Freakonomics and Misconceptions of Economy Essay

In the book Freakonomics, written by economist Steven D. Levitt and journalist Stephen J. Dubne, the authors go through different parts of modern life to show how economics describes why people act a certain way as well as the way specific outcomes occur. They look into different aspects of society and view them with different perspectives. With the use of specific data and the fundamentals of economics, the very obscure comparisons and the different chapters in the book show correlation between economics and human nature. The main point of this book is to explain a few fundamental ideas through the answers of strange questions and how they play a major role in society.

Charles states as his number one point that economics is really unpredictable. He uses the Coca-Cola Company as a fine example for this. That company starts of turning out to be loss and failure but within 10 years since it started it turned out to be very profitable. Charles also states that markets are extreme powerhouses over individual’s daily lives. Markets are also self-correcting because they use prices to allocate their resources. Individuals all work for their own self-interest so they can be better off in the society. One very good example the author provides is the Soviet’s socialist economy and how it failed because the bureaucracy controlled the economy, or basically he’s saying that

Pathos. Being a book of nonfiction and being written with the purpose of educating others, Levitt and Dubner do not hesitate to throw logistics on what they talk about. The title of this chapter asked what schoolteachers and sumo-wrestlers have in common and anyone would be surprised by how much they actually do in fact have in common. A usage of pathos used by Levitt and Dubner is “ Whatever the incentive, whatever the situation, dishonest people will try to gain an advantage by whatever means necessary”(page 21), in saying this, Levitt and Dubner want you to grasp your mind around the fact that basically people will do whatever they need to do. The whole chapter

In the book Freakonomics, by Steven D. Levitt and Stephen J. Dubner, is made up of a series of scenarios in which an economist and a journalist apply basic principles of economics to demonstrate that information can often expose interesting truths about how the world operates. It uses the science of economics and specific data to challenge our assumptions about everything. In the book Freakonomics by Levitt & Dubner, compares and contrasts two groups of people or things by using their informational data. This is called juxtaposition, which means the fact of two things being seen or placed close together with contrasting effect. Levitt and Dubner look at the world in a way that is both surprising, occasionally funny, and always enlightening. They do so by drawing unexpected connections between two greatly different but complementary aspects of sociology and economics, such as sumo wrestlers to school teachers, KKK members to the real estate agents, and lastly, crack gangs to McDonalds.

In chapter 3 in Freakonomics by Stevin Levitt and Stephen Dubner, it concentrates on conventional wisdom. The chapter begins by discussing about conventional wisdom, and how conventional can be wrong. Conventional wisdom was invented by John Kenneth Galbraith to explain generally acceptance by the public. It is furthered explained that conventional wisdom is associated with convenience. That many experts used it for their own agenda. But then explained how asking pointed questions can often overturn conventional wisdom. The authors provide some examples of when people have done some creative lying to draw attention. One of the examples was about getting people’s attention on how rape is a serious problem, it’s much more attention grabbing to tell people that it occurs in every one in three women, rather than the

The book Freakonomics by Steven D. Levitt and Stephen J. Dubner, is designed to pose fundamental questions concerning economics using a variety of imaginative comparisons and questions. Examples of these comparisons and questions can be seen in the list of contents, with chapter titles such as “How is the Ku Klux Klan like a group of real-estate agents?” and “Why do drug dealers still live with their moms?” Not everyone is interested in economics, but with titles that grab attention, it is almost impossible not to pick up the book and read it for yourself. The two chapters of Freakonomics I will be analyzing are “What do Schoolteachers and Sumo Wrestlers have in common?” and “Perfect Parenting, Part II; or: Would a Roshanda by any other

First, real estate agents had unrealistic expectations from the market. Because banks were giving out low interest rates for a certain amount of time, people didn`t foresee the consequences of taking out loans which are not affordable at first. Since people were not knowledgeable about the financial market, they bluntly believed in the real estate agents and such.

