"Freakonomics" by Steven Levitt

Despite the sensationalist tittle, which, I am sure, is influence of the journalist co-author of the book, "Freakonomics: A Rogue Economist Explores the Hidden Side of Everything" is a thought-provoking book, succeeding in shedding some light on issues you would never think would succumb to economical analysis. Some of the issues Levitt discuses are: why crack-dealers live with their moms, how swimming pools are more dangerous than guns, how legalized abortion lead to crime decrease, what to KKK members have in common with real-estate agents, how a child's name may largely determine the child's future financial circumstances, and why children don't get higher grades if put in better schools.


Levitt has received numerous awards for his thinking and work in economics, have been called 'the freshest thinker in America', and has received numerous fellowships, among which one from Harvard University, and he currently teaches at Chicago University. This book lacks a unifying theme, and that's the point, Levitt says, quoting a conversation with bunch of other Harvard fellows where he concluded that at his age (he's only XXXX) he should not have a unifying theme and should be free to explore whatever topic interest him. But still there is a unifying theme throughout the articles, and that is the economical analysis approach to problems most people would not see fit for economical analysis.

One of his more controversial claims is that the reduction of the crime rate in the 90s has mostly to do with the legalizing of abourtion (Roe vs. Wade) about a score years earlier. This statement is sure to outrage both abortion camps, but the data supports Levitt's claims. Levitt explains this by pointing out that when women were allowed to have abortion there were much fewer unwanted children born (decrease by some 90%), and exactly these unwanted and uncared for children are at greatest risk of having abusive childhood and growing up to become criminals.

Another issue he analyzes is the earnings of crack-dealers, which is a very competitive business, and finds out that the 'foot soldiers' which are the lowest ranking members of the gang, selling crack on the street corners, actually earn about and average of $3.30/hr. However these earnings rise exponentially as the gangster climbs up the ranks, but the dangers rise too, including being shot to death. Levitt uses this and other cases to explain that a carefully designed system of incentives can make people do even obviously unproductive jobs, while wrong system of incentives has little or opposite effect on the planned outcome (like the one used for high-stakes standardized tests in the USA, where teachers would cheat and tell the students the answers only to keep the school better rated or get bonuses themselves).

Although some of the claims can be termed sensationalist and some of the data is open to further interpretation and maybe somewhat different conclusions, the book is a refreshing read and will stimulate every thinking reader's brain.