Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
Freakonomics: A Rogue Economist Explores the Hidden Side of EverythingINTRODUCTION
STEPHEN J. DUBNER STEVEN D. LEVITT
What trait is shared by both Ku Klux Klan members and real-estate agents? In what way do the working worlds of Chicago schoolteachers and Japanese sumo wrestlers intersect? These questions might seem puzzling at first glance, but the answers provided in Freakonomics: A Rogue Economist Explores the Hidden Side of Everything reveal that fundamental notions of economics can be used to interpret just about everything in modern society.
One of the authors, Steven D. Levitt, is an award-winning economist; the other, Stephen J. Dubner, is a former writer and editor for New York Times Magazine. The two met when Dubner was working on a profile of Levitt for the magazine. The article was a huge success, and the two men guessed that a book-length discussion of Levitt's work would prove equally popular. Indeed, Freakonomics reached number two on the New York Times bestseller list, and it was chosen as a New York Times Notable Book for 2005.
The book has generated an astounding amount of interest among mainstream readers, most notably for its controversial assertion that the legalization of abortion in the 1970s led to a significant drop in crime in the United States. The authors also tackle well-worn examples of conventional wisdom—for example, the notion that Head Start preschool programs lead to smarter kids or the idea that guns are a greater threat to young children than swimming pools—and use hard data to show that they are wrong. Instead of offering a book focused on a single theme, the authors say they "opted instead for a sort of treasure-hunt approach" so that they might "follow whatever freakish curiosities may occur to [them]."
Steven D. Levitt was born on May 29, 1967. He attended St. Paul Academy and Summit School in St. Paul, Minnesota, followed by undergraduate work at Harvard and doctoral studies at MIT, where he earned his doctorate in economics in 1994. Since then, Levitt has written numerous academic papers related to the application of economic principles in the real world. In 2003, he was chosen by the American Economic Association to receive the John Bates Clark Medal, awarded for outstanding work by an American economist under the age of forty. His research served as the basis for the best-selling book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, which was released in 2005.
In addition to numerous articles for magazines such as the New Yorker and Time, Dubner has also written Turbulent Souls: A Catholic Son's Return to His Jewish Family (1998) and Confessions of a Hero-Worshipper (2003). He is also the author of a children's book titled The Boy With Two Belly Buttons. As of 2006, Dubner is working on several books, including a sequel to Freakonomics: A Rogue Economist Explores the Hidden Side of Everything with Levitt. He lives in New York with his wife and two children.
Introduction: The Hidden Side of Everything
In the introduction to Freakonomics, Levitt and Dubner present several scenarios from recent history and everyday experience. They briefly discuss the conventional wisdom associated with these scenarios and then suggest that the "wisdom" is, in every case mentioned, wrong. This is a theme they return to several times throughout the book.
For example, in the early 1990s, media outlets reported extensively on the rapidly increasing crime rate across the country. Experts warned that the rise in crime was bound to continue, reaching record levels by the end of the century. It was conventional wisdom that urban crime—especially murders among teenagers—was virtually unstoppable.
However, just the opposite happened. As Levitt and Dubner write, "By 2000 the overall murder rate in the United States had dropped to its lowest level in thirty-five years." The rates of most other types of crimes also fell dramatically. Experts scrambled to explain this sudden and unpredicted drop in crime. Many credited the booming economy, tighter gun control, and new methods being used by police as key factors. According to Levitt and Dubner, those experts were wrong.
According to the authors, the 1973 Supreme Court ruling Roe v. Wade—which granted women across the country the right to a legal abortion—set up a decrease in crime two decades later. By allowing a pregnant woman to terminate her pregnancy, the authors argue, the decision helped reduce the number of children who were either unwanted or could not be adequately cared for. This, in turn, led to fewer troubled young people on the streets and, ultimately, to lower crime rates across the board. The authors note, however, that no experts or media outlets at the time mentioned this as one of the factors contributing to the crime drop.
In another example, the authors explain the notion of correlation: the idea that two factors in a scenario are related in some way. How does one determine if one factor causes the other, or vice versa? For example, records show that political candidates who spend more money on their election campaigns also tend to win more often. Does this mean that more money causes the candidates to win? Not according to Levitt and Dubner. In fact, candidates who are more appealing to voters—for whatever reason—are more likely to raise more money and are more likely to win. When other variables are factored out, money plays a minuscule role in swaying voters.
The goal of the book is to use data to examine how and why people act the way they do in given situations. The authors do this through the lens of economics, noting, "Incentives are the cornerstone of modern life." They apply the methods of economics to all sorts of real-world scenarios not often considered for serious study. As the authors put it, "Thus our invented field of study: Freakonomics."
Chapter 1: What Do Schoolteachers and Sumo Wrestlers Have in Common?
In ten Israeli daycare centers, two economists undertake a study focusing on how incentives can affect human behavior. The economists first note a fairly consistent number of instances each week of parents arriving late to pick up their children from daycare. The economists then introduce what appears to be a negative incentive: Any parent who arrives late for pickup has to pay an additional three dollars per child per occurrence. After hearing of this new policy, the number of parents who arrive late does not go down—in fact, it more than doubles.
To explain what happened at the daycare centers, the authors describe three different types of incentives: economic, social, and moral. All these incentives can be either positive or negative. A positive economic incentive might be a cash bonus for performing well at work; a negative economic incentive might be a fine for speeding on the freeway. A negative social incentive might include the banning of certain behaviors, such as smoking, in public places. An example of a positive moral incentive might be the good feeling a person gets after donating blood.
The authors point out two problems with the negative incentive introduced at the daycare centers. First, the amount—three dollars—was too small to serve as a meaningful penalty. Second, the negative economic incentive replaced a far more powerful moral incentive. Guilt had previously kept more parents from arriving late, but once the fine was instituted, the parents no longer had a reason to feel guilty.
Sometimes, incentives can lead to cheating, even among groups of people that one might never normally associate with such behavior. For example, what incentives would cause a schoolteacher to cheat, and how would administrators detect it? Because many school districts use students' standardized test scores to evaluate teacher performance, the authors argue, some teachers might feel the incentive to raise their students' scores through cheating.
Such cheating would likely result in unusual patterns of answers. For example, if several classmates' answer sheets show the exact same cluster of correct answers—especially if those same students missed easier questions on the test—it is possible that their teacher simply changed that block of answers before turning in the answer sheets.
By analyzing test score data from the Chicago Public School system, researchers discover "evidence of teacher cheating in more than two hundred classrooms per year, roughly 5 percent of the total." In 2002, a new CEO named Arne Duncan took control of Chicago Public Schools and used these statistical methods to hone in on teachers who might be cheating. Their students were retested, and their answer sheets were collected directly instead of being left with the suspicious teachers. On average, the students of suspected cheaters scored a full grade level lower on their second tests.
