Book Review: Freakonomics

Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
by Steven D. Levitt and Stephen J. Dubner

Last month I read this really interesting book, and probably so did the rest of North America Continent since it has been consistently on top five of The New York Times best sellers for more than fifteen weeks now. The introduction quickly grappled my attention and the next thing I know I finished the book. Ok-maybe I'm exaggerating a little, but this book is definitely one of the few economics books that doesn't put me to sleep. The author, Steven Levitt teaches economics at the Univeristy of Chicago and was recently awarded the John Bates Clark Medal (awarded every two years to the best American economist under forty). This book attempts and successfully achieves to explain the unexplanable using a variety of economics models and techniques. Though the book obviously has no unifying theme, Levitt's unique perspective turned the most conventional wisdom upside down. And using the principles of economics he answered the questions such as what kind of impact did Roe v. Wade have on violent crimes? What do schoolteachers and sumo wrestler have in common? And why do drug dealers still live with their moms? Levitt's economist writing style and logic was especially refreshing, anyone can probably enjoy this book without any economics background.

The one most singular natural experiment that he mentioned was the bagel experiment by Paul Feldman, a former argricultural economist turned bagel vendor. Without giving too much away, this experiment was conducted inadvertently to quantitatively test the "good nature" of people: "There is a tale, 'The Ring of Gyges,' that Feldman sometimes tells his economist friends. It comes from Plato's Republic. A student named Glaucon offered the story in response to a lesson by Socrates- who, like Adam Smith, argues that people are generally good even without enforcement. Glaucon, like Feldman's economist friends, disagreed. He told of a shepherd named Gyges who stumbled upon a secret caven with a corpse inside that wore a ring. When Gyges put on the ring, he found that it made him invisible. With no one able to monitor his behavior, Gyges proceeded to do woeful things- seduce the queen, murder the king, and so on. Glaucon's story posed a moral question: could any man resist the temptation of evil if he knew his acts could not be witnessed? Glaucon seemed to think the answer was no. But Paul Feldman sides with Sorcrates and Adam Smith- for he knows that the answer, at least 87 percent of the time, is yes" (51). Economics in action is....simply too cool! This experiment could probably be extended to different cultural geographic regions, and probably yield some interesting results as to which ethnic group is more "good natured" than others which I wonder if it can affect insurance charges or simply how we do business with people.

Though this book is probably intended for genreral audience, I wish that it could be more technical in describing, collecting, and interpreting of data, rather than just spelling the conclusion out loud. (maybe there will be a second book just for econ majors!) But the most important take-away of this book is that, "If morality represents how we would like the world to work, then economics represents how it actually does work," which is what this book promised to prove and did exactly just that.

Book Review from The New York Times 'Freakonomics': Everything He Always Wanted to Know