Book Review: Freakonomics

“Freakonomics: A Rogue Economist Explores the Hidden Side of Everything” by Steven D. Levitt and Stephen J. Dubner

I was admittedly late to the party on this one, as Freakonomics has been one of the best-selling books in the world since it was published in 2005. I’ve wanted to read it for a while, but kept putting it off for some reason. Maybe I just didn’t want to feel like I was “selling out” due to all the hype?

Now that I’ve read it, though, I’m glad I did. For a book which — by the authors’ own admission — has no central theme, it remained remarkably coherent and interesting from cover to cover. This is a testament to the strengths of its two authors. Levitt is a brilliant and unorthodox economist with a knack for asking and answering unique and provocative questions. His partner Dubner is a former writer and editor for The New York Times Magazine whose clever prose makes the book an easy and enjoyable read, despite its normally blasé subject matter: economics.

What drives Levitt’s interest in asking unusual questions (such as “Why do drug dealers still live with their moms?” and “How is the Ku Klux Klan like a group of real-estate agents?“)? It is a combination of his insatiable curiosity, his conviction that conventional wisdom is often wrong, and his economists’ mind which believes that understanding people’s incentives can allow one to draw conclusions and formulate predictions about their actions.

These incentives which drive people’s actions constitute “the hidden side of everything”. Incentives come in many varieties: monetary, social, and moral, to name a few. And just as understanding incentives is a major predictor in the world of finance (the field in which we usually associate the word “economics”), so this science can also be applied to social behavior, as this book shows.

One of the most interesting features of Freakonomics is the relationship between economics and morality. Investigating the incentives which motivate a given action leads to conclusions which may have many moral implications. However, the science of economics is unable to make moral judgments. As the authors state in the book, “morality represents the way we would like the world to work and economics represents how it actually does work.”

Here is an example:

In the chapter titled “Where Have All the Criminals Gone?”, Levitt sought to determine a reason for the drastic and unexpected drop in crime during the 1990’s — a time during which it had been predicted that violent crime would reach unprecedented levels. Conventional wisdom (driven largely by the media) attributed this to causes as varied as “tougher gun-control laws”, “innovative policing strategies”, and “increased use of capital punishment”. However, the data support none of these claims. The conclusion reached by Levitt was that the primary cause of the reduction of crime was the advent of legalized abortion following Roe v. Wade.

Initially, this is a very shocking and controversial claim! But Levitt’s research seems to support it. After all, the demographic most likely to have an abortion (young, poor, single mothers with little education) was the same group of mothers previously most likely to give birth to a violent criminal. This is by no means a pleasant thought, particularly for those of us who are so  staunchly pro-life, but different moral conclusions can be drawn from this evidence.

For those who believe that life begins at conception, Roe v. Wade signals a dramatic increase in violent crime, as they will interpret the data to show that millions of American babies have been murdered since 1973 (a point which is made in the book). However, this is a moral, and not an economic judgment. Highlighting the difference between morality and economics, the authors state that “the trade-off between higher abortion and lower crime is, by an economist’s reckoning, terribly inefficient.” The reasoning? Statistics show that hundreds of babies must be aborted in order to prevent one murder. While it can be difficult to adjust one’s thinking along these lines, it is the thought-provoking nature of this type of investigation that lends the book its value.

So did the book live up to its hype? Yes and no. Freakonomics is great for the stretching of one’s mind (without having to work too hard), but I certainly wouldn’t classify it as “life-changing” as many reviewers have done. Still, it’s a bestseller for a reason, and I encourage you to read it if you haven’t already. I look forward to its sequel, Superfreakonomics: Global Cooling, Patriotic Prostitutes, and Why Suicide Bombers Should Buy Life Insurance.

Buy Freakonomics here.

P.S. – For examples of the type of writing/reporting done in this book, you might like to check out the authors’ Freakonomics Blog.

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