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Freakonomics Revised and Expanded Edition Paperback – April 22, 2020
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The legendary bestseller that made millions look at the world in a radically different way returns in a new edition, now including an exclusive discussion between the authors and bestselling professor of psychology Angela Duckworth.
Which is more dangerous, a gun or a swimming pool? Which should be feared more: snakes or french fries? Why do sumo wrestlers cheat? In this groundbreaking book, leading economist Steven Levitt—Professor of Economics at the University of Chicago and winner of the American Economic Association’s John Bates Clark medal for the economist under 40 who has made the greatest contribution to the discipline—reveals that the answers. Joined by acclaimed author and podcast host Stephen J. Dubner, Levitt presents a brilliant—and brilliantly entertaining—account of how incentives of the most hidden sort drive behavior in ways that turn conventional wisdom on its head.
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“Provocative… eye-popping.” — New York Times Book Review: Inside the List
“If Indiana Jones were an economist, he’d be Steven Levitt… Criticizing Freakonomics would be like criticizing a hot fudge sundae.” — Wall Street Journal
“The guy is interesting!” — Washington Post Book World
“The funkiest study of statistical mechanics ever by a world-renowned economist... Eye-opening and sometimes eye-popping” — Entertainment Weekly
“Steven Levitt has the most interesting mind in America... Prepare to be dazzled.” — Malcolm Gladwell, author of Blink and The Tipping Point
“Principles of economics are used to examine daily life in this fun read.” — People: Great Reads
“Levitt dissects complex real-world phenomena, e.g. baby-naming patterns and Sumo wrestling, with an economist’s laser.” — San Diego Union-Tribune
“Levitt is a number cruncher extraordinaire.” — Philadelphia Daily News
“Levitt is one of the most notorious economists of our age.” — Financial Times
“Hard to resist.” — Publishers Weekly (starred review)
“Freakonomics is politically incorrect in the best, most essential way.... This is bracing fun of the highest order.” — Kurt Andersen, host of public radio's Studio 360 and author of Turn of the Century
“Freakonomics was the ‘It’ book of 2005.” — Fort Worth Star-Telegram
“An eye-opening, and most interesting, approach to the world.” — Kirkus Reviews
“An unconventional economist defies conventional wisdom.” — Associated Press
“A showcase for Levitt’s intriguing explorations into a number of disparate topics…. There’s plenty of fun to be had.” — Salon.com
“One of the decade’s most intelligent and provocative books.” — The Daily Standard
“Freakonomics challenges conventional wisdom and makes for fun reading.” — Book Sense Picks and Notables
“The trivia alone is worth the cover price.” — New York Times Book Review
“An easy, funny read. Many unsolvable problems the Americans have could be solved with simple means.” — Business World
“Economics is not widely considered to be one of the sexier sciences.... Steven D. Levitt will change some minds.” — Amazon.com
About the Author
Steven D. Levitt, a professor of economics at the University of Chicago, was awarded the John Bates Clark Medal, given to the most influential American economist under forty. He is also a founder of The Greatest Good, which applies Freakonomics-style thinking to business and philanthropy.
Stephen J. Dubner, an award-winning journalist and radio and TV personality, has worked for the New York Times and published three non-Freakonomics books. He is the host of Freakonomics Radio and Tell Me Something I Don't Know.
Stephen J. Dubner is an award-winning author, journalist, and radio and TV personality. He quit his first career—as an almost rock star—to become a writer. He has since taught English at Columbia, worked for The New York Times, and published three non-Freakonomics books.
- Publisher : William Morrow Paperbacks; Expanded edition (April 22, 2020)
- Language : English
- Paperback : 352 pages
- ISBN-10 : 0063032376
- ISBN-13 : 978-0063032378
- Item Weight : 8.8 ounces
- Dimensions : 5.31 x 0.88 x 8 inches
- Best Sellers Rank: #9,676 in Books (See Top 100 in Books)
- Customer Reviews:
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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. 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. 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.
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. 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? 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.
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.
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.
(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.
Just one side point - although I really agree with the authors on how important it is to be able to ask questions, I think for normal readers who don't have access to adequate data and who aren't equipped with econ analytical skills, it would often be very difficult (if not impossible) for readers to verify their propositions. As humans tend to believe they are right, there is a risk that readers might believe in the wrong answer to their right questions.
Economics is called the `dismal science' because it is all about numbers, but in the hands of a rogue economist like Steve Levitt, with help from NY Times writer Steve Dubner, it yields some probable answers to a lot of questions. Why has crime decreased even though the population has increased? Why is a real estate agent in such a hurry to sell your house at a lower price, and does he do the same for his own house? How about sumo wrestlers, school teachers, on-your-honor donut clubs? Are they cheating too?
I'm not giving away any secrets in saying that Roe V. Wade, the 1973 ruling making abortion legal, is declared to be the cause of crime decrease in recent years; it is very well known that the book says this. Levitt does a masterful job of shooting down the `conventional wisdom' theories of strong economy, aging of the population, gun issues, etc., to finally show that abortions among certain segments of the population has reduced the criminal population. Very simply, there are a lot of criminals who were never born because of Roe V. Wade. Although I am 100% pro-life and remain so regardless of any book, I have to agree with his conclusion. Levitt re-iterates that the study of economics has no moral base and doesn't ask any moral questions, and, in fact, asks no questions at all. He also says that people are more comfortable with root causes they can touch or feel now and not far reaching causes from the past, and I can't argue with that. I was impressed with his right-brained mentality.
Levitt also tackles some sensitive issues like how unique `black' names seem to hold back the carriers of those names. Does it cause racial prejudice or is it a consequence of racial prejudice? There was a fascinating chapter about the most popular `white' names and `black' names according to the racial and economic backgrounds of the different population segments. He gives charts of the actual names even according to amount of education of the mother, or the age of the mother at her first childbirth. Also, we see that some sets of names chase other sets of names, and those other sets of names consequently move on.
You'll find, if you read the book, how important `information asymmetry' or information hoarded by experts is. Is someone who is handling your money keeping your best interests or his own best interests in mind? (Three guesses!!) He gives plenty of examples in the book. I can give you one that I'm personally familiar with (not in the book because it is so obvious). Financial advisors like to get their clients into loaded funds, which essentially provide an extra commission to them; independent outfits like Morningstar will tell you never to get into loaded funds because they are a rip-off. There is nothing illegal about that but it shows you how knowledge asymmetry can work against you when you trust an `expert'.
I was impressed how Levitt thought and his methods of coming to his conclusions, how he could do `regression analysis' on a topic by `controlling' for certain variables to screen out data `noise'. Thankfully, he doesn't get too technical on us, though he does give us some idea of his methodology. I think it's ingenious how he got economics to give up such useful information, and was able to explain it in a non-technical way.
It was a gutsy book and a fascinating read.