for sure.
As a communication person,
I want to drive down this
road a little farther, were
there certain things you did that
you think increased your ratings?
As an economist,
I would think you would have some
insight into things you could do to
improve your ratings.
>> Well, so for one thing, and this
comes back to some of the stuff
I do research on, for one thing I
never tried to game the ratings.
And I think that in this case,
you don't want to do that, so,
I never told people give me a high
rating or bribe them with mints or
anything like that.
I just tried to be courteous and
on time and do a good job and
now I did have a nice car,
[LAUGH] so,
>> I see maybe that helped.
So, it sounds to me like what
helped you get such a high rating
above a nobel laureates rating
was the fact that you were being
congruent incredible.
>> Yeah. Some of the stuff we
talked about earlier.
Now you mentioned you're a labor
economist and so
you've been studying how
work has been changing, I'm curious
what have you concluded?
And what advice would you have for
those listening in who
are looking for work or
looking to change their work?
>> So first of all,
I would say now is a really good
time to be looking for work.
So a lot of what makes you
successful in the job market is
the macroeconomic conditions at
the time you're looking.
I've actually done research on this
showing the people who graduate
during good economic times, they
get benefits that last a long time.
And by the same token,
now is a good time to be switching
jobs and finding just the right job
given the state of the job market.
But actually, in terms of the
overall trends in the labor market,
there's some evidence emerging and
it's relatively new research area.
To suggest the communication skills
are becoming more valuable in
the labor market,
will see how important it is, and
how well that gets backed up.
But because jobs are more
white-collar in nature and
often at a distance and what not,
social and communication skills
are becoming more important.
>> I know writing a book takes
a long time from when you complete
it to when it comes out.
So I'm curious, since you finished
your previous book,
what are you currently working on?
What's the next crazy job you're
going to look into?
>> Yeah, I wish I had a better
answer to that, mostly the crazy
job I've been looking into lately
as being Senior Associate Dean of
the Stanford Business School.
And trying to help among many
people here at the GSB,
keeping the trains on the track
during COVID which obviously was
a challenge to all educational
institutions everywhere.
So that was the short term thing,
but then in the longer term,
I think we can now
start turning our attention to what
did we learn from COVID.
Some of those technical changes
we talked about in the job market
are taking hold in education.
What do we need to do to keep
the business school up to date?
How should programmes change?
How should we the way we teach
change?
And that's just an exciting thing
to be able to be part of here at
the GSB >> Yeah, and I have to say
as somebody who is the recipient of
your work and others, I was
very impressed with how timely and
transparent you were.
Things were changing
dramatically and it's not to say
that mistakes were made and
things had to be adjusted.
But the transparency and
timeliness was very helpful and
I think that's important for
all communications.
>> Thanks. >> Before we end,
I'd like to ask you the same three
questions I asked everyone who
joins me, is that sound all right?
>> I would love it.
>> If you were to capture the best
communication advice you have ever
received as a five to seven word
presentation slide title,
what would that be?
>> My answer is so
unbelievably trite and cliche, but
it's true, and
that's just keep it simple.
As academics, and especially
as economists we have such an urge,
such a natural urge to complicate
things.
And it's just so
unhelpful, I mean, I would much
rather get a simple message across
quickly and say it over and
over again than try to get through
every nuance.
>> Well said, taking your advice,
excellent, very good.
My second question is,
who's a communicator that you
admire and why?
>> Can I cheat and
give two answers?
>> Yes sir, you may.
>> So, there's a novelist
Richard Russo.
My favorite book of his is
Empire Falls, but
he has many other great books.
And then a non-fiction writer, who
I read a lot of his books he's now
deceased William Manchester wrote
a biography of Churchill, and some
other many other books I've read.
What's great is,
they communicate through stories,
and they have a point.
But if they just said the point
you wouldn't remember it,
it's the way they weave it together
in a story that captures you.
I'm a very much an admirer of
people who do that.
We have had Jennifer on, and we
have talked about story a lot and
it's a really important point.
Just giving data and lists are hard
for us to remember, but if you can
weave those together into a clear
narrative, it can be very helpful.
Final question, what are the first
three ingredients that go into
a successful communication recipe?
>> I think, both in economics and
in my role in the classroom,
a couple of things come to mind.
One is, often I like to start
presentations with one graph that
tells the whole story and
then the rest is just details.
One graph and
just the rest is gravy,
I really like that.
And along a similar line,
a second idea is one story or
anecdote that exemplifies the point
you want to make.
So for example,
if I went into teach my expenses
model I was talking about earlier,
I might start with a graph of some
sort that gets at the idea in
the underlying economics and
tell the story of the pencil or
something along those lines.
And then I think just in a setting
like an economics seminar in the
classroom in both those settings,
I think a third ingredient would be
transparently and
sincerely addressing the questions
and concerns that arise.
The goal of learning is,
it all comes from back and
forth and
frankly from disagreements and
arguments.
So one thing I'd love to see us do
more at the GSB over time is
we're such a friendly place,
we are afraid to disagree with one
another.
And I don't mean like disagree and
fight and be uncivil, I mean,
civil disagreement that leads to
learning, so >> Well, I disagree,
no, I actually agree with
everything that you've said there.
>> And you're quite consistent,
I mean, really what you're
talking about in those first two
ingredients is that notion of
credibility and being congruent.
And then the second element there
really is in line with what you
talked about earlier around
really engaging with the ideas.
Well, Paul, it has been a pleasure
to chat with you, your insights and
approach to research, and the
things you study are fascinating.
I love that you experience
the things that you research.
And best of luck with your
new book,
an Economist Goes to the Game,
How to Throw Away $580 Million and
Other Surprising Insights from
the Economics of Sports.
Thanks, Paul.
>> Thank you so much, Matt.
[MUSIC]
>> You've been listening to Think
Fast, Talk Smart, The Podcast,
a production of Stanford Graduate
School of Business.
This episode was produced by
Michael Riley, Jenny Luna, and me,
Matt Abrahams.
Find more resources and join in the
conversation by searching LinkedIn
for Think Fast, Talk Smart.
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