It is explained in the book SuperFreakonomics (2009) why thinking like an economist may assist us in better understanding our contemporary environment. Using colorful tales from human history, these notes explain fundamental economic concepts and the necessity of data collection. They also suggest unexpected answers to the global issues that we are now facing, such as climate change.
Who is the target audience for the SuperFreakonomics book?
- Anyone who is interested in interesting statistical truths regarding human behavior should read this book.
- Mathematicians and statisticians who believe in the power of statistics
- Anyone interested in learning about a very low-cost method of combating global warming should read on.
Who are Steven D. Levitt and Stephen J. Dubner, and what do they do?
The American economist, Steven D. Levitt, has degrees from Harvard University and the Massachusetts Institute of Technology. He has specialized in the study of crime and corruption for the last two decades. He is now employed as a professor at the University of Chicago.
Stephen J. Dubner is a writer and journalist from the United States who specializes in economic topics. In addition, he is the author of Choosing My Religion (formerly known as Turbulent Souls) and Confessions of a Hero-Worshiper, both of which are available on Amazon.
What exactly is in it for me? Data holds the key to solving society's problems.
Do you get enraged when you consider society's issues, whether they are global warming, terrorism, or illness, since there are no answers in sight? Why is it that there are so many intelligent individuals in the world who are unable to solve any problem? Why are they failing so spectacularly? Uncomfortably, many experts aren't searching for solutions in the most obvious place: cold, hard facts. This is an unpleasant reality. A disproportionate number of them base their ideas on the faulty memories and experiences of people, which leads to misconceptions and errors. Statistics, on the other hand, are unemotional, solid, and straightforward. These comments highlight a few of the more unexpected responses that may be found in the data. Reading them may cause you to reconsider your approach to issues and your search for solutions.
In these notes, you will learn why contemporary prostitutes are paid much less than prostitutes in the nineteenth century; why increased taxes contributed to the rise in the rat population; and why the answer to global warming may be to pump more pollution into the atmosphere.
Statistics can provide us with a wealth of information about our world.
Are you one of those individuals that gets annoyed when someone in your immediate vicinity leaves their garbage behind? It's possible that you'll be left wondering what it is that causes them to act in such a careless manner. You may even wish you could go into their minds and find out what they are thinking. The fact is, we can't get inside the minds of other people. Therefore, we tend to dismiss such thoughts. Even yet, we have the ability to influence their unwanted actions. Because, after all, governments and other public institutions do this all the time, in the form of incentives that reward us for doing what is good. Unfortunately, incentive programs are seldom successful in the way that they are intended. The majority of the time, they have detrimental knock-on effects, which puts the law of unintended consequences into play.
Take, for example, the implementation of volume-based garbage collection costs. This was intended to serve as an incentive for individuals to reduce their trash production. Instead, individuals came up with ingenious methods to get around paying the charge. Many individuals in Germany began dumping uneaten food down the toilet, which resulted in an increase in the rat population as a consequence. However, if we could anticipate people's responses to incentives before putting them in place, we would save a great deal of time and effort in the process. And how are we going to do this? By infiltrating their minds with statistical evidence. People act in certain ways for a variety of reasons, which may be discovered via the collection and analysis of data and statistics. Some interesting and unexpected tales are revealed in the following notes, which have been collected by the writers in order to emphasize the significance of statistics in comprehending human behavior.
Make economic decisions and you will be able to uncover the mysteries of civilization.
Econometricians are subjected to harsh criticism at times of economic collapse and crisis—and very rightfully so! Despite this, economists, or at least those who believe in the same way as they do, may really be of tremendous assistance to society as a whole. In spite of the fact that we tend to connect economic thinking with unethical efforts to maximize profits, economic thinking really has more to do with attempts to understand the outside environment. The basis of economics is nothing more than the formulation of hypotheses with the use of reliable facts. This enables economists to maintain their objectivity and distinguish between normal behavior and exceptions to the rule.
