The Authors

Stephen LevittB.A from Harvard University

PhD from MITProfessor of Economics at Univ. of Chicago

2003 John Bates Clark Medal winner

Stephen Dubner Award winning author, journalist, TV & Radio

personality He has taught English at Columbia University

(while receiving an M.F.A. there) Played in a rock band started at Appalachian

State University, where he was an undergrad.

QuestionsWhat do school teachers and sumo wrestlers

have in common?How is the Ku-Klux Klan like a group or real-

estate agents?Why do drug dealers still live with their moms?Which is more dangerous, a gun or a swimming

pool?

Freakonomics conceptsIncentives are the cornerstone of economic

lifeThe conventional wisdom is often wrongDramatic effects often have distant, even

subtle, causesExperts use their informational advantage

to serve their own agendaKnowing what to measure and how to

measure it makes life simpler

Freakonomics book summaryChapter 1-What Do Schoolteachers and Sumo Wrestlers have in Common?Economics defined as a study of incentives and how they are

pursued?How do we profit by what we do and what incentives are so

attractive that they compel us to act unethically?Cheating can be predictedEg. School teachers helped children cheat on standardized

tests Analysis of standardized test answer patterns helped identify

groups of correct answers Retest administered to find the offendersBy comparing the performances of the wrestlers in matches

with different stakes and potential consequences, the author found that cheating does often take place in the sport

How individuals, organizations, and businesses often exploit their access to information at the expense of others

Entire industries attain great success and many significant historical events transpire as a result of an imbalance in the flow of information

Chapter 2- Why is the Ku Klux Klan like a group of real estate agents?

Eg. a man helped cripple the racist Ku Klux Klan simply by widely disseminating their secrets

He infiltrated the group and documented the secret rituals and codes of the organization

He gave the records and reports to Hollywood writers, who used the information to create a long-running story

Children across the USA imitated the shows in their schoolyard games, and gradually, the mystery and influence of the group were diminished

Real estate agents when selling their own houses may not always have their clients’ best interests at heart

Chapter 3- Why do drug dealers still live with their moms?

The author compares the organizational structure of drug dealer gang to McDonalds

He explains how very few executives and upper level managers prosper from the work of 1000′s of minimum wage or low wage workers

He even found that most street drug dealers made less than minimum wage

Therefore the common notion that all drug dealers are rich proved to be incorrect

Chapter 4- Where have all the criminals gone?Research showed of a link between legalization

of abortion in 1973 and drop in violent crimes in 1990s

The author claims that many of the additional children who would have been born annually if abortion had remained illegal would have been at high risk for engaging in violent crime

The authors conclude that women with the right to choose abortion tend to make good decisions

Chapter 5- Which is more dangerous, a gun or a swimming pool? What makes a good parent?

Research found that when allowing children to play in swimming pools, they were more than 100 times more likely to die in a swimming pool than playing with a gun

 “good” or “positive parenting outcomes” on their children are connected more strongly to factors such as socioeconomic status and the education of parents more than any specific parenting practices

Chapter 6- Would a Roshanda by any other name smell as sweet?

The focus of the final chapter is on economic implications of children’s names

The author says that having a distinctively “black name” was linked to lower attainment, less education, less income, and overall less success in life

Epilogue-Two Paths to HarvardThe life paths of two Harvard graduates who may

have seemed to be locked into divergent patterns of achievement based on their backgrounds• Privileged Background

• Access to all resources typically correlated with success

Ted Kaczyns

ki• African American• Raised in an impoverished,

unstable family• Now a promising Harvard

Economist

Roland G. Fryer

There are limits to the ability of

economic analysis to predict every

possible outcome