This is a tough book to define. What is it? It’s written by an economist, but deals with subjects such as crime, drugs, sumo wrestlers, real-estate agents, the KKK…and the dust jacket describes it as” A Rogue Economist Explores The Hidden Side of Everything”. Ohhhh, a rogue economist. That’s scary.
Basically, the two authors, Stephen Dubner and Steven Levitt, try to break down mass amounts of data and try to develop conclusions. Now, in some places, I understood and thought the conclusions were pretty natural.
The first instance was a daycare. When they decided to fine late parents $3, they found the instances of tardiness actually rose. Because parents viewed $3 as inexpensive…but by paying a fine they alleviated their guilt at inconveniencing others.
Other cases, they go from A to B to G. How they got to G doesn’t make sense. Because really, all they are doing is trying to dissect data. They actually aren’t experts in their fields (though it seems they did a ton of research). An example is a community snack box. You know, the ones where you pay by the honour system. Take a snack, pay some money. In this case, they were bagels.
In the bagel case study, the data showed that smaller companies had a higher payment rate than big companies. The authors concluded it was because smaller companies mirror rural areas (where social pressures keep people honest), and the big companies mirrored urban centres.
I disagree with the conclusion. It has nothing to do with social pressures…but rather the ability of the individual to put aside personal responsibilities when in a crowd. In a crowd, we become anonymous — a theft of a bagel is impossible to track. A theft of a bagel in an office of three is pretty obvious.
They do have some interesting theories — but again, these guys are merely drawing interesting conclusions from data. Are they right? Maybe, maybe not. There is no true way to tell.
Another example: Real Estate agents typically sell their house for $10,000 more than their client’s houses. What does that say? That they KNOW they are undervaluing their clients houses? Perhaps (that’s the authors conclusions) or is it that Real Estate Agents know what people value…and thus, can directly influence the sale by applying those values (whereas their clients, perhaps, might not want to renovate a bathroom).
Of course, I do think Real Estate agents are crooks…but that’s just an example of where there is no way to tell — it is just data.
Still, Freakonomics is an entertaining read…the kind of book that you can sit down and read in a night (took me about 2-3 hours).