Freakonomics

The latest attempt by an academic economist to write a popular book is  Freakonomics by Steven D. Levitt and Stephen J. Dubner. It arrives in stores on April 12 and will be available in an unabridged audio CD on May 1.

First, let me note that I think the William Morrow imprint of Harper Collins Publishers may have some trouble with this book. The reason is that I've been working on this post on and off for about 2 weeks. Late last night I got around to checking my RSS feeds that I'd neglected over the long holiday weekend. There I found the review from Newmark's Door, which completely and independently hit on a whole bunch of the same problems I did. If the old adage that one observation is an analogy and two is data, then Harper Collins may have gotten some data they didn't expect from their marketing campaign.

Having said that, it is a fun book with some deep flaws. They ought to be superficial, but they are laying out there for everyone to see - so maybe not.

Anyway, Levitt is the economist. He’s a professor at the University of Chicago, and the most recent winner of the John Bates Clark Medal for the most promising economist under the age of 40. His co-author Dubner is a free-lance writer. They met when the latter profiled Levitt for The New York Times Magazine almost two years ago (available here). This book is the fruit of that interview.

The worst part of this book is the title. I’m sorry, but Freakonomics doesn’t do it for me. I understand they were trying to come up with something catchy, but I don’t think this choice works. Obviously it’s a portmanteau, but of what? Freaky economics? Freakin’ Economics? I don’t see any deep meaning there, much less a shallow one. Or is it setting us up for the sequel, Superfreakonomics? (If that doesn't ring a bell then you may want to check out Newmark's link about the street meaning of freak.) Most importantly, what is there about the title that makes people think the book is about economics? To me, the “freak” part dominates the whole word.

Then there is the subtitle: “a rogue economist explores the hidden side of everything”. Everything? OK, probably not. Hidden? How so? I think the beauty of Levitt's work is not that the results were hidden but that no one was looking for them where they were laying in plain site. And what about rogue? Here are some of the quick definitions you get by putting “define rogue” into Google: “a deceitful and unreliable scoundrel” (WordWeb.Net) ), "someone who strays from the accepted path, is mischievous, or is a cheat” (WhatIs.Com), “a deliberately dishonest person; a knave; a cheat.”,  "one who is pleasantly mischievous or frolicsome; hence, often used as a term of endearment" (Dictionary.Net). I guess we'll have to take the last definition, but I think the choice of words is problematic at best, and at worst a signal to marginal readers to not take the book seriously.

So, what about the economic content? This is less a book of ideas than one of facts and data. If you're looking for a pop economics book like Landsburg's, this is not it. But it is interesting and provocative in its own way.

This is all summed up in this quote, which appears at more than one point in the book: "Morality represents the way we would like the world to work and economics represents how it actually does work." [p. 50] It's clear when you see this that the co-author is a journalist who has seen the light economists have been flashing into dark corners of society for so many years like so many Mulders.

The book starts with a couple of "gotchas" to set the tone. Crime has been dropping for quite a while now, but few people are advertising that. When we hire people to represent us they don't always do the best job possible, even though we're led to believe so. Lastly, money doesn't buy elections, although it apparently bought some support from bloggers and probably a few journalists the last time around. Then the provocatively titled core chapters start.

In "What Do Schoolteachers and Sumo Wrestlers Have In Common" the theme is cheating. It's pervasive, even in arenas where we don't expect it. Understanding the algorithm used to find cheating teachers is probably worth the price of the book itself. Nonetheless I was disappointed in this chapter. At the end they make the alternative point that in many situations many people don't cheat, but perhaps miss the point that this is the oddity that needs better explanation.

In "How Is the Ku Klux Klan Like a Group of Real Estate Agents" the theme is information, and how to abuse others who don't have it. This is the classic asymmetric information problem familiar to all economics students. The short history of the rise and unusual demise of the popularity of the Ku Klux Klan ought to be required reading for people who doubt the effects of the spirit (if not the letter) of the Helsinki Accords and process. The bit about the words used by successful real estate agents is priceless. It actually makes me think that all those resume and cover letter advisors know what they're talking about - although I have a sinking feeling that many of them use exactly the wrong words.

In "Why Do Drug Dealers Still Live with Their Moms?" a crack gang is discussed extensively to get at why people enter into tournaments, and how we behave when there are small probabilities of reaping really big rewards. Oh, and if you're curious, drug dealers live with their moms for the same reason that hamburger flippers do.

Probably the most unusual idea associated with Levitt is discussed in "Where Have All the Criminals Gone?". This is so shocking and important that I presented a summary of this research to a conservative ethics and morality conference last year just to get the idea more publicity. The answer is that like so much in economics and jazz, what is important is what is absent rather than what is present. In this case, the criminals are gone, because the people who are likely to commit crimes disappeared first - that is young males who are poorly connected to the society around them. Where'd they go? Let's just say that the people who knew they'd be unable to help them make those needed connections made a tough choice that helped out their neighbors. When their turn came up they chose not to create negative externalities for society.

In "What Makes a Perfect Parent" they take a good shot at bringing down all the things that worry parents so much. They sum this up on pg. 175, and I paraphrase: the things that adults are determine whether or not they are good parents, not the things they do. The same thought underlies much of the next and last chapter "Perfect Parenting, Part II, or: Would a Roshonda By Any Other Name Smell As Sweet?". Here the question is whether the choice of a baby's name has any ability to influence their destiny. That answer again is no - it is what the parents have done to make themselves the people they are that helps determine a child's destiny, while the things the parent does explicitly (like choosing a name) are less important.

It surprises me that the authors don't add a little bit of finance to make sense of those last two chapters. What we really have here is a case of efficient markets in parenting. Efficient markets is the idea that all relevent news about the performance of a company is reflected in its current price, and by corrollary that news often doesn't affect share prices too much because big parts of it are already incorporated in the share price. By the same token, the things that a parent is (by the time their child is born) that may make them less effective at that task are the same things that lead them to choose a name correlated with poorer parenting. So being named Orangejello (an actual name from New Orleans that made it into this book) in and of itself doesn't harm the child. Rather the poor behaviors of the parents predict both that the child is likely to do poorly on average, and that those parents are also likely to choose an unusual name. All I know is I'm glad my parents had 4 out of the 8 positive features, that I worked hard to get where I am, and that my wife and I have 6 and perhaps a 7th one down pat.

As I close this out, what would a review be without a tidbit from the book that made me laugh? Mine is the choice of authoritative nouns as non-traditional first names, and how they break up by race: Harvard, Princeton, Lawyer, and President get chosen exclusively by blacks, while Yale, Judge, and Senator get chosen by whites. [pg. 190]

One last quote, which is actually from the New York Times Magazine piece is worth passing on: "...economics is a science with excellent tools for gaining answers but a serious shortage of interesting questions...". I think that's part of what makes economics-oriented blogs so interesting - our answers may be quick and dirty but we're certainly ferretting out some interesting questions. Maybe we can get Levitt to write a blog and put all of us out of business - but I guess I'm not the first person to think of that.

BTW: for the curious, yes, I too am part of the online promotion of this book - through blogs - put together by Julia Bannon at Harper Collins. Other thoughtful posts about this book appear at Marginal Revolution (in chronological order here, here and here), the aforementioned Newmarks' Door piece, Burnstein Banter, The Buck Stops Here, Sabernomics, an interview with Levitt at TJ's Weblog, Luke Gilman, Institutional Economics, Booker Rising, and Brad Delong's Semi-Daily Journal.

Comments

[Blondie Walker]

Excellent information...enjoyed reading this...great!!