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Freakonomics, by Levitt and Dubner

What was the cause for the drop in crime in the 1990s? Why do drug dealers live with their mothers? How is the Ku Klux Klan like a group of real estate agents? These burning questions and many more are answered in Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, by Steven D. Levitt and Stephen J. Dubner.

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The authors believe that they have come up with an entirely new way of looking at the world, casting aside conventional wisdom and delving into the reality of situations. They do this by applying economics and especially the notions of economic man and markets to every day situations. For example, how do you get parents to be on time to pick up their little tikes from day care? You might think that imposing an economic penalty on them would help motivate parents to be prompt. But a study in Israel found that this was not the case. Parents proved to be less reliable when assessed with a fee for tardiness. Why? Levitt proposes that the parents saw the fee as a way of buying off their own guilt. The economic penalty they paid might also have been seen as a purchase of time.

The premises behind this book have proved extremely controversial and no wonder. Levitt's thesis on the reason for the great crime drop of the 1990s and early 2000s pushes the biggest hot button of the age, abortion. Levitt's work shows that there is a direct correlation between the absence of children in "at-risk" households (at the age most likely to commit crimes) with the drop in crime rates. A plunge carries through the demographics of inner cities - as the generation that was subjected to abortion begins to reach adolecence and adulthood crime diminishes drastically. No matter what you think of the moral issue of abortion, the argument the authors put forward is compelling. However, they also note that, the application of abortion as a method for reducing future crime is highly inefficient and possibly unethical.

This kind of analysis is what Freakonomics is all about. Although it delves into statistics, and answers hard questions, the book is imminently readable. I knocked it off in two days. The text as well as the ideas were so interesting that I found myself eagerly seeking out the book whenever I had a spare minute, just to see what the authors would discuss next.

The chapters on parenting proved fascinating as well as light hearted. The authors are both parents of young children and the realities of parenting come through. The section on names and their effects on a child's life should be read by parents before they blithely hand out monikers. I found it interesting that both authors have the same first name, but they are spelled differently (Steven and Stephen). The former is the economist and the latter is the writer for the New York Times. Is this significant? I don't know, but their analysis of names showed that the actual name given a child seldom had much effect on the child's outcome, except as an indicator of what kind of parents the child came from. The genetics of the parents actually proved to be the decisive factor.

All in all, this is a fun and informative book that displays the tremendous potential economics has for application to every day life.

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