In chapter 1, Levitt and Dubner describe how many people in different cultures and walks of life, which are otherwise inclined to be honest, find subtle ways of cheating to advance their position or increase monetary awards when incentives are strong enough. The authors define an incentive as “a means of urging people to do more of a good thing or less of a bad thing,” and identify three varieties of incentives. Economic incentives are those, which a person responds to in the marketplace. Social incentives motivate people to respond in a certain way because they care or are worried about how they will be viewed by others. Moral incentives appeal to a person’s sense of right versus wrong. Three case studies of the

SABMiller and Diageo are two largest beer producer in Africa. ”SABMiller, if combined with its partnership with France's Castel Group, sells roughly 60% Africa’s beer by volume. Diageo’s also expands its operation successfully that Senator Keg, its supercheap beer, is also now number two most popular beers in Kenya. As these giant brewers monopolized Africa’s beer market, it can be said that the market has an oligopoly market structure, and both pursue identic operations, so the market can be labeled as competitive. The interdependence that is happening between both brewers makes the competition happens. As SABMiller produces Impala that is half price from its previous beer Manica, Diageo produces Senator Keg to balance it. Diageo

Economic systems are organized way in which a state or nation allocates its resources and apportions goods and services in the national community. An economic system is slackly defined as country’s plan for its services, goods produced, and the exact way in which its economic plan is carried out. There are three types of economic systems exist, they are command economy, market economy, and mixed economy. Command economy is also sometimes called planned economy. The expectations of this type of economy is that all major decisions that related to the construction or production, distribution, commodity and service prices are all made by the government. However, in market economy, national and state governments play a

The main reason that large corporations are in dire need of money is simple, greed. Financial institutions went out and found people who wanted to purchase a house, but couldn’t afford it, because of bad credit reports, debt, income, etc. So the banks went out on a limb with these risky people, and loaned them “x” amount for the house. Banks were only trying to make some money off of the outrageous interest rates of the mortgages, because that’s what banks do, they make money. Now banks and other lenders did this type of business on a large scale. People loved the idea that they could go out and get a mortgage on let’s say a four hundred thousand dollar house, with a bad credit score and slightly above minimum wage salary. Can you see

By definition, Capitalism is an economic system controlled chiefly by individuals and private companies instead of by the government. In this system, individuals and companies own and direct most of the resources used to produce goods and services, including land and other natural resources labor, and “capital”. “Capital” includes factories and equipment and sometimes the money used in businesses (Friedman, 5).

In this way, the Fed manages price inflation in the economy. So bonds affect the U.S. economy by determining interest rates. This affects the amount of liquidity. This determines how easy or difficult it is to buy things on credit, take out loans for cars, houses or education, and expand businesses. In other words, bonds affect everything in the economy. Treasury bonds impact the economy by providing extra spending money for the government and consumers. This is because Treasury bonds are essentially a loan to the government that is usually purchased by domestic consumers. However, for a variety of reasons, foreign governments have been purchasing a larger percentage of Treasury bonds, in effect providing the U.S. government with a loan. This allows the government to spend more, which stimulates the economy. Treasury bonds also help the consumer. When there is a great demand for bonds, it lowers the interest rate.

1) According to the Law of Demand, the demand curve for a good will A) shift leftward when the price of the good increases. B) shift rightward when the price of the good increases. C) slope downward. D) slope upward. Answer: C 2) An increase in the price of pork will lead to A) a movement up along the demand curve. B) a movement down along the demand curve. C) a rightward shift of the demand curve. D) a leftward shift of the demand curve. Answer: A 3) An increase in consumer incomes will lead to A) a rightward shift of the demand curve for plasma TVs. B) a movement upward along the demand curve for plasma TVs. C) a rightward shift of the supply curve for plasma TVs. D) no change of the demand curve for plasma TVs. Answer:

The U.S. never fully recovered from the Great Depression until the government employed the use of Keynes Economics. John Maynard Keynes was a British economist whose ideas and theories have greatly influenced the practice of modern economics as well as the economic policies of governments worldwide. He believed that in times when the economy slowed down or encountered declines, people would not spend as much money and therefore the economy would steadily decline until a depression occurred. He proposed that if the government injected money into the economy, it would help stimulate consumers to purchase more and firms would produce more as a result, in a continuous cycle. This cycle is called the multiplier effect. Keynes ideas have