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on January 17, 2017
I’ve heard of this book for years, but never bothered to read it because I was already an economist and didn’t think I needed to read a popular summary of Steven Levitt’s work.[1] My impression was that the book summarized his work in a popular (non-academic) style that helped people understand what economists do. I though that the book was useful in this respect in helping people understand what I do. Indeed, the most common reaction I get from people when telling them that I am an economist is that they have read Freakonomics, which implies that they have at least seen some work similar to what I do at aguanomics.[2]

It turns out that I was mistaken in my initial beliefs.

I just read this 2004 book 2006 revision, and it's made me think a bit more about how we (economists) communicate with the general public, and I think that some ways are better than others. First, there are textbooks, which describe the tools that economists use to put their theories into practice. Many many people have told me “I didn’t learn anything in economics. All I remember was a lot of math and curves.” This depressing outcome results from lecturers who merely reproduce problems and equations on the blackboard, without helping students understand either why those theories are used or how they came to be so popular with economists.[3] Second, there are books that explain how economists think or how their thinking has evolved as they have tried to understand and summarize the people’s behaviour. These books, in my opinion, are the most interesting — and challenging — because they push people to revisit their assumptions and perspectives.[4] These are the books that I would recommend to people looking to “think like an economist” or, to be blunt, to think more accurately about how they and those around them actually behave. Third, there are books like mine [pdf] that try to explain how to improve failing policies using basic economic insights and incentives. Finally, there are books like Freakonomics that reproduce academic papers in a popular form. These books — like Economic Gangsters — give the public a limited vision of research without explaining the struggles of getting the right data or explaining the limitations of theories that are used (or not) in the final paper.

Freakonomics is therefore NOT the book that I would recommend to anyone interested in (a) learning economic theory, (b) learning about how economists think, or (c) understanding the world or thinking of ways to improve it.

This book with a memorable (but useless) name provides readers with just-so stories that are good for cocktail conversations but not for understanding economics.[5]

For example,
Legalized abortion explains the drop in crime in the US. Not only do Steve and Steve back off from the main claims of the original paper (they add other factors), but this theory has been falsified by others (see this and this). What struck me is their ongoing attempts to hold onto at least some elements in the original claim in later blog posts in what I’d call a “my-ladydoth-protest-too-much” manner.
Real estate agents serve themselves better than they serve clients when selling their own homes. As a former real estate agent, I had to agree with their basic premise, but I thought their explanation too simplistic.[6] The most obvious problem is that agents have an entirely different understanding of themselves as sellers as well as of the markets. Surely that different information (and the resulting “patience” that gets them a higher price as sellers) matters?
Looking over their other chapters (on cheating sumo wrestlers, drug dealers who live with their moms, the KKK as a multilevel marketing organization, etc.), I agree that the chapters are interesting and thought provoking, but they do not provide “lessons on the hidden side of everything.” Instead, they read like a series of magazine articles whose quirky “insights” might contribute to your next cocktail conversation.

The authors say that they want you to ask more questions and see the world differently, but what tools have they given to you in this book?[7] I didn’t detect any reliable technique (except perhaps to collect a neat dataset and call Steve Levitt), and that’s where I was disappointed. Freakonomics does not really reveal the hidden side of everything. Indeed, it’s more likely to mislead you into thinking you’ve learned something, when you’ve only learned an interesting angle on a complex topic on which you may lack either the experience or methods needed to put it into a useful context.[8]

Take their example of the “underpaid” drug dealer who they say faces a higher risk of death than someone on Death Row in Texas (and thus must be overestimating the gains from their job). Does this statistical analysis mean that those street dealers are irrational? I don’t think so. As all economics students learn, you need to look at their opportunity cost (i.e., the costs and benefits of their potential other choices). In this case, street dealers are (a) NOT condemned to death, (b) not able to find other work with their experience, and (c) not aware of their statistical mortality as much as their potential wealth. Those street runners are “taking their chances” in the same way as Americans are “living the dream,” i.e., in ignorance of reality.[9]

Bottom Line: I give this book THREE STARS. Dubner and Levitt present interesting puzzles worthy of cocktail conversation, but they overstate their contributions and accuracy (“numbers don’t lie” but theory can be incomplete or just wrong). I suggest that anyone interested in understanding how economics works and applying those lessons to “the hidden side of everything” read Economics in One Lesson by Henry Hazlitt. It’s free to download and provides a really useful perspective that anyone can apply to any topic they care about.[10]

(1) I’ve met Steven Levitt. He's a fine person and excellent economist, but this book is too “pop” in its oversimplification of his work and hagiographic treatment of his insights. Yes, he brings interesting statistical tools to“freaky” questions, but he’s not a “rogue economist exploring the hidden side of everything.” He’s just a guy with a dataset and empirical theory who finds some strong correlations. As I explain later on, he does not deliver the last word on pretty much any topic in this book. (It's interesting to see the two authors pooh-poohing people's objections to their claims in this revised edition. I get the impression that their answer is "bestseller, bitch!" more than "hmmm..., maybe we claimed too much.") Also see note 8.

