Maybe part of my emotional reaction is that, like Obama’s mother, I have forced my kids to get up at ungodly hours to study in the morning. We have been doing “daddy school” in the morning and during the summer for years. When my 7-year-old daughter said she desperately wanted a dog, I told her (in a twist on another Obama story) she could have one if she published an article in a peer-reviewed journal. And then we worked together on a family statistical project for more than two years to make it happen. Our dog is named Cheby (Shev) in honor of a statistician.

Obama’s “buster” story came back to me as I was reading Malcolm Gladwell’s excellent new book, Outliers: The Story of Success. Gladwell writes beautifully, and I like this book even more than Blink or The Tipping Point.

In story after story, he destroys the simplicity of the raw-genius explanations for personal success that we love to tell. Gladwell insists that there are always background conditions of opportunity and good luck that are equally, if not more, important. Many of these opportunities come from parents, but some come from cultural advantages. For example, he tells about the linguistic advantage that Chinese speakers have in math. Fourteen and 23 are hard to add in English (because linguistically, 4 comes before 10 in 14, but 3 comes after 20 in 23). But in contrast, Chinese has a much less idiosyncratic linguistic system, as Gladwell explains in the book:

Ask an Asian child to add three-tens-seven and two-tens-two, and then the necessary equation is right there, embedded in the sentence. (p. 229)

Gladwell also argues that the crushing difficulty of maintaining successful rice paddies has tended to make hard work a more central part of Chinese culture than many Western cultures. He points to this Chinese proverb:

No one who can rise before dawn 360 days a year fails to make his family rich. (p. 238)

What scares me a bit about the book (and myself) is the normative gloss that Gladwell puts on the hard-work ethic. He doesn’t renounce the 360-day proverb; he seems to embrace it. He openly extols the Bronx KIPP Academy, where school starts early and goes half the day on Saturdays, and for several weeks in the summer. (KIPP’s plan actually sounds a lot like my “daddy school,” which I wrap around my kids’ traditional school day.)

Gladwell wants society to open up opportunities to work hard — with programs like KIPP — so that many more people have the chance to succeed. To be clear, the book is about the many different contextual elements that are prerequisites to success — and practicing some skill for 10,000 hours is only one of them. In the very last sentence of the book, harkening back to the factors that led to his mom’s rise from poverty in Jamaica, Gladwell poetically asks:

[I]f the resources of that grocer, the fruits of those riots, the possibilities of that culture, and the privileges of that skin tone had been extended to others, how many more would live a life of fulfillment, in a beautiful house high on a hill? (p. 285)

For Gladwell, the answer is pretty clearly “A lot more.”

But the book, in hinting at this normative thesis, fails to consider the wisdom of Robert Frank. In The Winner-Take-All Society, Frank and coauthor Philip Cook argue that changes in the productive technology in many fields have concentrated the benefits from success in a smaller and smaller set of winners. When you can listen to a Kathleen Battle CD, why would you buy any other soprano’s recording? Frank would argue that if we subsidize the opportunities for a million more people to study voice, we would probabilistically produce a better winner. But most of the gains would still go to the winner. We would still just have one beautiful house on the hill.

I’m taking such an active part in my kids’ education mostly because I want to imprint on them my idea of the good life, but partly because (even before reading Outliers) I have bought into Gladwell’s thesis that opportunities are crucially important.

What gives me pause, though, is that I also accept Frank’s thesis that there are a limited number of houses on the hill. I selfishly want to increase my kids’ chances of success. But a less selfish part of me is attracted to Frank’s idea that society should do just the opposite of what Gladwell wants and dampen the rat-race incentives to get up before dawn 360 days a year.

But The Times recently ran a piece that is also near and dear to my heart — emphasizing the power of peer pressure to change behavior. Positive Energy has been working with the Sacramento Municipal Utility District to test the impact of giving customers a different kind of information on their energy bill:

Last April, it began sending out statements to 35,000 randomly selected customers, rating them on their energy use compared with that of neighbors in 100 homes of similar size that used the same heating fuel. The customers were also compared with the 20 neighbors who were especially efficient in saving energy.

Customers who scored high earned two smiley faces on their statements. “Good” conservation got a single smiley face. Customers … in the “below average” category got frowns, but the utility stopped using them after a few customers got upset.