The summer of 2001 in the United States has come to be known as the "Summer of the Shark." An eight-year-old boy who was attacked and lost an arm and a chunk of his thigh received extensive media attention, which contributed to the increased awareness of underwater predators. Because of this, the public was led to believe that sharks were more deadly than ever. However, after doing objective statistical research, it was shown that the number of shark attacks that year was comparable with the normal numbers from prior years - public awareness was just greater than usual. In this manner, thinking like an economist will get you closer to the reality of the situation. But that's not all - it will also encourage you to think beyond the box. Even the most intractable issue may be solved by approaching it in a logical, methodical, and thorough manner from all possible points and perspectives.
Horse-drawn carriages were the primary mode of transportation in the early twentieth century. The resultant overabundance of horse excrement has grown into a significant and unpleasant odor issue. However, since there was no method to make horses generate less dung in any manner, this issue seemed to be insurmountable. Rational-minded, inquisitive researchers have started to approach the issue from a different viewpoint, rather than concentrating only on how to get horses to eat less. Instead of attempting to minimize manure, they created something that might effectively replace the horse itself: the automobile! In a similar vein, the topics covered in these notes will examine many elements of our society from diverse perspectives, beginning with prostitution.
Statistics on prostitution show a number of economic factors that are at play.
Today, the majority of companies are controlled by males, as shown by the pay disparity that many women still experience. However, there is one industry in which women have always had a dominant position: prostitution. When we look at the statistics of sex work, we may see some really fascinating patterns emerge. Prostitution provided much higher pay one hundred years ago. It was estimated that the Everleigh Butterfly Girls, who worked in a renowned brothel in Chicago about 1900, earned up to $430,000 per year. This is a salary that a contemporary sex worker could only dream of earning. So, what has changed since then? Men used to visit prostitutes more often in earlier times, when premarital sex was less prevalent than it is now in a more free culture. Working in a brothel was also illegal, so the chance of being arrested, as well as the social shame associated with prostitution, resulted in greater pay to compensate for the risks and disadvantages of the occupation.
However, in recent years, more women have volunteered to work in the sex industry, while fewer men are ready to pay for sex. Due to a surplus of supply relative to demand, prices have fallen, and incomes have fallen as a result. Demand for sex work is likewise subject to fluctuations in short-term events. According to the findings of a two-year investigation into the issue, sex workers engage in pricing discrimination. The implication of this is that women charged greater rates to clients who were clearly richer, as indicated by better clothes or more refined demeanor.
The results also show how sex workers respond quickly when there is an increase in demand for their services. For example, rates in one area increased by 30% over the Thanksgiving holiday season, owing to an inflow of customers visiting their relatives and seeking for a little additional entertainment. Even those who did not work in the sex industry took advantage of the chance to earn a little more money over the Christmas season! In terms of how they respond to demand, sex workers are not unlike department store Santas: when they perceive an opportunity to earn more money, they will work overtime to make the most of the short-term employment opportunities at their disposal.
Terrorists may be apprehended before they launch an assault if we use economic reasoning.
Terrorism is one contemporary danger that we should all be concerned about, especially since targets and victims are selected at random. This is also one of the reasons why terrorism is so difficult to avoid. Although data analysis is not without its limitations, it may be useful in detecting terrorists before they carry out their attacks. To comprehend terrorists, it is necessary to grasp their motivations. Alan Krueger, a professor of economics at Princeton University, conducted a study in which he compared data on terrorists in Lebanon to statistics on the country's general population. The results were shocking to everyone. Instead of being poorly educated and coming from a middle-class, wealthy household, terrorists are more likely to be well-educated and originate from such families. What motivates them is not poverty or personal gain, but rather the desire to engage in a political act of solidarity.
Developing a better understanding of why and how terrorists operate will allow us to better identify them in the future. However, traditional anti-terrorist methods, like listening in on suspects' discussions, have been shown to be ineffective in the past. So Ian Horsley, whose real name has been altered here to protect the identity of the author, created an algorithm that analyzes financial data in order to hunt out potential terrorists. Originally designed to identify fraudsters, the system now employs indications to identify behavior that may indicate the presence of a terrorist. It is possible to identify positive indications by looking for traits that terrorists often share, such as renting rather than purchasing a home or being enrolled as a student. Additionally, a negative indication represents something terrorists would not usually do, such as investing in life insurance, which clearly would not pay off in the event of a suicide by a terrorist.
Despite the fact that the algorithm isn't flawless, it has the potential to be a useful tool in identifying suspects who would otherwise go undetected. For their part, terrorists may now consider purchasing life insurance, just to be on the safe side of things.
