“Economics is, at root, the study of incentives: how people get what they want, or need, especially when other people want or need the same thing. Economists love incentives. They love to dream them up and enact them, study them and tinker with them. The typical economist believes the world has not yet invented the problem that he cannot fix if given a free hand to design the proper incentive scheme.”
Dates read: November 26-December 1, 2016
Rating: 6/10
Lists/Awards: New York Times bestseller
Why do people act the way they do? It’s a question that has been debated by societies for what we can only assume is basically the entirety of human existence. Astrology has been used to try to explain it, as has the balances of humors in the blood. In modern times, there’s an entire scientific field that studies human behavior and what causes it. Psychology, though, tends to focus on the bigger, more 40,000 foot view of why people behave in particular ways. It doesn’t answer, for example, why crack dealers often live with their mothers. In Freakonomics, economist Steven D. Levitt (with co-writer Stephen J. Dubner) attempt to answer that and various other questions about human quirks. Some of these are relatively light-hearted (tracking how baby names move down through social classes over time), and some have much more serious implications (tying Roe v. Wade/more widespread access to abortion with decreasing crime rates).
Levitt and Dubner put all their faith into a field usually called behavioral economics. It posits that humans are rational actors, and when they appear not to be, it’s because the incentives that drive their choices aren’t obvious. How much you go along with their theories depends on how much stock you put into behavioral economics, and for me, it’s honestly a mixed bag. The most interesting portion of the book, in my eyes, was the chapter on abortion and crime. It’s more of a purely statistical dive, and the underlying assumption that he uses, that women are good judges of when they shouldn’t bring children into the world because they won’t be able to devote sufficient resources (money, of course, but time and energy too) to their raising, is one that makes sense to me. The children that might otherwise have been brought into the kind of poor home environments that correlate with (but don’t necessarily cause) criminality simply weren’t born and therefore can’t be in the world, committing crimes. It’s a bold hypothesis, and unsurprisingly turned out to be one of the most controversial. Since I had the revised/expanded edition of the book, they actually included an appendix chapter doing a deep dive into their statistical analysis. I’ve got some very basic grounding in statistics, but it was beyond my ability to actually comprehend, so I just have to trust that they did their homework correctly.
There are some other interesting tidbits, including one about charter/magnet schools and their effect on student achievement, but I found myself often skeptical of their breezy assurance of their own correctness and faith in their data. After the massive statistical analysis failure of the 2016 election, it’s more obvious than ever that data isn’t always all-knowing…it needs careful parsing and tweaking to accurately reflect reality.
Tell me, blog friends…how much faith do you put in data?
One year ago, I was reading: The Moonlight Palace
Two years ago, I was reading: Occidental Mythology
