Sunday, March 09, 2008

Steven Levitt & Stephen Dubner, "Freakonomics" (2005).

If I made a hierarchical list of my reading interests, the subject of economics would be close to the bottom. When I was an undergraduate, course requirements included a semester each of macro- and micro-economics. I remember very little of anything that was presented in those courses. I didn't pay much attention because I found the material tedious. Since then my understanding of the way economies work hasn't gotten much further than the laws of supply and demand, and diminishing returns. I consider my curiosity fairly broad, but for some reason I'm not compelled to learn much else about economics. So if you suggested that I would be likely to find myself reading a book on the topic, I'd probably laugh at you.

Yet somehow I am reading a book that can be nominally defined as a study of "economics". Still I'd characterize Steven Levitt and Stephen Dubner's Freakonomics as a work more aligned with sociology than any ordinary approach to economics. Levitt is a Harvard-educated academic who is considered to be among the very best economists of his generation (he recently turned 40). In 2006 Time Magazine included him on their list of "100 People Who Shape Our World". But it is not strictly his theoretical genius that has earned him worldwide fame. Actually he's best known for his unconventional approach to the application of economics. He uses the tools of the field to examine phenomena in politics, law enforcement, and education.

Freakonomics is the result of repeated requests from publishing houses for Levitt to write a mass market book on economics for laymen. Having judged himself an insufficient writer, he enlisted the help of Dubner, who had interviewed him previously. Together they set out to write a book that the average reader could understand. Levitt expresses a distrust of the typical obfuscations that the mathematics of economics employs. In fact he has been noted as having said "I just don’t know very much about the field of econometrics." His basic belief is that the rules of the field can be applied to virtually anything. And together the authors convey a set of these structures in "common sense" language that doesn't require a background in economics to understand.

But what makes this work eminently readable are the mysteries that Levitt and Dubner study, and the conclusions that they draw. Likely the most controversial finding is their contention that "Roe Vs. Wade" is responsible for the steep decline in American crime rates during the mid-90's. It was this bit of analysis that brought Freakonomics to my awareness in the first place. Upon its initial release, there was a wave of protest about this idea. The authors explain that the huge increase in abortions after legalization eliminated a large portion of the criminal class that would have come to age in the early part of the last decade. The underlying assumption here is that unwanted babies grow up with a greater risk of transforming into law-breaking adults. This was obviously damaging for the growing number of moralists and fundamentalists in the US.

This slim volume is packed with similarly intriguing (if mostly less incendiary) material. Levitt and Dubner talk about the commonalities of Japanese sumo wrestlers and American teachers. Apparently both groups will cheat if given the proper incentive. They describe the asymmetrical information advantages of real estate agents, and how the Internet is actively undermining that imbalance. They even present an insider's look at the accounting logbooks of a chapter of the Black Gangster Disciple Nation. We get to see exactly how lucrative crack-dealing is, and for whom. All in all, this is an entertaining and informative read- if only a bit thin conceptually. Although I don't feel that it offered me an integrated way of thinking about the world, Freakonomics did let me peer through some unlikely windows for unique perspectives.

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Blogger Dagrims said...

I enjoyed this book when I read it a couple of years ago. You might also like Surowiecki's The Wisdom of Crowds and Taleb's Fooled By Randomness.

11:15 PM  
Blogger Merge Divide said...

Thanks for the recommendations. I'll keep an eye out for them.

8:53 PM  

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