Freakonomics is about unconventional wisdom, using the raw data of economics in imaginative ways to ask clever and diverting questions. Levitt even redefines his definition. If, as he says, economics is essentially about incentives and how people realise them, then economics is a prospecting tool, not a laboratory microscope.
It is an intelligent and interesting book. I highly recommend it.
Steven D. Levitt and Stephen J. Dubner are able to talk about serious things in a jovial way and it doesn’t come across as doom and gloom.
The writers makes you think a bit differently about things, it makes you to start asking more questions about conventional wisdom.
You might become more skeptical of the conventional wisdom, you may begin looking for hints as to how things are not quiet what they seem, perhaps you will seek out some trove of data and sift through it, balancing your intelligence and your intuition.
The most likely result of having read this book is a simple one:
You may find yourself asking a lot of questions. Many of them will lead to nothing. But some will produce answers that are interesting, even surprising.
It is not a hard core economics book but the writers have applied economics to everyday life and making it easy to understand.
Steven and Stephen believe that conventional wisdom is often wrong. Money alone doesn’t win elections, and surprise, drinking eight glasses of water a day has never actually been shown to do a thing for your health.
In keeping with this, Freakonomics espouses these 5 principles:
- Incentives are the cornerstone of modern life.
- The 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 love it, if you enjoy Malcolm Gladwell, you are likely to enjoy this book. It is a smart book, a nerdy book.
It challenges conventional thinking, for example:
- People think they are safer driving their cars than taking a flight. Their thinking goes like this: Since I control the car, I’m the one keeping myself safe, since i have no control of the airplane, I am at the mercy of a lot of external factors. They believe this despite the fact that we are more likely to die from a car accident than a flight.
- Consider the parents of an eight-year old girl named, say Molly. Her two best friends, Amy and Imani, each live nearby. Molly’s parents know that Amy’s parents keep a gun in their house, so they have forbidden Molly to play there. Instead, Molly spends a lot of time at Imani’s house, which has a swimming pool in the backyard. Molly’s parents feel good about having made such a smart choice to protect their daughter. But according to data, their choice isn’t smart at all. In a year, there are more kids dying from drowning in pools than from gun shots.
- How naming your child affects their outlook and success in life. According to a study, if DeShawn Williams and Jake Williams sent identical resumes to the same employer, Jake Williams would be more likely to get a callback. The implication is that black-sounding names carry an economic penalty. Such studies don’t explain why DeShawn was called back, is it because the employer is racist? or did he reject him because DeShawn Williams sounds like someone from a low-income, low education family? Studies show that people’s names does have an impact on first impressions.
My favourite Quotes:
- “Morality, it could be argued, represents the way that people would like the world to work, whereas economics represents how it actually does work.”
- “Economics is above all a science of measurement. It comprises an extraordinarily powerful and flexible set of tools that can reliably assess a thicket of information to determine the effect of any one factor, or even the whole effect.”
- “The conventional wisdom is often wrong.
- If you both own a gun and a swimming pool in your backyard, the swimming pool is about 100 times more likely to kill a child than the gun is.”
- “A slight tweak can produce drastic and often unforeseen results.”
- “Sunlight is said to be the best disinfectants.”
- “Just because a question has never been asked does not make it good.”
- “Journalists need experts as badly as experts need journalists. Every day there are newspapers pages and television newscasts to be filled, and an expert who can deliver a jarring piece of wisdom is always welcome. Working together, journalists and experts are the architects of much information wisdom.”
- “There are enough guns in the United States that if you gave one to every adult, you would run out of adults before you ran out of guns.”
- “Spare the rod and spoil the child; spank the child and go to jail.”
- “In a world that is increasingly impatient with long term processes, fear is a potent short-term play.”