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A serious response to a non-serious work,
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This review is from: Freedomnomics: Why the Free Market Works and Other Half-Baked Theories Don't (Hardcover)
Personally, I liked Freakonomics. By pointing out "the hidden side of everything," it forces the reader to think about how things are connected in ways the average non-economist might not imagine. However, that's all the book is really good for. There's not a lot of serious economic analysis in there, only interesting ideas thrown about at almost at random. Thus, reading Freakonomics for the conclusions makes about as much sense as reading Playboy for the articles. For this reason, a book responding to Freakonomics shouldn't have been necessary. Given the buzz created by Freakonomics, though, it probably was, and Lott is as good an economist as any to do that.
For example, Levitt and Dubner wrote in Freakonomics that realtors keep their homes on the market a little longer than their customers do, and also make a bit more profit upon selling them. From this, Levitt and Dubner jumped to the conclusion that this meant realtors are systematically scamming their customers. Lott rightly countered with a much simpler and more straightforward explanation: every realtor follows his own sage advice, but not every realtor's customer does. Lott's conclusions regarding the interplay between crime and abortion are a bit more questionable. True, the fact that the U.S. and Canada experienced a similar drop in crime at the same time in the early 1990s, while Canada's version of Roe came a decade too late to fit neatly with Levitt and Dubner's theory, does appear at first blush to be problematic for their theory. However, at second blush it's not clear how how problematic that factor is, given that the very few Canadians live more than a couple hundred miles from the U.S. border, meaning that nearly all could have easily availed themselves of Roe in the interim. Lott is on shakier ground still when he argues that legalized abortion caused an increase in crime, while citing data equally consistent with the view that some other factor, e.g., the sexual revolution, caused both the increase in uncommitted sex (with or without contraception) and the push for legalized abortion. Given the relatively short history between Griswold and Roe, in which Americans enjoyed a "constitutional" right to contraception but not abortion, it's not clear we will ever know which factor caused the other. That said, Lott does appear to have made as strong of a case for the view that abortion causes crime as Levitt did for the view that it prevents it, thereby neutralizing the abortion-as-crime-control argument with which Levitt himself stops short of fully endorsing.
Lott has plenty of books filled with tables, linear regressions, and all that other geeky stuff few of us could understand if we tried. Freedomnomics is not such a book. Rather, it reads as exactly what it purports to be: a conservative reply to Freakonomics. Like Freakonomics, it is written to be accessible to the layman, not to provide the reader with a mountain of data supporting every conclusion. For this reason, I'd urge readers to read both books in much the same way: use both to help you recognize issues you may otherwise not have noticed, but take both books' conclusions on these issues with an appropriately sized grain of salt. And I'm saying this as one who agrees with many of Levitt and Dubner's conclusions, and almost all of Lott's.
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Showing 1-9 of 9 posts in this discussion
Initial post: Jun 26, 2007 7:34:57 PM PDT
Too Cold in Madison says:
How is the claim that it's stupid customers rather than selfish real estate agents that account for the longer sale times and higher prices "simpler and more straightforward"?
Posted on Jul 5, 2007 11:18:37 AM PDT
Joao de Faria says:
Someone check this reviewer's IP! Remember the Mary Rosh's controversy?
Reason Online: "The Mystery of Mary Rosh".
In reply to an earlier post on Dec 21, 2007 8:04:35 PM PST
Xrlq did not describe what Lott wrote correctly. The conclusion that Lott draws is that it should be expected that realtors make more money from home sales for the same reason that personal trainers are in better shape than the people that go to them for help. The average person just doesn't have the knowledge, experience, discipline, etc. to benefit in the way that professionals can. It's not that customers are stupid or that professionals rip the average person off, it's that professionals are better at their own profession than their customers.
Too Cold in Madison: It's pretty clear from your reply that you never read Lott's book otherwise you would have understood what Xrlq was saying. And you would know what Lott was getting at. In particular, what Lott gets at throughout the book is don't jump to conclusions. There are all sorts of variables to consider than the ones you may be thinking about, e.g., there may be some other explanation other than "stupid customers" or "greedy professionals" .