A survey of official results from professional sumo wrestling matches suggests that cheating is also fairly common in this esteemed Japanese sport. In a typical sumo tournament, each wrestler participates in fifteen matches. If a wrestler wins more than half of his matches, he rises in rank within the league. In matches that would lead to an all-important eighth win for a wrestler, that wrestler tends to win about thirty percent more often than expected against a wrestler who has already achieved his eight victories. Then, when the same two wrestlers meet next in a subsequent tournament, the former winner tends to lose about ten percent more often than expected. According to the authors, "The most logical explanation is that the wrestlers made a quid pro quo agreement: you let me win today, when I really need the victory, and I'll let you win next time."
A bagel salesman in New York also provides interesting data about cheating. The salesman, Paul Feldman, drops off bagels each morning at over one hundred business offices, along with payment boxes and a posted price for each bagel. He then returns later in the day to collect the money. Even with no one watching over the bagel transactions, Feldman averages close to a 90 percent payment rate—that is, a 10 percent theft rate. Over the years, Feldman discovers that smaller business offices usually have less theft, and that higher-level executives are more likely to steal than lower-level office workers. Bad weather also seems to result in more cheating, as do many major holidays like Christmas and Thanksgiving. Overall, though, Feldman's experience shows that the vast majority of people follow established rules and laws for many reasons—and not just to avoid the simple negative incentive of getting caught.
Chapter 2: How Is the Ku Klux Klan Like a Group of Real-Estate Agents?
Information asymmetry is the difference between what two people know about a given situation or field of study. People who hold the power of information are often viewed as experts, and many earn their living by maintaining an information asymmetry over the average person. In such situations, it is often to an expert's advantage to carefully control the amount and quality of information he or she provides to others.
A type of information asymmetry was used by the Ku Klux Klan in the 1940s. The organization held the power of fear over people, at least in part due to its ultra-secret structure, rituals, and terminology. A human-rights crusader named Stetson Kennedy decided to go undercover and join the Klan, hoping to gain enough information to end the organization's reign of terror over those it persecuted.
After documenting massive amounts of information about the Klan—everything from the secret handshake to the names of regional leaders—Kennedy thought of the perfect way to expose the organization. He contacted the producers of The Adventures of Superman, a popular children's radio show, and pitched the idea of having Superman wage a campaign against the Klan as an ongoing storyline. The producers agreed. Kennedy gave them access to all the secret Klan information he had collected, which they included in the show. When the radio programs started to air and the Klan's silly slang and rituals became the subject of mockery, membership in the shadowy organization dropped significantly.
Experts in modern society often use information asymmetry to their own advantage, even when hired to look out for someone else's interests. For example, a real estate agent is hired by a homeowner to help sell a house for the best possible profit. The homeowner assumes the agent should work hard to make sure the homeowner receives a high offer. However, a real estate agent knows that aiming for the highest possible offer means more work for her and more time for the house to be on the market, which delays the agent's payday. By instead persuading the homeowner to accept a less attractive offer quickly, the agent may lose a small amount of pay but saves a great deal of time and effort. The influence of these agents, like car salesmen and insurance agents, is threatened as the Internet allows average consumers to peek inside the black box of their professional expertise.
Sometimes people provide information inconsistent with their actions or characteristics. Such is the case with online dating services, where daters carefully select what information to reveal about themselves. A study by two economists and a psychologist reveals that more than two-thirds of the daters classify themselves as having better than average looks. In addition, 4 percent list their annual income at over $200,000, though only 1 percent of the general population earns that much. The self-proclaimed weight of female daters in the study is twenty pounds less than the national average. And though many white daters declare that the race of their potential mate does not matter, those same daters only rarely send queries expressing interest in nonwhite daters.
Chapter 3: Why Do Drug Dealers Still Live with Their Moms?
In the 1990s, graduate student Sudhir Venkatesh spent six years studying a Chicago gang known as the Black Disciples. During that time, one of the members, fearing for his life, gave Venkatesh several notebooks containing years' worth of financial data about the gang. Venkatesh kept the notebooks, not sure what to do with them, until he met Steven Levitt at Harvard. He showed the books to Levitt, who studies the records with the eye of an economist.
Levitt discovered that, for the vast majority of gang members, crime pays very poorly. The "foot soldiers," or crack dealers who sell drugs for the gang, earn roughly $3.30 per hour. Even the three higher-level officials who oversee the operation earn only about $7 per hour. Meanwhile, the gang leader—a college-educated man named J. T.—earns about $100,000 per year, and the regional "board of directors" (to whom J. T. reports) earn even more. The organization's structure is much like what one finds in corporate America. "In fact," the authors note, "if you were to hold a McDonald's organization chart and a Black Disciples org chart side by side, you could hardly tell the difference."
In addition to terrible wages, foot soldiers in the gang run the constant risk of being arrested, injured, or killed. During the years Venkatesh spent with the gang, the average member was arrested about six times and stood a 25 percent chance of being killed. Why would anyone risk such odds? Because each member hopes to be the next J. T., earning a fortune while the foot soldiers beneath him pay their dues.
Chapter 4: Where Have All the Criminals Gone?
In what is perhaps the most infamous and controversial chapter of Freakonomics, the authors discuss in detail the dramatic drop in crime that took place in the United States starting in the 1990s. Although experts failed to predict this decline in crime—and indeed, had predicted crime rates to continue rising—these same experts were quick to find reasons to explain it. Among the most popular reasons cited were new law enforcement strategies, more prisons and prisoners, changes in illegal drug markets, the older average age of the population, stronger gun control, a robust economy, and more police on duty.
By evaluating each of these factors, the authors rule out four of them as possible contributors to the drop in crime. New law enforcement strategies such as those used in New York City happened at about the same time as the drop in crime, but crime dropped just as dramatically in areas that did not institute new policing methods. The gradual shift of the average age of the American population, though it may contribute to a steady drop in crime over decades, is far too gradual a process to explain the sudden and steep drop seen in the 1990s. A booming economy might be correlated with a drop in nonviolent crime, but not a similar drop in violent crime; in fact, in the 1960s, a booming economy was accompanied by a surge in violent crime. Efforts to remove firearms from the street through buy-back programs have not been nearly successful enough to explain the drop in crime rates.
The other three factors—increased incarcerations, changes in the illicit drug market, and more police officers—all played a part in the lower crime rate, according to the authors. However, they suggest another factor as a primary cause of the drop in crime: the nationwide legalization of abortion in 1973. They explain, "Legalized abortion led to less unwantedness; unwantedness leads to high crime; legalized abortion, therefore, led to less crime." The authors also note that the crime rate started to drop just as the first phantom generation of legally aborted, presumably unwanted children would have reached adulthood—a ripe age for troubled males to launch their criminal careers. As further proof of the connection between abortion and the declining crime rate, the authors point out that the five states where abortions were legalized prior to Roe v. Wade—New York, California, Washington, Alaska, and Hawaii—experienced drops in their crime rates before the rest of the country did.
