Freakonomics Short Summary
Freakonomics is a book composed by Stephen J. Dubner and Steven Levitt brushing over some questions, stories, and ideas that featured the entire content. The book takes a novel aspect to discuss an information asymmetry, correlation vs. causation, real estate agents, the 1990 crime drop, and most importantly, the incentives.
A Detailed Synopsis
The first chapter introduces the concept of incentives which the authors define as a means of convincing people to do less of a bad thing and more of good. The book analyzes how diverse groups of people are incentivized to do wrong or cheat. The author further claims that economic, social, and moral incentives affect human behavior. For instance, financial incentive evaluates how human action changes their wealth. Social motivation assesses how an individual’s actions determine how society perceives them. Lastly, the moral impulse estimates how an individual’s actions are their sense of right and wrong.
The first chapter looks at the two primary cheating groups, which are the Sumo wrestlers and the public school teachers. In Chicago public schools, there is a high tendency of cheating by teachers with the intent of protecting their careers and also the future of the entire school. Teachers are incentivized to change student’s answers in the test answer sheets to avoid failures that may incur them penalties attributed to poor scores. In Japan, Sumo wrestlers are incentivized through bribes, moral, and social incentives to organize a crucial match to increase one wrestler’s rank. A wrestler with more wins loses voluntarily to the one with less to give room for the latter’s ranking which determines their wage at the bi-monthly tournament.
The second and third chapter evaluates how real estate and drug dealing have been incentivized, and the American society lives by that fact. The fourth chapter, however, portrays a controversial material on the 1990 crime drop in America. Even though it is widely associated with the American 2nd amendment, which stresses on gun control and police presence, the authors claim that the drop is attributed to affordability and legalization of abortion. They argue that abortion prevents the birth of children who would otherwise be exposed to 50 % likelihood of poverty and resort to crime.
Lastly, the authors examine the probability that the name given to a child, affects its long-term life. They examine how racially distinct names can affect the success of a child. They affirm that study has proved that white names are likely to receive interview requests that black names. Black names distinctively do correlate with a low-quality life since they are stereotyped to originate from low-income households, low education family bases, and crimes.