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Freakonomics Book Summary, Review, Notes

Freakonomics’ purpose is to investigate the hidden side of . . . everything! This is a peculiar idea for a book in some ways because most others provide a single subject. This approach makes use of the greatest analytical techniques economics has to offer, but it also gives us the freedom to pursue any bizarre curiosities that may come to mind.

Book Title: Freakonomics: A Rogue Economist Explores a Hidden Side of Everything
Author: Steven D. Levitt and Stephen J. Dubner
Date of Reading: June 2023
Rating: 9/10

Table of Contents

What Is Being Said in Detail


INTRODUCTION: The Hidden Side of Everything


What might lead one person to cheat or steal while another didn’t?

Why would someone lie about their weight or height?

What is more dangerous, a swimming pool or a gun?

Can we blame parents for trying to do something to help their child succeed?

These questions might not seem like ones that an economist would often ask. Steven D. Levitt, however, is not an average economist. According to Levitt, economics is a discipline with great resources for finding solutions but a severe lack of intriguing questions. The answers to those questions, among others, will be stripped from the surface of modern life to see what is happening underneath.

It may be claimed that morality symbolizes how individuals would like the world to function, whereas economics portrays how it actually works. Above all, economics is a science of measurement. It consists of an incredibly strong and adaptable set of tools that can accurately examine a mass of data in order to determine the impact of any one aspect or even the overall effect. These days, it looks at the impact, ideas, and behavior of humans rather than just numbers.


CHAPTER 1: What Do Schoolteachers and Sumo Wrestlers Have in Common? 


Instead of asking, “Why is there so much crime in modern society?” Consider: “Why isn’t there a lot more crime?”

After all, we all constantly turn down opportunities to harm, steal from, and cheat people. It is undeniably a powerful motivation to avoid jail time since doing so would mean losing your freedom, your home, and your job—all of which are basically economic penalties. However, individuals also react to moral incentives (they don’t want to do something they believe to be bad) and social incentives (they don’t want to be perceived as doing something wrong) when it comes to crime. Simply put, an incentive is a way to encourage individuals to do more of the right things and less of the wrong ones.

Consider this example: high-stakes testing is a controversial debate among American school administrators, teachers, parents, and students. Schools are held accountable for their results, with most states requiring annual standardized tests for students in elementary and secondary schools. Schools with low reading scores face probation, staff dismissal, or reassignment. Advocates argue that it raises learning standards and encourages students to study.

But who cheats?

In order to maintain a job, teachers can provide students with extra time to complete tests by obtaining a copy early and preparing them for specific questions. With multiple-choice answers and no penalty for wrong guesses, the teacher can instruct students to fill in blanks randomly, using a long string of Bs or an alternating pattern of Bs and Cs. The teacher can also fill in the blanks after students leave the room.


Steven D. Levitt and Stephen J. Dubner Quote


To catch cheaters, you need to think like one. For instance, teachers can erase students’ wrong answers. It can avoid changing too many wrong answers or every student’s test. Instead, s/he can select a string of eight or ten consecutive questions and fill in the correct answers for half or two-thirds of students. This allows the teacher to memorize a short pattern of correct answers, making it faster to erase and change them than individually. The focus is on the end of the test, where the questions are harder than the earlier ones.

What might a cheating teacher’s classroom look like?

A block of ten bright students with correct answers to the first five questions on an exam isn’t suspicious, but if ten poor students give correct answers to the last five questions, it’s worth investigating. A strange pattern within a student’s exam, such as getting hard questions right while missing easy ones, could be suspicious. The algorithm would also seek out classrooms with students who performed better than their past scores predicted but went on to score significantly lower the following year.


CHAPTER 2: How Is the Ku Klux Klan Like a Group of Real-Estate Agents?


Consider the difference between your description at a job interview and that on a first date. Or consider how you would conduct yourself if it were your first time on television. What kind of impression would you like to convey?

The dating app revealed that 71% of men admitted to being married, with a significant minority reporting being “happily married.” However, only 12 of the 243 “happily married” men chose to post a picture of themselves, indicating that the reward of gaining a mistress was outweighed by the risk of having their wife discover their personal ad. A significant factor in dating website failure is not posting a photo of oneself. Men who do not include their photo receive 60% of the email response volume, while women who do not include their photo receive only 24%. A low-income, unhappily employed, unattractive, slightly overweight man with a photo is more likely to receive emails than a handsome man with a $200,000 salary. Reasons for not posting a photo include technical challenges, the shame of being spotted by friends, or being unattractive.