Chapter 5: What Makes a Perfect Parent?
Raising children is a difficult job, and it is only made more difficult by the confusing messages presented by experts and the media. In addition, a parent's natural reaction to certain dramatic threats, such as a handgun in the home, is far greater than that of less intimidating dangers, such as an exposed swimming pool in the backyard. In fact, a child is about one hundred times more likely to die in a swimming pool than from a gun. Furthermore, risk specialist Peter Sandman has observed that people generally pay too much attention to unlikely threats beyond their control (such as terrorist attacks), and not enough attention to likely threats within their influence (such as heart disease).
Aside from protecting a child, how much does parenting matter? What elements of a child's upbringing can directly affect something measurable, such as school performance? By using a statistical method known as regression analysis, economists can look at a large pool of data and attempt to find correlations between certain factors. A correlation is simply a relationship between two or more things; one does not necessarily cause the other, but they are related. For example, cold temperatures are correlated with snow. The cold does not directly cause snow to fall, nor does the snow cause the temperature to be cold, but both are frequently found together. By examining different factors (or variables) in a large pool of data tracking students' backgrounds and academic performances, a statistician can look for variables that appear to be correlated with better school performance.
By doing this, Levitt finds eight characteristics that are correlated with test scores in a student. Six are positively correlated, meaning that they are associated with higher test scores, while two are negatively correlated and associated with lower test scores. These are the six characteristics associated with higher scores: the student's parents are highly educated; the student's parents are in a high socioeconomic class; the student's mother was at least thirty when she had her first child; the student's parents speak English as their primary, everyday language; the student's parents are active in the PTA; and the student's home is filled with books. Conversely, a student with a low birth-weight or a student who is adopted is more likely to have lower test scores. As explained earlier, correlation does not mean low birth-weight and adoption directly cause low test scores in students, but students who exhibit these traits also happen to score lower than students who are otherwise alike.
Interestingly, the following characteristics showed no correlation at all with student test scores: the student's birth parents are still together; the family has recently moved to a nicer neighborhood; the student was raised by a stay-at-home mother until kindergarten age; the student attended the Head Start preschool program; the student's parents frequently make family trips to museums; the student is routinely spanked as a form of discipline; the student watches a lot of television; and the student's parents read to him or her on a daily basis.
The authors note that most of the characteristics associated with higher student test scores are determined long before the parents actually start parenting.
Chapter 6: Perfect Parenting, Part II; or: Would a Roshanda by Any Other Name Smell as Sweet?
When it comes to naming a child, America is in some respects sharply divided along lines of race and class. Although Asian American and white parents tend to name their children very similarly, the names chosen by African American parents are likely to be quite different. Research conducted by Roland G. Fryer, Jr., suggests that this "black-white naming gap" gained force throughout the 1970s and continues today. As the authors note, "More than 40 percent of the black girls born in California in any given year receive a name that not one of the roughly 100,000 baby white girls received that year."
Does a particularly "black-sounding" or "white-sounding" name affect a child's chances for employment and economic opportunities when he or she grows up? By analyzing data from California birth records, it appears that people with names more commonly found among blacks (such as DeShawn or Ebony) are more likely to hold lower socioeconomic status. However, the authors posit that their disadvantages are not because of their names, but rather because they are more likely to be born into families with fewer economic advantages to begin with. When all other factors are equal, names do not appear to create measurable obstacles or benefits.
By comparing a list of the ten most popular names for white females in 1960 with a comparable list from 2000, the authors note that zero names appear on both lists. Older names fall out of fashion and newer names gain popularity. How do new names become popular? New names often emerge among those in the highest socioeconomic class. Over the years, these names work their way down to the middle and lower classes, until finally falling out of favor entirely. The name "Brittany" is one such example: As it has steadily fallen in popularity among the higher and middle classes, it has gained popularity among poorer families. If this pattern holds true, the authors suggest that some of the most popular names in the year 2015 will include Emma, Grace, Isabel, Cooper, Aidan, and Liam.
Epilogue: Two Paths to Harvard
Although Levitt and Dubner point out that Freakonomics does not have a "unifying theme," they do note a recurring methodology in place for all their research: "It has to do with thinking sensibly about how people behave in the real world." Although the nuggets of information uncovered may be of little consequence to the average person, the biggest benefit comes from viewing the world in a slightly different way. As the authors put it, "The most likely result of having read this book is a simple one: you may find yourself asking a lot of questions."
Though the authors contend that Freakonomics has no unifying theme, they do note several basic ideas that form the core of their shared perspective. Among those is the notion that "conventional wisdom is often wrong." "Conventional wisdom" can be thought of as a collection of beliefs that seem to make sense and are accepted as fact, even though they have not been proven.
In Freakonomics, the authors offer many examples of conventional wisdom that turn out to be just plain wrong. For instance, most parents would be less likely to let their young children play at a friend's house that held a gun than at a friend's house with an unfenced pool in the backyard. However, looking only at the statistics, a child is about one hundred times more likely to die in a backyard swimming pool than from a gunshot.
The authors spend much of Freakonomics examining various examples of conventional wisdom and comparing those beliefs with what the data suggests is true. Sometimes, conventional wisdom is upheld. Such is the case with the notion that the children of highly educated parents perform better on standardized tests than children with less-educated parents. Often, however, popular notions of what is truth, such as that the Head Start preschool program boosts student performance in later years, are shown to be nothing more than illusion.
Another recurring notion in Freakonomics is the idea that incentives play a crucial role in human behavior. When attempting to explain why a person would act a certain way in a given situation, the authors ask, "What incentive is the person responding to?" They use incentives to explain why some teachers cheat on their students' standardized tests. Incentives also reveal why charging a fine of parents who are late to pick up their children from daycare just might have the opposite of the intended effect.
The authors describe an incentive as "simply a means of urging people to do more of a good thing and less of a bad thing." However, failing to fully understand incentives can lead to unexpected and unwanted results, as in the case of blood donors being offered a small amount of cash for their donation. According to researchers, the donation rate goes down because donors suddenly feel as if they are exchanging their blood for money, instead of doing it out of charity and kindness.
An unabridged audio recording of Freakonomics was released by HarperAudio in 2005. The book is read by co-author Dubner, and it is currently available on compact disc or as an audio download through www.audible.com.
An electronic book version of Freakonomics was released by HarperCollins e-books in 2005 in both Adobe Reader and Microsoft Reader formats. Both versions are currently available for purchase through www.amazon.com.
Cause and Effect
Many of the findings in Freakonomics deal with determining the causes of certain behaviors or trends, such as the reduction of crime rates in America in the 1990s. Even when the authors are not directly searching for a cause—for example, when trying to spot cheating teachers in a sea of test results data—the idea of cause and effect still plays an important part in shaping their hypotheses and search criteria. Knowing that cheating is the end result or effect, the authors must ask, "What would cause a schoolteacher to cheat?" Their answer helps them determine how a schoolteacher might cheat, which leads to a strategy for spotting cheaters within the data.
