Freakonomics : A Rogue Economist Explores the Hidden Side of Everything

Authors: Steven Levitt and Stephen Dubner
Publisher: William Morrow (May 1, 2005)

The issue that got a lot of press was the authors' assertion that a reduction in the crime rate across the entire United States could be correlated against the Roe v Wade decision in 1973 that legalized abortion, thereby reducing the number of unwanted children that would inevitably grown up and become criminals in their teens-- starting right around 1990.  There is a bit more detail in the book, of course, and in the end the argument is plausible.  However, there seems to be a running theme that correlation does not imply causality, and even in this case I'm fairly certain that someone could make a legitimate counter-argument.  They do present a rather complete accounting of the "other" arguments commonly used to explain the crime rate reduction, so I would consider the abortion correlation a well-defended causal explanation of the reduced crime rate.  Your mileage may vary.

In general, the book goes into the analysis of scenarios one comes across which can be analyzed using economietric techniques, relying heavily on the avilablity of good and copious data.  There are some leaps made using this data where data is not universally available.  For example, data from Chicago schools is used to support a cheating-teacher thesis, and data from California birth records us used to support general trends in child naming correlated against race and socioeconomic status.  Having in lived in California myself, I can't automatically accept that a ton of data from there explains behavior of, well, anyone else in the United States, but I suppose the assertions made from this data should be classified as "interesting" in any case. 

I was ever-so-slightly put off in the first chapter, where the author dismisses claims about the classic "8 glasses of water per day" recommendation, suggesting that nobody ever showed a causal relationship between water intake and health-- some of us know that 8 12oz. glasses of water is 96 oz. is about equal to 2.8 Liters of water.  That's also 2800 mL of water, and liberating one Calorie [1 kcal] of energy during digestion requires about 1 mL of water, and you can correlate that with the recommended 2000-2500 Calorie/day diet on which the water intake recommedation is based.  That that wasn't mentioned definitely took a point away from the overall score, because I'm asked to believe the other researched assertions on top of this fumbled one. A minor point, but it still stuck with me.
[Note: I had left some place-holder numbers in there... they were 8x8oz glasses of water, which is not about 2.0 L.  Anyone checking the math? -dh]

One scenario explained in the book was particularly disappointing because it was so highly topical.  That would be the argument that the candidate in an election with the most money does not always win.  Here again-- but with more discussion this time-- the author seems to offer an explanation for a general case election where everything is done above boards.  Given the machinations we all witnessed in the 2004 presidential race-- 509 organizations and their influence, extremely strong negative campaign strategies, strategic appeals to voting blocks on a huge scale, etc-- it's hard to dismiss the power that a campaign has to wage an extremely broad-based effort without money, and with the election being as close as it was, I found the amount of discussion on the topic minimalist.  The 2004 election is actually probably a worthwhile topic for a similar book that might explore the economics of the popular vote, the electoral college, and how campaigns collect and spend money.  What a dry book that would be.

On a more positive and even more topical note (though this was not quite topical when the book was authored).  The issue is the abhorant practice of lynching, and the author describes how the number of lynchings taking place over time actually decreased sharply.  The explanation is that the fear of lynching was as effective as lynching itself, and he claims the numbers show this clearly.  This is part of a larger discussion that includes the Ku Klux Klan and is one that went on a bit long, but the statistics on lynchings over time were interesting given the recent US Senate apology offered for their lack of legislative action during the 1960s to combat this practice.  While any more than zero lynchings is barbaric, no one in the media brought up this aspect of the problem as the Senate apology news came out.  In essence, the Senate took no action to address a problem that was decreasing significantly in severity over time.  Some insight into the reasoning back then-- was this viewed as a travesty that was taking care of itself?-- would have been extremely interesting.

On the whole, the book is interesting, because it does give one pause.  As they state in the book, "Morality often describes the way things should be, Econonomics describes the way they really are."  A simple statement with huge implications.  The sections about real estate agents and cheating teachers were particularly interesting, because they both represented tangible human behaviors that we can all come across day-to-day--  issues and scenarios not nearly so weighty as the others I touched on above.  I came away with a new appreciation for the way some situations can be better-interpreted based on available information.  The trick, of course, is to obtain and properly treat and interpret that available information, and this book most certainly does not attempt to cover the nuances of econometrics.  Perhaps another book is forthcoming to cover this.

In the end, the author lives up to a promise made up front, that the book would wander all over the place.  There is a nice little twist at the end that-- to me reminiscent of a Paul Harvey commentary for some reason--  ties up a couple of things with a nice "ahhh" factor.  It's a great read, quite interesting, and probably most imporantly stimulates further thinking on these matters and the methods he uses to explore and explain them.  Maybe wait for the soft cover, though I managed to get it for 30% off at my local bookseller, at a price that actually matches online sellers.  Grab it.