(2) I wrote on the human right to water and oil and water for their Freakonomics blog.

(3) I published an article [pdf] on how students don’t really understand the “downward sloping demand curve” because its form is based on advanced techniques they won’t see for a few more classes (meaning "never" for those who take one class or drop the major).

(4) Of those I have reviewed, I recommend Small is Beautiful, the Calculus of Consent, the Company of Strangers, Predictably Irrational, etc.

(5) "Freaky" anything sounds bad to me, and "freaky" economics -- unlike most economics -- isn't useful to most people. Even worse, there's nothing freaky to the stories in terms of the economics. I wish the authors had spent more time on the basic economics (making the book a useful learning experience) and less time defending empirical research that is interesting and provocative but not really wise.

(6) I corresponded with Levitt’s co-author on my objections to their working paper back in 2005. The main one was that their analysis missed the most important point: it’s better to have an agent than not to have an agent — an obvious insight that saved me about €10,000 when I bought a flat in Amsterdam. Going further, would an agent work harder for you if their commission was a flat rate rather than a percentage of the sales price? They harp about commissions as detrimental to the client’s interest due to the small share of the additional profits an agent gains from working harder on your behalf — e.g., 3% of another $10,000 is only $300, but why would an agent work any harder on a flat-rate commission? In my experience, agents love on referrals from old clients, which may explain why they work hard "despite the weak incentives."

(7) My definition of an expert is “someone who knows what’s missing.” As an example of this, I give a fourth reason why it’s NOT irrational to vote (they give three weak reasons in the blog post included in their revised edition), i.e., the benefits to an individual from study and engagement in a topic.

(8) My years of experience traveling in 100+ countries leads me to respect the diversity of beliefs and institutions that result in a variety of outcomes. Most academics need to exit the Ivory Tower and hit the road more often.

(9) On page 134, they write “The typical parenting expert, like experts in other fields, is prone to sound exceedingly sure of himself. An expert doesn’t so much argue the various sides of an issue as plant his flag firmly on one side. That’s because an expert whose argument reeks of restraint or nuance often doesn’t get much attention.” They need to apply the same critique to themselves. (They cite themselves in later chapters — p139 on abortion and crime — as if their earlier claims were facts.) As another example, take Dubner on page 199, who writes “that paper [on police officer counts and crime] was later disputed… a gradate student found an obvious mathematical mistake in it — but Levitt’s ingenuity was obvious.” I’m not sure I’d say the same about someone whose claims rested on logic with “obvious mathematical mistakes”!

(10) Hazlitt says "the art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups," which he summarizes as "...and then what?" That's a good question, and it's how I can easily predict that cheap water prices will lead to failing infrastructure or water shortages, why climate change is arriving "too fast" (due to a lack of carbon taxes), and so on. I'd prefer people to ask "and then what?" more often and spend less time showing off their knowledge of cheating sumo wrestlers.
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on December 16, 2015
Very interesting read about everyday statistics and how they explain our motivations. The writers challenge some predictions and show us, with numbers, that what we predict may sometimes be different from what happens in actuality and how people think. It's a good insight into what motivates us into doing or not doing things. It is very well written. I got the audiobook version and it was very entertaining. I even let my kids listen to some parts of it. It's one of those books where you can start at the beginning middle or end and enjoy it every time. I bought a few copies as gifts for my kids' history teacher, math teacher, and language teacher. Also, a gift for my uncle and for one of my friends. Recommended. I think it's better than the following books but they are also entertaining.
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on February 10, 2014
I think I assumed this book would be dry, boring or simply not something that would interest me. Needless to say, I was wrong! This is a very readable book and I read it much faster than I would have expected. The extended / expanded edition contains a bunch of extra articles and blog posts that they've written since their book was originally published which makes the book look larger than it is really.

