Freakonomics Revised and Expanded Edition

by Steven D. Levitt

  EIGHT GLASSES OF WATER A DAY: See Robert J. Davis, “Can Water Aid Weight Loss?” Wall Street Journal, March 16, 2004, which cites an Institute of Medicine report concluding that “there is no scientific basis for the recommendation [of eight glasses of water a day] and that most people get enough water through normal consumption of foods and beverages.”

  ADAM SMITH is still well worth reading, of course (especially if you have infinite patience); so too is Robert Heilbroner’s The Worldly Philosophers (New York: Simon & Schuster, 1953), which contains memorable profiles of Smith, Karl Marx, Thorstein Veblen, John Maynard Keynes, Joseph Schumpeter, and other giants of economics.

  1. WHAT DO SCHOOLTEACHERS AND SUMO WRESTLERS HAVE IN COMMON?

  THE ISRAELI DAY-CARE STUDY: See Uri Gneezy and Aldo Rustichini, “A Fine Is a Price,” Journal of Legal Studies 29, no. 1 (January 2000), pp. 1–17; and Uri Gneezy, “The ‘W’ Effect of Incentives,” University of Chicago working paper.

  MURDER THROUGH THE AGES: See Manuel Eisner, “Secular Trends of Violence, Evidence, and Theoretical Interpretations,” Crime and Justice: A Review of Research 3 (2003); also presented in Manuel Eisner, “Violence and the Rise of Modern Society,” Criminology in Cambridge, October 2003, pp. 3–7.

  THOMAS JEFFERSON ON CAUSE AND EFFECT: Autobiography of Thomas Jefferson (1829; reprint, New York: G. P. Putnam’s Sons, 1914), p. 156.

  BLOOD FOR MONEY: See Richard M. Titmuss, “The Gift of Blood,” Transaction 8 (1971); also presented in The Philosophy of Welfare: Selected Writings by R. M. Titmuss, ed. B. Abel-Smith and K. Titmuss (London: Allen and Unwin, 1987). See also William E. Upton, “Altruism, Attribution, and Intrinsic Motivation in the Recruitment of Blood Donors,” Ph.D. diss., Cornell University, 1973.

  WHEN SEVEN MILLION CHILDREN DISAPPEARED OVERNIGHT: See Jeffrey Liebman, “Who Are the Ineligible EITC Recipients?” National Tax Journal 53 (2000), pp. 1165–86. Liebman’s paper was citing John Szilagyi, “Where Some of Those Dependents Went,” 1990 Research Conference Report: How Do We Affect Taxpayer Behavior? (Internal Revenue Service, March 1991), pp. 162–63.

  CHEATING TEACHERS IN CHICAGO: This study, which also provides considerable background on high-stakes testing, is detailed in two papers: Brian A. Jacob and Steven D. Levitt, “Rotten Apples: An Investigation of the Prevalence and Predictors of Teacher Cheating,” Quarterly Journal of Economics 118, no. 3 (2003), pp. 843–77; and Brian A. Jacob and Steven D. Levitt, “Catching Cheating Teachers: The Results of an Unusual Experiment in Implementing Theory,” Brookings-Wharton Papers on Urban Affairs, 2003, pp. 185–209. / 23 The Oakland fifth-grader with the extra-helpful teacher: Based on an author interview with a former assistant superintendent of the Oakland Public Schools. / 30–31 Cheating among North Carolina teachers: See G. H. Gay, “Standardized Tests: Irregularities in Administering of Tests Affect Test Results,” Journal of Instructional Psychology 17, no. 2 (1990), pp. 93–103. / 31–33 The story of Arne Duncan, CEO of the Chicago schools, was based largely on author interviews; see also Amy D’Orio, “The Outsider Comes In,” District Administration: The Magazine for K–12 Education Leaders, August 2002; and various Chicago Tribune articles by Ray Quintanilla.

  THE UNIVERSITY OF GEORGIA BASKETBALL TEST was made public when the university released 1,500 pages of documents in response to an investigation by the National Collegiate Athletic Association.

