Book Review: Freakonomics

Freakonomics by Steven Levitt and Stephen Dubner is an interesting book that will make you think twice about the way this world works, before accepting any explanations.

For example, what has the best effect on reducing crime? Education, larger police force, tougher laws, or abortion? How much effect does parenting have on kids? Is parental influence stronger, or peer pressure? Do real estate agents really work for your best?

The authors believe that you can find out the answers to these questions, and every other question about how the world works, if you know what to measure and how to measure it! Yes, at the end of the day, it's all about numbers. The answers can be quite surprising! And long held beliefs can be proved wrong.

Let us take the example of crime in the US. In the 1990s crime had risen to such a level, that President Clinton gave the country a 6 year deadline to control it, else predicting the country would descend into chaos. Contrary to all expectations and predictions, crime suddenly started dropping, from a predicted 100 percent rise, to just 50 percent of what it used to be. One can assume this was due to higher police presence, but take the example of Denver and Washington DC. Both cities have a similar sized population, but Washington has three times the police officers, and eight times the murder rate! One can argue that the increased police committed the increased murders!

The authors describe, through measurements and statistics, how the legalization of abortion in the 1970s ultimately led to a decrease in the number of kids who would be born to poor, unmarried women, and it is this drop in population of the "crime-prone" population that resulted in the dropping crime rates in the US.

The authors present a few fundamental ideas:

1) Incentives - positive or negative - economi, social or moral - are the cornerstone of modern life. And understanding them is the key to solving every problem in life.
2) Conventional wisdom is often wrong
3) Dramatic effects often have distant, even subtle, causes
4) "Experts" use their informational advantage to serve their own agenda
5) Knowing what to measure and how to measure it makes this complicated world much less so!

Interesting book - definitely worth attention. At the least, it will make you realise that every coin has not even just two, but potentially a lot more sides!