I found the book to be nowhere near as dry as you might expect and occasionally laugh out loud funny or thought provokingly interesting. The authors touch upon subjects that would be of interest to most people like the actual effects of good or bad parenting, how to detect if a teacher is helping her kids cheat on state exams, why drug dealers still live with their parents, why crime rates dropped unexpectedly and what a baby name might tell you about said baby’s parents and the baby’s expected life.

Of course all of the “answers” in this book are just statistical probabilities and not hard and fast truths. I’m sure there are lots of exceptions to the rules and probably other angles at which you could look at some of these questions as well that might result in different answers. But I loved the overall concept of the book: the idea of looking at a question differently and not taking information at face value is definitely a useful thing to keep in mind.

The book definitely brought about a lively and interesting book club discussion. I’d say by and large, most of the members of my book club group enjoyed the book. I’d definitely recommend it to anyone who’s been on the fence and considering reading it.
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on May 3, 2014
University of Chicago professor and Economist Steve Levitt and Journalist Stephen J. Dubner are the authors of "Freakonomics" an insightful, informative, ingenious, and witty non-fiction book that seeks to discover "The Hidden Side of Everything." Probably the most profound topic to which Levitt is the lead researcher is legalized abortion; this chapter is called "Where Have All the Criminals Gone?" Since 1973, the Roe V Wade law was passed, legalizing abortion nationally. However, what Levitt has discovered since then was that crime rates in the 1990's had a precipitous dropped from an all-time high in the 80s. Going through all of the possible theories that may have contributed to the drop in crime, such as harsher prison sentences, more police, and better economy, to Levitt, one plausible cause was left out--Legal abortion. With convincing evidence, Levitt believes that those likely to have an abortion before and certainly after Roe V Wade were single, poor, young and uneducated women. He went on to describe some states like New York and California, which had legal abortions before 1973, saw crime drops before the law was passed nationally. These children, described as unwanted, Levitt explains the link between crime and an unwanted child. An unwanted child would have had likely been raised in a single-parent home, exposed to abuse, neglected, and unloved by the caregiver. The child would then grow up adapting criminal attitudes and behaviors like petty crimes and displaying defiance. Suddenly, the child comes of age as an adult and is already a career criminal. The solution by Levitt suggests that since Roe V Wade in 1973, crimes in the 90's simply dropped because the babies that likely would have committed the crimes weren't born to commit them.
To readers, at first glance, this may come as immoral and disturbing and some would even berate Levitt for such explanations. For Levitt, it is a solid explanation that best explains what led to the largest crime drop during the last decade of the 20th century. Levitt does provide some good reasonable arguments to the crime drop of the 90's. However, this may be viewed by some readers and crime pundits as irrational.

I choose to write my whole review based on the Roe v Wade and correlation to crime drop because I thought it was the most significant finding in the book. There are other very good segments, for instance, "What do School teachers and sumo wrestlers have in common?", "Why do Drug dealers live with their Mothers", and "What Makes a Perfect Parent" very good information on those findings. Overall, "Freakonomics" is a magnificent book that combines human behavior and economics; it explains how economics influence human behavior. It also challenges conventional wisdom; what people tend to believe is​ the explanation of certain things. In "Freakonomics," The authors attempt to counter this by displaying that actual raw data tells a different story.
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on August 7, 2017
While I'mnot generally inclined to read economics books, Freakonomics is very, very accessible. The book is written in clear, readily understandable language (including the best description I've ever seen of regression analysis, causality, and correlation). The topics discussed are quite interesting - why crime REALLY went down in the 90's, the impact parents can REALLY have on their kids, and several others. Whether one ultimately agrees with the authors' conclusions or not, the book certainly encourages you to think about everyday things more critically and not just accept the conventional wisdom.


My only disappointment is that the book wasn't longer!
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on February 19, 2018
I had been wanting to read this book for years and finally did. I found the most interesting aspects to be about how to ask the right questions more than any real significant findings. The book shows that popular opinion is not always correct all while acknowledging that there are always exceptions to the rules. The book was an interesting read but many people will find the concept of analyzing data outside of biased emotion to be expected, although probably not the norm.
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on June 30, 2014
I've wanted to read this for quite a while and finally got around to it. As the title suggests, it's a discussion on freaky economics. I know those two words tend to not be used together in the same sentence, and that's what makes this book fun ( which is another word not usually used to describe economics.)

Creative and controversial, Levitt has the ability to take uninteresting statistical data and spin it in ways that can totally change the meaning usually assigned to it. It's, among other things, a lesson on the fact that data can be interpreted ( and manipulated ) in many different ways, some biased, some not as much. Personally, I think all data is unavoidably subject to the bias of the interpreter.

