Freakonomics Revised and Expanded Edition

by Steven D. Levitt

  So how about the absence of a unifying theme in the book? My own hunch, borne out by the public response to this book, is that nobody really cares about or even wants a unifying theme in a book. Everyone is just afraid not to have one, since almost all books do. (In this respect, I think unifying themes in books are a lot like campaign spending: all candidates feel compelled to spend a lot of money for fear of the disastrous consequences that could result if they take a chance and don’t spend, spend, spend.) But when I read Malcolm Gladwell’s incredible books, I don’t care about the theme, I just love his stories. His books top the charts because he has really good taste and he is the best storyteller going. For me, and others I talk to, the unifying themes sometimes get in the way of his stories which are individually so amazingly interesting. Books of short stories, similarly, have no unifying theme. I certainly don’t feel cheated by that either. More valuable than anything else I or Dubner ever does, perhaps, would be to make the world safe for books that have great stories but no unifying theme.

  All of the Crooked Timber commentaries spent some time discussing where I fit into economics and the social sciences more broadly. If I got to make three wishes, perhaps one of them would be that I might turn into a truly interdisciplinary social scientist who uses data to inform human behavior in ways that both shed light on and draw upon not only economics, but sociology, political science, and psychology as well. But let’s be realistic. I’m having trouble even mastering the tools of my own discipline. If you ask my students whether I know calculus, they will say “not very well.” I’m not proud of that fact, but I am a realist. If you ask the really great economic thinkers like Gary Becker or Kevin Murphy how often I’m right when I try to apply Chicago price theory, they will simply tell you that I am showing a lot of improvement, because they are kind. The only things I’m good at, really and honestly, are asking questions that people seem to find interesting, and figuring out how to trick data into answering those questions. I will never be even a passable sociologist, political scientist, or psychologist. But that is okay. I think the thing that gets a lot of economists into trouble is the false belief that they can be good at everything.

  A few years back, when I was on sabbatical at the Center for Advanced Study of Behavioral Sciences at Stanford, I gave a talk to the other fellows on my research. Some in the audience were indignant, asking why I called myself an economist given what I did. They said I was really a sociologist. One only had to look at the horror on the faces of the sociologists in the room to see that I wasn’t a sociologist either. But by starting from the position that I don’t know much, I am open-minded enough to co-author with an ethnographer (Sudhir Venkatesh), an econometrician ( Jack Porter), a political scientist (Tim Groseclose), and now a journalist (Stephen Dubner). And maybe, in addition to making it safe in the future for someone to publish a book without a theme, I will make it easier for academics from all social sciences to follow the sort of “adisciplinary” (as opposed to interdisciplinary) path I’m on.

  Next, there is the question of incentives. In the same way that “utility maximization” can be turned into a tautology, the commenters point out that our use of the term “incentives” is moving in that direction as well. By widening incentives, as we did in Freakonomics, to encompass not only financial but also social and moral incentives, we have covered just about everything. Still, I think there isn’t really another choice. To focus just on financial incentives would obviously be misguided. On the flip side, for me—and I think this is the thing that makes me an economist ultimately—I just can’t get away from the idea that people are active decision makers trying to get what they want in a reasonably sophisticated fashion. The most real sense in which I think incentives are the unifying theme of my research (even in cases where they aren’t obviously present, as in the abortion-crime stuff ) is that whenever I try to answer a question, I put myself in the shoes of the actors and I ask myself, “What would I do if I were in that situation?” I am the kind of person who is always trying to concoct some scheme to beat the system or avoid getting scammed, so I presume the people I’m studying are thinking the same way. So when I think about legalized abortion, I think it sounds like a really sick form of insurance policy against an unwanted pregnancy. When I see that one sumo wrestler has more to gain from a win than the other foregoes by losing, I figure they’ll make a deal. When I think about real-estate agents, I’m constantly paranoid they are trying to screw me.

  I am the first to admit that if all economists were like me, the field would probably be a disaster. But the fact that other economists more or less like me in spite of this fact tells me that there is plenty more room for rogue economists in the profession.

  —SDL (May 23, 2005)

  “Our California Trip”

  Last week, we went to California. Our publisher, William Morrow/HarperCollins, had determined that Freakonomics wasn’t selling as well there as elsewhere. It may have been a simple case of late adoption—Levitt and I are based in Chicago and New York, respectively, two cities where the book started strong—but Harper was taking no chances. So, having to this point avoided anything resembling a book tour, we were shipped west for three days. This was more of a hardship for Levitt than for me. He hates human interaction (or so he says). Our first day there, in L.A., he constantly claimed to be feeling suicidal. But he said this casually, and with a bit of a smile. I felt like Mandy Patinkin in The Princess Bride, when he tells Wally Shawn, “I don’t think that word means what you think it means.” But hey: Levitt is more of a numbers guy than a word guy. Maybe what he meant was “homicidal.”