Human beings are neither completely altruistic nor completely apathetic about their actions.
According to The New York Times, when Kitty Genovese, a 28-year-old woman from New York, was stabbed to death on a day in 1964, the three distinct assaults that resulted in Genovese's murder were witnessed by 38 pedestrians, none of whom reported the incident to the authorities.Because of its prominence as a great illustration of bystander indifference, a phenomenon that explains the way we observe something concerning but do nothing about it because we believe that someone else will take care of it, this case has gained widespread attention. This was seen by critics as a loud and obvious warning that society was fundamentally selfish and insensitive to the needs of others.
Nonetheless, only 20 years later, public perception has completely shifted. Everyone began to believe that society was inherently benevolent in its intentions. As a prominent trend in the 1980s, game theory, which is the scientific synthesis of psychology and economics, was popularized. One experiment, in particular, offered a much-applauded insight into the nature of human behavior. The Dictator Game assesses a subject's readiness to share their money with a complete stranger in exchange for a monetary reward. The outcomes were really amazing. Players from a variety of countries and situations were unanimous in their support for sharing the money equally, dispelling the stereotype of a greedy and stupid human.Did it happen, or didn't it? According to John List, a well-known experimental economist, this finding did not sit well with him. A series of Dictator Games, modified and more realistic in nature, was devised by him in order to put society's benevolence to the test.
According to List's interpretation, individuals may both steal and donate money to an imaginary stranger. And, before the game could begin, players were required to perform some mundane chores, such as stamping letters with their names on them. In the end, only 6 percent of participants opted to share the money, with the other 66 percent keeping it for themselves.
Some of the most difficult issues have some of the most straightforward answers.
Everyone has experienced the frustration of dealing with a difficult issue that refuses to go away no matter how hard you try. This is precisely what scientists go through on a daily basis. What are they supposed to do when there are no solutions in sight? They amass information in order to analyze the situation objectively and determine the root reasons. As happened at a Vienna hospital in 1847, this technique may even be lifesaving in certain cases. At the time, one in every six healthy women who gave birth in a hospital was at risk of contracting a potentially fatal puerperal fever. Ignatz Semmelweis made the decision to take on this issue by collecting as much information as he possibly could about the situation.
In his research, he found that women who gave birth at home or in midwives' wards were much less likely to get a fever than women who gave birth in male physicians' hospitals. A few days later, the news broke of a male doctor's death after cutting his finger during an autopsy and getting contaminated with cadaverous particles. The male physicians who performed the autopsy then proceeded straight to the birthing station, where they transmitted cadaverous particles to the ladies who were about to give birth. The answer was straightforward - they just needed to wash their hands! Obtaining information also aids in the identification of issues that may not have been evident before. Solutions to newly discovered issues lead to invention, as was the case in the 1950s when Henry Ford started working with data from automobile accidents to develop the Model T.
Crash fatalities were a significant source of mortality in the period, accounting for 40,000 deaths each year. Robert Strange McNamara was recruited by Ford to gather and analyze data in order to make driving a safer experience. McNamara found that the majority of the injuries were caused by the passengers' heads collapsing against the steering wheels and the windshield as a result of the collision. Because of this, several designers have tried to make steering wheels softer in order to reduce fatigue. Instead of focusing on the issue from the same perspective as the data, McNamara approached it from a different perspective: why not just prevent the head from moving around in the first place? The conclusion was a low-cost, simple remedy that may decrease the risk of mortality by as much as 70%: the seat belt!
It is difficult to combat global warming because of the misunderstanding around it.
Global warming is considered to be one of the most serious dangers to human survivssssssal, according to the scientific community. So why aren't we doing more to address this issue? Global warming is a new phenomenon caused by human activity; however, we do not yet understand how or to what extent it is occurring.Because we have no way of knowing how big our influence will be or whether it will result in a disaster or not, it is difficult to have an impartial public discussion on the subject. Furthermore, the fact that global warming debates are affected by persistent misconceptions does not help. For example, automobiles and industry are consistently presented as the primary drivers of global warming. However, the world's ruminants, particularly cows, are responsible for 50 percent more greenhouse gas emissions than the whole transportation industry combined.
