Freakonomics: A Review

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

Thank goodness Stephen Dubner and Steven Levitt met. As the preface to the book explains, Levitt first met Dubner, a New York based writer, for an article in the New York Times Magazine. Levitt had just received the prestigious John Bates Clark Medal, which the American Economics Association awards every other year to the best economist under 40, for his innovative and unique contributions to the discipline. The article, which appeared in August of 2003, introduced the mainstream to an economist who was doing things that were interesting and new to both economists and laymen. There was clearly an interest in what Levitt had to say, and the book publishers were calling; however, Levitt’s opportunity cost was quite high. Already the editor of the Journal of Political Economy in addition to his academic research, it just wasn’t worth Levitt’s time to write the book that needed to be written. But luckily, Levitt’s friendship with Dubner, led to Freakonomics.

I had some high expectations when I first cracked the spine, which is always a bad thing for me. I rarely see movies, because any movie that interests me enough to see it has already raised my expectations so high that I am almost always disappointed. But, Freakonomics exceeded my expectations. This book is more than a dumbed down version of Levitt’s academic work. Even economists familiar with Levitt’s work will learn new things and stay interested in the book. And though Levitt’s unique approach normally involves statistical work, readers can easily grasp the gist of his empirical methods and comprehend the results presented. The writing is good enough for beach reading with a beer. It’s simply a good read no matter what your knowledge of economics.

So what’s in the book? Well, the reader will find several very frank discussions about crime, corruption, inside information, poverty, parenting, and race. As a new parent, I found the parenting chapters the most interesting. This book is politically incorrect, but not in the sense that it’s topics and insinuations will offend to modern liberals; it’s offensive to all facets of the conventional wisdom that get in the way of the truth. If you’re a high society type who gets offended when sensitive topics enter public conversations, stay away. This book is not for intellectual snobs, but social scientists in search of truth, no matter how ugly the truth may be. Here’s a list of some of the book’s assertions:

  • Teachers sometimes cheat to promote lagging students in order to save their own hides.
  • Doctors and real estate agents don’t necessarily have the best interests of their patients and clients in mind, and possess a power of intimidation similar to the KKK in its heyday.
  • We get to see the business structure of a urban street gang, where we learn street thugs have a lot in common with aspiring athletes and actors, and we get to meet the “Johnny Appleseed” of crack cocaine.
  • The abortion of “unwanted” children following Roe. v. Wade explains much of the drop in violent crime in the 1990s.
  • The educational success of a child is largely determined by the education, wealth, and health of parents; while divorce, having a stay-at-home-mom, engaging in “enlightened” activities, spanking, and watching TV have almost no impact.
  • Poor parents imitate the child names given by rich parents to gain cache, and the rich just as quickly choose other names to avoid the loss of cache. But, luckily names don’t seem to impact success in life.

I’ve been a Levitt fan for some time due to his taking economic thinking to the extreme (eXtreme-Economics would have been a good alternate title). Levitt seems to have held onto the things in economics that encouraged every PhD economist to go to graduate school, but is only in the back of our minds by the time we leave. Sure, we know enough fun examples to inspire a few young minds to keep our dissertation advisors employed, but our research is typically as bland as toasted white bread. In his Principles of Economics the great neo-classical economists Alfred Marshall wrote:

The economist needs the three great intellectual faculties, perception, imagination and reason: and most of all he needs imagination, to put him on the track of those causes of visible events which are remote or lie below the surface, and of those effects of visible causes which are remote or lie below the surface.

No economist has taken Marshall’s advice so literally. Levitt’s imagination, the first faculty beaten out of most economics graduate students, has been the key to his becoming the most innovative economist since…well, maybe ever. The message of Freakonomics is twofold: the economic method is a powerful intellectual tool and economics is fun. This book is a small step towards shedding the economics’ inappropriate nickname as “the dismal science.” Economists are rock stars, not Ben Stein’s Ferris Bueller stereotype.

Though my review is certainly a positive one, no review is complete without some criticisms, which are minor. The snippets from Dubner’s original article on Levitt that start each chapter are unnecessary. Since Levitt is a coauthor of the book, it’s distracting to be reminded of how brilliant this guy is. I would have preferred to have the entire article included in the book as an opening chapter. And, where is the discussion of Levitt’s work on sports? Levitt has written on hit-batters in baseball, penalty kicks in soccer, and referees in hockey; topics that would clearly have fit in this book. Lastly, I think the book is too short, and it just ends when I’m ready for more. I guess that’s the price we pay for getting a book from Levitt so soon in his career. So, maybe this is less of a criticism and speaks more to the excellent quality of the material presented. I’d rather be left wanting more than struggling through to the end. In any event, the purchase of this book will yield sufficient consumer surplus and no buyers remorse.

6 Responses “Freakonomics: A Review”

  1. Anonymous says:

    It sounds like a great book. But, as a non-economist that works with economists, I must confess to some skepticism about what you call the economic method. It seems to me that (at least in the antitrust field), much of the economic method entails making conclusions based on theories that require specific assumptions about human behavior. I don’t doubt that there is a lot of value in the economic method to the extent that it involves empirical research, but I am dubious when I hear someone making absolutist conclusions such black and white conclusions such as the ones you highlighted in your review. I think there needs to be some skepticims about some of his statements. Still, it sounds like a fascinating book and I like the idea of challenging conventional wisdom. Unfortunately, in my experience, economists often see economic analysis as the ONLY legitimate form of analysis and it becomes the conventional wisdom, impervious to skepticism.

  2. Bob says:

    You might want to see here, here, here, here and here. He offers some arguments against Leavitt’s theory on the link between abortion and the drop in crime.

  3. Steve Sailer says:

    Levitt contends that legalizing abortion cut crime, but he conveniently skips over the awkward fact that the first generation born after legalization went on the worst teen murder spree in American history.

    See “Pre-emptive Executions?” to learn what Levitt won’t tell you about the controversy:

    http://amconmag.com/2005_05_09/feature.html

  4. Steve Scott says:

    Steve Sailer wrote: “Levitt contends that legalizing abortion cut crime, but he conveniently skips over the awkward fact that the first generation born after legalization went on the worst teen murder spree in American history.”

    On the contrary, Levitt talks in length about that generation and their contribution to the crack epidemic and violent crime. He then goes on as to how the projected violence from that generation didn’t actually happen, and he explains why.

    Did you actually read the book?

    SCS

  5. Steve Sailer says:

    “Did you actually read the book?”

    Of course, I read the book. Which is why know Levitt leaves out all the evidence against his theory, such as that

    By the way, I was the first person to tell Levitt that the crack era even happened, back in 1999 in our debate in Slate.com: http://slate.msn.com/id/33569/entry/33571/

    Levitt managed to invent his theory while being blissfully unaware of the biggest crime wave of recent years. His ego, which is so rampantly on display in his book, then got in the way of his modifying his abortion theory — with his name attached to it he just kept on keeping on, despite all the evidence against it. It evidently proved a good strategy judging by all the people it has snookered this year.