The exciting news is that “customers who received the personalized report reduced energy use by 2 percent more than those who got standard statements.”

This isn’t a surprise to Robert Cialdini (the author of the classic book Influence), who back in 2004 published a small, randomized study of 290 households in San Marcos, California — again looking at the impact of emoticons (those smiley and frowny faces) on energy consumption. The following figure summarizes the core results:

Peer information alone led to a reversion to the mean. The households that consumed above the average reduced their consumption, while the below-average households responded to the good news that they were consuming less by increasing their energy consumption. But look what happens in the right-hand columns where peer information is paired with the emoticons. The above-average energy consumers again conserved, without the perverse energy increases from the households that started below average. It looks as if these conserving households act to keep their gold star of approval.

There is also a great writeup of this study as a prime example of choice architecture in the book Nudge. The independent power of the emoticons shows that what’s going on is not just the dissemination of information; it’s about how the information is framed.

In Sacramento, Positive Energy ultimately discontinued sending out the emoticons after a few complaints. But an intermediate strategy would be to discontinue the frowny faces to the energy hogs but continue sending out smiley faces to the “good” conservationist households.

I should add that Cialdini has a financial interest in these outcomes, as he owns a stake in Positive Energy. I also have more than a passing interest. I’m working with Positive Energy to analyze future data on the power of both peer information and commitment contracts. I’ve also been promoting the value of peer information for the last few years. Back in 2005, Barry Nalebuff and I published an article in Forbes, arguing for something right in line with Positive Energy’s core mission:

Why not have the heating bill tell you if you’re using too much energy? Most heating bills report how much gas or electricity you used last month compared with a year ago. A lot of them also report heating degree days (how far and how long the temperature veered below 65 degrees over the course of the month). But this pair of numbers isn’t very helpful. Together they don’t tell you whether you need to upgrade your insulation.

There’s a better way to answer this question. Just tell people how much energy they used that month compared with other people in similar-size homes. In many cities (including our own New Haven), the square footage of each house is publicly available — so the gas company could calculate the energy per square foot for each house and display the information on each month’s bill. Further helping you out by doing the math, it could report energy consumed (in BTU) per square foot per degree day.

We’ll call this measure B-Tush (BTU per square foot per heating degree day). The key here is to report how folks did relative to their neighbors. According to a 1997 Department of Energy survey, the U.S. average B-Tush is 10. If you are up to 25, then you are among the worst 10 percent. You should invest in better insulation — or else turn down the thermostat and buy some sweaters.

Economists tend to think of information and incentives as the core drivers of human behavior. But Cialdini and Positive Energy have me thinking that smiley faces may also play a useful role.

P.S. stickK.com hasn’t quite gone so far as to include emoticons in its messaging to help people stick to their commitments, but we are enhancing the behavioral support features. We’ve just launched several new communities (concerning things like “health and lifestyle,” “green initiatives,” and “money and finance”) to help people better connect with others who have similar goals.

Investigative reporting in the old days seemed like it was a loss-leader in the information bundle to which we subscribed. As a kid, I read the newspaper for the funnies, movie times, the sports scores, and for the classified ads. I still value this info, but I never get it from the printed page. Even a few years ago, I can remember feeding money into New Haven Register newspaper dispensers to learn the local movie times. But with an Internet-enabled cell phone, I almost never buy the Register anymore.

The bottom line is that we may need to publicly subsidize investigative reporting if we’re going to get enough of it. But the problem with subsidies lies in this question: who is going to decide what kinds of issues get investigated? It’s scary to think of having politicians decide the targets of journalism.

Bruce Ackerman and I have a solution (just published in the Guardian):

We urge democracies throughout the world to consider the creation of national endowments for journalism that are carefully designed to confront the impending collapse of investigative reporting.

The real concern is not the newspaper, but news coverage. It’s not clear that print news is a viable technology. Classified ads are more efficiently delivered by websites. Nobody under 50 waits to read all about stock prices or scores in the morning edition. The government should sit back and let the market decide the right way to distribute the news.

But there are huge costs to losing a vibrant core of investigative reporters covering local, national, and international stories. The Internet is well suited to detect scandals that require lots of bloggers to spend a little bit of time searching for bits of incriminating evidence. But it’s no substitute for serious investigative reporting that requires weeks of intelligent inquiry to get to the heart of the problem. Without Woodwards and Bernsteins, there will be even more Nixons and Madoffs raining mayhem and destruction.

