Freakonomics
Stephen J. Dubner and Steven D. Levitt
Contributed by Marshall Raine

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Overview
Author
Stephen J. Dubner and Steven D. Levitt
Year Published
2005
Type
Non-Fiction
Genre
Non-Fiction
About the Title

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner discusses various themes that encourage the readers to interpret the world utilizing the economics strategies explained in the book's chapters. The book commences with an introduction discussing the dramatic rise in crime in the 1990s. At the time, experts projected a rapid increase in crime reaching records levels by 2000. This conventional wisdom made society practically believe that crime was unstoppable. Nonetheless, the contrary happened as Levitt and Dubner state "and then, instead of going up and up and up, crime began to fall, and fall and fall and fall some more. The crime drop was startling in several respects" (2). Seeking to justify the drop, experts credited restrictive gun control, policing strategies, and the booming economy to crime reduction. However, both Levitt and Dubner state that the experts? justifications were wrong, and instead the authors credit the reduction in crime to a young Dallas woman named Norma McCorvey, famously known as Jane Roe. According to the authors, the court ruling in favor of Jane Roe, permitting legalization of abortion across America contributed to the rapid reduction in crimes. In essence, Levitt and Dubner argue that legalizing abortion led to crime reduction since uneducated women whose kids were likely to grow up to become thieves stopped being born.

The authors further point to how society relies on experts who utilize informational advantage to manipulate people for their own personal gains. Levitt and Dubner postulate that incentives motivate experts and the best way to detect if they [experts] are misusing their informational advantage is by comparing how they perform a service for themselves versus how they perform a similar service for other people. A good example used by the authors is of real estate agents selling homes for others and for themselves. To illustrate the power of incentives, Levitt and Dubner state that a real estate agent gets 1.5% of the sales profit by selling a customer?s house worth $300,000 and thus, encourages a client to take the first offer. However, when selling his or her house, the same agent waits for ten days longer to sell a house worth $300,000 for an extra 3-plus percent, thereby, concluding that informational advantage is an incentive that compels people to manipulate others the same way money does.

Levitt and Dubner further argue the concept of correlation versus causation using the anecdote of two candidates. The authors dispute the common belief that more money makes a candidate win an election, and instead postulate that the more appealing candidate anticipated to win attracts both money and votes. The authors correlate two candidates by hypothesizing that an appealing candidate who reduces his expenditures in half loses only 1% of the votes while a trailing contender who doubles his campaign spending only increases the votes by the same 1%. This depicts that increasing or decreasing spending on campaigns has an insignificant effect on the votes gained.

The introduction ends with Levitt and Dubner explaining the purpose of the book, which is to ?explore the hidden side of . . . everything? (12) basing on several ideas: i) incentives as the cornerstone of conventional life, ii) that conventional wisdom is often wrong, iii) dramatic effects often have distant, even subtle cause, iv) experts utilize their informational advantage to serve their own agenda v) and knowing what to measure and how makes a complicated world much less so (Levitt and Dubner 11-12).

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