Generally, I don't expect books about economics to be particularly entertaining, but Levitt and Dubner have taken a rather dry subject and made it very readable and interesting. Will you agree with them? Very possibly not. There's discussion about very touchy topics (for example how Roe v. Wade has affected crime rates), but if you're open to alternative interpretations of data, at the very least you'll be entertained. Can't wait to read the followup books.

If I have one gripe about this book, it's that I wanted it to be longer.
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on March 25, 2014
I bought this book years ago for one of my sons to help him understand how economics applies to the real world and to disprove some common myths and conventional wisdom.

The author's first chapter asks the question, what do school teachers and sumo wrestlers have in common? The heart of the issue is what motivates us? Money, punishment or recognition? How do we achieve goals? Who will cheat or how high do the stakes have to be for one to cheat? If a teacher's future is on the line, how far will they or anyone go in order to keep their job?

Or think about it this way, remember Enron? How far did greed push people? In the book, the economists use the example of the Chicago Public School system. Excellent example that will remain timeless.

In chapter 2, they ask the question how is the Ku Klux Klan like a group of Real Estate Agents? You can't imagine they are, can you? Other than the Klan's power had grown and derived in large part because it hoarded information. If that information fells into the wrong hands, the group's advantage disappeared. The same can be said of real estate and life insurance agents. Think about the power of their information.

In Chapter 3 they ask, why do drug dealers still at home with Mom? They describe the gang, their perspective, unwritten circuitous rules, revenues, organizational structure, mercenary fighters and overall economics.

In Chapter 4 they ask where have all the criminals gone? They question the correlation of criminals, crime and the economics of unwanted children. In this chapter they evaluate the rise and fall of homicide and the correlation to abortion. The numbers are startling.

A refreshing read that makes one want for more.
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on March 29, 2010
Freakonomics by Levitt and Dubner doesn't overflow with numbers, what it does is tell the story behind them and it is very enlightening. This is a book that makes you think. If thousands of women want and get abortions (Roe verses Wade1973), and seventeen years later violent crimes plummet, does that mean abortion is good for crime prevention? Obviously a lot of teenagers did not begin their life of crime because they just weren't there, but there is no way for us to know how many Albert Einsteins, George Washington Carvers, and Thomas Jeffersons were mixed in with this missing group either. Big populations are good for the state, more votes! More babies born in the Parish mean more money and support for the church, but what about the children whose mothers despise them? These are some of the things the book made me think about. This is a book that makes you ask yourself hard questions.
This is also a book about money and experts. Why should my real estate agent help me get the best deal for me when it's not a good deal for them? After you read this think about every real estate deal you've ever been involved in, it's very educational. After reading about real estate agents and the ku klux klan you'll have a much better understanding of the importance of information balance and how the experts you trust, make their money.
The most important numbers for me were those of teachers who don't or can't teach their students so THEY cheat on testing to make themselves look good and dump their unprepared pupils on the next grade up. Creating the software that catches those teachers who steal our tax dollars while robbing our children of their education was a thing even greater than writing a book to tell us about it. The education you get from this book will pay you many times over for its cost.
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on March 20, 2014
The book is a great read and a useful one. The book vaccinates the reader against spurious "logical" explanations of economic or political phenomenon. Perhaps someday this will be required reading for journalism schools...

Some important topics are analyzed: crime, parenting, heredity, pre- and post-natal environment, cheating in sports and in professions. The authors pose a puzzle and list the solutions that experts have proposed. The reader is engaged to consider what seems reasonable. And then the results culled from the data are presented. The results are always surprising and the science is impressive. I wish these folks were in charge of sanity-checking every politician's or pundit's utterance.

Given the effort of finding suitable data and sifting it, it is not surprising that the authors leave you wanting more. Fortunately there is more: Super-Freakonomics, which I just ordered, along with Kahneman's book on thinking. (Kahneman and Tversky wrote an early classic in this field, showing by experiment that conventional-wisdom and "reasoning" usually arrive at the wrong answer because of biases that helped us survive back when we were prey as well as predators.)

The appendix to my (recent) edition reinforces the integrity of the book by reporting on data falsification by an informant in one of the earlier chapters. Again, I wish that every expert were so transparent.

I found myself reading excerpts to friends. Highly recommended -- especially if you vote (there's a chapter on that, too.)
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