TOPICS FOR FURTHER STUDY
- One of the fundamental principles in Freakonomics—and, indeed, in economics in general—is the notion that human behavior is shaped by incentives. Someone in need of money will likely respond to the incentive offered by a paying job. Similarly, someone concerned about the environment is likely to respond to the moral incentive offered by volunteering for a conservation group. What kinds of incentives do you encounter in your daily life? Are they economic, social, or moral? Are they positive or negative incentives? Which incentives have the most dramatic effect on your behavior? Write a report detailing some incentives you have encountered. Be sure to discuss how these incentives affect behavior, as well as cases where they fail to work as intended.
- In chapter 3 of Freakonomics, the authors describe the economics at play in a gang of Chicago drug dealers. The "foot soldiers" of the gang work for very little pay and incur a huge amount of risk to do what they do. Each foot soldier endures these conditions because he hopes someday to become the next leader of the gang, with all its power and financial rewards. However, there is only one leader position, and hundreds of foot soldiers are all vying for the spot. This type of labor market is known as a "winner take all" market, where just one or a few people succeed while all others are left with nothing for their efforts. Think of another real-world example of a "winner take all" job market, and discuss your thoughts with a group. What do the participants hope to achieve? What is the likelihood of their success? Why do they keep trying, even though the odds are against them?
- Conventional wisdom is a collection of accepted beliefs, not necessarily truths, about how the world works. The authors of Freakonomics contend that "conventional wisdom is often wrong." Think of an example of conventional wisdom and devise a plan for testing it. What kind of experiment would you create to prove or disprove the statement? How would you make sure to weed out other factors that might affect your results? Write a report detailing your plan of action. Remember to explain the example of conventional wisdom you would test, as well as what you expect the results to show.
- The authors of Freakonomics have been criticized for studying topics some people find offensive. For example, in addition to investigating the link between legalized abortion and crime, the authors also engage in an exercise where they place a "value" on an unborn fetus (equal to 1 percent of the value of a newborn baby). Are there moral lines that scientists are obligated not to cross? Or should scientists be free to study any topic they wish, regardless of the moral consequences? Write a brief position paper stating your opinion on the subject. Remember to include examples and arguments to support your position.
The authors focus much of their attention on cause-effect relationships that do not seem obvious to not just the casual observer, but appear to have been overlooked even by experts. Such is the case with the link they assert exists between legalized abortion and a dramatic drop in crime rate. As the authors state in the introduction, "Dramatic effects often have distant, even subtle, causes."
Studies and Research
The core of Freakonomics is Levitt's academic research in the field of economics. A great deal of the book is devoted to describing the conditions and results of various experiments and studies. For each topic covered, the authors walk the reader through the process of developing a hypothesis and comparing it with the available data. For example, when examining the issue of schoolteacher cheating, the authors offer one possible scenario that would result in an identifiable pattern of teacher misconduct. They then present actual sets of data so the reader can identify the pattern independently. By doing this, they encourage the reader to participate in the scientific inquiry and gain a fuller understanding of what the results mean.
Throughout the book, the authors include anecdotes and brief asides that explain the historical context of certain subjects related to their research. For example, when discussing the economics of a drug-dealing gang in Chicago, the authors include a brief history of how crack cocaine became the drug of choice for many inner-city Americans. These short history lessons provide context for the research discussed, and they also allow the authors to tell narrative stories within the larger framework of a book about economics.
Each chapter of Freakonomics opens with a brief excerpt from a feature article written by Dubner about Levitt for the New York Times Magazine in 2003. This article is as much a profile of Steven Levitt as it is an exploration of his work; it includes candid conversations with Levitt, as well as physical descriptions of the man himself. These vignettes serve to present the reader with a fuller, more interesting picture of a man whose academic work, while interesting, does not convey the extent of his personality or character. They also function as transitions between the topics covered in consecutive chapters. This excerpt appears before chapter 1:
"I'd like to put together a set of tools that let us catch terrorists," Levitt said. "I don't necessarily know yet how I'd go about it. But given the right data, I have little doubt that I could figure out the answer."
It might seem absurd for an economist to dream of catching terrorists. It probably seemed absurd to a Chicago schoolteacher to learn that a skinny man with thick glasses had developed an algorithm that determined that she was a cheater—and that she was being fired. Steven Levitt may not believe in himself, but he does believe in this: Teachers and criminals and politicians may lie, as may real-estate agents and CIA analysts. But numbers do not.
The Evolution of Economics
The term "economics" is derived from the Greek terms oikos ("household" or "estate") and nomos ("law" or "norm"). Economics, then, was first defined as a study of the laws and norms governing the function of a household or estate. The term was not coined until the late nineteenth century, when economic theory flourished.
From the 1500s onward, as countries began developing sophisticated methods for producing and distributing goods, early economic theories were devised to explain the best way for a country to achieve and sustain wealth. Most theorists of the time argued that a nation's wealth depended on both its gold reserves and its balance of trade. By exporting more goods than it imports, a nation could gain wealth from other countries while still keeping its own wealth within its borders. This idea became known as "mercantilism."
Adam Smith was the first person to present a sweeping theory of economics that expanded beyond the narrow view of mercantilism. For this reason, Smith is often considered to be the "Father of Economics." His 1776 book An Inquiry into the Nature and Causes of the Wealth of Nations helped establish and popularize the notion of a "free market" society, a defining characteristic of capitalism. Smith also noted that people tend to act with their own self-interests in mind when making decisions and try to achieve the maximum worth for their resources.
The field of economics has since grown into numerous branches of study, including macroeconomics (the study of the economic behaviors of large groups or populations) and microeconomics (the study of the economic behaviors of individuals). Although it often deals heavily with mathematics and statistics, economics is generally considered a social science much like psychology or sociology. Today, economists play a key role in nearly every major aspect of American life and culture. Steven D. Levitt, co-author of Freakonomics, represents a new breed of economists who apply economic theory to various aspects of modern life in an attempt to gain new insights into human behavior.
The Rise of Crack Cocaine in America
Chapters 3 and 4 of Freakonomics briefly outline the history of crack cocaine as it relates to crime and gangs in inner-city America. Although humans have ingested derivatives of the coca plant for thousands of years, it was not until the mid-1800s that chemists first isolated the intoxicating alkaloid that makes cocaine the drug it is. Soon after, many consumable products sold in the United States touted the presence of cocaine for its medicinal qualities. By the twentieth century, however, the drug's highly addictive nature and its damaging effects on frequent users became clear. In 1914, the United States outlawed the sale or use of cocaine.
Cocaine in powdered form resurfaced as a popular recreational drug in the 1970s. However, due to its price, powdered cocaine was considered a "status drug" available only to the rich. In the 1980s, a new type of cocaine appeared on the streets of Los Angeles: "crack" cocaine, a cheap but powerful form of the drug that quickly became popular among lower-income drug users.
