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O O K R E V I E W
There’s a reason why Steven D. Levitt and Stephen J. Dubner’s Freakonomics is at the top of the Globe & Mail’s non-fiction bestsellers list: it’s a rare gem of elevator economics where one adept scholar of the priesthood makes a rare descent from the Ivory Tower in order to bring fundamental economic truths to bear on everyday life. Elevator economics is a type of economics practiced by few academics, as it entails a succinct communication of often several abstractions without assuming prior knowledge of the subject area. It is, essentially, an explanation of economic thought within the time limit of an elevator ride; quick, constrained and usually in terms of analogies. For example, way back in Sunday school I learned in chapter four of the Biblical Book of Exodus that the prophet Moses went up to the mountain to talk to God. However, when he needed to relay the words to Pharaoh, he had his brother Aaron do it for him. Why is that? Moses and Aaron were probably the first literary pairing of the “ideas guy” and the “articulate guy”, and Levitt and Dubner represent such a pairing. Levitt, who has a degree from MIT in Economics and teaches at the famed University of Chicago’s Department of Economics has teamed up with Dubner, a noted contributor to the New York Times Magazine and the Washington Post, to present Levitt’s economic way of thinking in a way that is accessible, funny, sensible and downright offensive, but in a manner which differs from the Ten Commandments. One of Levitt’s studies, reviewed thoroughly in the book, examined the social role of the Roe V. Wade decision in the sudden decrease of the overall U.S. crime rate. The premise was simple; aborted crack babies do not grow up to become crack dealers. His study was greeted with scorn by Republicans and Democrats alike; the former were critical of any social benefits stemming from abortion whereas the latter interpreted it as an allegation that abortion could be used as a crime prevention strategy. But economics is not so much about offending people as it is asking questions about the obvious in a way that hasn’t been asked before. For example, it is a generally held truth that most crack dealers live with their mothers, or that names like “Bobby-Jo” are associated with trailer park residents. Typically, such observations are derided as stereotypes, as there are always exceptions to any rule. The economic way of thinking, however, examines such questions in terms of probabilities, defined in this case as the probability of selecting one crack dealer at random and finding that he lives with his mother, or that the guy with the Confederate flag hanging in his living room window is named Bobby-Jo. The issue isn’t whether or not one can find an exception to the rule; rather, it is the social impact of such stereotypes, as I’m sure rich crack dealers and investment bankers named Bobby-Jo could attest to. The most powerful concepts readers will understand after reading this book are the power of information, the importance of properly designed incentive mechanisms as well as the futility of examining issues from one dimension – that of common sense. Freakonomics ought to be used in first-year economics classes, not as a textbook, but as means to introduce the economic way of thinking to students. It is highly readable and while the lack of data may not please those with backgrounds in the field, it will certainly rekindle any recovering economist’s thirst for understanding the real world. 07/2005 |
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