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Tar Heel Pundits
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Thursday, April 14, 2005

Freakonomics

A Constrained Vision (recently discovered through The VC) posts a mini-review of Freakonomics by Steven D. Levitt and Stephen J. Dubner. "Freakonomics" is a reference to the type of economics Levitt practices---economics as a way of looking at the world instead of economics as math. A New York Times Magazine profile of Levitt put it this way:
In Levitt's view, economics is a science with excellent tools for gaining answers but a serious shortage of interesting questions. His particular gift is the ability to ask such questions. For instance: If drug dealers make so much money, why do they still live with their mothers? Which is more dangerous, a gun or a swimming pool? What really caused crime rates to plunge during the past decade? Do real-estate agents have their clients' best interests at heart? Why do black parents give their children names that may hurt their career prospects? Do schoolteachers cheat to meet high-stakes testing standards? Is sumo wrestling corrupt?

And how does a homeless man afford $50 headphones?

Many people-including a fair number of his peers-might not recognize Levitt's work as economics at all. But he has merely distilled the so-called dismal science down to its most primal aim: explaining how people get what they want, or need. Unlike most academics, he is unafraid of using personal observations and curiosities (though he is afraid of calculus). He is an intuitionist. He sifts through a pile of data to find a story that no one else had found. He devises a way to measure an effect that veteran economists had declared unmeasurable. His abiding interests-though he says he has never trafficked in them himself-are cheating, corruption and crime.
This stuff facinates me (ed: "Stuff"? Yes, "stuff." I don't know how else to describe this area that I am interested in.) It's why I've read Malcolm Gladwell's books Blink and The Tipping Point. This also comes on the heels of Asymmetrical Information's "really, really, really long post about gay marriage that does not, in the end, support one side or the other,” where she discusses how past changes to laws, which at the time seemed small, had consequences that outstripped even the fears of those who opposed the changes. Specifically, she talked about how not putting a constitutional cap on the income tax had a profound effect on how our tax system developed, the effect of providing welfare to unwed mothers on marriage, and the effect of the relaxation of divorce laws on marriage. (Some of this is disputed in the comments to her post, where a lot of interesting discussions have taken place—read some of them if you get a chance, but be warned that there are already over 400 comments. She suffered an Instalanche due to the post.)

How are these all related? I'm not sure. I think it all has to do with human behavior: why people behave in certain ways. The Tipping Point is about how ideas spread. Blink is about how snap judgments are sometimes better than reasoned, thought-out decisions. Asymmetrical Information's post discussed why large numbers of people may have stopped behaving in one way (getting married) or started behaving in another (raising taxes). Freakonomics appears to apply some economic principles to how people behave.

In other words, this is a very long post saying that I’m going to order Freakonomics from Amazon. If anyone else knows of more good books in this vein, please let me know.

UPDATE: Slate has published an excerpt from Freakonomics discussing whether someone having a "black name" or a "white name" has an effect on how the person does in life. Levitt's conclusion:
"The data show that, on average, a person with a distinctively black name—whether it is a woman named Imani or a man named DeShawn—does have a worse life outcome than a woman named Molly or a man named Jake. But it isn't the fault of his or her name. If two black boys, Jake Williams and DeShawn Williams, are born in the same neighborhood and into the same familial and economic circumstances, they would likely have similar life outcomes. But the kind of parents who name their son Jake don't tend to live in the same neighborhoods or share economic circumstances with the kind of parents who name their son DeShawn. And that's why, on average, a boy named Jake will tend to earn more money and get more education than a boy named DeShawn. DeShawn's name is an indicator—but not a cause—of his life path." (emphasis in the original)


Hat tip: Joey from Straight Bangin', whose blog you ought to be reading more often.


posted by John Branch @ 8:31 AM


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