Freakonomics

Book critique by Sebajdin Bytyqi

Freakonomics, Steven D. Levitt and Stephen J. Dubner

As stated by the authors, the book has no unifying theme. But it is based on a few fundamental ideas (p. 13). The first one being: Incentives are the cornerstone of modern life. The authors argue that understanding them is the key to solving virtually any riddle. The second idea is that the conventional wisdom is often wrong. Then, the third idea put forward is that dramatic effects often have distant, even subtle, cases. Another idea fundamental to the book is that “experts”, regardless of their field, use their informational advantage to serve their own agenda. And, at the same time the authors argue that their advantage is shrinking every day in the face of the internet. Finally, the last idea vital to the book is that “knowing what to measure and what to measure it makes a complicated world less so” (p. 14).

In the first chapter, “What Do Schoolteachers and Sumo Wrestlers Have in Common?” the authors talk about incentives and how people cheat. They use different examples to try to explain that ranging from an Israeli day-care center which tries to solve the problems of late children pick-ups, to the sudden disappearance of seven million American children when the IRS changed a rule (p. 25), to cheating schoolteachers in Chicago, to cheating in sumo wrestling. Finally, the authors use an example to prove most people can “resist the temptation of evil if they knew their acts could not be witnessed” (p. 51). Using the case of a person who sells bagels by leaving them in the break rooms of different companies and going back to collect the money, they argue that at least 87 percent of the people are usually honest (ibid).

In chapter 2, “How Is the Ku Klux Klan Like a Group of Real-Estate Agents?” they argue that nothing is more powerful than information, especially when that power is abused. At the same time it is argued that (information based) discrimination against Hispanics is prevalent in the American society (p. 79).

In the third chapter, titled “Why Do Drug Dealers Still Live with Their Moms?” the authors find that conventional wisdom is often a web a fabrications, self-interest, and convenience. They talk about a wide array of phenomena and come up with intriguing conclusions and data. Especially interesting is their analysis of how a crack cocaine dealing gang works and the conclusion that with a 1 in 4 chance of being killed “you stand a greater chance of dying while dealing crack in a Chicago housing project than you do while sitting on death row in Texas” (p. 104).

In chapter 4, “Where Have All the Criminals Gone?”, the authors try to sort out facts about crime from fiction. In this chapter they look at all theories that try to explain the fall of crime rates in the 1990s and finally come up with a new theory. They argue that it is the legalization of abortion in the 1970s that had the biggest impact on the decline of crime in the 1990s.

In the fifth chapter, “What Makes a Perfect Parent?” a new question is asked: do parents matter? The answer to this question seems to be that “it isn’t so much a matter of what you do as a parent; it’s who you are” (p. 175). Looking at test scores of black and white students from the Early Childhood Longitudinal Study, they come to the conclusion that black students do poorer than white students in tests not because they are black, but because they usually come from poor families. Particularly intriguing is their account of how parenting experts scare parents into buying more unnecessary products.

In the last chapter, titled “Would a Roshanda by Any Other Name Smell as Sweet?” they look at the significance of the parents’ first official act in everyone’s life: naming. Here, they use data from a series of “audit studies” to prove that resumes with white names have gleaned more job interviews than those with immigrant or minority sounding names (p. 187). Then they try to explain why that is so. They come to the conclusion that the name is an indicator, not a cause of the outcome (p. 189). Since having a distinctively black name means you come from a not so well-off neighborhood, they argue that changing your name wouldn’t help you have a better outcome in life.

In the epilogue authors conclude that “there is at least a common thread running through the everyday application of Freakonomics. It has to do with thinking sensibly about how people behave in the real world. All it requires is a novel way of looking, of discerning, of measuring” (p. 205).

In conclusion, as endorsed by the authors themselves, the most likely result of having read this book is that you may find yourself asking a lot of questions. The most important premise of this book is that it proves how important numbers and data are. And, at the same time, this book itself is proof that data are not only useful to scientists but to everyone. This book uses data, or instructs us how to use them, to prove or prove wrong theories from those put forward by PhD’s to those circulating in the cafes.

However, the reader sometimes may find the assumptions made in this book too bold. Still, anyone with a curious and inquisitive mind should read this book. I would definitely recommend it to managers, policy makers and policy analysts because it does help understand how human relations work and provides insights on interactions among different groups.