Oscar Danilo Blandon, a former Nicaraguan government official-turned-smuggler whom Levitt and Dubner refer to as the "Johnny Appleseed of Crack," is often named as the primary source of America's crack cocaine in the 1980s. Supplying the demand for the cheap and abundant form of cocaine is, in turn, considered the fuel that fed the proliferation of inner-city gangs throughout the United States in the 1980s and 1990s.
High-Stakes Testing and No Child Left Behind
In 2002, President George W. Bush signed the No Child Left Behind Act into law, which instituted several measures and requirements intended to improve the quality of education for American grade-school and high-school students. One of the most controversial elements of the new federal law was the requirement that students demonstrate adequate yearly progress by taking assessment tests at the end of the school year. As authors Levitt and Dubner note, "The stakes are considered high because instead of simply testing students to measure their progress, schools are increasingly held accountable for the results."
In chapter 1 of Freakonomics, the authors explain how such weighty testing—and the subsequent liability of individual teachers in such a system—can provide teachers with the incentive to cheat, with some going as far as to fill in correct answers on their students' answer sheets before turning them in for scoring. High-stakes testing has also been criticized for other reasons, including the risk that standardized tests routinely exhibit cultural and socioeconomic bias in favor of white, upper-class students, or that the tests simply do not foster improved education in general.
Roe v. Wade
In the early 1800s, although no state or federal laws had yet been enacted about it, abortions in the United States were generally considered acceptable if they occurred during the first three months of pregnancy. This was based on an old standard found in English common law, in which "quickening"—when a woman can first feel a fetus move in her womb, usually in the fourth month of pregnancy—was considered the cut-off for deliberately terminating a pregnancy.
In the mid-1800s, through a movement largely supported by feminists such as Susan B. Anthony, many states began to outlaw abortion completely. By the turn of the century, it was nearly impossible for a woman to obtain a legal abortion in the United States unless her pregnancy posed an imminent threat to her own life.
Abortions continued, but they were done illegally and often in unsafe conditions. In the 1960s, some states began to reverse their previous restrictions on abortion. With public support shifting in favor of a pregnant woman's right to choose whether or not to be pregnant, activists in Texas filed a lawsuit seeking to overturn the state's strict anti-abortion law. In the suit, the plaintiff was named only as "Jane Roe" to protect her identity. The case eventually reached the U.S. Supreme Court, where in 1973, the Court voted 7-2 to strike down the Texas law. This paved the way for a return to legalized first-trimester abortion across the United States.
A book that examines the world through the principles of economics might seem an unlikely candidate for mainstream success. However, upon its initial release in 2005, Freakonomics became an instant hit, reaching number two on the New York Times nonfiction bestseller list.
Critical reception of the book, when positive, was enthusiastic, with many critics noting the appeal of Levitt's unusual research in particular. In a review for Time, Amanda Ripley noted, "Each chapter is an enlightening field trip"; Benjamin Svetkey, in a review for Entertainment Weekly, called the book "the funkiest study of statistical mechanics ever by a world-renowned economist." Cass R. Sunstein from the New Republic wrote, "it is fun and even exhilarating to see how a real social scientist goes about testing competing hypotheses. Some of Levitt's inquiries read like good detective stories." An unnamed reviewer for the Economist applauded: "Far more intelligent, modest and orthodox than it pretends, the book is a delight; it educates, surprises and amuses."
However, Levitt's research as presented in the book evoked an altogether different response from many other critics. Lyn Millner, in a review for USA Today, argued that the book "needs more meat," and that "it's one of those fad books with fab titles that doesn't dig deep enough to stand the test of time." Philip Hensher, in a review for the Spectator, asserted that the book is "best enjoyed … as a series of music-hall turns, tall tales and outrageous paradoxes rather than anything resembling an argument." Hensher also noted of Levitt's research, "Having asked us to believe all those impossible things before breakfast, he could have given us something a bit more concrete to go away with." Although Sunstein complimented Levitt's contributions, the reviewer also noted that "some of his findings are not terribly exciting." Similarly, Dan Rosenheck, writing for the New Statesman, asked, "Is anyone surprised that some athletes cheat, that some funeral salesmen are unscrupulous, or that parents give their children names they associate with success?" Rosenheck concluded his review with the warning that "those seeking an intellectual mother-lode at the end of the 'treasure hunt' will surely be disappointed."
Some went even further in their criticisms of the book's content. An unnamed reviewer for Psychology Today pointed out one of the limitations of the authors' methods: "Rather than tackle the complexities of actual human beings, the data-dog authors prefer to rummage through the statistics we humans leave behind." Robert P. Holdstock, writing for the American Enterprise, claimed that the book exhibits "scholarly lassitude" and noted that the authors "seldom miss a chance to surprise readers with brash comparisons that are less impressive than advertised." Holdstock also charged that the book "contains many careless arguments" and "displays an adolescent mentality that relishes shock value and iconoclasm for its own sake."
The authors' writing style was also an issue for some other reviewers. Many noted dissatisfaction with the title, which Sunstein called "stupid"; according to the unnamed reviewer for the Economist, the title suggests "an airport-ready, dumbed-down romp." Millner stated that the book contains "a lethal dose of hype," and the reviewer for the Economist blames co-author Dubner for what he called "the book's frequently tiresome breathlessness." According to Sunstein, "The authors seem to fear that their substantive material might be boring, and they try too hard to create major drama." Rosenheck is one of the few reviewers to praise the book's style, calling it "lively" and "conversational."
In the wake of the book's wild popularity, many readers have become polarized by some of the book's reported findings—most notably those related to the link between abortion and crime. Additionally, several economists and statisticians have questioned both Levitt's methodology and the validity of some of his conclusions. Still, Freakonomics was selected as the 2006 Adult Nonfiction Book of the Year by Book Sense, and its continued success has prompted the authors to begin work on a sequel.
Wilson has written essays and articles examining a wide range of topics related to popular culture, from video games and mass-market fiction novels to modern poetry and classic literature. In this essay, he argues that the authors of Freakonomics make a number of missteps in the book that ultimately damage the credibility of their work.
In the book Freakonomics, economist Steven D. Levitt and journalist Stephen J. Dubner present surprising and enlightening examples of how economics can be used to describe why people do the things they do. But for all of the authors' clever use of data and scientific methods to reach conclusions both entertaining and accessible to the layperson, they frequently make missteps that undermine the scientific premises on which the whole enterprise is based.
It must be tough to write a mainstream book that attempts to distill insights gained from mountains of complex research performed by economists and statisticians. What Levitt and Dubner have created—a sort of whimsical fantasia of incentive and risk analysis, with some fascinating historical footnotes thrown in—certainly provides an entertaining experience for the reader. But scientific research is filled with all sorts of conditions, caveats, and clarifications that do not translate well into simple bits of engaging prose. In this book, such dry material tends to get glossed over for the sake of entertainment.