CHAPTER 3: Why Do Drug Dealers Still Live with Their Moms?


If you had spent any time in the apartments where crack was so often sold, you would have observed something odd: not only did the majority of crack dealers still reside there, but they also frequently did so with their mothers. You could have then pondered the situation and questioned, “Why is that?” In contrast to economists, crack dealers seldom receive economics training. Identifying someone who did actually reside among drug traffickers and was able to escape with their trade secrets is the first step in determining the answer to this issue.

A crack gang operates very similarly to a typical capitalist business in that high wages are only earned by those at the top of the pyramid. Despite the leadership’s claims that the company is a family affair, the gang’s pay is about as unequal as pay in corporate America. The position of gang boss, which was both highly prominent and wealthy, was for many of them the ideal employment opportunity.


CHAPTER 4: Where Have All the Criminals Gone?


The Romanian dictatorship made abortion illegal, leading to a doubling of the birth rate within a year. However, these children would have worse lives, with lower academic performance, less success in the labor market, and a higher likelihood of becoming criminals. On this day in 1989, Nicolae discovered the hard way—after taking a gunshot to the head—that his ban on abortion had far-reaching consequences. Everyone was astonished in the early 1990s when the crime rate started to decline since it happened so quickly and abruptly.


CHAPTER 5: What Makes a Perfect Parent?


Consider a girl called Molly. Her two best friends, Amy and Imani, each live nearby. Since Amy’s parents keep guns at their home, Molly’s parents restrict her from playing there. Molly spends much of her time at Imani’s house instead, which includes a pool in the backyard. Molly’s parents feel good about having made such a smart choice to protect their daughter.

But according to the data, their choice isn’t smart at all. In a given year, there is one drowning of a child for every 11,000 residential pools in the United States. (In a country with 6 million pools, this means that roughly 550 children under the age of ten drown each year.) Meanwhile, there is one child killed by a gun for every 1 million plus guns. (In a country with an estimated 200 million guns, this means that roughly 175 children under ten die each year from guns.) The likelihood of death by pool (1 in 11,000) versus death by gun (1 in 1 million-plus) isn’t even close: Molly is far more likely to die in a swimming accident at Imani’s house than in gunplay at Amy’s. Why, then, does a swimming pool seem less terrifying than a gun?

The idea that a youngster may be shot in the chest with a neighbor’s gun is shocking, dramatic, and terrible. Swimming pools don’t make people upset. The familiarity factor is partly to blame for this. Most of us are far more familiar with swimming in pools than using guns.


CHAPTER 6: Perfect Parenting, Part II; or: Would a Roshanda by Any Other Name Smell as Sweet?


On average, individuals with distinctively black names, such as Imani or DeShawn, have a worse life outcome than Molly or Jake. However, this is not due to their names. If two black boys, Jake and DeShawn, were born in the same neighborhood and shared familial and economic circumstances, they would likely have similar outcomes.


Steven D. Levitt and Stephen J. Dubner Quote 2


However, parents who name their son Jake don’t typically live in the same neighborhood or share the same economic circumstances as those who name their son DeShawn. As a result, Jake tends to earn more money and receive more education than DeShawn. His name is an indicator, not a cause, of his outcome. California name data indicates that parents often use names to signal their expectations for their children’s success. While names may not significantly impact their children’s success, parents can feel better knowing they made their best efforts from the beginning.


EPILOGUE: Two Paths to Harvard


While it may not improve materially, Freakonomics-style thinking does not involve morality. Parents can still help their child succeed, even if it’s something irrelevant like giving them a high-end first name. While there is no unifying theme to Freakonomics, it is essential to consider how people behave in the real world and measure their actions.


Most Important Keywords, Sentences, Quotes


CHAPTER 1: What Do Schoolteachers and Sumo Wrestlers Have in Common?


“Cheating may or may not be human nature, but it is certainly a prominent feature in just about every human endeavor. Cheating is a primordial economic act: getting more for less.”

“A thing worth having is a thing worth cheating for.”

“The typical economist believes the world has not yet invented a problem that he cannot fix if given a free hand to design the proper incentive scheme. His solution may not always be pretty—it may involve coercion, exorbitant penalties, or the violation of civil liberties—but the original problem, rest assured, will be fixed.”

„An incentive is a bullet, a lever, a key—an often tiny object with astonishing power to change a situation.”

