Freakonomics
Economics is a science with excellent tools for gaining answers but a serious shortage of interesting questions.
There was a factor that greatly contributed to the massive crime drop of the 1990s. It had taken shape more than twenty years earlier and concerned a young woman in Dallas named Norma McCorvey. On January 22, 1973, the court in Dallas ruled in favor of Ms. McCorvey (disguised as Jane Roe) allowing legalized abortion throughout the U.S.
It wasn’t gun control or a strong economy or new police strategies that finally blunted the American crime wave. It was, among other factors, the reality that the pool of potential criminals had dramatically shrunk.
What are incentives for real-estate agents? Simply to make the best deal possible.
Does money buy elections. Front-runners and incumbents raise a lot more money.
What this book is about is stripping a layer or two from the surface of modern life and seeing what is happening underneath.
Morality, it could be argued, represents the way that people would like the world to work – whereas economics represents how it actually does work.
Incentives are the cornerstone of modern life. And understanding them – or, often, ferreting them out – is the key to solving just about any riddle. The conventional wisdom is often wrong. Dramatic effects often have distant, even subtle causes. Experts – from criminologists to real-estate agents – use their informational advantage to serve their own agenda.
What do schoolteachers and sumo wrestlers have in common
An incentive is a bullet, a lever, a key: an often tiny object with astonishing power to change a situation. An incentive is simply a means of urging people to do more of a good thing and less of a bad thing. There are three basic flavors of incentive: economic, social and moral.
Any incentive is inherently a trade-off, the trick is to balance the extremes.
Who cheats? Well, just above anyone, if the stakes are right. Cheating is a primordial economic act: getting more for less.
It is true that sports and cheating go hand in hand. That’s because cheating is more common in the face of a bright-line incentive (the line between winning and losing, for instance) than with a murky incentive.
Schoolteachers helped their students cheat on national exams and sumo wrestlers are willing to make an agreement on losing and winning in some cases.
Could any man resist the temptation of evil if he knew his acts could not be witnessed?
How is the Ku Klux Klan like a group of real-estate agents
Ku Klux Klan was founded in the immediate aftermath of the Civil War by six former Confederate soldiers in Pulaski, Tennessee. Within barely a decade, the Klan had been extinguished. If the Klan itself was defeated, however, its aims had largely been achieved through the establishment of Jim Crow laws. The Klan lay largely dormant until 1915, when the film The Birth of a Nation helped spark its rebirth. By the 1920, a revived Klan claimed eight million members.
Of all the ideas that Kennedy (former member of Klan who now wants to expose them) had thought up to fight bigotry, this campaign was easily the cleverest. He turned the Klan’s secrecy against itself by making its private information public; he converted heretofore precious knowledge into ammunition for mockery. The Klan – much like politicians or real-estate agents or stockbrokers – was a group whose power was derived in large part from the fact that it hoarded information.
Information is the currency of the Internet. As a medium, the Internet is brilliantly efficient at shifting information from the hands of those who have it into the hands of those who do not.
Big part of real-estate agent’s job is to persuade the home owner to sell for less than he would like while at the same time letting potential buyers know that a house can be bought for less than its listing price.
The point here is not that real-estate agents are bad people, but that they simply are people – and people inevitably respond to incentives. The incentives of the real-estate business, as currently configured, plainly encourage some agents to act against the best interests of their customers.
The gulf between the information we publicly proclaim and the information we know to be true is often vast. This can be seen in personal relationship, in commercial transactions, and of course in politics.
Why do drug dealers still live with their moms
The first trick of asking questions is to determine if your question is a good one. Jus because a question has never been asked does not make it good.
John Kenneth Galbraith coined the phrase “conventional wisdom”. He did not consider it a compliment. Galbraith view is that conventional wisdom is convenient, comfortable, and comforting, though not necessarily true.
The answer on the question why drug dealers still live with their moms, if they make so much money is that, expect for the tops cats, they don’t make much money.
The problem with crack dealing is the same as in every other glamour profession; a lot of people are competing for a very few prizes.
Where have all the criminals gone
Until 1966, Romania had had one of the most liberal abortion policies in the world. Abortion was in fact the main form of birth control, with four abortions for every live birth. The story of abortion in Romania might seem as odd way to begin telling the story of American crime in the 1990s. But it’s not.
The broken window theory, which was conceived by the criminologists James Q. Wilson and George Kelling. The broken window theory argues that minor nuisances, if left unchecked, turn into major nuisances.
The Supreme Court with its decision for abortion in Rae w. Wade gave voice to what the mothers in Romania and Scandinavia – and elsewhere – had long known; when a woman does not want to have a child, she usually has good reason.
In the early 1990s, just as the first cohort of children born after Rae w. Wade was hitting its late teen years – the years during which young men enter their criminal prime – the rate of crime began to fall. The states with the highest abortion rates in the 1970s experienced the greatest crime drops in the 1990s.
What makes a perfect parent
Has there ever been another art so devoutly converted into science as the art of parenting?
No one is more susceptible to an expert’s fearmongering than a parent. Fear is in fact a major component of the act of parenting. Separating facts from rumors is always hard work, especially for a busy parent.
In a world that is increasingly impatient with long-term processes, fear is a potent short-term play.
Peter Sandman has reduced his expertise to a tidy equation: Risk = hazard + outrage. When hazard is high and outrage is low, people underreact, and when hazard is low and outrage is high, they overreact.
The most radical shift of late in the conventional wisdom on parenting has been provoked by one simple question: how much do parents really matter?
Could it really be that even school choice doesn’t matter much?
Correlation is nothing more than a statistical term that indicates whether two variables move together. A regression analysis can demonstrate correlation, but it doesn’t prove cause.
By the time most people pick up a parenting book, it is far too late. Most of the things that matter were decided long ago – who you are, whom you married, what kind of life you lead. If you are smart, hardworking, well educated, well paid, and married to someone equally fortunate then your children are more likely to succeed.
Perfect parenting, part II; or: would a Roshanda by any other name smell as sweet
The belief in parental power is manifest in the first official act a parent commits: giving the baby a name. does the name you give your child affects his life.
Roland G. Fryer Jr. the young black economist was wondering is distinctive black culture a cause of the economic disparity between blacks and whites or merely a reflection of it.
What the California names data suggest is that an overwhelming number of parents use a name to signal their own expectations of how successful their children will be.
Epilogue: two paths to Harvard
Freakonomics-style of thinking simply doesn’t traffic in morality. If morality represents an ideal world, then economics represents the actual world. The data have by now made it clear that parents matter a great deal in some regards and not at all in others.
Microeconomists are gaining on the macro crowd, empiricists gaining on the theorists. Behavioral economists have called into doubt the very notion of “homo economicus” the supposedly rational decision-maker in each of us.
The Swiss study suggests that we may be driven to vote by a financial incentive than a social one.
What do a gym membership, a bottle of prescription pills and a holiday gift card have in common? Each of them is a thing that is bought and then often goes unused.
If gift-giving destroys so much value, why not take the most efficient route and simply give cash.
So why do people really pay their taxes: because it is the right thing to do, or because they fear getting caught if they don’t? It sure seems to be the latter.