  On the final day, we visited Google headquarters in Mountain View. The Google folks later asked us to write up our impressions, to be posted on the Google blog. Here’s what we had to say:

  To: All Googlers

  From: The Freakonomics Guys

  Date: Aug. 4, 2005

  Re: Our visit last week

  We didn’t know quite what to expect at Google. A few months ago, we had been invited to give some kind of presentation at Google while we were in California. Were we interested? Sure, we said. When something is that far away, you’ll generally agree to it without much thought.

  Because we got to the Googleplex late—we were coming from a meeting with some people who may want to turn Freakonomics into a board game (!)—our tour was cut a little short. Still, we did manage to see:

  —Your Google-logo-colored pylons at the extremely low-key “security” post.

  —Your very user-friendly name-tag-generating/sign-in computer.

  —Your very, very fancy toilets.

  —Your rack of primordial servers with the thin layers of cork that used to make the fire department so nervous.

  —Your roaming dogs, one friendlier than the next.

  —Your beautiful scrolling query screens, which are a great piece of conceptual art: Hilary Duff…pits puppies…Yenifer Lopez…Spanish Dictionary. (We were a little disappointed to not catch a glimpse of “Freakonomics” but maybe it got caught in your filter: people sometimes give it some pretty deviant spellings.)

  —Your quartz rug, robust cacti, fancy yurts, and ecologically sound staircase in the Africa building.

  Then it was time for our “presentation.” Our guide, Hunter Walk, walked us over to the room where we’d be speaking: Whomp! It wasn’t some little room, with a conference table and a couple dozen people, as we’d imagined. It was a big big room, rows and rows of chairs, all of them filled with Googlers, and many many more Googlers sitting on the floor and standing in the back and—well, not exactly hanging from the rafters but it felt like it. The walls were black, the stage lights white-hot, the room alive with chatter. This wasn’t a presentation; this was a presentation. It was a Sally Field moment: They like us! They really like us! (We realize, of course, that the average Googler is far too young to catch this reference. Don’t worry; it’s not very funny anyway.) As we picked our way through the floor-sitting Googlers, it felt like
we should have been carrying a couple of Telecasters; it was likely the closest that either of us will ever get to having a rock-star moment. (In truth, I was a minor-league rock star but that was in the late 1980s, so it doesn’t really count.)

  The other thing is, Hunter had ordered a few hundred copies of Freakonomics from Amazon* and passed them around, so now, looking across the long rows of chairs, you could see one Googler after the next with the open book in his/her lap, as if preparing to hear a speech from Chairman Mao. It was, well, freaky. A bit like happening upon your own funeral.

  We had to talk things over to decide what kind of talk to give. We are not very practiced at this. Hunter was encouraging, and patient. There was one podium and one microphone, so we decided to do a tag-team talk, to discuss the book (why crack dealers still live with their moms, e.g.) and to tell a few stories based on research that’s happened since the book (monkey prostitution at Yale, e.g.). We seemed to do okay, based on the fact that you all laughed a lot, although it’s quite possible you were just laughing at us. The biggest laugh came when Levitt mentioned that we spoke at Yahoo! a day earlier, and got a much smaller crowd. The funny thing is, that was really true. Your turnout was about double Yahoo!’s. On the other hand, that means Google may have lost twice the productivity—unless you think that our Freakonomics talk may have somehow increased productivity, in which case you thought a lot more of it than we did. The best question of the day was this: “What would you do with our data if we could give it to you?” Believe us, we’ve thought about that quite a bit. We’ll get back to you.

  After our talk, we had a few minutes to hang around and talk with miscellaneous Googlers. This was the most impressive slice of the day. Not only were you all smart and inquisitive and friendly, but you were so damn happy. First of all, there is surely no company in the world where so many employees wear T-shirts with their company logo, which we took to be a sign of true pride (or perhaps simply a deep, deep discount). But the happiness shone through in a dozen other ways. It seems this is the by-product of doing interesting work with smart colleagues in beautiful environs, all with a profound sense of mission. A $297 stock price probably doesn’t hurt, either.

  —SJD (Aug. 19, 2005)

  2. ROE V. WADE AND CRIME, CONT’D.

  Of all the topics covered in Freakonomics, one would have thought that the theory linking the legalization of abortion to a drop in crime would have engendered the most hate mail. But that wasn’t the case at all. It seems that when people read for themselves the argument as laid out in chapter 4, and see that it isn’t a remotely political or religious argument, they weigh for themselves how they feel about the theory and seldom resort to an overheated defense of their beliefs, wherever those beliefs may lie.

  The same cannot be said for some of the other stories in the book. The study about real-estate agents, for instance, provoked hundreds of angry e-mails, most of them from Realtors who were unhappy with our description of how the incentive structure of their business encourages agents to exploit their own clients. There were also plenty of e-mails from teachers who didn’t like hearing about teachers who cheat; from parents who couldn’t accept some of our conclusions about parenting; and from readers who thought the entire chapter on first names was downright idiotic.

  But if the abortion-crime story didn’t produce much reader outrage, it certainly did resonate in the media and elsewhere. This was never more true than when William Bennett cited the book in the process of creating a huge racial controversy for himself. Here are two blog postings addressing different elements of the abortion-crime debate. The first is an assessment of Bennett’s statements. The second is a response to an academic challenge to the abortion-crime theory; it is fairly technical (the faint of heart may wish to read just the last three paragraphs), but key to understanding the original research.

