The Hidden Side of Freakonomics

The Hidden Side of Freakonomics

Freakonomics by Steven D. Levitt and Stephen J. Dubner is a book aimed at exposing the secret within everything. The authors prove that in many cases, two items don’t have to be connected because they are correlated. Moreover, two unrelated items can in fact be connected. Proving so was less difficult than it would seem. All it took was the right information. They were able to prove the most unlikely of correlations. The authors stress that in a world where incentives influence every action, information is priceless.

The authors show the power of information through countless examples. For example, it’s reasonable to say that innovative policing techniques would have caused the huge crime decline that occurred in the late 1990’s. Surprisingly, the cause was the ruling in the Supreme Court case Roe vs. Wade. By legalizing abortion, all the would-be criminals were being aborted as babies. A mother who has an abortion is typically young, alone, or has a dependency of some sort. A child being born into that environment is 50% more likely than average to live in a poor home and 60 percent more likely to live with the absence of a parent. Prior to the Roe vs. Wade ruling, only the relatively wealthy could afford an abortion. Babies born into those households would not have been nearly as likely to become criminals. By simply going to the data, the authors were able to see that there was an underlying and unlikely cause to this phenomenon.

Understanding that incentives rule our actions, and that having the right information can cause rationale to overpower our incentives, is key. In one day, the typical person will have hundreds of chances to lie, cheat, or steal. When they don’t, the incentive of gain is overshadowed by the knowledge of consequence. Now if the incentive is strong enough, say $100 million, knowledge of consequence may not outweigh the incentive of such a large financial gain. This can be applied to many aspects of everyday life. For example, a man hires someone to do a certain task. If the person knows they will be paid the same amount despite the quality of the work, their incentive to do a thorough job is nearly non-existent. Why work harder for the same reward? Contrastingly, if the employee knows that high quality work will receive higher pay, their incentive to perform well skyrockets.

The book provided me with a lot of unconventional wisdom, and a new way of