Freakonomics

Steven Levitt: He's a superfreak.

Great and terrible Books

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Arthur Koestler Brian Inglis Fred Hoyle Bobby Fischer Trent Lott Enver Hoxha v - t - e

Freakonomics (ISBN 0061234001) is a 2005 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.

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 the similarities between real estate agents and Klansmen in Chapter 2 (no really). The book spawned a blog, a documentary-style movie and a podcast.

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, a study of American teachers and data gathered at a DC bagel shop. The authors draw the conclusion that when given the opportunity and a desperate situation, people sometimes cheat. The first example deals with a conspiracy in sumo wrestling; wrestlers who had won enough matches to advance in a tournament would throw matches against those who hadn't in exchange for money. The teaching example shows that five percent of school teachers were willing to cheat on behalf of their students in order to qualify for desperately-needed funding.

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 those 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.

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.

Controversial points

The fact that there's an entire chapter that compares realtors to KKK members should tip you off that this book makes some controversial arguments. One such argument deals with a proposed correlation between kids' names and their socio-economic status, which concludes with the assertion that discriminatory hiring practices are justified because people with stereotypically African American names are more likely to grow up in "low-income, low-education, single parent families."

Abortion as crime deterrent

See the main article on this topic: Abortion

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 20^th century was due to Roe v. Wade and that all those at-risk children who 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. Despite Levitt and Dubner's defense of their conclusions, academics remain skeptical. A 2016 study found four important confounding factors (out of 20 possible factors examined) that strongly predict both fertility rates and crime rates, only one of which relates to the Freakonomics hypothesis.

Summary

The book is rife with a peculiar sense of dark humor 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.

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 with the first book, SuperFreakonomics in 2011 makes some interesting insights but also some horrifically controversial arguments.

The good

In the first chapter, the book provides an 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 who respond to incentives, with lab monkeys being trained to use currency and even inventing a crude system of prostitution.

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. 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…

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 geoengineering 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. A smattering of academics objected to these conclusions, including both climate scientists and other economists.

Summary

It's more of the same, really. If you liked the math, arguments and humor 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 second one.

The authors make themselves out to be experts at microeconomics, but yet how can they be so bad at basic statistical ideas (correlation vs. causation), and how can they not realize how bad some of their conclusions look to people?