Freakonomics

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It
is rare that an economics book makes the New York Times non-fiction bestseller
list. The masses are more likely to be interested in reading about getting rich
quick or flattening their stomachs; not supply, demand and other purposeful human
action.

But,
Steven D, Levitt and Stephen J. Dubner have struck publishing gold with their
book, Freakonomics:
A Rogue Economist Explores the Hidden Side of Everything
. It is Levitt’s
curiosity about the world and his work on topical issues concerning public policy
written about with the skill of best selling author Dubner, that makes this a
collaboration that brings a new way of thinking to the average reader.

Freakonomics
is not unique in its concept. While reading it, I couldn’t help notice the
similarities to David (son of Milton) Friedman’s Hidden
Order: The Economics of Everyday Life
, and The
Economics of Life: From Baseball to Affirmative Action to Immigration, How Real-World
Issues Affect Our Everyday Life
, written by another Chicago school economist,
Gary Becker. And, Levitt’s chapters on parenting bring to mind Richard Herrnstein’s
and Charles Murray’s The
Bell Curve: Intelligence and Class Structure in American Life
. For sure,
these books are more intellectually rigorous, but none were bestsellers.

Levitt
and Dubner name their chapters provocatively to reel the reader in: for instance,
Chapter 1 is entitled, "What Do Schoolteachers and Sumo Wrestlers Have in
Common?"

Levitt’s
work examining test scores in Chicago schools has provided proof that mandating
test scores give teachers incentive to cheat. And what of Sumo wrestlers? Those
who finish tournaments with records under .500 are forced to wait hand and foot
on participants who finish over .500. A review of the data of final tournament
matches between 7-7 wrestlers and 8-6 opponents reveal that 7-7 wrestlers win
nearly 80 percent of the time, far more than the predicated win percentage of
less than 49 percent.

The
book’s chapter comparing the Ku Klux Klan and real estate agents is about information.
The KKK had power until they were exposed over the radio and real estate agents
hold pricing power if market prices are not widely known and accessible to the
public. The authors also delve into internet dating sites. No surprise, women
tend to lie about their weight, and men about their height. Women are most interested
in men’s incomes while men are most interested in a woman’s looks.

Professor
Levitt spent months in a Chicago ghetto gathering data on the drug trade. From
this he learned of the extensive business network that was developed to sell drugs.
Although most people assume drug dealers make bundles of money and drive big fancy
cars, what Levitt learned was that like any other profession that holds out the
potential for fame and riches (entertainers, athletes) most dealers make less
than minimum wage and live with their moms while they keep working, hoping to
make it to the top and earn millions.

The
book’s most controversial section is on crime, where the authors contend that
legalizing abortions in the 1970’s paved the way for lower crime rates in the
1990’s. The theory being that with abortion legal, the price of the procedure
fell, and more poor, unmarried women would abort unwanted children that would
more likely grow up to be criminals.

Levitt
and Dubner spend a quarter of the book on parenting and kids. The authors come
to some interesting conclusions about what really matters in parenting. Kids tend
to get higher test scores if their parents are highly educated: because these
parents have higher IQs and IQ is strongly hereditary. Children of mothers over
thirty tend to do better in school. These women tend to be better educated or
career oriented. Children whose parents speak English at home have better test
scores. Conversely, adopted children do worse on tests, because adopted kids are
most influenced by their biological parents’ IQs; that are likely low. Reading
to children doesn’t improve test scores. However, children growing up in a house
full of books do well in testing. Lots of books, mean high IQ parents.

The
final chapter on naming children is the most fun. What’s in a name? Nothing really.
But, the speed at which children’s names change and why is interesting and funny.

Freakonomics
has been criticized for its controversial content, its lack of scholarly rigor,
trivial subject matter and conclusions, and failure to expose the real economic
damage done by government regulations and government granted monopolies. But,
despite the flaws, I’m happy that a book of this subject matter is a bestseller.

June
21, 2005

Doug
French [send him mail] is executive
vice president of a Nevada bank and a policy fellow of the Nevada Policy Research
Institute. He is the 2005 recipient of the Murray N. Rothbard Award from the Center
for Libertarian Studies.

Doug
French Archives

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