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Impressing audiences all around the world with their wry and unconventional insights, Steve Levitt and Stephen Dubner offer data-based stories of things that influence human behavior, and demonstrate which incentives work, which ones don’t — and why.
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The Authors
Stephen LevittB.A from Harvard University
PhD from MITProfessor of Economics at Univ. of Chicago
2003 John Bates Clark Medal winner
Stephen Dubner Award winning author, journalist, TV & Radio
personality He has taught English at Columbia University
(while receiving an M.F.A. there) Played in a rock band started at Appalachian
State University, where he was an undergrad.
QuestionsWhat do school teachers and sumo wrestlers
have in common?How is the Ku-Klux Klan like a group or real-
estate agents?Why do drug dealers still live with their moms?Which is more dangerous, a gun or a swimming
pool?
Freakonomics conceptsIncentives are the cornerstone of economic
lifeThe conventional wisdom is often wrongDramatic effects often have distant, even
subtle, causesExperts use their informational advantage
to serve their own agendaKnowing what to measure and how to
measure it makes life simpler
Freakonomics book summaryChapter 1-What Do Schoolteachers and Sumo Wrestlers Have in Common?Economics defined as a study of incentives and how they
are pursued?How do we profit by what we do and what incentives are
so attractive that they compel us to act unethically?Cheating can be predictedEg. School teachers helped children cheat on standardized
tests Analysis of standardized test answer patterns helped
identify groups of correct answers Retest administered to find the offendersBy comparing the performances of the wrestlers in
matches with different stakes and potential consequences, the author found that cheating does often take place in the sport
How individuals, organizations, and businesses often exploit their access to information at the expense of others
Entire industries attain great success and many significant historical events transpire as a result of an imbalance in the flow of information
Chapter 2- Why is the Ku Klux Klan like a group of real estate agents?
Eg. a man helped cripple the racist Ku Klux Klan simply by widely disseminating their secrets
He infiltrated the group and documented the secret rituals and codes of the organization
He gave the records and reports to Hollywood writers, who used the information to create a long-running story
Children across the USA imitated the shows in their schoolyard games, and gradually, the mystery and influence of the group were diminished
Real estate agents when selling their own houses may not always have their clients’ best interests at heart
Chapter 3- Why do drug dealers still live with their moms?
The author compares the organizational structure of drug dealer gang to McDonalds
He explains how very few executives and upper level managers prosper from the work of 1000′s of minimum wage or low wage workers
He even found that most street drug dealers made less than minimum wage
Therefore the common notion that all drug dealers are rich proved to be incorrect
Chapter 4- Where have all the criminals gone?Research showed of a link between legalization
of abortion in 1973 and drop in violent crimes in 1990s
The author claims that many of the additional children who would have been born annually if abortion had remained illegal would have been at high risk for engaging in violent crime
The authors conclude that women with the right to choose abortion tend to make good decisions
Chapter 5- Which is more dangerous, a gun or a swimming pool? What makes a good parent?
Research found that when allowing children to play in swimming pools, they were more than 100 times more likely to die in a swimming pool than playing with a gun
“good” or “positive parenting outcomes” on their children are connected more strongly to factors such as socioeconomic status and the education of parents more than any specific parenting practices
Chapter 6- Would a Roshanda by any other name smell as sweet?
The focus of the final chapter is on economic implications of children’s names
The author says that having a distinctively “black name” was linked to lower attainment, less education, less income, and overall less success in life
Epilogue-Two Paths to HarvardThe life paths of two Harvard graduates who may
have seemed to be locked into divergent patterns of achievement based on their backgrounds• Privileged Background
• Access to all resources typically correlated with success
Ted Kaczyns
ki• African American• Raised in an impoverished,
unstable family• Now a promising Harvard
Economist
Roland G. Fryer
There are limits to the ability of
economic analysis to predict every
possible outcome