Freakonomics by Steven D. Levitt & Stephen J. Dubner Is Based on These Fundamental Ideas: Incentives, Conventional Wisdom, “Experts”-Use Their Informational Advantage

One of the primary fundamental ideas expressed in Freakanomic is that “incentives are the cornerstone of modern life”. An incentive is persuading people to do more good than bad. Levitt defines three types of incentives, social, economic, and moral. The authors state that individuals including sumo wrestlers and teachers, will behave unprofessionally to meet their needs and desires, if the incentives are good enough. A schoolteacher’s incentive to cheat has increased due to high-stakes testing. While a sumo wrestler’s chance of cheating will increase when he is on the bubble since the outcome of his matches will affect every aspect of his life. In order to determine if these incentives to cheat exist, specific data is viewed. For the

When I first looked into finding this book I didn’t think much of it as I just thought it was just another type of text book or some sort. I was thinking that this would be some kind of auto biography or something I would not be interested in. In fact after reading this book I was stunned by the different views and aspects of economics that was explain and I would had never thought about them in that sort of way. This book covers a lot about we discussed in class. This book explains different examples of economic concepts that may be used in our daily lives. They

In chapter one of Freakonomics, Stephen Dubner and Steven Levitt describe how when incentives are strong enough, many usually honest people from different walks of life will cheat in order to gain financially or climb the ladder in their careers. The authors define an incentive as “a means of urging people to do more of a good thing or less of a bad thing.” This chapter covers three varieties of incentives: Economic, Social and Moral. Economic incentives motivate people with the promise of money or goods. Social incentives motivate people to respond in a certain way because they care about how they will be viewed by others. Moral incentives motivate people on the basis of right and wrong. We look at four

Levitt next examines the incentives that cause people to cheat. The first example of cheating is a story of teachers cheating in Chicago public schools. To avoid the risk of getting fired or getting penalty by the government for low test scores, many teachers chose to cheat and inflate their students ' scores. They cheated by allowing the students to have more time during test, giving away answers, and even by changing students’ answers by themselves. In this case, we can see that the schoolteachers are driven by economic incentives. For them, moral and social incentives are not as strong as economic incentives. Similar cheating can be seen in sumo wrestling. In Japan, sumo wrestling is a very popular sports and the high-ranked wrestlers get great honor. Also, among sumo wrestlers, their rank determines their salary, reputation, how they are treated, and even how much he gets to eat and sleep. Because they are so desperate for higher rank, the incentive for cheating is very powerful. In the crucial matches that determines sumo wrestler’s ranking, they cheat by

“Real estate is a year-round opportunity to help countless people realize the American dream” (“Why Real Estate”, 2012). Eighty-five percent of buyers believe that home purchases are good financial investments, and a majority of homebuyers and sellers rely on the services and expertise of real estate professionals to assist them with their transactions (Profile of Home Buyers and Sellers, 2010). “The primary job description for an agent is communicating with potential clients to determine what kind of property they are looking for” (Richard, 2012). This means, setting up interviews with clients to see if the agents firm possesses property that meets the client’s specific needs. Once it is apparent exactly what the client is looking for, the agent sets appointments to show houses to clients and many times the agent physically accompanies couples while showing off properties.

In Steven D. Levitt and Stephen J. Dubner’s Freakonomics, they use unconventional wisdom to explain certain events. They use very solid data in order to support their conclusions about certain events. However, some of their conclusions suffer from errors in reasoning, or rather, fallacies. Although they have done several different types of fallacies, the main one they’ve done is the either-or choice.

This book is filled with completely polarizing chapters in which the two things discussed seemingly have nothing to do with each other, but the authors find a way to connect them. In this summary, I will take you through some of the highlights of my favorite chapters and some of the more important chapters as well. The interesting thing about the book as a whole is that it does not even seem like you are reading a book that is trying to teach you economics through some outrageous situations. Another intriguing thing about this book is that these authors have such an extensive knowledge of studies that they can pull from any study, even if it has nothing to do with what they are talking about, and they can make it relevant.

