Freakonomics
Stephen J. Dubner and Steven D. Levitt

by

Jack Shields

Context

Introduction

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).

Context

William Morrow published the book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner in April 2005. The book is a New York Times bestseller and nominated as Distinguished Book for that year. Readers appreciated the book not merely, because it manages to achieve the seemingly insurmountable, that is, making statistics and economics interesting, but also because both Levitt and Dubner utilize satirical and lively styles to convey their message. The book went on to sell over 4 million prints across the globe in thirty-five different languages. The book also led to the establishment of a radio program, a follow-up book, SuperFreakonomics, a highly rated documentary film, and a prize-winning blog classified as the "most readable economics blog in the universe."

The uniqueness of the book originates from the authors’ ability and bravery to ask queries, which others might not be bold and courageous enough to ask. Rather than reporting surveys and studies or listing statistics, Levitt and Dubner discuss and consider the implications, which culminate from numbers, as well as survey answers, even if the implications are objectionable to many.

The book’s high profile helped create a new category within the genre of nonfiction. The authors do not shy away from interlinking subjects, which most people refrain from connecting, for instance, the correlation between the decrease in crime and legalization of abortion in the 1990s. To make the book interesting as a nonfiction, both Levitt and Dubner approach the topics, such as abortion and crime, with economic and writing expertise thereby encouraging readers that have a hard time understanding statistics to explore the book. Resulting from the authors’ tactical writing, what would normally be unstimulating and disinteresting to many is made intriguing to read.

Levitt and Dubner’s focus is on exploring the concealed side of everything as well as digging below the seen surface. Levitt and Dubner explain the purpose of the book in the introduction when they state, "this book is about stripping a layer or two from the surface of modern life to seeing what is happening underneath” (Levitt and Dubner 10). The authors strive to ask many questions that illuminate totally new perspective of seeing the world, such as what do schoolteachers and sumo wrestlers have in common? Why do drug dealers live with their mothers? Where have all the criminal gone as well as what makes a perfect parent? The imperative concepts of this book rely on several fundamental ideas such as that incentives are the cornerstone of conventional life, that conventional wisdom is often wrong, and that dramatic effects often have distant, even subtle cause. Experts utilize their informational advantage to serve their own agenda and knowing what to measure and how makes a complicated world much less so (Levitt and Dubner 11-12).

Levitt and Dubner postulate that the field of economics is really a study of incentives, which is a simple technique of persuading people to continue doing more of good deeds while minimizing undesirable actions. In their own words, Levitt and Dubner assert that “an incentive, is a bullet, a lever, a key: an often tiny object with astonishing power to change a situation” (16). In this perspective, the authors rightly claim that incentives are the fundamental of contemporary life, and thus, the key to resolving any riddle. Levitt and Dubner argue that incentives directly guides people's lives as well as contribute in shaping the society. However, it is worth noting that the authors chose not to focus on a single theme thereby allowing them to opt for a treasure-hunting tactic so that they can "follow whatever freakish inquisitiveness may occur to [them]. Thus [they] developed the field of study: Freakonomics” (12).

About the authors

Steven D. Levitt was born in 1967 and joined St. Paul Academy and Summit School. Levitt later graduated with a B.A. in Economics in 1989 from Harvard University. In 1994, he studies doctoral studies in Economics at MIT and received his Ph.D. in Economics. Since then, Levitt has written various academic articles associated to the application of principles of economy. Levitt has received various accolades such as John Bates Clerk Medal awarded by the American Economic Association in 2003 for outstanding work and being the best economist in American below forty years. In collaboration with Stephen J. Dubner, Levitt published the best New York selling book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.

Stephen J. Dubner (born in 1963) is a reporter who in addition to writing various articles for magazines like The New York Times, has written several books, such as Turbulent Souls: A Catholic Son's Return to His Jewish Family (1998). Dubner got a scholarship from Appalachian States University and graduated in 1984. He started a band while studying at Appalachian however; in 1988, he resigned from the band and focused on writing by studying at Columbia University where he received a Master of Fine Arts in writing in 1990. Dubner become known after working with Levitt in the best New York selling book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.

info_outline
Have study documents to share about Freakonomics? Upload them to earn free Studypool credits!