Book review: Freakonomics

Freakonomics cover
I was looking forward to reading Freakonomics because a lot of my friends have it, and the cover looked interesting.

In essence – it’s enjoyable, but you could probably compress the useful stuff onto a couple of sides of A4.

Here’s the executive summary:

  • It’s about asking strange questions and finding surprising answers, which it does
  • It’s not really a book, it’s a collection of interesting articles
  • It’s full of rhetoric
  • It gets a bit boring and repetitive 2/3 of the way through
  • It has a really interesting cover
  • It does contain some nice insights into social behaviour

Here’s some more detail.

Questions & Answers

Freakonomics is not a book. Really. It’s just a cleverly written set of papers on interesting social behaviour, backed up by the word of an economist. Here’s what those papers are on:

  • Linking abortion and crime: this postulates that when abortion was legalisated, crime dropped as potential criminals were no longer born.
  • Are politicians elected because they are successful or because they are rich? This examines the difference between correlation an causality – an excellent lesson to learn.
  • Do real estate agents work as hard for you as they would for themselves? Unsurprisingly, no.
  • Can cheating (in teaching & sumo wrestling) be detected statistically? Apparently, yes.
  • Does openness (in the Klu Klux Klan & real estate pricing) make people more honest? Again, yes.
  • Do drug dealers make any real money? Apparently, only the ones at the top. Of all the case studies, this was the most fascinating.
  • What factors statistically make a difference in parenting? (There’s a whole list of answers here.)
  • What’s the best name for your child? I don’t have any bambinis, so my attention was drifting at this point.

I think that’s a fairly exhaustive list.

Rhetoric

Dubner, the ex-journalist has his hand in making the book interesting to read. That also means there’s a lot of rhetoric and fluff in it. Here’s an example – check the article on p222:

“There’s no good economic rationale for going to the polls. So what is it that drives the democratic instinct?”

The book takes 4.5 pages to say “because of social pressure.”

I suppose that’s par for the course, but I can’t help getting a little uncomfortable when economics crosses into partisan politics, on p10:

“And what about the other half of the election truism – that the amount of money spent on campaign finance is obscenely huge? In a typical election campaign that includes campaigns for the presidency, the Senate, and the House of Representatives, about $1 billion is spent per year – which sounds like a lot of money, unless you care to measure it against something seemingly less important than democratic elections.

It is the same amount, for instance, that Americans spend every year on chewing gum.”

That seems a little manipulative. Of course government is more important than chewing gum, but that’s not quite the problem. Wrigley’s is there to make money, while the House of Representatives is there to make people’s lives better.

The fluff at the back

By the time you get to 2/3 of the way through, the book finishes, and you’ll find a set of blog posts and articles. I’d suggest you don’t bother reading any further – you can just read the up to date blog itself, and the articles are astonishingly arrogant. Not many books would write this about the author in the main text:

“Levitt is considered a demigod, one of the most creative people in economics and maybe all of social science.”

It’s like reading a Times editorial on how great the Times is. There’s plenty more on P197.

Useful observations

The most useful parts of the book are in its observations on organisational behaviour. For example, here’s what the book says about incentives.

It classifies them like this:

  • Financial
  • Moral (concerning what you think about yourself)
  • Social (concerning what others think of you)

Isn’t that neat?

Another is the list of factors that contribute to how large a wage is:

  • If lots of people are willing & able to do a job, it will pay less
  • If the job requires specialised skills, it will pay more
  • If the job is unpleasant, it will pay more
  • If the job produces a service that a lot of people need, it will pay more

Conclusion

This is a popular science book. On one hand, that means it’s interesting. On the other hand, if you’re expecting rigorous analysis, forget it – it’s written like a newspaper article, crafted to astound the reader with essentially mundane facts.

Perhaps in a common theme for popular science books, the hidden premise seems to be, “If you’re looking for a new God with all the answers, this book would like you to believe in Economics.” From p210:

” … teachers and criminals and real-estate agents may lie, and politicians, and even CIA analysts. But numbers don’t.”

Here’s why that makes me uncomfortable: almost any analysis can have its parameters changed to prove something entirely different. In essence, numbers really CAN lie. An analytical conclusion can only be believed once the analysis is understood – and in this book, the analysis is never explained. It’s almost like watching a magician at work.

As is frequently shown in the book, examining incentives is a good way to model behaviour – and in the case, the authors have a strong incentive to make the questions and answers as sensational as possible. That leaves its conclusions difficult to take at face value.

2 thoughts on “Book review: Freakonomics”

  1. My problem with the book is that it starts by saying “phhhh – you can prove anything with stats” before going on to prove stuff with stats.

    This isn’t a book about economics. I’d recommend The Undercover Economist over this any day which is a book about real-life, actual economics.

  2. hey shahid i think the book lacked in many areas and failed to capture my attention.in short,it was BOORRRRING.Theres a new book out called THE SECRET DIARIES OF DON JUAN.Its not really a read for the guys tho.i cant wait to get my hands on it!! it sounds like a much better read by far

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