Freakonomics

Freakonomics
by Steven D. Levitt and Stephen J. Dubner, 2005 HarperCollins Books

Book Review:
This was an insightful and interesting narrative on todays societal conundrums explained from an economics incentive perspective.

The crime drop in the 80's is less explained by Clinton and Giuliani's claims of aggressive crime interventions than the fact that Roe v. Wade limited the supply of future criminals 18 years earlier when their birthrate sharply declined.

An inner city gangs prosperity and fall correlates sharply to the risks and rewards seen by the foot soldiers that make the gang drug sales possible. These soldiers make less than minimum wage just for a chance to make a modest salary some day as the leader who makes not much more than the average white collar worker. This is because the only white collar jobs visible in these neighborhoods are very limited and the gang leaders have visible prestige. The drug sales and recruitment skyrocketed with high priced new crack cocaine onto the market and fell dramatically with the flooding of crack on the market and in the event of a turf war in Chicago. The risks became too high for the perceived rewards.

The correlating factors with good educational outcomes in kids are parents of an older age, parents of extensive education, the child has many books in the home, and the child is not adopted and speaks english in the home.

Sumo wrestlers outcomes when "on the bubble" for their 8th win against a wrestler who already has secured his eighth win are statistically far out of line with probability. A 48% chance of winning turns out to be an 80% winning rate in this situation, even though Japanese culture would far decry any insinuation of cheating. Interestingly, a "payback" loss appears statistically when those same wrestlers meet again at a 40% chance of winning for the one who was on the bubble, for which the future winning rate normalizes back to its average of 48%. Although cheating in Sumo wrestling culture is cause for great dishonor, even suicide, the statistics here are difficult to ignore. The same results appear to school teachers in Chicago who have punitive job outcomes with poor test results in classes that perform poorly on standardized tests. Reviewing the test results revealed outliers that when retested by proctors who were not their proctors fell sharply against a control group of classes that performed well who were not suspected of cheating. Freakonomics.

The revelation of Ku Klux Klan secret passwords to a 1950's radio Superman kids show divulged the Klan's only real currency: secret information. As kids in the street pretended to thwart the "evil Klan" members, bigotry and prejudice had no value when associated with no inside group protection or secret information. After two radio shows the attendance fell of 95%, dues of 10$ were cut off to the membership making money, and civil liberties were protected more in the South preventing a post-war resurgence after WWII. Freakonomics.

Overall, I enjoyed this read and narrative of economic incentives in our everyday life. It helped me consider what drives the world I live in locally, regionally, and culturally in our nation. I think the value of these ideas will only increase as our world faces global threats and ignorism in terrorist recruitment, international disputes with other industrialized countries, and my personal hedges in an uncertain world. Thank you both Levitt and Dubner.