Freakonomics Blog

''Freakonomics: A Rogue Economist Explores the Hidden Side of Everything'' is the debut non-fiction book by University of Chicago economist Steven Levitt and ''New York Times'' journalist Stephen J. Dubner. Published on April 12, 2005, by William Morrow, the book has been described as melding pop culture with economics. By late 2009, the book had sold over 4 million copies worldwide. Based on the success of the original book, Levitt and Dubner have grown the ''Freakonomics'' brand into a multi-media franchise, with a sequel book, a feature film, a regular radio segment on National Public Radio, and a weekly blog.

Overview

The book is a collection of articles written by Levitt, an expert who had gained a reputation for applying economic theory to diverse subjects not usually covered by "traditional" economists. In ''Freakonomics'', Levitt and Dubner argue that economics is, at root, the study of incentives. The book's chapters cover:

* Chapter 1: Discovering cheating as applied to teachers and sumo wrestlers, as well as a typical Washington, D.C.–area bagel business and its customers
* Chapter 2: Information control as applied to the Ku Klux Klan and real-estate agents
* Chapter 3: The economics of drug dealing, including the surprisingly low earnings and abject working conditions of crack cocaine dealers
* Chapter 4: The role legalized abortion has played in reducing crime, contrasted with the policies and downfall of Romanian dictator Nicolae Ceauşescu (Levitt explored this topic in an earlier paper entitled "The Impact of Legalized Abortion on Crime", written with John Donohue.)
* Chapter 5: The negligible effects of good parenting on education
* Chapter 6: The socioeconomic patterns of naming children (nominative determinism)

One example of the authors' use of economic theory involves demonstrating the existence of cheating among sumo wrestlers. In a sumo tournament, all wrestlers in the top division compete in 15 matches and face demotion if they do not win at least eight of them. The sumo community is very close-knit, and the wrestlers at the top levels tend to know each other well. The authors looked at the final match, and considered the case of a wrestler with seven wins, seven losses, and one fight to go, fighting against an 8–6 wrestler. Statistically, the 7–7 wrestler should have a slightly below even chance, since the 8–6 wrestler is slightly better. However, the 7–7 wrestler actually wins around 80% of the time. Levitt uses this statistic and other data gleaned from sumo wrestling matches, along with the effect that allegations of corruption have on match results, to conclude that those who already have eight wins collude with those who are 7–7 and let them win, since they have already secured their position for the following tournament. Despite condemnation of the claims by the Japan Sumo Association following the book's publication in 2005, the 2011 Grand Tournament in Tokyo was canceled for the first time since 1946 because of allegations of match-fixing.

The authors attempt to demonstrate the power of data mining, as a number of their results emerge from Levitt's analysis of various databases. The authors posit that various incentives encourage teachers to cheat by assisting their students with multiple-choice high-stakes tests. Such cheating in the Chicago school system is inferred from detailed analysis of students' answers to multiple-choice questions. Levitt asks, "What would the pattern of answers look like if the teacher cheated?", and hypothesizes that the more difficult questions found at the end of test sections will be answered correctly more frequently than the easy questions at the beginning of test sections.

Second edition

In Chapter 2 of ''Freakonomics'', the authors wrote of their visit to folklorist Stetson Kennedy's Florida home where the topic of Kennedy's investigations of the Ku Klux Klan were discussed. However, in their January 8, 2006, column in ''The New York Times Magazine'', Dubner and Levitt wrote of questions about Stetson Kennedy's research ("Hoodwinked", pp. 26–28) leading to the conclusion that Kennedy's research was at times embellished for effectiveness.

In the "Revised and Expanded Edition" this embellishment was noted and corrected:
"Several months after ''Freakonomics'' was first published, it was brought to our attention that this man's portrayal of his crusade, and various other Klan matters, was considerably overstated ... we felt it was important to set straight the historical record."

Criticism

''Freakonomics'' has been criticized for being a work of sociology or criminology, rather than economics. Israeli economist Ariel Rubinstein criticized the book for making use of dubious statistics and complained that "economists like Levitt ... have swaggered off into other fields", saying that the "connection to economics ... snone" and that the book is an example of "academic imperialism". Arnold Kling has suggested the book is an example of "amateur sociology".

The impact of legalized abortion on crime

Revisiting a question first studied empirically in the 1960s, Donohue and Levitt argue that the legalization of abortion can account for almost half of the reduction in crime witnessed in the 1990s. This paper has sparked much controversy, to which Levitt has said

The numbers we're talking about, in terms of crime, are absolutely trivial when you compare it to the broader debate on abortion. From a pro-life view of the world: If abortion is murder then we have a million murders a year through abortion. And the few thousand homicides that will be prevented according to our analysis are just nothing—they are a pebble in the ocean relative to the tragedy that is abortion. So, my own view, when we idthe study and it hasn't changed is that: our study shouldn't change anybody's opinion about whether abortion should be legal and easily available or not. It's really a study about crime, not abortion.

In 2003, Theodore Joyce argued that legalized abortion had little impact on crime, contradicting Donohue and Levitt's results ("Did Legalized Abortion Lower Crime?" ''Journal of Human Resources'', 2003, 38(1), pp. 1–37). In 2004, the authors published a response, in which they argued that Joyce's argument was flawed due to omitted-variable bias.

In November 2005, Federal Reserve Bank of Boston economist Christopher Foote and his research assistant Christopher Goetz published a working paper, in which they argued that the results in Donohue and Levitt's abortion and crime paper were due to statistical errors made by the authors: the omission of state-year interactions and the use of the total number of arrests instead of the arrest rate in explaining changes in the murder rate. When the corrections were made, Foote and Goetz argued that abortion actually increased violent crime instead of decreasing it and did not affect property crime. They even concluded that the majority of women who had abortions in the 1970s were middle class whites rather than low income

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