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Tuesday, December 31, 2019

How Cognitive Bias Destroyed the Livelihood of California’s Gig Workers

We ignore the intelligence trap at our own peril.

Image Credit: Pexels-Tim Gouw | Pexels License

In September, California passed a bill regulating the gig economy. The worker status bill, which goes into effect on January 1, 2020, redefines “employee” to include freelancers. Progressives hailed the new law as providing needed worker protections.

After the law passed, Veena Dubal, a law professor at the University of California, Hastings, and prominent supporter of the bill tweeted, “I have tears in my eyes and goosebumps on my limbs.”

As 2020 approaches, it is the gig workers who are crying.

Vox Media announced “it would end contracts with hundreds of freelance writers and editors in California.” Vox is the same media company that hailed the passage of the bill as “a victory for workers everywhere.”

A Predictable Outcome

One of Vox’s fired employees, Rebecca Lawson, tweeted: “California, you’re breaking my heart (and taking my money),” adding:

I am heartbroken that the state I love so much has forced a company I love working for to cut formal ties with people who are doing amazing work — and who are able to help themselves and their families with the extra income that a passion project or side hustle can sometimes provide.

Another freelance writer, Andi Loveall, tweeted:

Just lost my ability to earn a living because of California Assembly Bill No. 5. My freelance brokerage company says they have to let California authors go. Almost a decade of hard work gone in an instant. I can’t stop crying.

The consequences for freelancers were hardly unanticipated. The law of unintended consequences prevailed: “actions of people—and especially of government—always have effects that are unanticipated or unintended.”

Dubal and other supporters of the worker status bill could have read hundreds of articles—including here and here, at FEE—that predicted the dire outcomes for freelancers. As Elizabeth Nolan Brown writing in Reason pointed out:

Mainstream politicians and pundits love to cite “unintended consequences” when their preferred policies cause harm in the exact ways libertarians said they would. It’s a brilliant way to get credit for trying to Do! Something! about a problem while absolving one’s side of any blame for the negative consequences of that action.

I doubt if Dubal, who is regarded as an expert on the gig economy and technology, will acknowledge the consequences of her mistake.

Smart but Biased

It’s all too easy to dismiss Dubal as stupid; chances are, she is intelligent.

Keith Stanovich, emeritus professor of applied psychology at the University of Toronto, writes,

We have an implicit [but wrong] assumption that intelligence and rationality go together—or else why would we be so surprised when smart people do foolish things?

Stanovich, coined the term dysrationalia “meaning the inability to think and behave rationally despite having adequate intelligence.”

In his book, The Intelligence Trap, David Robson explores “why smart people,” such as Dubal, “make dumb mistakes.”

Robson reports on research conducted by professors Norbert Schwarz and Eryn Newman, who study how our emotions influence our decision-making.

Consider this question: “How many animals of each kind did Moses take on the Ark?”

Since it was Noah, not Moses, who built an ark, the answer is zero. Robson writes, “Yet even when assessing highly intelligent students at a top university, Schwarz has found that just 12 percent of people register that fact.”

According to Schwarz’s and Newman’s work,

truthiness comes from two particular feelings: familiarity (whether we feel that we have heard something like it before) and fluency (how easy a statement is to process).

Robson explains further:

The problem is that the [ark] question’s phrasing fits into our basic conceptual understanding of the Bible, meaning we are distracted by the red herring—the quantity of animals—rather than focusing on the name of the person involved. “It’s some old guy who had something to do with the Bible, so the whole gist is OK,” Schwarz told me. The question turns us into a cognitive miser, in other words—and even the smart university students in Schwarz’s study didn’t notice the fallacy.

Try this thought experiment. Imagine you are a politician, professor, or a concerned citizen interested in workers’ rights. You have a pre-established cognitive bias that government is the best protector of workers. Thus, a statement such as California’s Worker Status bill is needed to protect the rights of freelancers would likely meet with your approval. Given your cognitive biases, the statement has “familiarity” and “fluency.” You’ve cheered a thousand times before for statements that begin with: This bill is needed because… Such statements are easily cognitively processed.