  “Bill Bennett and Freakonomics”

  Bill Bennett and I have a fair amount in common. We’ve both written about crime (his “superpredator” theory gets a quick discussion in Freakonomics), we have both thought a lot about illegal drugs and education (he was the original “drug czar” and is a former secretary of education), and we both love to gamble (although it seems I do it for much lower stakes and perhaps with greater success).

  Now we also share the fact that we have made controversial statements about the link between abortion and crime.

  Here’s what Bennett said during the Sept. 28 broadcast of Salem Radio Network’s Bill Bennett’s Morning in America:

  CALLER: I noticed the national media, you know, they talk a lot about the loss of revenue, or the inability of the government to fund Social Security, and I was curious, and I’ve read articles in recent months here, that the abortions that have happened since Roev. Wade, the lost revenue from the people who have been aborted in the last thirty-something years, could fund Social Security as we know it today. And the media just doesn’t—never touches this at all.

  BENNETT: Assuming they’re all productive citizens?

  CALLER: Assuming that they are. Even if only a portion of them were, it would be an enormous amount of revenue.

  BENNETT: Maybe, maybe, but we don’t know what the costs would be, too. I think—does abortion disproportionately occur among single women? No.

  CALLER: I don’t know the exact statistics, but quite a bit are, yeah.

  BENNETT: All right, well, I mean, I just don’t know. I would not argue for the pro-life position based on this, because you don’t know. I mean, it cuts both—you know, one of the arguments in this book Freakonomics that they make is that the declining crime rate, you know, they deal with this hypothesis, that one of the reasons crime is down is that abortion is up. Well—

  CALLER: Well, I don’t think that statistic is accurate.

  BENNETT: Well, I don’t think it is either, I don’t think it is either, because first of all, I think there’s just too much that you don’t know. But I do know that it’s true that if you wanted to reduce crime, you could—if that were your sole purpose, you could abort every black baby in this country, and your crime rate would go down. That would be an impossible, ridiculous, and morally reprehensible thing to do, but your crime rate would go down. So these far-out, these far-reaching, extensive extrapolations are, I think, tricky.

  Bennett’s comments have, not surprisingly, ignited a furor—in the media and even at the White House, which denounced his statement.

  Here are my thoughts on this exchange:

  People should bear in mind that this took place on an unscripted radio show in response to a caller’s question. It was clearly off-the-cuff. This is a very different situation than, say, Bennett’s writing an op-ed piece.

  Race is not an important part of the abortion-crime argument that John Donohue and I have made in academic papers and that Dubner and I discuss in Freakonomics. It is true that, on average, crime involvement in the U.S. is higher among blacks than whites. Importantly, however, once you control for income, the likelihood of growing up in a female-headed household, having a teenage mother, and how urban the environment is, the importance of race disappears for all crimes except homicide. (As we’ve written, the homicide gap is partly explained by crack markets.) In other words, for most crimes, a white person and a black person who grow up next door to each other with similar incomes and the same family structure would be predicted to have the same crime involvement. Empirically, what matters is the fact that abortions are disproportionately used on unwanted pregnancies, and disproportionately by teenage women and single women.

  Some people might think that my comments in point 2 above are just ducking the race issue because it is politically correct to do so. Anyone who has read Freakonomics knows that I am not afraid to take issues of race head-on. Much of the book deals with challenging issues of race (e.g., black-white test score gaps, black naming patterns, etc.). I mean it when I say that, from a purely fact-based and statistical perspective, race is not in any way central to our arguments about abortion and
crime.

  When a woman gets an abortion, for the most part it is not changing the total number of children she has; rather, it is shifting the timing so those births come later in life. This is an important fact to remember. One in four pregnancies ends in abortion and this has been true for thirty years in the U.S. But the impact of abortion on the overall birth rate has been quite small.

  In light of point 4 above, it is hard to even know what Bennett means when he says “you could abort every black baby in this country, and your crime rate would go down.” Implicit in his comment is the idea that some external force, like a government, is forcing blacks to have abortions. This is obviously a completely different situation than abortion as we know it today, in which a woman chooses whether or not to have an abortion now, and then starts her family later in life, when her situation is more stable and conducive. The distinction between a woman choosing to control her fertility and the government choosing to limit her fertility is fundamental, and people often seem to lose sight of that.

  If we lived in a world in which the government chooses who gets to reproduce, then Bennett would be correct in saying that “you could abort every black baby in this country, and your crime rate would go down.” Of course, it would also be true that if we aborted every white, Asian, male, Republican, and Democratic baby in that world, crime would also fall. Immediately after he made the statement about blacks, he followed it up by saying, “That would be an impossible, ridiculous, and morally reprehensible thing to do, but your crime rate would go down.” He made a factual statement (if you prohibit any group from reproducing, then the crime rate will go down), and then he noted that just because a statement is true, it doesn’t mean that it is desirable or moral. That is, of course, an incredibly important distinction and one that we make over and over in Freakonomics.