Freakonomics is a gutsy, fascinating, post-modern book even if you might not like some of the conclusions. According to the authors, there is no unifying theme, only the `thread' of people chasing incentives. In other words, it is about the effect money has on people. To put it even more simply, a guy named Paul the Apostle once famously said: `Money is the root of all kinds of evil'.

Economics is called the `dismal science' because it is all about numbers, but in the hands of a rogue economist like Steve Levitt, with help from NY Times writer Steve Dubner, it yields some probable answers to a lot of questions. Why has crime decreased even though the population has increased? Why is a real estate agent in such a hurry to sell your house at a lower price, and does he do the same for his own house? How about sumo wrestlers, school teachers, on-your-honor donut clubs? Are they cheating too?

I'm not giving away any secrets in saying that Roe V. Wade, the 1973 ruling making abortion legal, is declared to be the cause of crime decrease in recent years; it is very well known that the book says this. Levitt does a masterful job of shooting down the `conventional wisdom' theories of strong economy, aging of the population, gun issues, etc., to finally show that abortions among certain segments of the population has reduced the criminal population. Very simply, there are a lot of criminals who were never born because of Roe V. Wade. Although I am 100% pro-life and remain so regardless of any book, I have to agree with his conclusion. Levitt re-iterates that the study of economics has no moral base and doesn't ask any moral questions, and, in fact, asks no questions at all. He also says that people are more comfortable with root causes they can touch or feel now and not far reaching causes from the past, and I can't argue with that. I was impressed with his right-brained mentality.

Levitt also tackles some sensitive issues like how unique `black' names seem to hold back the carriers of those names. Does it cause racial prejudice or is it a consequence of racial prejudice? There was a fascinating chapter about the most popular `white' names and `black' names according to the racial and economic backgrounds of the different population segments. He gives charts of the actual names even according to amount of education of the mother, or the age of the mother at her first childbirth. Also, we see that some sets of names chase other sets of names, and those other sets of names consequently move on.

You'll find, if you read the book, how important `information asymmetry' or information hoarded by experts is. Is someone who is handling your money keeping your best interests or his own best interests in mind? (Three guesses!!) He gives plenty of examples in the book. I can give you one that I'm personally familiar with (not in the book because it is so obvious). Financial advisors like to get their clients into loaded funds, which essentially provide an extra commission to them; independent outfits like Morningstar will tell you never to get into loaded funds because they are a rip-off. There is nothing illegal about that but it shows you how knowledge asymmetry can work against you when you trust an `expert'.

I was impressed how Levitt thought and his methods of coming to his conclusions, how he could do `regression analysis' on a topic by `controlling' for certain variables to screen out data `noise'. Thankfully, he doesn't get too technical on us, though he does give us some idea of his methodology. I think it's ingenious how he got economics to give up such useful information, and was able to explain it in a non-technical way.

It was a gutsy book and a fascinating read.

Brand	N/A
Rating	4.4 (5687 ratings)
Price	$0.99
Category	Real Estate

Freakonomics: Revised Edition