From the book Freakonomics, Stephen D. Levitt and Stephen J. Dubner use personal curiosities and observations in unveiling how modern and real world issues often influence the world’s economies. Levitt and Dubner Embark on exploring the book’s thesis which points out how basic economic theories can be utilized in explaining and analyzing a diverse array of various social phenomena. Freakonomics showcases how various systems of various incentives, arrays of information as well as other economic theories influence our social behaviors on a large scale and not just our economies.
After reviewing both chapters, it became evident that Chapter 2 is the strongest chapter. This is because the chapter identifies with the central thesis book which explores how various systems of various incentives, arrays of formation as well as other economic theories influence our social behaviors on a large scale and not just our economies. The chapter also unveils how social behavioral patterns and incentives influence our economy in one way or another. The chapter begins by revealing the hidden secrets of the Klux Klan and how it managed to influence those who considered it as an enemy. This is clearly illustrated when the authors cite that “The Klan was in cahoots with political, business, and law enforcement leaders. The public was frightened and felt powerless to act against the Klan”, (52).
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In the chapter, the authors optimizes a number of perspectives to help illustrate how most experts like real estate agents use the power of information to make ends meet. This becomes evident when the authors cites that “The Klan Unmasked, Kennedy’s memoir of his exploits “inside” the Klan, is in fact more of a novelization than a straight nonfiction account”, (52). Thus, the Klan becomes a classical example of how information asymmetry can be a powerful tool in shaping economic status of any people. The authors cites that this usually occurs when one person or when a group of individuals happen to have more information than the other person or group.
On the contrary, after reviewing the book, Chapter 3 stood out as the weakness chapter. This is because the chapter uses minimal perspectives in supporting book’s thesis of how various systems of various incentives, arrays of formation as well as other economic theories influence our social behaviors on a large scale and not just our economies. This is clearly illustrated when Galbraith states that” Economic and social behaviors, Galbraith continued, “are complex, and to comprehend their character is mentally tiring. Therefore we adhere, as though to a raft, to those ideas which represent our understanding”, (80)
The chapter focuses on analyzing the Black Gangster Discipline Nation. The chapter proceeds by elucidating its hierarchy and how its profits are often distributed. The chapter also compares this drug dealing organization to large corporations. Levitt and Dubner cites that just like the corporate America, the highest-ranking member often have the privilege of taking the lion’s share of profits. Though the chapter seeks to explore how the various systems of incentives influence our economy, it does not extensively explore other aspects such as the economic theories and arrays of information as witnessed in chapter 2. This is shown when the authors cite that “Drug dealers are rarely trained in economics, and economists rarely hang out with crack dealers”, (83). Moreover, the aspect of comparing drug dealing to corporate America does not support extensively the central idea of the book in a practical setup.
2. How Is the Ku Klux Klan Like a Group of Real-Estate Agents?
Cahpter 2 discusses the Ku Klux Klan, which was founded by six men with an initial intention of doing harmless midnight pranks and later began targeting and lynching Blacks and Catholics (51), “ It concerned itself not only with blacks but also with Catholics, Jews, communists, unionists, immigrants, agitators, and other disrupters of the status quo”. The secrets of the clan were unveiled by an undercover writer, Stetson Kennedy, who secretly joined the group and moved up to the ranks of Klavaliers, the Klan’s secret police. In an effort to explain how obtaining information is, Levitt and Dubner state that, “He also attended public Klan events and, as he would later write, he even set about to infiltrate the Klan in Atlanta”, (51). Information regarding the secret group were later unveiled over a radio show and this information turned the group to a mockery hence its drastic downfall. The chapter is more effective as it explains how Kennedy’s success was mainly attributed to the clan’s power of information which had been kept a secret from the world. Levitt and Dubner cite that, “Regardless, there was great information to be gleaned from this Brown/Kennedy collaboration”, (53).
This case was not different after the advent of technology since it led to the downfall in the price of term life insurance due to the ability of consumers to effectively compare prices of different policies. The authors state that, “Shopping around for the cheapest policy, a process that had been convoluted and time-consuming was suddenly made simple”, (60). The possession of information has also been balanced by the internet and consumers are able to access information about products and services and make decisions.
Levitt and Dubner again establish the concept of the power of information in the case of real-estate agents who take its advantage. Levitt and Dubner state that, “Experts depend on the fact that you don’t have the information they do”, to show how the power of information (63). Additionally, real estate agents induce fear and convince their customers to sell their houses at lower prices than it could have been if it had stayed in the market longer. Specific words like granite and maple tend to relate with high selling prices while phrases like charming and fantastic tend to correlate to lower selling prices. The writer further explains that the power of information is often portrayed by people in different situations like during first dates or job interviews.
3. Why Do Drug Dealers Still Live with Their Moms?
Chapter 3 of the book talks explore how drug dealing is conducted in Black neighborhoods. The hidden side of drug dealing and why drug dealers still live with their moms is unveiled by the writer severally in this chapter. To begin with, the story behind the large drug cartels was merely known and the writer uses a character by name Sudhir Venkatesh, who is a trained economist to try and understand the secrets of the drug trades.
The University of Chicago graduate uses a questionnaire to first meet the gang members and after a long conversation, they become friends and learn to trust each other. The combination of Sudhir and the drug dealers is appropriate as it seeks to explain how the drug dealers operate their cartels without much knowledge in economics. To emphasis the point of economists and drug cartels, the writer states in page 83 that, “Drug dealers are rarely trained in economics, and economists rarely hang out with crack dealers”. Sudhir later comes to learn that one of the reasons why drug dealers lived with their mum was to provide some needs for them as they would do anything to put food on their table.
To support this, the authors state that , “We ain’t got no choice, and if that means getting killed, well, shit, it’s what niggers do around here to feed their family”, (87). After some years of trust, Sudhir came in contact with the selling records of the organization which was given by one of the members of the gang following an indictment. Sudhir and his friend Levitt learnt that the gang operated in ways similar not different from most business like the McDonald’s organization and even had ranks from top to bottom including members receiving minimum wage. Moreover, the organization comprised of employed officers, treasurer, enforcers, runners, and foot soldiers.
The number of people under the organization was large as stated in page 89, “At the very bottom of J.T.’s organization were as many as two hundred members known as rank and file”. The gang’s respect for their families is also illustrated in page 91 where J.T. states that, “You got to respect the family”, when asked why he gives financial aid to families of fallen dead gang members. The gang was also supported by their moms in case an emergency occurred as illustrated by Sudhir. Levitt and Dubner state that , “He bought toys for their children; he once watched a woman use her baby’s bib to sop up blood of a teenaged drug dealer who was shot to death in front of Sudhir”, (88).This largely explains why drug sellers often stay with their moms despite making good money.
Conclusion
Levitt and Dubner explore the behavioral patterns often implicated with the economy, citing how the incentive influences the economic aspect of the society. The authors point out the various behavioral patterns in society and how these behaviors shape our ideas and actions in impacting the global economics. Levitt and Dubner seek to answer questions like why drug dealers live with their parents and yet they make good money. They also seek to explore the relationship that exists between the Ku Klux Klan and real estate agents. The authors goes ahead and unmasks the subtle systems that exist within society that often influences how everything operates from issues such as a house being sold to high impacting issues such as systematic crime.