To begin with, regression analysis—the statistical method by which many of the correlations described in the book have been discovered—is more complicated and controversial for these applications than the authors suggest. They do eventually concede this to some degree, though only after the reader is already more than three-quarters of the way through the book:
It should be said that regression analysis is more art than science…. But a skilled practitioner can use it to tell how meaningful a correlation is—and maybe even tell whether that correlation does indicate a causal relationship.
More art than science. So which is it, science or art? In fact, the authors state quite explicitly in the introduction, "Economics is above all a science of measurement." The whole point of the book is ostensibly to apply a scientist's objectivity to huge amounts of data in an attempt to judge the conventional wisdom on a variety of subjects. Many readers may not recognize that they have been offered conclusions that not only are unscientific, but also in some ways reflect the exact opposite of the scientific method.
Using the scientific method, a researcher observes some phenomenon in the natural world and thinks up a hypothesis that might explain the phenomenon. The scientist then devises a carefully controlled experiment to test that hypothesis. The experiment must be reproducible, so the results can be confirmed or disproved by other scientists. As it is used throughout Freakonomics, regression analysis is essentially an examination of (often uncontrolled) observations that have already been recorded and cannot be reproduced. The results are in before the hypotheses are formed.
In the book, the authors provide due warning about mistaking correlation for a causal relationship. For example, snowfall is always found in conjunction with cold temperatures (correlation), but that does not mean cold temperatures are the direct cause of snowfall (causal relationship). However, the authors themselves issue some rather definitive statements about causal relationships that are not altogether airtight.
In what is certainly the most infamous section of the book, the authors declare that the nationwide legalization of abortion in the 1970s was one of the main causes of a drop in crime twenty years later. They do not stop at merely suggesting a correlation between legalized abortion and a subsequent drop in crime. If they had, they might have spared themselves the wrath of not only pro-life activists, but also those concerned with the preservation of scientific rigor. Their "proof" of a causal relationship is hardly compelling. Most of it merely correlates legalized abortion and lower crime. The authors note that the first states to legalize abortion before the Supreme Court decision of Roe v. Wade paved the way for nationwide legalization were also the first states to see a drop in crime years later. That may well be, but there may be plenty of reasons why those same states, generally considered some of the country's most progressive, would be the first to experience any number of nationwide trends. And since the authors only mention figures for the two groups as whole entities—early-legalizing states versus later-legalizing states—how do the figures hold up on a state-by-state basis? The answer might be found in the guts of Levitt's co-authored work for the Quarterly Journal of Economics, but it is nowhere to be seen here.
When it comes to the abortion issue, the authors also paint a deceptive picture of the average abortion recipient in the early 1970s. As the authors describe her, "Very often she was unmarried or in her teens or poor, and sometimes all three." This is an important part of their argument that the women most likely to seek abortion were those who could not adequately care for their children. The authors carefully employ wiggle words like "very often" and "sometimes," but still deliberately offer a description that does not match the known data. According to the Centers for Disease Control, over two-thirds of all women who obtained abortions in 1972 were at least twenty years old. (More than one-third were over twenty-five years old.) On top of that, the percentage of abortions obtained by teens dropped steadily over the next two decades before stabilizing at about 20 percent.
Additionally, three-quarters of all abortions in 1972 were obtained by white women. (The percentage dropped to about two-thirds by 1976, where it remained steady for over a decade.) According to these figures, it seems that the "average" woman seeking an abortion in the early 1970s was an adult white woman—who, as the authors point out elsewhere, was much less likely to be living in poverty than a black woman of the same age. This does not prove that their conclusions are wrong, but it does suggest that the authors intentionally slant the facts to support their arguments.
Another nagging problem with the book is that the explanations offered for people's behavior often rely on wild speculation about what those people were thinking. This is evident in the section about the television game show The Weakest Link. The authors assume that, in an ideal world, every player on every episode of the show would use the exact same strategy: Vote off other players who do not know the answers early in the game, when the pot increases based on everyone's combined efforts; and vote off those who do know the answers later on, since they are the player's strongest competition.
The authors might consider this the only sensible strategy, but it is hardly the only strategy contestants use. To unequivocally state that, in later rounds, "contestants want to keep Hispanics around to weaken the field" seems presumptuous and unfair. In addition to performance, the personality of a player has a lot to do with how long he or she lasts on the show. If other players consider someone arrogant or annoying, they may vote that player off regardless of performance. Also, players who commit egregious errors—like not knowing the name of the vice president of the United States—might get voted off even if other players have made more mistakes.
Another misstep the authors make is to either overstate the significance of data that favor their argument, or understate the significance of data that contradict it. For example, when discussing a survey of data from Internet dating websites, they note that the applicants, based on their own descriptions, must be "a lot richer, taller, skinnier, and better-looking than average." Computer users may indeed be wealthier and healthier than the average American. Why should we assume that they are not? Only with random sampling is it valid to assume the characteristics of the sample mirror those of the population, and this sample is self-selected, not random at all. The authors go on to mention that these applicants reported themselves to be about an inch taller than the national average. One inch of height may or may not fall within a reasonable statistical margin of error, but in the real world, one inch does not fall within the description "a lot taller." Their point may be valid, but it is undermined by a broad and sloppy overstatement.
Similarly, when discussing possible cheating among professional sumo wrestlers, the authors note with great emphasis that a wrestler who desperately needs a win in his final tournament match to improve his ranking—the most important factor in his professional status—tends to have a success rate of about 80 percent against a wrestler who has already achieved that ranking but is not in contention for higher honors. The authors concede that conventional wisdom suggests that the wrestler who needs the win will try harder than the wrestler who does not. However, they go on to point out that, because the winning wrestlers then lose 60 percent of their subsequent matches against those same opponents, there must be some sort of cheating involved. "The most logical explanation," the authors write, "is that the wrestlers made a quid pro quo agreement: you let me win today, when I really need the victory, and I'll let you win next time."
Unfortunately, the very numbers that the authors provide do not suggest a quid pro quo agreement at all. If there were indeed such an agreement between the wrestlers, one would expect to see the winner of the first match lose the next tournament match at a rate of about 80 percent—a perfect symmetry that suggests an equitable transaction between the two wrestlers. In reality, a given loss rate of 60 percent is not much higher than the "all things equal" expected rate of 50 percent that the authors assume at the start of a new tournament. Conventional wisdom might suggest that the wrestler who lost the first match is slightly more motivated to win the second time (though not as motivated as the first wrestler, since ranking is not directly at stake in the second match). But as the authors say, conventional wisdom is often wrong.