  THE CHICAGO BLACK SOX: Several readers of the original version of Freakonomics have declared that the White Sox came to be called the Black Sox not because of the gambling scandal, but for another reason entirely. This is how the explanation plays out on the user-generated encyclopedia wikipedia.org: “The term ‘Black Sox’ came about earlier in [1919], when [team owner Charles] Comiskey decided to make players pay for their own laundry. The players stopped doing their laundry in protest, and as their white stockings became soiled and dark, the writers tagged them with that nickname.” As endearing as this explanation may seem, Levitt and Dubner found no support for it in the historical record.

  CHEATING IN SUMO: See Mark Duggan and Steven D. Levitt, “Winning Isn’t Everything: Corruption in Sumo Wrestling,” American Economic Review 92, no. 5 (December 2002), pp. 1594–1605. / 35–41 There is a lot to know about sumo, and quite a bit can be found in these books: Mina Hall, The Big Book of Sumo (Berkeley, Calif.: Stonebridge Press, 1997); Keisuke Itai, Nakabon (Tokyo: Shogakkan Press, 2000); and Onaruto, Yaocho (Tokyo:Line Books, 2000). / 40 Two sumo whistle-blowers die mysteriously: See Sheryl WuDunn, “Sumo Wrestlers (They’re BIG) Facing a Hard Fall,” New York Times, June 28, 1996; and Anthony Spaeth, “Sumo Quake: Japan’s Revered Sport Is Marred by Charges of Tax Evasion, Match Fixing, Ties to Organized Crime, and Two Mysterious Deaths,” reporting by Irene M. Kunii and Hiroki Tashiro, Time (International Edition), September 30, 1996.

  THE BAGEL MAN: Paul Feldman was looking for a research economist to take an interest in his data, and brought himself to Steven Levitt’s attention. (Several other scholars had passed.) Levitt and then Dubner subsequently visited Feldman’s bagel operation near Washington, D.C. Their research led to an article that was substantially similar to the version of the story published here: Stephen J. Dubner and Steven D. Levitt, “What the Bagel Man Saw,” The New York Times Magazine, June 6, 2004. Levitt has also written an academic paper about Feldman’s bagel operation: “An Economist Sells Bagels: A Case Study in Profit Maximization,” National Bureau of Economic Research working paper, 2006. / 43 The “Beer on the Beach” study is discussed in Richard H. Thaler, “Mental Accounting and Consumer Choice,” Marketing Science 4 (Summer 1985), pp. 119–214; also worth reading is Richard H. Thaler, The Winner’s Curse: Paradoxes and Anomalies of Economic Life (New York: Free Press, 1992).

  2. HOW IS THE KU KLUX KLAN LIKE A GROUP OF REAL-ESTATE AGENTS?

  SPILLING THE KLAN’S SECRETS: This section has been substantially revised since the original version of Freakonomics was published, owing to the authors’ discovery that Stetson Kennedy—in both his memoir, The Klan Unmasked, and in interviews with the authors—had misrepresented his role in personally infiltrating and attacking the Klan. ([“Hoodwinked?” New York Times, January 8, 2006] for a fuller explanation of this issue.) For general Klan history, see Col. Winfield Jones, Knights of the Ku Klux Klan (1941); David M. Chalmers, Hooded Americanism: The First Century of the Ku Klux Klan, 1865–1965 (Garden City, NY: Doubleday, 1965); Wyn Craig Wade, The Fiery Cross: The Ku Klux Klan in America (New York: Simon & Schuster, 1987); and many others. The most relevant writings of Stetson Kennedy include Southern Exposure (Garden City, NY: Doubleday, 1946; republished in 1991 by Florida Atlantic University Press) and The Klan Unmasked (Boca Raton: Florida Atlantic University Press, 1990), which was originally published as I Rode with the Ku Klux Klan (London: Arco Publishers, 1954). Also helpful was Ben Green, Before His Time: The Untold Story of Harry T. Moore, America’s First Civil Rights Martyr (New York: Simon & Schuster, 1999). Stetson Kennedy’s documents relating to the Klan, as well as the reports of “John Brown” and other related material, can be found in various archives, including the Schomburg Center for Research in Black Culture, a public library in New York City; the Georgia State University Library in Atlanta; and the archives of the Anti-Defamation League in New York City. Transcripts of the Drew Pearson Washington Merry-Go-Round radio program can be found at http://www.aladin.wrlc.org/gsdl/ collect/pearson/pearson.shtml.

