Freakonomics, as the title suggests looks at a random pool of topics in a way that has never been looked upon. It is largely a pool of experiences of Steven D. Levitt who has observed and analysed them in a fascinating way light years away from conventional economics. The questions he answers in a book is not for a typical economist to ask. But, Steven D. Levitt is not a typical economist either. He studies the riddles of everyday life – from cheating and crime to parenting and sports – and reaches conclusions that turn conventional wisdom on its head. Freakonomics is a path-breaking collaboration between Levitt and Stephen J. Dubner. While Levitt is a John Bates Clark professor of economics at University of Chicago and one of the most influential economists, Dubner, on the other hand, is an award-winning journalist who started by writing a profile of Levitt for the New York Times Magazine and then collaborated with him for the book.
Steven Levitt being an intuitionist approaches the book in a similar fashion where stories have been discovered from a random pile of data through his personal observations and experiences. Each story begins with a unique data that most economists wouldn’t even bother looking into. The book looks into such data and finds a way to measure an effect or phenomenon that most would consider unmeasurable and that very thing is what makes this book one of its kind – a work of art that would make readers interested. The book looks at some strange issues starting from what sumo-wrestlers and schoolteachers have in common, why drug dealers still live with their mothers or what makes a perfect parent. Some of these I found to be more interesting and intriguing than the others, whereas some might seem a bit irrelevant.
There were two particular questions or analysis that interested me the most. The first analysis of the book, what lies common between sumo wrestlers and schoolteachers was perhaps the most interesting one. On giving it thought it one would ordinarily find it incredibly tough to relate the two issues. However, Levitt has analysed it a way that only he can. The thing that he talks about is that both of them cheat. The United States implemented a policy of standardised tests to evaluate student performance and only those a minimum marks would be promoted. However, teachers also found an incentive that is if the students performed better, they would have a higher chance of promotion or salary raise. The book shows how upon looking at thousands of test answers, it was found that teachers used to change the answers after submission of the answer script. It was also found how average marks miraculously improved between grades which appeared to be rather strange. The story of cheating continued into the arena of sumo wrestling in Japan where there is a huge difference in incomes of the elite wrestlers and those of the bottom half of the top 100 wrestlers. The rankings are based upon performances in elite tournaments where upon finishing with 8 or more wins the player improves his rankings. The book talks about how players rig matches between those who have already won 8 or more and those with no chances of winning eight matches. The manner in which the issues are explained makes a reader stick to the book with curiously analysing and trying to make sense of things on his own.
The other analysis that struck me was why crime rates dropped significantly in the last decade in New York City. This was a much more relevant and comprehensive analysis in the sense that it not only discusses the opinions and theories of authors, it also analyses all theories mentioned in news articles and whether there is actual evidence in support of these theories. Levitt presents some of these theories such as gun control measures, changes in the drug market, the longevity of population and effective prison systems. He believes that these are the only tip of the iceberg and do not explain effectively why crime rates fell exponentially within a decade. Levitt credits legalisation of abortion in 1973 in the United States as the real reason for the fall in crime rates. Women who believed that they wouldn’t be able to parent their child properly got an abortion which wasn’t the case earlier where a child was born in circumstances that usually involved poor economic conditions, uncaring parents, drug-addicted mothers and other socially negative conditions for child development.
The book also covers a few other topics which stress the importance of information and tackle issues such as proper parenting. The book does discuss in significant detail about proper parenting and things that actually made a child perform better in school. The central theme involves that the things that impact the child most are pre-decided before the birth of the child such as parent’s education level or parent’s income level. The book also analyses a story which I did not find to be interesting and its logic was fairly simple – why drug dealers stayed with their mothers? Levitt explains that only drug dealers at the lower level of the business chain which generally do the dirty work usually aren’t paid as much. The managers or kingpins of the drug dealing business usually take a significant proportion of the profits leaving only a few of the ones at lower levels of the business chain.
Overall, I felt that the book is a collection of exciting trivia rather than an in-depth analysis of a particular issue which research papers are concerned with. However, the book provides thrilling, insightful, counterintuitive conclusions on random issues which one would generally find impossible to analyse or relate to. Another, aspect on which the authors must be duly appreciated is that they have reached beyond the economic audience who are unaware of core economic theories.
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