Wednesday, March 11, 2009

A Convincing Case?

What makes a convincing case for a strategy, method, or proposed solution? How do you convince people that something will work — and when you hear a proposal, when should you be convinced that it is worth a try?

These are important questions in economics right now because of the ongoing discussion of and growing doubts about the U.S. Treasury’s role in “rescuing” the financial system, but they are just as relevant in any area of life where something needs to be done, but experience does not quite tell you what actions are needed.

These are a few things that make a proposal or strategy more credible:


Clearly identified benefits. With so many things to do already, people want to undertake something new only for a reason. The more clear the purpose of action is, the easier it is to get people’s attention.

Track record. An approach that has solved problems in the past, for people in similar circumstances, is far more credible than one that has never been tested, or that when tried, produced problematic results.

When you see someone take a series of actions with good results, and you can take the identical actions and hope for similar results, that is particularly appealing. Then, when something really works, it can get around without anyone really thinking very much about it. Years ago, on one of the early reality shows, I saw a man give up drinking Kool-Aid. He became visibly less jittery and someone said his skin improved. I was surprised by this effect, and gave up Kool-Aid myself.

I got generally similar results and was also happy about the money I was saving. My story, in turn, may have helped persuade a friend to give up soda last year. He saved money, as he had expected, but also lost several pounds of excess body weight without any effort at all. That success, combined with other stories, prompted me a week ago to give up drinking milk, which with its recent price increases had become one of the most expensive foods in my kitchen. Can I save money and lose weight by drinking water instead of milk? There is a track record I can look at that says I probably can.

Known limitations. No method works for every problem or every situation, so a method is more convincing if people can point out the limitations. If I say, “Clean up the clutter on your desk, and you’ll get more work done — it works, I promise,” that isn’t particularly convincing because I didn’t say anything about the limitations of this strategy. If I add, “Make sure you can find everything you need, and that you have plenty of space to work in,“ it makes it more convincing, because I’ve expressed one of the limitations of the strategy. I don’t want you to spend the rest of the day cleaning your desk, but perhaps just long enough to achieve these two benefits.

Advocates for change often forget to spell out the limitations of the changes they are promoting. “Recycle everything” is a nice idealistic slogan, but if you can provide a list of the five common household materials that are most effectively recycled at this point, people take more action. That list, I’m told, is paper (which has to be clean, with no food, plastic, or metal on it), aluminum, polyethylene terephthalate (PET), high density polyethylene (HDPE), and glass (bottles and jars only). Likewise, if we want to advocate rail travel as the most energy-efficient way for a person to travel, it is important to remember that, even in the most optimistic passenger rail proposals, most towns will not have a train station. Rail travel is an option in some places but not others.

Known risks. If you know what could go wrong and how it could go wrong, it makes an idea more comfortable than if all the risks are unknown.


Look for these elements in the U.S. Treasury plan to “rescue” the financial system, and it’s easy to see why the majority of citizens and a growing chorus of experts are not convinced it is a good idea. There is no track record for the bank bailout in the United States, and when other countries tried it, they were almost always were forced to nationalize the banks they had bailed out, sometimes with distressing results. The limitations have not been acknowledged. The main beneficiaries would not be the entire economy, but mainly Wall Street and very large corporations. In addition, the approach would not work for very long, and no one has drawn up an exit strategy. The risks are not only unknown, but secret, a subject officials have sometimes refused to answer in Congressional hearings.

But most of all, the benefits of the plan are not clearly defined. Why “rescue” the financial system at all? Even if the plan were to work perfectly, it is hard to say whether the result is better than doing nothing at all, because no one can point out the specific effects the plan is supposed to produce. It was supposed to increase lending, but lending has decreased instead, and anyway, lending is not an end in itself, so how do we know that a change in lending is resulting in something useful in the economy? The specifics just aren’t there.

I was going to make a list of things not to do when you propose something, or things that reduce the credibility of an idea, but I will leave that to another writer. Losing My Religion author William Lobdell last week wrote a list of the ineffective techniques have used to try to rope him, and people like him who have reluctantly lost their belief in Christianity, back into the Christian fold. Threats, quotes from advocates, free lunch, debates, and similar approaches won’t work, he says. Lobdell is writing specifically about evangelical Christianity, but the problems he cites apply in a similar way to discussions of economic recovery, climate policy, diet programs, or anything else you might consider. A convincing case ultimately has to be based on some kind of story of success, of problems solved. When the arguments do not seem to be convincing anyone, the problem could be that the story is not strong enough, but it could also be that the success that the story is based on is not large enough to support the claims that are being made.