Freakonomics by Stephen J. Dubner and Steven D. Levitt

Freakonomics is not an ordinary book. It is an unconventional, provocative look at things by a young economist and dissident. A freak is a person, who does not fit into the framework of standard thinking, and has the audacity to challenge the fact that everything has been canonized as an indisputable authoritative opinion. The book asserts that the new economy requires a new unorthodox and innovative look at things, an exit beyond the narrow framework of conventional judgments and a popular belief that only yesterday seemed to be the unshakable “gospel” truth.

Actually, the success of an enterprise and the efficiency of public administration are based on the ability to soar above the traditional approaches. While traditional economics answers the questions “What to do?” and “How to do?”, freakonomics tries to answer the questions “Why to do it?” and “Why is this so?” (Levitt and Dubner 27). The book is good in the sense that it has no brain-twisting formulas and formulations, but provides simple and clear examples, because the economy is not only supply and demand curves, but also primarily people, who shape them.

 

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Economics is a science that studies how people achieve their goals in a highly competitive battle, when they have exactly the same purpose. A system of incentives lies at the heart of the motivation of any human activity, and freakonomics is a study on the one illustrated by many intriguing examples from real life. In fact, it is behavioral economics, and this book is a concentrated popular psychology course in the economic behavior of people.

Understanding the need to build a proper and balanced system of incentives is critical for optimizing any business. It is equally important for a schoolboy preparing for an exam and investors seeking to enter the market. However, this course should be remembered by those, who invest, and in whose region, province, and city are invested. It should be kept in mind that with a distorted or inadequate system of incentives, investors and the subject of investments may face the fate of Buridan's ass, oscillating in a choice between two equidistant and equivalent bundles of hay and, as a result, dying from hunger. In the case of the equality of opportunities unbalanced by incentives, a choice can be very difficult or even impossible. However, its absence is also a choice. The latter is a blessing, but for its full implementation, it is necessary to create the best incentives.

The authors of the book, scientist and economist Steven Levitt and journalist Stephen Dubner, have formulated and proposed simple questions, which have not come to anyone’s mind. They confirm the idea that the modern world is quite understandable and knowable, and for this, it is necessary to find essential criteria and measurements. They have collected an array of seemingly random data, converted them into a matrix of common sense, and draw conclusions that have an absolutely practical meaning. For example, the authors have debunked the myths of campaign finance and have enthusiastically told the secrets of the Ku Klux Klan: information freedom causes the erosion of the strongest citadels created by the humankind (Levitt and Dubner 54).

The authors have revealed the truth of the real motives in the work of real estate agents: an expert has all information, but he does not always use it to the benefit of the client. In the world of increasing information asymmetries, it becomes more important.

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Levitt and Dubner have convincingly deployed a thesis that inviolable inner sanctum in Japan, namely sumo wrestling, is riddled with corruption and fraud. The authors ask the question “Who cheats?’ and answer it: "Yes, almost everybody” (Levitt and Dubner 234). Opposing this extreme, but robust judgment, the authors demonstrate that human behavior is not only motivated by incentives of the maximization of their personal wealth. The dark side of human nature is still dominated by virtues and intelligence, because, as Adam Smith has said, man is distinguished from animals by the very fact that he can put his self in other person’s place and have compassion.

This book is not a textbook on economics; it is a stimulator of new ideas that contribute to reformatting stereotypical thinking with a new quality. Governments create economic instruments and mechanisms, but their success depends on how quickly and efficiently the company will be assimilated to a changing paradigm of economic thinking and behavior. That is why, the book is a good way to stimulate creative thinking.

Economics as a science demonstrates what the world really is. Freakonomics is a study on everything. It consists entirely sensational discoveries, because its main method is to challenge “expert assessments”.

The book is intriguing, due to it definitely shows the basic question of why the government and the economic system are such. It reveals the secrets of the lie that people have heard. The authors explain the truth as the opposite to what the public does not hear.

Freakonomics is a collection of amusing puzzles, curiosities, and mysteries, which can be solved by means of a custom look at things and materiel part. The authors do not try to be serious, but do not roll down to outright clowning, although, in some aspects, a literary text plays slightly against the general impression. It is a surprise, when Levitt and Dubner periodically produce some platitudes obvious to anyone among truly brilliant and unexpected ideas. It resembles the story of an insurance salesman. Even controversial moments are easier to understand, due to the style and boldness of thought are always present. Perhaps, slipping evidence should be attributed to the difference in mentalities. In general, the stories told by the authors remind the traditional dialogue between Holmes and Watson, which is always played at the beginning. Levitt’s explanations and arguments are surprisingly simple.

The book is very special and strong in relation to its content. The main purpose is to make the reader abandon the usual “narrow-minded” view of the world and create a new way of careful observation. The example, with which the book begins, is the most telling. In the early 90’s in the U.S., a sharp decline in juvenile crime began against all expectations. Residents found the cause in the economic growth and good work of the police. Levitt also stated that the reason for the reduction of crime was that abortions were legalized in the 70’s, and potential criminals were not born from that time and to the 90’s. It was shocking, but confirmed by facts.

Many interesting thoughts on the cause-effect relationships between the behavior of people and various social events are laid out in the book. These are backed by a scientific approach to the available statistical data taken by the researchers. In the hands of an intelligent and impartial investigator, statistics becomes a powerful tool. The developed algorithm of identifying teachers and rogues during national testing in the U.S. is very exciting. Besides, the chapter on motivation is very interesting.

There are almost no formulas, graphs, or tables in the book. However, the latter is useful and creative. Many facts just flip upside down.

The unifying theme of the book does not exist, but the work can change people’s view of the world. To do this, they just have to change the way of thinking that does not require excessive mental efforts. Transition to a new one will not be particularly noticeable at first glance, but it will form a critical attitude to the conventional wisdom and will help to realize that many things are not as they seem.

Freakonomics has nothing in common with morality. While the latter represents an ideal world, the economy is a real one. Data of the research suggest that parents can be very powerful and, on the contrary, can have no power. It all depends on the time of childbirth. Parents cannot be criticized for trying to help their child, even if the aid is expressed in the choice of a “successful” name only. However, a powerful random effect negates even the best parents’ intentions.

Having remembered the two boys, black and white, the following should be mentioned. The white boy had smart, caring and loving parents, who gave him good education. The black one was left by his mother and was beaten by his father, and then he joined a street gang. The second child (almost 30 years old), Roland G. Fryer Jr., was a distinguished economist, who studied causes of discrimination at Harvard. The first child had also entered Harvard and even became a professor of mathematics, but was famous for something quite different. His name was Ted Kaczynski, notorious “Unabomber”, suffering from intellectual disabilities. He had sent out parcels with bombs for many years, killed three and wounded twenty-nine people, terrorizing America for seventeen years.

No doubt, Freakonomics excited millions of people having interest in economics, instead of what the authors called the economy. Itis a book with a strange name and even a stranger genre, where several articles are different and weakly connected to each other. This publication is included in many bookstores ratings and tops, and it is worthwhile noting that it is deserved. The authors have investigated the ordinary sides of unusual phenomena of human life. An optimal combination of theoretical postulates, fun examples and hypotheses are found there.

Thus, the book is an excellent work by a young American scientist and economist, known for his unconventional approach to the study of economic and social institutions, and a journalist, who has contributed a more finished aspect to it. There is no description of the “Lafer’s curve”, critics of Keynesianism, and other classical problems of general economics. The book tells about the economic motivation and correlations between the actions of economic agents and their effect. Everybody reads the work as an exciting story, revealing curious facts and laws, which allow changing the view of the cause-and-effect relationships in everyday life.