Freakonomics

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Freakonomics is a book by American economist Steven Levitt and jazzed up by New York Times columnist Stephen J. Dubner. The point of it and its sequel is to "explore the hidden side of everything"; essentially, it was an attempt to explain social phenomena using microeconomic principles to try and get at the root cause of these phenomena. The book, subsequent movie adaptation and sequel (titled SuperFreakonomics) raise several interesting points and are very convincing at using economics backed by econometric data to elucidate their points. There are, however, a number of problems with some of their conclusions as well as the methods used to make those conclusions.

Contents

[edit] The First Book

Released in 2005, Freakonomics contains 6 chapters each dealing with a particular theme pertaining to economic theory applied to one or two sociological phenomena; in the case of multiple phenomena, these are usually tangentially related like that of the similarities between real estate agents and Klansmen in Chapter 2 (no really). The book spawned a blog[1], a documentary-style movie[2] and a podcast.[3]

[edit] Interesting Points

The first chapter highlights the usefulness, if not the necessity of data mining. The points explored therein deal with cheating and its incentives using Sumo wrestling, American teachers and a DC bagel shop to make its point that when given the opportunity and a desperate situation, people will cheat. The Sumo and teacher examples are the more interesting arguments here (for our purposes): the former deals with how these supposedly noble and ritually pure wrestlers would have an incentive to take a dive for the benefit of some of their stablemates; specifically, if up-and-coming wrestlers face off against established veterans, the veterans have little to lose but the novices have everything to gain and so will take a dive. The teaching one is more curious and contains some interesting data to show that school teachers will cheat on behalf of their students in order to boost their grades and get access to desperately-needed funding.[4]

The next good point in the book comes from Chapter 3 which starts out by asking why drug dealers live with their parents if that particular career path is so lucrative. The fact that the idea of drug dealers making bank off of the misery of others precludes information such as most dealers being at a very low-level of a larger criminal operation and having to pay dues to their higher-ups is not a surprise to the initiated in criminology. It is however a little unsettling to learn that instead of being super wealthy crime lords, most dealers in the sampled city barely make minimum wage.[5]

Lastly, Chapter 5 discusses parenting and adoption, specifically taking a stance on the Nature vs. Nurture argument. They present the case that even having good parents cannot reduce certain behavioral patterns that are genetic.[6]

[edit] Controversial Points

The fact that there's an entire chapter that compares realtors to KKK members should tip you off that this book has contains some controversial arguments.[7] The other lightly controversial point in the book deals with a correlation between kids' names (particularly kids with stereotypically African-American names) and their socio-economic status.[8] Both of these pale in comparison to the biggest WTF-moment in the book...

[edit] Abortion as Crime Deterrent

In a spectacular display of confusing correlation for causation, the authors assert in Chapter 4 that the reduction in violent crime experienced near the end of the 20th century was due to Roe v. Wade and that all those at-risk children that would've ended up becoming violent criminals never came to be because they were aborted. The wingnut response to this point was as predictable, pointless and irrelevant as you would expect, but many academics were skeptical of the claims made by the Steves.[9][10] Despite Levitt and Dubner's defense of their conclusions[11], academics remain skeptical.[12] A 2016 study found 4 important confounding factors(out of 20 possible factors examined) that strongly predict both fertility rates and crime rates, only one of which relate to the freakonomics hypothesis[13].

[edit] Summary

All in all, it's a pretty good book! Even when they're wrong, the Steves aren't totally off base, they show their work and they're not afraid to answer questions or admit errors that they make - basically, they make like good academics. To top it off, the book is rife with a peculiar sense of dark humour worthy of Yoram Bauman spliced within the math, stats and lines of argument. Again though, there is an issue throughout with equating correlation with causation, so don't take their words for granted.

[edit] The Sequel: SuperFreakonomics

Despite the academic controversies unleashed by the first (or perhaps because of them), the Steves wrote a sequel to their first book. As the first book, SuperFreakonomics makes some interesting insights but also some horrifically controversial arguments.

[edit] The Good

In the first chapter, the book provides economic rationale for legalizing prostitution and cites examples of how well it has worked in polities that have legalized it, making a strong case for small government in the most politically-liberal sense. Other nifty points include discussions of altruism as well as the bystander and observer effects in Chapter 3 using the murder of Kitty Genovese as an example for the former and experimental economics as an example for the latter. Chapter 4 yet again highlights the necessity of data-mining, this time using the examples of Ignaz Semmelweis combating Puerperal fever and Robert S. McNamara's (yes, that one) time at Ford Motor Company and his contributions to vehicle safety (seat belts, in particular). Lastly, the final chapter shows that humans aren't the only ones that respond to incentives with lab monkeys being trained to use currency and even inventing a crude system of prostitution.[14]

[edit] More Controversial Points

The minor controversy in this book centers around the second chapter, concluding that terrorists should buy life insurance to avoid being caught by bankers in the UK who were otherwise profiling them because of their peculiar names.[15] Additionally, the chapter explores terrorists' upbringings and though it does note that radical Muslims tend to be more well-to-do amongst their peers, they try to make the claim that their mothers were pregnant with them throughout Ramadan and thus did not get sufficient prenatal nutrition leading to intellectual disadvantages; yeah, that's a bit of a contradiction there. However, the Steves go on to trump the controversy in their last book...

[edit] Global Cooling

This is not to say that the authors endorse the idea of global cooling or that they do not accept anthropogenic climate change, but the fifth chapter tries to make a case for geo-engineering as a means to combat global warming and climate change. Being good academics, the Steves made sure to use research by an actual climate scientist, but in the book they managed to misrepresent his research.[16] A smattering of academics objected to these conclusions, including both climate scientists[17] and other economists.[18][19][20]

[edit] Summary

It's more of the same, really. If you liked the math, arguments and humour of the first one, you'll like this one. The controversial points really do highlight that when it comes to factual accuracy even in the social sciences, popular publishing is no match for peer review. Whatever applies to the first book applies to this one.

[edit] References

  1. This is their blog.
  2. Basically, if you liked the book you'll like the movie.
  3. Available here.
  4. No child left behind, indeed.
  5. Ouch.
  6. Which is not to say that there's no point in adopting, but that the adopted sprog isn't exactly free from a life of struggle and hardship. Bit of a duh moment.
  7. In the authors' defense, the point being made here is not that realtors are inherently racist, but that they have an incentive to maintain an information asymmetry over their clients.
  8. Again, in their defense they spend a lot of time discussing issues of causality with this argument. Eventually they point out that a kid's lot in life has more to do with their parents and that their name is possibly a reflection of that.
  9. Like this one.
  10. ... and this one.
  11. As posted on their blog.
  12. Including these guys.
  13. Declines in Crime and Teen Childbearing: Identifying Potential Explanations for Contemporaneous Trends Rhys Hester, Todd K. Hartman, Journal of Quantitative Criminology
  14. Just read the book already - that alone should be worth it!
  15. No really, there seems to be a problem with thinking this is okay.
  16. And predictably, he was unhappy.
  17. Like this this guy.
  18. Especially this guy.
  19. ... but also these guys.
  20. ... and these guys again.
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