“Cheating is a primordial economic act: getting more for less.”

“I don’t imagine that you would teach your children to cheat, so why do it yourselves?”

Morale is a big factor—that an office is more honest when the employees like their boss and their work.”

“How selfish soever man may be supposed,” Smith wrote, “there are evidently some principles in his nature that interest him in the fortune of others and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.”


CHAPTER 2: How Is the Ku Klux Klan Like a Group of Real-Estate Agents?


Information is a beacon, a cudgel, an olive branch, a deterrent—all depending on who wields it and how. Information is so powerful that the assumption of information, even if the information does not actually exist, can have a sobering effect.”

“The Internet has proven particularly fruitful for situations in which a face-to-face encounter with an expert might actually exacerbate the problem of asymmetrical information—situations in which an expert uses his informational advantage to make us feel stupid, rushed, cheap, or ignoble.”

“If you were to assume that many experts use their information to your detriment, you’d be right. Experts depend on the fact that you don’t have the information they do. Or that you are so befuddled by the complexity of their operation that you wouldn’t know what to do with the information if you had it. Or that you are so aware of their expertise that you wouldn’t dare challenge them.”


CHAPTER 3: Why Do Drug Dealers Still Live with Their Moms?


“With what most closely accords with self-interest and personal well-being or promises best to avoid awkward effort or unwelcome dislocation of life. We also find highly acceptable what contributes most to self-esteem.” Economic and social behaviors, Galbraith continued, “are complex, and to comprehend their character is mentally tiring. Therefore, we adhere, as though to a raft, to those ideas that represent our understanding.”


CHAPTER 4: Where Have All the Criminals Gone?


“Economy might have seemed, on the surface, a likely explanation for the drop in crime, but it almost certainly didn’t affect criminal behavior in any significant way.”

“The broken window theory argues that minor nuisances, if left unchecked, turn into major nuisances: that is, if someone breaks a window and sees it isn’t fixed immediately, he gets the signal that it’s all right to break the rest of the windows and maybe set the building afire too.”

“Just beyond the horizon, there lurks a cloud that the winds will soon bring over us,” James Q. Wilson wrote in 1995. “The population will start getting younger again.” Get ready.”

“These two factors— childhood poverty and a single-parent household—are among the strongest predictors that a child will have a criminal future.”


Steven D. Levitt and Stephen J. Dubner Quote 3


“Legalized abortion led to less unwantedness; unwantedness leads to high crime; legalized abortion, therefore, led to less crime.”


CHAPTER 5: What Makes a Perfect Parent?


“The basic reality,” Sandman told the New York Times, “is that the risks that scare people and the risks that kill people are very different.”

“Risks that you control are much less a source of outrage than risks that are out of your control.”

“The first five years of life are the most important; no, the first three years; no, it’s all over by the first year. Forget that: It’s all genetics!”


CHAPTER 6: Perfect Parenting, Part II; or: Would a Roshanda by Any Other Name Smell as Sweet?


“People who can’t be bothered to come up with a name for their child aren’t likely to be the best parents either.”

“If morality represents an ideal world, then economics represents the actual world.”


Book Review (Personal Opinion)


The book deals primarily with causes as the authors attempt to help the reader look beyond the obvious to what may be less apparent but more satisfying. Freakonomics touches on some of the biggest social themes in the history of America at a level of fun, interest and accessibility that might not be found in an economic textbook. 


Rating: 9/10


This Book Is For:


  • Economists and CEOs
  • Students in the School of Economics and Business
  • Anyone curious about economics or how the world around us works  


If You Want To Learn More


Watch an interview with the authors here:
The Best of Freakonomics with Steven Levitt and Stephen Dubner


How I’ve Implemented The Ideas From The Book


I may not agree with everything Freakonomics has to say, but it both entertains and makes me think. When I scroll through the news, I am already seeing things differently now; rather than being upset at all the bad things happening in our world. I am picking what to worry about and why more carefully. After all, what more can you from a book?


One Small Actionable Step You Can Do


This book covers a variety of subjects, including white-collar crime, drug culture, racism, and abortion. But how many of us can make an argument for our beliefs based on concrete evidence? Most Americans form opinions based on their emotional reactions to certain bits of information they have been exposed to in the media. Instead, we should take the time to acquire and examine all the information that is available on a topic in order to come to a good conclusion that addresses our queries about these topics.

Freakonomics by Steven D. Levitt and Stephen J. Dubner - Summary-Infographic