So why not collect and analyze additional data in order to determine the variables that are really driving climate change? The truth is that global warming is a highly complicated issue, with a number of indications to take into consideration, as previously stated. Furthermore, climate scientists are unable to perform trials, which means they are unable to determine which policies are most effective in reducing global warming. Our attempts to combat global warming are also hampered by negative externalities. Negative externalities are consequences that are felt by a large number of individuals but are not felt by the ones who are responsible for them. The excessive meat intake of Westerners – as well as the greenhouse gases generated by cows – is a major contributor to sea level rise and the submergence of a tiny island in the South Pacific, for example.
Unfortunately, if you are accountable but do not have to face the repercussions of your actions, it is doubtful that you will alter your behavior for the better. Initiatives such as Al Gore's film An Inconvenient Truth and his Alliance for Climate Protection have attempted to increase awareness, with varied degrees of success, of climate change. We will not alter our behavior as long as we are not provided with incentives to do so, which is why dealing with global warming is so difficult. However, there may be a fast cure available — have you heard about it? More information may be found in the final note!
According to statistics, we can combat global warming by increasing pollution rather than decreasing it.
People are reluctant to put money aside to prevent a future issue, since there is always the possibility that a more affordable and expedient remedy may emerge. There may really be a quick and cost-effective method to combat global warming — it simply seems to be paradoxical at first glance. For a better understanding of how it works, we must go back to 1991 and the eruption of the volcano Mount Pinatubo. Two years passed before the haze in the air cleared as a result of the massive eruption. Surprisingly, the planet cooled throughout this time period, and the woods grew more aggressively as a result. Nathan Myhrvold, a former chief technology officer at Microsoft who is now a researcher at Intellectual Ventures in Seattle, came up with an idea after thinking about it: why not attempt to mimic this process by affecting the weather?
Geoengineering, or the act of interfering in the global climate system, may be the key to reversing the effects of climate change. It was disclosed in a 1992 study by the National Academy of Sciences that pumping sulfur dioxide into the stratosphere might chill the globe — it was only a matter of getting it higher than what industry was doing at the time! 100,000 tons of sulfur dioxide injected into the atmosphere per year might reverse warming in the Arctic and decrease it in the Northern Hemisphere if it were carefully positioned. The only thing we would need to do is make use of existing power facilities and pump the pollutants from them into the stratosphere using a hose-shaped apparatus. Budyko's Blanket is the name given to the hazy cover generated as a result of the experiment, in honor of a Russian climatologist. This technique would not only be inexpensive and simple, but it would also be reversible if it did not perform as intended.
Yes, it seems a bit odd to combat the effects of air pollution by causing more pollution, but the evidence suggests that it may be effective. Consider that this would only cost $250 million, which is $50 million less than Al Gore's organization spends each year on raising public awareness about climate change.
The primary theme of this book is that human behavior may be considerably more successfully comprehended when statistics are used to aid in the analysis. Finding answers to long-standing issues and making the world a better place may be accomplished via data collection, asking the appropriate questions, and being objective. Advice for action: You can never have too much information! Whenever you find yourself faced with an issue that you can not seem to solve, begin by disassociating yourself from any preconceived notions about the situation. Are you of the opinion that your cat pees on the floor on Wednesdays since it is a Tuesday? It seems to be improbable. Begin gathering as much information as possible in order to identify the most significant indications. What do you do on Wednesdays, and what does your cat do on Wednesdays as well? What exactly does it eat? Try to figure out how you may affect these indications in order to arrive at a solution to your issue. Perhaps your cat feels lonely as a result of the long hours you work on Wednesdays, and it is attempting to get your attention. Further reading is recommended: When to Rob a Bank, written by Steven D. Levitt and Stephen J. Dubner, is a book on how to rob a bank. When to Rob a Bank (2015) is a compilation of essays originally published on the Freakonomics blog at Freakonomics.com, which has been running for 10 years and is still going strong today. Levitt and Dubner focus their attention on the unexpected and outright odd, discussing anything from why you should avoid someone with the middle name Wayne to why some of us should have more sex than others in their book.
Written by BrookPad Team based on SuperFreakonomics by Steven D. Levitt and Stephen J. Dubner