Friday, August 14, 2009

Freakonomics - A Rogue Economist Explores the Hidden Side of Everything by Steven D. Levitt and Stephen J. Dubner

Review by Bill Doughty
I would not recommend Freakonomics to anyone who knows exactly how the world works. Don't read it if you already have the answers to all of life's questions. It's not for people who are easily offended, either. However, for the rest of us, read on...

(Freakonomics at sea)

Written by a completely out-of-the-box economist named Steven Levitt, with help from New York writer Stephen Dubner, Freakonomics challenges conventional wisdom and assumptions on both sides of all fences.

key points:

"Knowing what to measure and how to measure is the key to understanding modern life," and "if morality represents the ideal, then economics represents the actual world."

Through measurements and analysis, and without being moralistic, Levitt spends most of the book presenting evidence of dishonesty in the actual world - cheating by Japanese sumo wrestlers, Chicago school teachers, day care parents, online daters, funeral directors, and bagel buyers, among others.
His conclusions are based on facts, metrics, and other data, and they are compelling.

The bad news: Many people will lie, cheat, and abuse power.

The good news: With the right incentives, the vast majority of people are, and remain, honest.

So what are the right incentives?

What do you think?

teases the reader to formulate his or her own opinion, but provides ways to step up and see over the fence.

Challenging conventional wisdom and superstition, this book promotes critical thinking. Take, for instance, the issues of abortion and gun control and their relevance to crime. Without making any outwardly moral judgments, Freakonomics explores these and other red-hot issues like the death penalty, crack cocaine, discrimination and the role of parents in raising children.
Some chapters may make you laugh, shake your head, or read passages aloud to your friends and family. A friend of mine couldn't resist writing arguments in the margins of his dog-eared copy.

Here are a few things you can discover in Freakonomics:

You'll see evidence that drug-dealing gangs have a similar business structure and hierarchy as McDonald's.

You'll learn that the Ku Klux Klan was a largely ineffectual group by the late 1950s, undermined by a children's television show.

You'll read the story of Robert Lane and two of his sons - one he named Winner and the other Loser. Which young man did well in life? How important is the name your parents gave you?

You'll see whether having lots of books in the home contributes to success later in life - which is intriguing information for supporters of the Navy's Professional Reading Program.

delves into the science of "cause and effect," "correlation," "nature and/or nurture," "fear," and the power of incentives in influencing behavior.

The three "basic flavors" of incentives according to Levitt are economic, social and moral. They are often most effective when combined such as in the U.S. anti-smoking campaign.

But, as asked earlier, what are the "right," most effective incentives in life?

Though not stated outright in the book, here’s what Freakonomics suggests: You can incentivize honesty, hard work, and good will by trusting in people, listening to them, and showing them love.

It’s that simple and that profound.

You don’t have to agree with all of the conclusions in Freakonomics in order to appreciate the authors’ courage in raising controversial questions, challenging assumptions and opening a dialog about critical, skeptical thinking.

Freakonomics is one of many great reads at the Navy Professional Reading Program. You can learn more about the program here.

For a cool Freakonomics essay by Tipping Point author Malcolm Gladwell click here.

To follow the Twitter-like Freakonomics blog at The New York Times, click here.

Special thanks to Roxanne Darling and Nathan Kam for use of their photos from an August 2009 embarkation to USS Nimitz. Roxanne left a really nice comment after the July 12 interview post with Prof. Jackson. I hope you'll scroll down and take a look.

1 comment:

Anonymous said...

Honestly, I haven't read many of the Navy Reading books, but this one may just make its way to my nightstand. Thanks for the great review, and congrats on the New York Times review.

Your friend, Mel