The Freakonomics Summary

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.

For this review I read Freakonomics written by Steven Levitt and Stephen Dubner. This book was published by William Morrow an Imprint of HarperCollins and is copyrighted 2005. Freakonomics is a unique book where there is no central story. It is not a story where it goes from point a to point b and follows a traditional storyline. This book is broken up into a collection of mini stories where the authors try explore issues and approach them from a non-conventional way of thinking. Some of these issues in the book include comparing Ku Klux Klan members to real estate agents, why drug dealers live with their moms, and linking abortion to criminal rates. The book addresses the issues at hand and uses data they have accrued and in their

In what way are schoolteachers and sumo wrestlers similar? At first, this question might be puzzling, but the answer is provided in the book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. Freakonomics is the result of a partnership between an award winning economist, Steven D. Levitt, and a journalist, Stephen J. Dubner. The duo decided upon making a book after Dubner was given an assignment to profile Levitt. Dubner realized that Levitt took a different approach to economics than other economists and he saw that Levitt had an interesting and effective way to explain statistics. This pushed the two to release the 315 page book to the public in 2005 in New York, New York. Since then, the book has flourished and has been republished numerous times. In Freakonomics, Dubner and Levitt reveal that fundamental ideas of economics can be used to interpret just about everything in modern society. The book focuses on a few key points including; incentives are the driving force behind everything, conventional wisdom is often wrong, small causes can often have dramatic effects, and the advantages of having information. The authors use many interesting stories and statistics to demonstrate these economic themes in the modern world. Stories include how some school teachers in the Chicago school system cheat, the influence that the legalization of abortions had on crime rates, and how real estate agents tend to sell their own homes for higher prices than if they

Your job isn’t to find these ideas but to recognize them when they show up.”

1. Chapter three, Why Do Drug Dealers Still Live With Their Moms?, expresses an intriguing thought by authors, Steven D. Levitt and Stephen J. Dubner. The Freakonomics authors follow a courageous man, Sudhir Venkatesh, a student at the University of Chicago, in his effort to understand and research the mysterious drug dealing business. Venkatesh first approached dangerous gangs and dealers in Chicago with a simple survey to learn more about them. After stumbling upon a branch of the “Black Gangster Disciple Nation”, Venkatesh wanted to take his study further. J.T., this specific branches leader, was interested in Venkatesh’s survey and initiated him as a spectator to his group. Venkatesh was integrated with this group for six years an acquired an immense amount of information on drug and gang groups. Thankfully, J.T. kept documents on the group 's wages. By looking at these books, Venkatesh was able to identify the hierarchy of a typical drug cartel. Which is where the main question of chapter is answered. Only the people on the top of the system made good money, for example, J.T. Contrary to popular belief, lower jobs of this business like foot soldiers make only $3.30 an hour, below minimum wage. Despite the fact that the foot soldiers are the ones who physically put their life on the lines. This style is compared to major corporations such as McDonald 's for a more context comparison. However, the people that are

Specifically, so much of the time, those who have brilliant ideas in their head do little or nothing with them, so actual actions instead of useless

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

Google, Inc. is a corporation that is known for innovation and amazing leadership practices. Google’s greatest innovation may actually be its managerial practice. Google is not led by a single CEO, but by a team that gives it immense strategic and management strength. (Nussbaum, n.d.) Engineers at Google are able to work on their ongoing projects 4 days out of the 5 day work week, and one day a week is designated for potential ideas of their own choice. (Sawyer, 2009) Google has innovation reviews, where each executive presents the most promising ideas from within his own division. The CEO is at these innovation reviews to listen to these innovative ideas. Another way to ensure that some of these ideas have the opportunity to be developed is to allow the engineers to work on these ideas for more than one day a week and in some cases full time. Allowing time to be creative and develop ideas is embracing the art of innovation and

Erik Brynjolfsson once said “The key to growth? Race with the machines”. Erik stated this in an argument against Robert Gordon. The two of these wise men had discussed innovation and had major differences. Robert believed that innovation would have an end, while Erik said growth would continue as long as the people kept up with it the innovations. I agree with Erik, because growth does not end; and it can continue as long as people race with the new productivity and don’t allow it to take over.

• Amabile: How to Kill Creativity? Harvard Business Review 1998 (course packet; writeup 1. For Feb 5)

“We’re drawn to the image of the lone genius whose mystical moment of insight changes the world. But the lone genius is a myth; instead, it’s group genius that generates breakthrough innovation. When we collaborate, creativity unfolds across people; the sparks fly faster, and the whole is greater than the sum of its parts.”

Drew’s product, masking tape, received much attention from his superiors, and 3M began to sell his product. Within a few years, 3M was selling more masking tape than sandpaper itself (84). Shortly after this occurrence, 3M adopted a policy which allotted employees 15 percent of their working time to work on “projects of their own choosing without needing approval from their supervisors” (85). Following in the footsteps of 3M, modern power companies like Twitter allows employees an entire week to “pursue an interesting project that is outside the regular domain of their job” (86). Facebook gives workers twelve hours per month for side projects that must be unrelated to work (86). Lastly, a software company named 37signals gives its employees “an entire month to experiment on whatever they [want]” (87). Jason Fried, cofounder of 37signals, says, “if you can't spare some time to give your employees the chance to wow you, you'll never get the best from them” (88). Genius grants prove that intrinsic motivation significantly improve creative expression demanded in the modern-day market, as opposed to extrinsic motivations, such as monetary

Many can conjure up ideas, but few bring them to life. Creativity needs a form of structure for its success. I use my knowledge of business economics as a structure for my creative thinking to carry out. I envision new ways to improve the world around me. I strive to help local communities become “green”.

What they were all responding to was the force of Levitt’s underly- ing belief: that the modern world, despite a surfeit of obfuscation, complication, and downright deceit, is not impenetrable, is not un- knowable, and—if the right questions are asked—is even more in- triguing than we think. All it takes is a new way of looking. - Stephen J. Dubner.

To begin, Steve Jobs shows to have always had a special talent in the field of innovation and has had a great way of combining his creativity along with innovation in order to create his great works. In general, what this section discusses is the ways in which Jobs has made use of the skill thinking ahead and how this factor has brought him to the great results he has come to attain as an entrepreneur. One point made about this subject is that although Jobs enjoyed creating new innovations, Jobs also had his focus on something much bigger. In one of my findings, Isaacson quotes Steve Jobs in his article on the topic. Jobs states that "Making an enduring company was both far harder and more important than making a great