Elaborate Arguments Hide Mistakes

If you need “intellectual” firepower for your bias, Dubal and other experts are ready to assist. In her essay, “Regulating the Gig Economy is Good for Workers and Democracy,” Dubal presents elaborate arguments:

Poverty is not a suspect classification under our Constitution, but it is an affront to life and dignity and to democracy more broadly. With the evisceration of the U.S. welfare state and the judiciary’s deference to political outcomes in the area of “economics and social welfare,” employment is the primary legal and political means to address economic inequality. In turn, employment is—for better or for worse—key to our democracy. It provides access to the tools for basic sustenance in modern America: the minimum wage, health insurance, safety net protections, and even the right to organize and collectively bargain. Our capacity to participate in life and partake in politics, depends, in no small part, on our employee status. In the words of political theorist Judith Shklar, “We are citizens if we ‘earn.’” To this observation, I might add that we are citizens if we earn enough.

If you are a true believer like Dubal—concerned about an “alarming trend” of “the use of app-based technology to proliferate work outside the regulatory framework of ‘employment’”—perhaps like Dubal you shed tears of joy that politicians passed a bill you believed would save democracy and solve the problem of inequality. Huzzah! If heaven is reached by having good intentions, surely your ticket has been punched.

Reading carefully, though, we see that the interests of the gig workers were buried under Dubal’s many other concerns. Perhaps gig workers such as Rebecca Lawson and Andi Loveall mean nothing to those who want to expand the role of government. Perhaps Dubal told herself she was helping the gig workers, while her ideology sought to expand the role of the government at the expense of gig workers.

Being smart is no protection against foolish ideas. We can expect to hear more elaborate arguments from smart people, justifying the worker status bill mistake. As Robson observes:

Intelligent and educated people are less likely to learn from their mistakes, for instance, or take advice from others. And when they do err, they are better able to build elaborate arguments to justify their reasoning, meaning that they become more and more dogmatic in their views.

In other words, dysrationalia needs to be defended. When we think we are smart, Robson explains, we “rationalize and perpetuate our mistakes, without recognizing the flaws in our own thinking.” The result is “building ‘logic-tight compartments’ around our beliefs without considering all the available evidence.”

Robson offers an antidote to dysrationalia:

Besides cognitive reflection, other important characteristics that can protect us from the intelligence trap include intellectual humility, actively open-minded thinking, curiosity, refined emotional awareness, and a growth mind-set. Together, they keep our minds on track and prevent our thinking from veering off a proverbial cliff.

Dysrationalia is not limited to progressives, nor is it limited to politics. We ignore the intelligence trap at our own peril.

In his 1710 essay, “Political Lying,” Jonathan Swift wrote,

Falsehood flies and the truth comes limping after it, so that when men come to be undeceived, it is too late; the jest is over, and the tale hath had its effect.

Swift gives as an example “a physician, who hath found out an infallible medicine, after the patient is dead.”

California’s gig economy is suffering from the consequences of dysrationalia. The “medicine” in this case is a repeal of a law that is already putting many out of work. No elaborate arguments are needed. Before the gig economy in California is dead, what is needed is a large dose of humility to admit a mistake.

  • Barry Brownstein is professor emeritus of economics and leadership at the University of Baltimore. 

    To receive Barry's essays subscribe at his Substack, Mindset Shifts.

    His essays also appear at the American Institute for Economic Research, Intellectual Takeout, Learn Liberty, The Epoch Times and many other publications. Barry’s essays have been translated into many languages, most frequently Spanish and Portuguese. He is the author of The Inner-Work of Leadership.

    Barry holds a Ph.D. in economics from Rutgers University and a B.S. in mathematical statistics from CCNY.