Introduction
Written by Steven Levitt and Stephen Dubner (2014), Freakonomics takes a novelistic approach in discussing the study of economics. The author begins by giving an overview of different segments he intends to cover in his book, including causation versus correlation, incentives, information asymmetry and the 1990s drop in crime. All six chapters of the book are separated to address a social problem from an economics perspective.
Summary of the Book
Chapter 1
This chapter talks about incentives and how they play a major role in decision making. For example, teachers in public schools will be inclined to cheat on the results their students get in high-stake exams so as to get promotions or to be retained in the institutions. Summon wrestlers may at times throw away a match to enable others to win so that they are retained in a tournament. The authors further categorize incentives into three, moral, economic and social incentives ( Holt, 2005 ).
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Chapter 2
Chapter two talks about information asymmetry. Levitt & Dubner (2014) compare the Ku Klux Klan to real estate agents. The Ku Klux Klan were not for retaining many secrets, most of which were known to but a few of the population. Same case applies to real estate agents who are known to have extensive knowledge on property. The population assumes that the main objective of these agencies is to sell houses at high rates but in reality, these agents strive to sell as many houses as possible in a short time span. Therefore, they may be inclined to sell houses at a cheaper price to ensure they meet their targets. These agents are also driven by incentives.
Chapter 3
In this chapter, the authors explore the similarities between crack dealers and many other businesses in the corporate world. People often assume that crack dealers are rich whereas in real sense, the wealth lies in but a few of the dealers. In the corporate world, there are many competent people competing for few employment opportunities. Those who manage to get employees are then paid huge salaries. On the other hand, the people at lower ranks get very little compensation, just as the dealers who risk their lives and end up getting very little payment ( Holt, 2005 ).
Chapter 4
Chapter four takes an interesting approach in explaining the decline of crime rate in the 1990s. The authors attribute this decline to the court decision made during the Roe vs Wade case. According to Levitt & Dubner (2014), many young and unable mothers took advantage of the legalizing of abortion thus reducing the population growth. If these children were to be born, they would have faced harsh living conditions leading them into crime during teenagehood. However, since they were never born, the risk of nurturing criminals was eliminated and hence the reduction of crime rate.
Chapter 5
This chapter examines the future outcome of a child based on the influence of the parent. The authors argue that external factors such as the type of school a child attends or the parenting technique the parents employ have little or no significance in the future of the child. Levitt & Dubner (2014) further claims that what the parents are is what determines the outcome of the child. Children born in wealthy homes have higher chances of becoming successful as opposed to those born in poor household. This is because often, parents are the role models of their children.
Chapter 6
This final chapter is a continuation of the fifth chapter in child development. The authors now explore the effects of a name given to a child on their success. For example, a person with a common Black name such as Deshawn is less likely to get a job compared to a Jake Williams, even though their resumes are completely the same. Another observation Levitt and Dubner make is that the common names from upper-class families tend to have a trickle-down effect, making those who have them have a higher probability of being successful ( Holt, 2005 ).
An Analysis
The book still has some criticisms. First, there is no unifying theme in the entire book. The authors have picked an array of topics randomly and tried to make sense out of them. Each topic is individually analyzed and there is no clear flow, albeit for the last two chapters that complement each other. Secondly, chapter six focuses on the naming of African American children and the effects of these names on their successes. The naming have correlations with the socioeconomic status. This is a contradiction of the agenda these authors hoped to achieve ( Holt, 2005 ).
Perception on the Respective Topic.
Nevertheless, Freakonomics challenges people to use the economic tools made available to interpret the world. It makes the study of economics more interesting by using relatable examples ( Holt, 2005 ). The authors further urge the readers not to be quick to make decisions on the basis on correlation as this may not always illuminate the cause and effect of the relationship. In addition, the authors reinforce the notion that information is power by discussing asymmetry of information. Lastly, Levitt and Dubner have managed to show the positive side of abortion by showing the impact of the act to the economy tears later. All in all, Freakonomics is a good read and people striving to have economics simplified should read it.
References
Dubner, S. J., & Levitt, S. D. (2014). Freakonomics: A Rogue Economist Explores the Hidden Side of Everything . William Morrow Paperbacks
Holt, J. (2005, May 15). 'Freakonomics': Everything He Always Wanted to Know. The NewYork Times. Retrieved from http://www.nytimes.com/2005/05/15/books/review/freakonomics-everything-he-always-wanted-to-know.html
