Freakonomics – The Hidden Side of Everything

It’s a good book. I liked it, and I’ll summarize the findings. First of all, I’ll say that it’s an extraordinary book, where the opinions presented are based on research.

What do sumo wrestlers and schoolteachers have in common?

This chapter discusses how motivation affects people and shows that even professionals in respected fields, like teachers and sumo wrestlers, may cheat if it benefits them (of course, not all, but a significant number do).

For example, there is an algorithm that, by analyzing student test results, identifies teachers who provided students with answers before the test.

How are the Ku Klux Klan and real estate agents alike?

This part talks about how people often use the asymmetry of information to achieve results. The Ku Klux Klan was a secret racist group in the U.S. that caused much harm, but the group disbanded after one of its secret plans was exposed by a mysterious member through radio broadcasts.

Similarly, the author argues that real estate agents use the asymmetry of information to convince property owners to lower their prices. They use indirect messages to persuade the owner to reduce the price. In this way, the agents secure the transaction and lose almost nothing.

Why do drug dealers live with their mothers?

The book examines the financial side of the cocaine business and the motivation system of dealers. It shows that those on the lower levels of the hierarchy earn less than waiters in restaurants, but because they hope to rise to higher levels in the future, they are willing to risk their lives.

Where did the criminals go?

Crime has significantly decreased since the 1960s. The book shows that the usual arguments for why crime has decreased are actually unrelated, and the decline was caused by other, unexpected factors.

For example, the increase in the number of police officers, better crime strategies, and improved living standards are all arguments that don’t actually affect crime reduction. So, what did reduce crime?

According to the author, three factors are responsible for the decrease: 1. The increase in the number of prisoners (naturally); 2. The drop in cocaine prices (the business was no longer as profitable due to an increase in supply); and 3. The legalization of abortion (since people who typically seek abortions are those unable to properly raise children).

The author also notes that one in four pregnancies in the U.S. ends in abortion, and the number of people killed during the peak of crime doesn’t even come close to the number of lives lost due to abortions.

What makes us good parents?

The book discusses a study conducted on 20,000 children. A list of factors believed to influence a child’s education was created, and a regression analysis was performed. The results were surprising.

For example, factors like taking a child to a museum or regularly reading books to them have zero impact. However, factors like the parent’s socio-economic status or IQ are influential. The book summarizes 8 influential and 8 non-influential factors that will surprise you.

The main conclusions are: 1) A child is more influenced by their peer group than by their family; and 2) It’s more important “who” the parent is rather than “what” the parent does in the upbringing process. In other words, parenting starts with self-development decades before the child is born.

The book also discusses the topic of names – whether a child’s name influences their future, and provides statistical analysis on common, branded, and unbranded names.

In short, it’s a good book…

Freakonomics – Steven D. Levitt & Stephen J. Dubner

www.freakonomics.com