I found it very helpful how Levitt and Dubner included an introduction to this book. The title Freakonomics, gave me an idea that it’s going to be about economics, however I wasn’t exactly sure. In the intro, both the authors explain why they are writing this book and how they are going to inform us about the hidden side of everything. The way the authors open this book was really helpful and it gave me any idea of what to expect. Now that I know what this book is going to be about I can’t wait to read about the hidden sides. For many of the readers this is a new experience and along with them, I am also expecting to learn something new.

Throughout Freakonomics nothing discussed was left to chance. There was a theory or answer to every question with facts and statistics to support it. At first, I thought Freakonomics was profoundly dull with all the numbers and statistics involved and I had to force myself to continue reading for the sake of completing the assignment on time. However, as I continued the book I became quite interested in the broadness of the topics, and how unusual the possible ideas and theories were. Overall I thought the assignments were challenging because they made you really evaluate the theory’s discussed throughout the chapters, which sometimes were unclear, and I had a hard time expressing my thoughts without copying what the book was saying. I was

Many kids and young adults today are the targets of this online media take over. Through the use of the web and the smartphone most of the things we once needed will be no longer necessary due to the advancements in technology. The web and the Internet consist of everything from Google to social media and everything in between. Most of the articles about the media portrayal of the real estate process on the web are complaints from companies. The reason for this is because like TV shows the web is as capable of falsely portraying the process. For example if the media over-exaggerates the realtors commission numbers, then everyone will believe that they make a certain number, causing an increase in realtors in a certain location. The media causes a domino effect. If it shows on a TV show that realtors and developers make absurd numbers, then it causes an increase in people in a certain area, which then causes the market to fluctuate. One of the quotes given in the article is from an interview with Masaru Miyao; the general manger of the international department for the Mitsui Real Estate Development Companies. In Japan, he is one of the most popular men in real estate. "He told attendees at a seminar on world property markets that he gets more than 500 proposals a day from developers around the world seeking joint venture partnerships or financing for new projects. When asked how

Every action I have and will ever take in my life can be analysed through the tools of economics. This is true for many sciences; such as Physics, Chemistry, Biology or Psychology, to name but a few. However what sets Economics apart is how it is perhaps the only science that would significantly and consistently improve the quality of my decisions if applied. Further more, what makes Economics truly outstanding is its diversity and broad range of application.

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

Economics in reverse is the best way of describing the unconventional method preferred by economist, Steven D. Levitt. While most economists measure social situations and present the data as numbers and graphs Levitt takes anomalies within the data to reveal truths obscured. It’s Levitt’s sociological take on economics that has set him apart from his peers with his heavy focus on incentives, choices, and the consequences they have. Freakonomics mirrors Levitt’s method since it’s a collection of stories he has uncovered or read, and the core economic principles are hidden within each story throughout the book, sometimes even in plain sight like how there are exactly as many chapters as there are core economic principles.

Freakonomics has three main concepts relating to economics: winner takes all labor market, supply demand and equilibrium price and incentives matter. Chapter 1 starts out with a study on ten day-care centers in Haifa, Isreal. This study lasted twenty weeks. The first four weeks of the study economists kept track of parents who arrived late picking up their child. As a result of these findings, a fine was instilled. This fine was $3 fee for any parent arriving ten minutes late. Economists were thinking that with this fee, the number of child pick ups would drop, but instead the number of late pickups actually increased. Economics found that the incentive had backfired. Here we see one of the concepts found in the book, incentives

With the wide use of the Internet in today’s commercial real estate industry, and the fact we are part of a Global economy, if not at least a National marketplace, it is inconceivable and totally arrogant that a broker today thinks they have access to all the probable investment buyers. So why hide behind no sales prices and confidentiality agreements which just slows and complicates the whole process....or maybe that’s what your broker wants to do in order to mask the reality of their lack of marketing expertise and market knowledge.