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Essay on Freakonomics
An initial reaction to the book's title might be that this is another book poking fun at economists; however, beneath the semi-serious approach are some excellent examples of economic analysis. The senior author, Steven Levitt, is a professor of economics at the University of Chicago and received the John Bates Clark medal that is awarded every two years by the American Economic Association to the best American economist under 40 years of age. His collaborator, Stephen Dubner, is an author and writer for The New York Times.
The underlying theme of the book is an analysis of how incentives and disincentives influence economic behavior. In the book, Levitt does not offer heavy theoretical analysis or econometric models but rather focuses on phrasing questions and then analyzing economic data to provide answers.
The topics are many and varied. One is whether and why real-estate agents behave differently in pricing the sales of their own homes compared to pricing clients' homes. Another is whether the use of monetary penalties provides an incentive to parents to pick up their children on time at a day care center or whether the penally, which is less than the cost of a baby sitter, will rather encourage parents to leave the children until it's more convenient to get them. Using Chicago public school data, Leavitt searched for evidence of cheating by teachers in order to improve the test scores of their students, given that higher grades will be rewarded by teachers' promotions and salary increases. He also analyzed the reasons behind a significant drop in the crime rate in the nation's cities in the late 1960s, raising the question of whether the decrease could be attributed to more aggressive police work (the number of police increased while the crime rate decreased) or to an increase in the number of abortions, which may have reduced the number of potential criminals..........
