Insights from The Voltage Effect

By Arun Dahal Khatri

John List's The Voltage Effect is a brilliant exploration of why specific ideas and innovations succeed at scale while others lose momentum. As a leading economist who has worked with some of the biggest names in the corporate and academic worlds, List brings a unique and data-driven perspective to the challenge of scaling ideas. His work as the chief economist for the world's largest ride-sharing company and the largest retail market chain highlights his passion for working with data, a passion that he masterfully channels into the pages of this book. List's catchphrase, "Data is DNA," speaks to his deep belief in the power of data to shape our understanding of what works—and, more importantly, why some ideas don't work when scaled beyond small experiments or pilot programs.

I had a great chance to attend one of List's sessions during the Expanding Diversity in Economics program, which further emphasized his deep commitment to the principles of behavioral economics and the real-world application of data-driven decision-making. His session was great, and I had a huge chance to interact with him and discuss his research and his book. He approaches economics as an academic discipline and a practical tool to drive change in various industries and policy areas.

At its core, The Voltage Effect examines why specific ideas that show promise on a small scale fail to replicate their success when expanded to a larger audience. The book taps into behavioral economics, but List goes beyond just theory to offer real-world applications and insights that can be used across various sectors, including business, policy-making, and personal ventures. A central premise of the book is that the things that make a project successful on a small scale might actually doom it when scaled up. The List calls this the "voltage drop"—a decline in effectiveness or impact when an idea is expanded to a broader, more diverse audience. The book explains why this voltage drops and, more importantly, how to avoid it. One critical reason that List identifies why ideas fail to scale is the inability to generalize findings from a small, specific sample to a larger, more diverse population. Often, an idea may work well within a particular niche but fail when applied more broadly due to differences in preferences, behaviors, or needs across a wider audience. This is particularly common in business and policy initiatives where early success in a pilot program leads to overconfidence, only for the scaled-up version to flounder because it doesn't resonate with a broader demographic. The central part of the book will discuss the scaling process, which leads to side effects that are absent or noticeable on a smaller scale. These spillovers can erode the initial benefits of the idea, making it difficult to maintain the same level of impact when the idea is rolled out more widely. Furthermore, His book highlights the challenge of unsustainable costs, pointing out that an idea may seem viable in a small, controlled setting but become prohibitively expensive when the scope is increased.

The List doesn't just focus on diagnosing the problems; he also offers practical tips for overcoming these scaling challenges. He draws from his experience running field experiments in academia, at Uber, for the federal government, and in program evaluation for an education nonprofit in Chicago. His background gives him a unique vantage point from which to explore how different sectors approach the problem of scaling and how those efforts can be improved. One of the most valuable insights in the book is the emphasis on thinking ahead about scaling from the beginning of an idea's development. Instead of focusing only on achieving success in a pilot study or small experiment, List advises entrepreneurs, policymakers, and leaders to consider their ideas' long-term sustainability and scalability right from the outset. This forward-thinking approach can help mitigate common pitfalls that lead to later voltage drops. List's engaging storytelling and the wide range of examples he draws on make The Voltage Effect particularly compelling. While many books in the business or economics genre can feel dry or overly technical, List manages to keep his writing accessible and relatable. He includes stories from his work with Uber, Walmart, and other companies and anecdotes from his time conducting experiments for the federal government and nonprofit organizations. These real-world examples help to illustrate the principles he's discussing, making them more tangible and easier to understand. Thanks to List's clear explanations and practical insights, even readers new to behavioral economics will find The Voltage Effect easy to follow. For readers with a background in behavioral economics, some of the concepts in The Voltage Effect may not be entirely new, but List's fresh perspective and real-world applications make the book well worth reading. His focus on scaling is a unique contribution to the field, and the lessons he shares are broadly applicable across industries. Whether working in business, public policy, or even personal projects, understanding why some ideas succeed at scale while others fail can be a game-changer. This book helps the readers to understand and reflect on their ideas and think critically about amplifying their impact in meaningful and sustainable ways.

Lastly, John List's The Voltage Effect is one of the phenomenon art in behavioral economics and one of the most relevant books for anyone interested in understanding the challenges of scaling ideas. The combination of the flavor of behavioral economics with practical experience offers a roadmap for overcoming the barriers to successful scaling. While the book may not break entirely new ground for experts in the field, it serves as an excellent primer or refresher on the principles of scaling. His storytelling ability and practical insights make the book more exciting and readable to readers like me who love to read flavourful economics books. Ultimately, The Voltage Effect leaves readers with one fundamental question: How can you apply these scaling laws to your big ideas? This book is recommended for anyone (student, business owner, researcher, or more) looking to understand the science of scaling and how to avoid the pitfalls that cause voltage drops.

Link for The Voltage effect: https://www.thevoltageeffect.com/about