Steven Levitt is an economist at the University of Chicago who developed a reputation for coming up with unusual questions to answer using economic analysis: Why do crack dealers live with their mothers? Why do real-estate agents tend to sell their own homes for more than they sell yours? Which parenting practices have a positive correlation with children’s academic success, and which ones have no effect? Does a child’s name make a difference for his or her success in life? Which is more dangerous for children: a swimming pool or a gun? In 2003, journalist Stephen Dubner wrote a profile of Levitt for the New York Times Magazine. A few years later, they decided to write a book together and called it Freakonomics. Their collaboration has since led to several more books and a popular podcast.
Most books have a unifying theme or central argument. The authors of Freakonomics make clear that they don’t really have a central argument; rather, the book is about “stripping a layer or two from the surface of modern life and seeing what is happening underneath.” The worldview from which they write the book has several components:
- Incentives, defined as “how people get what they want, or need, especially when other people want or need the same thing,” are the cornerstone of modern life.
- Conventional wisdom is often wrong.
- Dramatic effects often have distant, even subtle, causes.
- “Experts”—from criminologists to real-estate agents—use their informational advantage to serve their own agenda.
- Knowing what to measure and how to measure it makes a complicated world much less so.
I was a little concerned before starting this book that it would make a case for the omnicompetence of economics (you know, “This can solve all our problems!”). That’s often a trap that popular level books about scientific disciplines fall into. I was relieved to find that the claims made by the book were more modest (but still quite helpful).
If there’s one most important thing I learned from this book, it is the importance of asking good questions and looking at the right data. Levitt became an economic superstar through his knack for asking and answering creative questions. It was often the case in situations explored in this book that an issue had been explored thoroughly by other people, but Levitt looked at new data that no one else had thought to bring to bear on the issue.
Note: I read the revised and expanded version of this book, which included Dubner’s original profile of Levitt as well as several further articles and some posts from the Freakonomics blog.