  WHAT HAPPENED TO TERM-LIFE RATES? See Jeffrey R. Brown and Austan Goolsbee, “Does the Internet Make Markets More Competitive? Evidence from the Life Insurance Industry,” Journal of Political Economy 110, no. 3 (June 2002), pp. 481–507.

  SUPREME COURT JUSTICE LOUIS D. BRANDEIS writing that “Sunlight is said to be the best of disinfectants”: See Louis D. Brandeis, Other People’s Money—and How Bankers Use It (New York: Frederick A. Stokes, 1914).

  THE BRAND-NEW USED-CAR CONUNDRUM: This thesis, and indeed much of what we think today about “asymmetric information,” stems from a paper that George A. Ake
rlof wrote during his first year as an assistant professor at Berkeley in 1966–67. It was rejected three times—two of the journals told Akerlof that they “did not publish papers on topics of such triviality,” as he later recalled—before being published as George A. Akerlof, “The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism,” Quarterly Journal of Economics, August 1970. Some thirty years later, the paper won Akerlof the Nobel Prize in Economics; he is widely considered the nicest man to have ever won the award.

  THE ENRON TAPES: As of this writing, the tapes could be heard on http:// www.cbsnews.com/stories/2004/06/01/eveningnews/main6_20626.shtml. See also Richard A. Oppel Jr., “Enron Traders on Grandma Millie and Making Out Like Bandits,” New York Times, June 13, 2004.

  ARE ANGIOPLASTIES NECESSARY? See Gina Kolata, “New Heart Studies Question the Value of Opening Arteries,” New York Times, March 21, 2004.

  THE REAL REAL-ESTATE STORY, REVISITED: See Steven D. Levitt and Chad Syverson, “Market Distortions When Agents Are Better Informed: A Theoretical and Empirical Exploration of the Value of Information in Real-Estate Transactions,” National Bureau of Economic Research working paper, 2005.

  TRENT LOTT, NOT-SO-SECRET SEGREGATIONIST? The circumstances surrounding Lott’s damaging comments are well summarized in Dan Goodgame and Karen Tumulty, “Lott: Tripped Up by History,” Time.com/cnn.com, December 16, 2002.

  THE WEAKEST LINK: See Steven D. Levitt, “Testing Theories of Discrimination: Evidence from The Weakest Link,” Journal of Law and Economics (October 2004), pp. 431–52. / 72 The theory of taste-based discrimination originates with Gary S. Becker, The Economics of Discrimination (Chicago: University of Chicago Press, 1957). / 72 The theory of information-based discrimination is derived from a number of papers, including Edmund Phelps, “A Statistical Theory of Racism and Sexism,” American Economic Review 62, no. 4 (1972), pp. 659–61; and Kenneth Arrow, “The Theory of Discrimination,” Discrimination in Labor Markets, ed. Orley Ashenfelter and Albert Rees (Princeton, N.J.: Princeton University Press, 1973).

  THE ONLINE DATING STORY: See Günter J. Hitsch, Ali Hortaçsu, and Dan Ariely, “What Makes You Click: An Empirical Analysis of Online Dating,” University of Chicago working paper, 2005.

  VOTERS LYING ABOUT DINKINS / GIULIANI: See Timur Kuran, Private Truths, Public Lies: The Social Consequences of Preference Falsification (Cambridge, Mass.: Harvard University Press, 1995); also Kevin Sack, “Governor Joins Dinkins Attack Against Rival,” New York Times, October 27, 1989; and Sam Roberts, “Uncertainty over Polls Clouds Strategy in Mayor Race,” New York Times, October 31, 1989.

  VOTERS LYING ABOUT DAVID DUKE: See Kuran, Private Truths, Public Lies; also Peter Applebome, “Republican Quits Louisiana Race in Effort to Defeat Ex-Klansman,” New York Times, October 5, 1990; and Peter Applebome, “Racial Politics in South’s Contests: Hot Wind of Hate or Last Gasp?” New York Times, November 5, 1990.