Posted on Feb 20, 2008 6:43:34 PM PST
Sheesh. It's not a new insight that large commission sales people have WAY more incentive to close than to try to extract more value. Even the reputation peice is not such a big deal. They work on that by appearing professional, etc. But the incentives are to CLOSE. Hang around with I-bankers (who laughingly refer to themselves as real estate agents) and you'll understand. Sheesh, I'm really honestly surprised that this is news to anyone. I can find many previous discussions of this concept wrt real estate agents.
In reply to an earlier post on Apr 17, 2008 12:28:45 AM PDT
Last edited by the author on Apr 17, 2008 12:31:42 AM PDT
Book & Music Lover says:
Given the mess we are in today, in the so called "Credit Crisis," and there appear to be holes in the so called era of deregulation. All the consuming public has gotten is robbed. Thank you Jimmy Carter.
I mean everywhere one looks, we are being nickeled, and dimed to death. Credit cards, cell phone bills, banking, insurance, and the like. They all have their hands in our pockets, in a scam kind of way, and most of us do not realize the different manners in which these big businesses rob us.
Then they say well it was all in the contract, a contract which most lawyers cannot read. Here is a novel idea, we are told the average American reads only on an 8th grade level, so instead of writing contract so that no one can understand the fact that they are "Crooks," write all contracts on an 8th grade level.
As for a free market, what free market? Mom and pop just got trampled.
In reply to an earlier post on Jun 1, 2008 8:38:39 AM PDT
A housing market bubble, credit crisis, or recession is a natural part of the business cycle. It is needed to cure the excesses of the free market. It is natural and not something to be feared.
Posted on Jun 7, 2008 5:48:16 PM PDT
Kerrie Fitzgerald says:
Very intelligent review of this book. I'm currently reading "Freakanomics" and definitely found some contradictions that make for pop culture interest that the average masses wouldn't question (such as chapter one being about most people, 85%, being ethical/moral when no one is looking and then stipulating that realators are somehow not ethical/moral in the next chapter....or the chapter about the egregious offenses of the KKK w/racism and yet the support of abortion through crime analysis when the black populace is reproducing at 1/4 of what it was in the 1960s---clearly abortion has hurt blacks the most and yet Margaret Sanger espoused racist views and so that's not surprising. Anyway, I'm hoping to read "Freedomnomics" next as I like Lotts statistical answers to Levitt and Dubner's work that I've read on line.
In reply to an earlier post on Jun 8, 2008 8:42:56 PM PDT
Andrew Elgert says:
1) The "credit crisis" (more accurately, "the credit crunch"), was caused by bad quasi-government policy. I say quasi-government policy because the Federal Reserve made the policy rather than the Congress or anyone else. Basically they lent money at much lower interest rates than they should have, so banks and lenders made mortgages to unqualified borrowers. The responsibility (and the current pain) is being felt by both right now and both are guilty. First, many borrowers lied about their assets in order to attain a mortgage loan. Many of these people expect the government to bail them out or (unconstitutionally) terminate their contracts. Second, many lenders didn't do due dillgence in checking lenders' financials. As a result, the bad borrowers lost their homes and the bad lenders lost their shirts.
2) I can't imagine that any person must, to survive, own a credit card, cell phone, bank account, insurance policy or "the like." In a free market, these things are voluntary and are contracted. Contracts go both ways, so if you want to contract, you can negotiate to get what you think is fairer, but only if the other party agrees. Just remember that if you are unsuccessful, you may both get what you don't want: nothing. Yes, contracts are draconian and written in legalese, but they are precise instruments meant to leave nothing to chance, since courts have often punished contractual parties for frivolous or nonexistent problems.
3) Mom and pop may have a nice shop, but Wal-Mart provides more goods at lower prices than mom and pop can. While we may have sentimentality for "small time businesses," I doubt we could argue that a poor single mother living paycheck to paycheck should have to pay higher prices at mom and pop's store when a cheaper alternative is available.
In reply to an earlier post on Jan 4, 2009 9:58:37 PM PST
Stergios D. Marangos says:
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