Freakonomics: A Rogue Economist Explores the Hidden Side of Everything
By Steven D. Levitt and Stephen J. Dubner
(Paperback Edition 2006, HarperCollins Publishing)

If you think that economics is better left as a droll one-hour course about supply and demand,, think again. Despite the fact that the subject is something that many would rather delegate to scholars and financial experts to understand, economics is actually a living, breathing undercurrent to everyday life, from situations plain to peculiar… if you know where to look.

Well, look no further. University of Chicago professor Steven D. Levitt (a 2003 recipient of the John Bates Clark Medal) laid out his thought-provoking studies and collaborated with New York Times journalist Stephen J. Dubner, to bring his unorthodox scholastic observations out to the general public in an easy-to-read and interesting manner, hence “Freakonomics”. In the book, Levitt and Dubner survey seemingly unrelated issues like the impact of legalized abortion to lower crime rates in the U.S., athletes cheating in games, and how a person’s name can influence his/her socioeconomic status. What results from their meticulous research are findings that, while it challenges the conventional wisdom and preconceived notions, actually do make sense — and credit goes to economic methods you never thought you’d apply.

Take for example a section on Chapter 2, where the authors deal with information asymmetry (promoting false information, stating companies like Enron’s and Worldcom’s fabrications before their downfall) and the study of incentives. They correlate this with the example of real-estate agents selling a client’s house for less than the agents would sell — in the bottom line, it’s all about commissions. Levitt measured the difference between sales data for houses in Chicago that belong to real-estate agents themselves and the houses they sold on behalf of clients, and there are some startling (and convincing) disparities. This example suggests that sometimes, people we are inclined to trust like experts or professionals can use their specialized information to their advantage, rather than working for our best interests.

There are many other topics that the authors have brushed up on, such as the statistical average of faking profiles in on-line dating sites and why self-help parenting books aren’t much help in raising children. Overall, “Freakonomics” caters more to an American audience because of predominant subculture (abortion, mafias), but several subjects may just as well apply here, like the myth of rich politicians winning elections. The book doesn’t broach on a specific unifying theme, which gives it less than a satisfying end to some. And some conclusions seem to be controversial and unappealing, but as the authors say, “Freakonomics doesn’t traffic in morality. If morality represents an ideal world, then economics represent the actual world.” The appeal of “Freakonomics” does not lie in the answers it gives, but in the revelation that answers exist and can be discovered if we only know how to ask.

You don’t need to have a background in economics to be able to appreciate “Freakonomics”. You may not even realize that you are perusing a fact-ridden, technical volume because of the light prose, easy pace and the inflection of pop culture and engaging tidbits. It seems to be more about sociology and psychology than numerical analysis, but all the while slowly impacts us and makes us think differently about facts and figures. There are not even the usual charts or graphs you see in usual business books — it is designed for regular people like us who are simply curious about the world.