The authors are so concerned with providing surprising information that they sometimes present obviously artificial "conventional wisdom" just so they can prove it to be false. For example, in the section on Paul Feldman's "honor system" bagel business, they mention that employees at smaller offices are generally more honest than those at big offices. This is all well and good until the authors proclaim, "This may seem counterintuitive. In a bigger office, a bigger crowd is bound to convene around the bagel table, providing more witnesses to make sure you drop your money in the box." If that were the case, bigger cities would have less crime than small towns because of all those extra witnesses. The authors do eventually explain the findings well enough, but only after suggesting that they contradict what reasonable people would expect—which they certainly do not. Such "conventional wisdom" is simply a straw man they erect just to knock down.
Overall, Freakonomics is one of those rare bestsellers that actually encourages readers to think critically, and the authors certainly deserve some praise for that. Unfortunately, that message is undermined by many examples of wild speculation, obfuscation, and otherwise sloppy presentation. But at least readers are forewarned in the introduction when the authors write, "Experts—from criminologists to real-estate agents—use their informational advantage to serve their own agenda." It is true with all experts who have informational advantages and agendas, economists included.
Source: Greg Wilson, Critical Essay on Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, in Literary Newsmakers for Students, Thomson Gale, 2007.
James Q. Wilson
In the following essay, Wilson criticizes some of the conclusions presented in Freakonomics, and contends that its strength lies with the questions it asks, rather than the answers it offers.
During my many years of lecturing on crime, invariably the first two questions I would be asked were: "What do you think of the death penalty?" and "What do you think of gun control?"
No more. Now the first question is whether I believe that legalized abortion has cut the crime rate. For this I can thank Freakonomics, the weirdly named book by Steven D. Levitt and Stephen J. Dubner that has been high on the New York Times best-seller list for weeks now. My answer, by the way, is no: I do not believe the evidence shows a causal link between legalized abortion and our reduced crime rate.
Levitt, an acquaintance of mine, is a immensely talented economist whose restless mind has inquired into all sorts of fascinating topics. The book, written with the journalist Stephen J. Dubner (who in 2003 published an admiring article about Levitt in the New York Times Magazine), is a popular account of the many studies Levitt has done on subjects as diverse as real-estate agents, schoolteachers, sumo wrestlers, drug dealers, parenting, and the names given to black and white children. Also on abortion and crime.
WHAT DO I READ NEXT?
The Tipping Point (2000), by Malcolm Gladwell, is a "popular science" book in much the same vein as Freakonomics. Gladwell, a sociologist, offers the premise that small groups of people are often responsible for huge changes in society. After reaching a critical "tipping point," trends spread through a population much like viruses. He develops his argument through numerous examples throughout history, and by linking seemingly unconnected phenomena much like Levitt and Dubner do.
The World is Flat: A Brief History of the Twenty-First Century is Thomas L. Friedman's sweeping portrait of the swift economic globalization taking place in the world around us. By "flat," Friedman means that the world has become much more interconnected across national and continental borders, which creates both challenges and opportunities for all members of the global community. The book, originally published in 2005, was reissued in 2006 with significant revisions and an additional one hundred pages of new material.
Collapse: How Societies Choose to Succeed or Fail is Jared Diamond's 2004 follow-up to his Pulitzer Prize-winning Guns, Germs and Steel: The Fates of Human Societies. Both books focus on how environmental factors play a key role in the development and evolution of human society. In Collapse, Diamond concentrates on several societies that have failed throughout history—including the Anasazi and the Greenland Norse—and argues that a better understanding of our environment might help prevent similar collapses in the future.
Though originally published in 1994, Burglars on the Job: Streetlife and Residential Break-Ins picks up where Freakonomics leaves off in its study of criminal behavior: Instead of relying on statistics for their information, sociologists Richard T. Wright and Scott H. Decker interview burglars and other criminals to find out how they choose which house to rob, their most common or favored methods of entry, and what they do with the goods they steal.
The problem with a journalistic book about a serious scholar is that journalism does not tell you much, if anything, about the techniques the scholar has used, the challenges to his data that others have raised, or the scholar's response to those criticisms. While I am glad this book has exposed Levitt to a broad audience, I hope that anybody who is excited by it will go to his original studies and examine them carefully. Luckily, most of what he has written is quite accessible to the general reader.
Back to abortion and crime. Levitt's argument is that, with the legalization of abortion by the Supreme Court's 1973 decision in Roe v. Wade, many fetuses were killed in America that would otherwise have led to the birth of unwanted children. Such unwanted children, receiving little affection and guidance, would have been more likely to commit crimes when grown. Ergo, their removal from the population had something to do with our lowered crime rates.
Why should we think such children would have been unwanted? Because, Levitt contends, they would have been born to thousands of poor, single, teenage mothers. Levitt conspicuously refrains from saying so, but a very large fraction of these poor, single, teenage mothers would have been African American: over 60 percent of all black children are born out of wedlock, and the abortion rate is roughly three times greater among black than among white women.
To prove that abortion reduced crime, Levitt and his coauthor on the original paper, John Donohue, examined crime rates 15 to 18 years after the Roe decision, and found a drop. Moreover, they pointed out that five states had already legalized abortion three to four years before the decision; in these early-legalizing states, crime rates fell sooner than in states that did not permit abortion until Roe.
You would never know it from this book, but not only have these claims been criticized but several scholars have offered rival theories. On the issue of abortion rates alone, the economists John Lott and John Whitley have written that, even before Roe, many anti-abortion states allowed abortion if the life or health of the mother was at risk; in these states, there were at least as many abortions per 1,000 live births pre-Roe as in states that had made abortion legal. Why, then, attribute falling crime rates to legalized abortion?
Levitt and Donohue have rejoined that, in those states where abortions were still nominally illegal, it was well-to-do white women who mainly availed themselves of the loopholes in the system. But there is no evidence of this; to the contrary, black women were over-represented among those having abortions in such states.
Now look at homicide rates by the age of suspected offenders. In the late 1990's, roughly a quarter-century after Roe, the murder rate was falling for offenders aged twenty-six and older—a class of offenders much too old to have been affected by Roe one way or the other. As for the youngest offenders, those between sixteen and twenty, their murder rate had jumped up in the early 1990's, probably because of involvement in the crack cocaine trade. Again, no Roe effect.
George Akerlof, Janet Yellen, and Michael Katz have argued that legalized abortion actually increased the number of out-of-wedlock first births—because the availability of abortion, along with the advent of new contraceptive devices, rendered sex "cost-free" for men but not necessarily for the women they impregnated. Were the children who were increasingly likely to be born to unmarried women "unwanted"? Perhaps they were, but we do not know; Akerlof and his colleagues have not given us sufficient evidence.
As of now, no one is entitled to decide who is correct in this matter, whether Levitt or any of his critics. But it is certainly premature to say that Levitt is right, and positively disconcerting to take the word of an enamored journalist that Levitt must be right.
On another controversial matter, however, Levitt is clearly right, and I am his victim. I once wrote that the proportion of juveniles in the population was going up and that therefore the crime rate would go up. Levitt correctly takes me to task for this unwarranted assertion, which was later proved wrong. His criticism reminds me of something my Ph.D. adviser once said, no doubt quoting someone whose name I have forgotten: social scientists should never try to predict the future; they have trouble enough predicting the past.
