Freakanomics – [Book Review]

Freakanomics is ….. different. You go into it thinking about “freakanomics = freaky economics,” and you kind of get that. It’s more of a book of examples, which each one showing how one’s initial perceptions of causality are ….. not so truthful as one would think (or in many cases, hope).

The individual cases are quite isolated, but the authors [Levitt & Dubner] have been able to tie many loose ends into a free-flowing, smooth read. Even when there is no real conclusion to the book’s chapters.

Take chapter 4 for example: “Where have all the criminals have gone?” While the previous chapters have given enough foreshadow to paint the introduction on how “abortion rates are inversely proportional to crime rates,” this chapter explains the theory while almost contradicting itself later on. The audience adventures through the ideal, the reasoning through the correlation (how an unwanted child is a strong determinant to future behaviors), how to rule out alternative trends, and shows it through “data.” But then the chapter concludes how it may take roughly 100 abortions to prevent 1 murder….

Being written by economists, the authors are careful NOT to overwhelm the reader with too much “academic sludge” (though I think I could have lived without the ~15 pages of baby names in the last chapter). Additionally there are no academic equations or massive tables that may scare the average Joe away.

One major theme through the book really appealed to me when devouring the book. In many works of literature, authors will state a fact with a percentage value (20% more taxes / 5% in increased acceleration / 50 % off …. you get the drift). But percentages are significantly misleading, especially when you like to think BIG. If you don’t know the scale of the topic, the big picture is hard to truly imagine unless there are discreet values to nail down the expected change of range. And this is what this work articulates, and it does it very well.

For example, when Freakanomics talks about real estate agents, which gain 1-6% of the house’s value (in terms of sale bonus), the average person (including myself) would just assume that those in benefit would fight for the highest bid! But when that 1-6% difference is only a small margin $150 ( compared to their original winning of $10,000), they would rather sell TWO houses in the same time frame (and make $20,000) instead of fight for one house (for only $10,150). I don’t know what you would do…….but I’m totally for the two house setup, since I like being efficient.

Which brings us to the TRUE theme of Freakanomics. And that is……

Hmmm………give me a minute….

I would have to say it’s data. Data and how to approach it. We as humans constantly look at life with prejudice and assumptions. This is, unfortunately, really biased and thus obstructive when trying to figure out causation. One needs to approach a problem, gather as much data that best represents the environment you are analyzing, and crunch it without throwing in an “correctional factors.” And we are still realizing truths in our lives today through this method, because it’s hard to overcome these concrete thought processes that inhibit our mental progression.

And even when this process comes to a conclusion, taking another step back can drastically alter your newly found conclusions. Which isn’t a bad thing, but it’s also unsettling. It makes the audience wonder what exactly “truth” is. But there is only one thing that we can do to ensure that we don’t completely lose ourselves.

Keep asking questions.

 

 

Note: It’s nice to think that that book’s stated correlations suggest that I would be a great parent. But even though I don’t have to take them to the museum for them to get good test scores,  I’m going to that anyways!

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