Stone Cold Freak (Economics Version)

Levitt, Steven D. and Stephen J. Dubner. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: William Morrow, 2005.

When books like this sell a bunch of copies, people like me naturally become suspicious. I guess it is the knee jerk reaction of denizens of the "ivory tower" to automatically sneer at an attempt to "popularize" some aspect of academic thinking. In fact, being called a popularizer is about as bad a thing that you can call any academic. Like being called a child molester, it is a tough label to wash off.

What I do know is this: Levitt and Dubner sold more copies of this in a week than some academics sell in an entire career. I am a bit of a heretic, but I think that there is something to be said for that...along the lines of "laughing all the way from the ivory tower to the bank, several times."

This book did more than sell a bunch of copies; it sold a shitload of copies, and for a book that even hints at the fact that it is about economics, that is something indeed. The "dismal science" is not one that seems to interest a lot of people, but it is like many of the humanities and social sciences...present it well and people will become interested and perhaps learn something in the process.

First off, this book is easy to read, funny in parts and a well crafted book (due in no small part to the involvement of a journalist...when academics try to do these things on their own, it is usually a disaster). It does make good summer reading (at least for someone like me). It is not, however, the funniest book on economics out there: that goes without hesitation to P.J. O'Rourke's 1999 book Eat the Rich: A Treatise on Economics.

What the authors (principally Levitt) argue is that if morality represents the way people would like the world to work, economics represents how it actually does work. While eschewing that there is any central point to the book, Levitt and Dubner do proffer some key notions that do center the work.

These being that incentives are the cornerstone of modern life; conventional wisdom is often wrong; dramatic effects often have distant, even subtle, causes; "experts" use their informational advantage to serve their own agenda; and knowing what to measure and how to measure it makes a complicated world less so (13-14).

Well, that seems simple enough, almost simple that it should not take an economics professor from the University of Chicago and a New York Times journalist to figure them out. That is exactly their point and what makes their book so enjoyable and accessable. They show economics (and by implication most of the social sciences) for what they are - studies of how actual people behave and interact with each other and their surroundings.

Their case studies in the chapters that follow vary in interest level and novelty from things that a six year old could tell you (everyone, given the right payoff, will cheat) to the controversial (the decision in Roe v. Wade led directly to the decline in violent crime in the 1990's). All manner of data are marshalled in making these claims.

I found the chapters on crack dealers in the CHA housing projects, the reasons for the declining crime rates and factors that lead to success in parenting (Chapters 3, 4 and 5, respectively) particularly interesting, if for no other reason the methods employed to reach each conclusion. The story of how he got the data on the organization and economics of crack dealers is harrowing enough to be a story of its own (and in fact it soon will be).

The chapters on incentives and information-as-power seem like cases too easily made, and things that seem explanatory. We would not have common phrases like "everybody has his/her price" or "knowledge is power" if these were not intuitive notions. They do, however, speak at some length about how convetional wisdom is often wrong, but it seems that they make the exception in these two cases. The chapter on baby names and success (Chapter 6) just seems silly...we have a Secretary of State named Condoleeza (perhaps she is the exception that proves the rule, but I still think their argument is a stretch).

What this book does best is show people how economists and social scientists look at the world. Levitt says that economics is primarily a science of measurement. I partially agree with him.

I have always believed that economics is primarily a behaviorial science, studying what are some of the least generally interesting but some of the most important human behaviors. Unlike psychologists, who get to talk about fun stuff like crazy people, economists study things like incentives, opportunity costs, limited resources and unlimited wants and so on. Not the sexy (literally in some cases) stuff of Freud and the boys, but ultimately more useful in understanding how people interact with their world on a daily basis.

All in all, this book was a worthy read, even if some of the case studies are a bit far-fetched. They will leave you thinking "well, maybe they have a point there." Or maybe not.