The abortion-crime connection takes up only a small portion of this book; I have dallied on it because it has drawn so much attention, and because it may be symptomatic of a general disposition on the part of Levitt or his coauthor to avoid being thought politically incorrect. For just as this book's discussion of abortion ignores race, so its chapter on the gap in educational achievement between blacks and whites soft-pedals some indisputably important facts.
The chapter begins by considering how little influence parents may exert over their child's personality, given that half of the difference among personalities can be attributed to genes. This is quite correct. But genes also account for well over half (in some studies, as much as three-quarters) of differences in intellectual ability. If we are to explain the black-white gap in educational achievement, we cannot turn away from the fact that on average, African Americans have a lower IQ than white Americans.
There are, of course, many highly talented blacks and many really stupid whites. But these important individual differences are not relevant to explaining the average difference between black and white school achievement. That difference is not the product of racist innuendo; the matter has been measured for decades, often by means of tests that do not require the use of words.
It is true enough that black IQ scores have risen—owing, one suspects, to improvements in the social condition of blacks over the last several generations. But the black-white gap in educational attainment has not narrowed. In Freakonomics, the authors assert that this gap is the result of differences in incomes between blacks and whites. Such differences certainly exist. But income differences are themselves in large measure the result of differences in intelligence, so one cannot explain the gap in IQ-based school scores by "controlling" for income.
The best test of this was done by Sandra Scarr and Richard Weinberg. They looked for changes in the IQ scores of black children who had been adopted by white families, mostly middle-class and well-educated. Over a ten-year period, there was not significant gain in the IQ's of the adopted black children. (Nor was there any gain in the IQ's of adopted white children.) The data strongly suggest that parental environment, even in well-to-do families, has only a modest and probably short-lived effect on educational ability.
If you bothered to look up Levitt's original paper on the black-white test gap, written with Ronald G. Fryer, you would find that the authors are indeed aware of the many other studies that have been done of this issue. But they also think that once one "controls" for socioeconomic status, black and white schoolchildren become "observationally equivalent." Observationally, perhaps; but not actually. As they themselves note, moreover, the gap between black and white test scores increases as children get older, and this widening gap cannot be explained by socio-economic differences in the quality of the schools the children attend. Experts on genetics have long known that heritability increases with age, and so, as a result, will the average gaps in school achievement between white and black children.
After wrongly minimizing the role of IQ, Freakonomics returns to the issue of parental influence on educational achievement. Here, Levitt and Dubner make some excellent points. Whether a mother works, whether the neighborhood is depressing, whether the child watches a lot of television, whether he or she attends a Head Start program—all of these factors have next to no educational effect. The fact is that parental behavior has a limited impact—which means that many of the villains allegedly responsible for our children's low school achievement are not villains at all.
There is much else to praise in this book as well, and much to learn from Levitt's observations. Did you know, for example, that real-estate brokers get more money for their own homes than they do for others'? That sumo wrestlers and some Chicago schoolteachers cheat? That swimming pools are more dangerous than guns? That drug dealers live at home with their moms? That people select names for their children in ways that differ tellingly by race and social class?
In general, the great strength of Levitt's work is that he asks interesting questions and searches hard for facts that can help answer them. Since he is an economist, he is not telling people how they ought to behave, only trying to explain how they do behave. And unlike some economists, he does not believe that human behavior can be understood simply on the basis of how much money people earn. In 1976, on the bicentennial of American independence, I recall talking to a friend who later won the Nobel Prize in economics. He refused to accept that the Revolutionary war had cost Americans heavily in higher taxes and a depreciated currency. If we looked hard enough, he assured me, we would discover that we Americans started the Revolution in order to become economically better off.
Levitt does not make mistakes like that, which is one reason I urge people to read this book, even though much that is crucial has been left out or ignored. My advice in this: if you find something that intrigues you in Freakonomics, do not rely on the book to give you a full explanation of it. Instead, look up in a college library or on the Internet the articles Levitt has written, and study them. I wish he had assembled these articles and published them as a book. He would have made much less money, but his ideas would have been much clearer and, even in their scholarly form, easier to deal with.
Source: James Q. Wilson, "Dismal Science," in Commentary, Vol. 120, No. 1, July-August 2005, pp. 67-69.
"Curiouser and Curioser; Unconventional Wisdom," in the Economist (U.S.), Vol. 375, No. 8426, May 14, 2005, p. 85.
Hensher, Philip, "Findings of the Dismal Science," in the Spectator (U.K.), Vol. 298, No. 9232, July 16, 2005, pp. 32-33.
Holdstock, Robert P., "Hipsters Do Econ," in the American Enterprise, Vol. 16, No. 7, October-December 2005, p. 55.
Levitt, Steven D., and Stephen J. Dubner, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, William Morrow, 2005.
Millner, Lyn, "Economics Seen in a New Light," in USA Today, May 9, 2005, section B, p. 7.
Review of Freakonomics in Psychology Today, Vol. 38, No. 3, May-June 2005, p. 36.
Ripley, Amanda, "Unconventional Wisdom," in Time, Vol. 165, No. 18, May 2, 2005, p. 73.
Rosenheck, Dan, "Treasure Hunt," in the New Statesman (U.K.), Vol. 134, No. 4752, pp. 38-39.
Sunstein, Cass R., "Super Freak," in the New Republic, July 25, 2005, p. 27.
Svetkey, Benjamin, Review of Freakonomics in Entertainment Weekly, No. 815, April 15, 2005, p. 88.
Smith, Adam, Wealth of Nations (Great Minds Series), Prometheus Books, 1991, originally published in 1776.
This seminal work from the "Father of Economics" provides the first comprehensive discussion of economics in free-market societies. Though originally published in 1776, the book continues to be regarded as one of the most important economics texts in print.
Smith, Adam, The Theory of Moral Sentiments (Great Books in Philosophy), Prometheus Books, 2000, originally published in 1759.
This early Smith work—referenced twice in Freakonomics—focuses on the author's explorations of morality and ethics in humans. His arguments support the idea that morality is, in some sense, innate; this serves as an effective complement to what some perceive as the "every man for himself" view found in Wealth of Nations.
Becker, Gary S., and Guity Nashat Becker, The Economics of Life: From Baseball to Affirmative Action to Immigration, How Real-World Issues Affect Our Everyday Life, McGraw-Hill, 1998.
Gary S. Becker is a Nobel Prize-winning economist and pioneer in the application of economic methods to other aspects of the modern world. Here, he presents an entertaining overview of how economics plays an important part in every person's daily life.
Wheelan, Charles, Naked Economics: Undressing the Dismal Science, W. W. Norton, 2003.
In this easy-to-read introduction to the basics of modern economics, Wheelan shares everything a layperson should know about the subject, but does not. The author relies on simple, relatable examples instead of complicated math to explain fundamental economic principles.
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