It will take decades to revitalise investigative journalism if we allow the present corps of reporters to disintegrate. This is happening at an alarming rate. …

The problem with a BBC-style solution is clear enough. It is one thing for government to serve as one source of investigation, but quite another for it to dominate the field. A near-monopoly would mean the death of critical inquiry.

There are serious problems with private endowments as well. For starters, there is the matter of scale. Pro Publica, an innovative private foundation for investigative reporting, is currently funding 28 journalists. It is hard to make the case for a massive increase in private funding when university endowments are crashing throughout the world, imperiling basic research. More fundamentally, a system of private endowments creates perverse incentives. Insulated from the profit motive, the endowments will pursue their own agendas without paying much attention to the issues that the public really cares about.

Here is where our system of national endowments enters the argument. In contrast to current proposals, we do not rely on public or private do-gooders to dole out money to their favorite journalists. Each national endowment would subsidize investigations on a strict mathematical formula based on the number of citizens who actually read their reports on news sites.

Some might find this prospect daunting. Readers may flock to sensationalist tabloids that will also qualify for grants for their “investigations”. But common sense, as well as fundamental liberal values, counsels against any governmental effort to regulate the quality of news. So long as the endowment only subsidizes investigative expenditures, in-depth reporting will get a large share of the fund — provided that it generates important stories that generate broad interest.

The government provides the subsidy, but “the people” decide how it will be distributed. You vote with your eyes and ears. Bruce and I, in Voting With Dollars, suggest an analogous system called “Patriot Dollars” that would allow individual voters to decide how campaign-finance subsidies would be distributed. But here the voucher scheme is implemented by a less obtrusive choice architecture. The ordinary act of reading or listening to a piece of journalism tells government that this is the organization that should be subsidized.

The endowment must monitor media hits and circulation counts. This is doable. Advertisers already rely on independent audits. So can the government. Some governmental monitoring of financial matters is also necessary. News organizations would otherwise be tempted to obtain subsidies for marketing and business operations. Without minimizing the problems involved in institutional design, the creation of an effective and disciplined national endowment seems entirely realistic.

Instead of influencing the content of what will be reported on, government can empower readers by subsidizing the news organizations that have succeeded in the past.

Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything. This has been the case since 1933. The notes have no value for themselves, but for what they will buy. In another sense, because they are legal tender, Federal Reserve notes are ‘backed’ by all the goods and services in the economy.

Legal tender laws currently favor government-issued money, putting private contracts in gold or silver at a distinct disadvantage. Contracts denominated in Federal Reserve notes are enforced by the courts, whereas contracts denominated in gold are not. Gold purchases are subject to taxes, both sales and capital gains. And while the Constitution specifies that only commodity standards are lawful -- "No state shall coin money, emit bills of credit, or make anything but gold and silver coin a tender in payment of debts" (Art. I, Sec. 10) -- it is fiat money that enjoys legal tender status and its protections.

Now is the time to challenge the exclusive monopoly of Federal Reserve notes as currency. Buyers and sellers, by mutual consent, should have access to an alternate means for settling accounts; they should be able to do business using a monetary unit of account defined in terms of gold. The existence of parallel currencies operating side-by-side on an equal legal footing would make it clear whether people had more confidence in fiat money or money redeemable in gold. If the gold-based system is preferred, it means that people fully understand that the purpose of money is to facilitate commerce, not to camouflage fiscal mismanagement.

ADDITIONAL FUNDING DISTRIBUTION AND ASSURANCE OF APPROPRIATE USE OF FUNDS

SEC. 1607. (a) Certification by Governor- Not later than 45 days after the date of enactment of this Act, for funds provided to any State or agency thereof, the Governor of the State shall certify that: (1) the State will request and use funds provided by this Act; and (2) the funds will be used to create jobs and promote economic growth.

(b) Acceptance by State Legislature- If funds provided to any State in any division of this Act are not accepted for use by the Governor, then acceptance by the State legislature, by means of the adoption of a concurrent resolution, shall be sufficient to provide funding to such State.

(c) Distribution- After the adoption of a State legislature's concurrent resolution, funding to the State will be for distribution to local governments, councils of government, public entities, and public-private entities within the State either by formula or at the State's discretion.