Steven D. Levitt's Freakonomics

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.

The intended audience of Steven D. Levitt and Stephen J. Dubner’s Freakonomics is made up of middle class Americans and comprised of adults and teenagers with a basic education and a broad knowledge of a wide range of subjects. Since Levitt and Dubner reference a large variety of topics, it is imperative for the audience to also be familiar with a wide variety of subjects or at the very least to be aware of popular culture and government. For example, when Levitt and Dubner reference a Supreme Court case, Roe v. Wade, where a young woman named Norma McCorvey was “...the lead plaintiff in a class-action lawsuit seeking to legalize abortion” they establish their audience as one that would be educated enough to know the fundamentals of some of the most important events in American history (Levitt and Dubner 5). By referencing the Roe v. Wade case, a court case which is generally considered to be common knowledge for Americans, Levitt and Dubner reveal that their audience must be comprised of

Chapter 1 of Freakonomics focuses on the beauty of incentives. It asks the question “What do teachers and sumo wrestlers have in common?” The answer is that they both

They explained that: “Changes in incentives influence human behavior in predictable ways”. The main point of this concept is that the more attractive an option is the more likely an individual to choose it. Another point that they also focused on was the fact that if a particular product more costly, the more unappealing it will become to the consumer. They used examples such as employees will worker harder if they feel that they will be greatly rewarded or a student will study material that they feel will be on an

The author Steven Levitt studied economics at Harvard University and MIT. He is primarily known for his work in the field of crime. The title Freakonomics means a study of economics based on the principles of incentives. The title is related to the book since he emphasizes how incentives drive and affect people’s actions. Although this book does not have a single theme, the main focus of the book is a new way of interpreting the world using economic tools. He explores incentives, information asymmetry, conventional wisdom, crime and abortion, and parenting throughout the six chapters of the book.

Gladwell describes what makes some people more successful than others. His central premise focuses on the different opportunities that people receive throughout their lives and how those people use the opportunities to their advantage or disadvantage. Gladwell describes this theory as the Matthew Effect:

In the United States, we encounter quite a bit of obstacles that we can’t seem to get rid of completely. We as a nation deal with inflation, unemployment, stagflation, recessions, depressions, and so much more. Reading these three articles opened my eyes to the world of economics, and even made me question the society we live in. I’ve learned that sometimes questions can’t be answered, and I learned that once we solve one issue, there is always another issue on its way. These articles made me analyze, and think about the future of economics, and what I can do to try and help the economy. These authors of these three articles make it very clear that there are issues in the United States, and they do an amazing job

After reading freakonomics, I need to approach the job hunt from an Economist perspective. When it comes to financial incentives I need to determine my best course of action to make as much money as possible. For instance, do I work harder and stay late to get in good graces with my boss. Or do I go out of my way to help a coworker with their assignment. If given only one choice I need to weigh what is the possible outcome of either choice. One may lead to a good review and higher salary or the other will affect my relationship with a coworker. Also after reading this book the only thing that I was concerned with was salary. Now from an economist point of view I need to weigh the opportunity cost of the job I choose versus another potential job. Let us say job A offers 50k a year vs job B offers 40k. From a traditional point of view I would take Job A 100% of the time, but from an economist point of view the opportunity cost from each job could could include commute, benefits packages, and personal happiness. Let’s say job A is 30 miles farther than job B. The 1 hour extra each day adds up to 5 hours a week. Those 5 hours a week could add up to time spent with my family or time spent pursuing hobbies. Over a year those 260 hours adds up to a long vacation. Before reading freakonomics I would have never

* Incentives-a promise of a reward in the future, as a result of particular behaviour or achievement-the element of ‘if…then’.

However, Levitt, in the introduction of Freakonomics, declares economics to be a simple “science of measurement” depicting reality compared to and distinct from morality considered as ideals or utopias of that reality. In my opinion this statement underestimates the significance of economic theory in today’s world, is generalised and insufficient. Economic theory and measurements have strong implications, e.g. for the perception of national welfare, and consequently policies and regulations of a country which attributes to economics much more command than a mere supply of information. Furthermore, reality can hardly be described only by numbers since feelings and morality as foundations of our values and beliefs take a large and decisive part in life and our decisions, but can hardly be measured as such. Even the economic system of exchange is not only based on efficiency and quantitative terms but indeed on moral-based conduct as well. Overall, I consider explaining the world by mere measurements and a collection of factual data too simplistic.

The author uses money to reveal several different traits in the novel. All of the characters personality traits in the novel are based off of wealth. Without the money,

In the book Freakonomics, Steven Levitt and Stephen Dubner note “An incentive is a bullet, a lever, a key: an often-tiny object with astonishing power to change a situation” (16). This is to showcase the amount of power an incentive can have over a person or a situation; either good or bad. Humans are found to use incentives when it comes to making daily decisions. Often, people need motives to proceed with their plans. Some tend to make either moral, social, or economic incentive. The moral incentive is about self-respect; keeping in check with what was taught to believe is right and wrong. The social incentive is how the public views the person; wanting to look good in front others. Economic incentive, however, would relate to monetary benefit. While all three incentives can affect people’s decisions, economic

While watching “The Puzzle of Motivation” by Dan Pink, I was very intrigued. Throughout the entire talk, there were several interesting points that were made. It really interested me when Pink talked about the group that was rewarded. Pink stated that if the contestants were in the top 25% of the fastest times, they would be rewarded five dollars. With this incentive, most would hope to do well, if not better than the person that would not be rewarded. Pink then goes on to point out the results. How much faster did the group that was offered a reward actually do? On average, it took them three and a half minutes longer. This really stood out to me because when offered a reward for a task, normally a person would be more motivated and thus do better. What amazed me even more was that this isn’t just a one time thing. This is has been replicated over and over for nearly 40 years. As Pink says around 04:33, “These contingent motivators -- if you do this, then you get that -- work in some circumstances. But for a lot of tasks, they actually either don 't work or, often, they do harm.” These rewards that are being offered are being used to attempt to sharpen thinking and accelerate creativity, but instead it’s proving to do the opposite. It’s proving to dull thinking and block creativity.

In its essence, an incentive is a deliberate proposal calculated to make a person choose a certain action. Thus, the reason why incentives are so popular in society is because everything and

money’ and ‘one action gives rise to another’. That means if people are rewarded they will be motivated