  DAVID DUKE, MASTER OF INFORMATION ABUSE: Among the many helpful sources for this material were Karen Henderson, “David Duke’s Work-Release Program,” National Public Radio, May 14, 2004; and the exhaustive John McQuaid, “Duke’s Decline,” New Orleans Times-Picayune, April 13, 2003.

  3. WHY DO DRUG DEALERS STILL LIVE WITH THEIR MOMS?

  JOHN KENNETH GALBRAITH’S “CONVENTIONAL WISDOM”: See “The Concept of the Conventional Wisdom,” the second chapter of The Affluent Society (Boston: Houghton Mifflin, 1958).

  MITCH SNYDER AND THE HOMELESS MILLIONS: The controversy over Snyder’s activism was covered widely, particularly in Colorado newspapers, during the early 1980s and was revisited in 1990 when Snyder committed suicide. A good overview is provided in Gary S. Becker and Guity Nashat Becker, “How the Homeless ‘Crisis’ Was Hyped,” in The Economics of Life (New York: McGraw-Hill, 1997), pp. 175–76; the chapter was adapted from a 1994 Business Week article by the same authors.

  THE INVENTION OF CHRONIC HALITOSIS: The strange and compelling story of Listerine is beautifully told in James B. Twitchell, Twenty Ads That Shook the World: The Century’s Most Groundbreaking Advertising and How It Changed Us All (New York: Crown, 2000), pp. 60–69.

  GEORGE W. BUSH AS A MAKE-BELIEVE COWBOY: See Paul Krugman, “New Year’s Resolutions,” New York Times, December 26, 2003.

  NOT AS MUCH RAPE AS IS COMMONLY THOUGHT: The 2002 statistics from the National Crime Survey, which is designed to elicit honest responses, suggests that the lifetime risk of a woman’s being the victim of unwanted sexual activity or attempted unwanted sexual activity is about one in eight (not one in three, as is typically argued by advocates). For men, the National Crime Survey suggests a one-in-forty incidence, rather than the one-in-nine incidence cited by advocates.

  NOT AS MUCH CRIME AS THERE ACTUALLY WAS: See Mark Niesse, “Report Says Atlanta Underreported Crimes to Help Land 1996 Olympics,” Associated Press, February 20, 2004.

  SUDHIR VENKATESH’s LONG, STRANGE TRIP INTO THE CRACK DEN: As of this writing, Venkatesh is a professor of sociology and African American studies at Columbia University. / 83–99 The biographical material on Venkatesh was drawn largely from author interviews; see also Jordan Marsh, “The Gang Way,” Chicago Reader, August 8, 1997; and Robert L. Kaiser, “The Science of Fitting In,” Chicago Tribune, December 10, 2000. / 89–99 The particulars of the crack gang are covered in four papers by Sudhir Alladi Venkatesh and Steven D. Levitt: “The Financial Activities of an Urban Street Gang,” Quarterly Journal of Economics 115, no. 3 (August 2000), pp. 755–89; “‘Are We a Family or a Business?’ History and Disjuncture in the Urban American Street Gang,” Theory and Society 29 (Autumn 2000), pp. 427–62; “Growing Up in the Projects: The Economic Lives of a Cohort of Men Who Came of Age in Chicago Public Housing,” American Economic Review 91, no. 2 (2001), pp. 79–84; and “The Political Economy of an American Street Gang,” American Bar Foundation working paper, 1998. See also Sudhir Alladi Venkatesh, American Project: The Rise and Fall of a Modern Ghetto (Cambridge, Mass.: Harvard University Press, 2000). / 94 Crack dealing as the most dangerous job in America: According to the Bureau of Labor Statistics, the ten most dangerous legitimate occupations are timber cutters, fishers, pilots and navigators, structural metal workers, drivers/sales workers, roofers, electrical power installers, farm occupations, construction laborers, and truck drivers.

  THE INVENTION OF NYLON STOCKINGS: It was Wallace Carothers, a young Iowa-born chemist employed by DuPont, who, after seven years of trying, found a way to blow liquid polymers through tiny nozzles to create a fiber of superstrong strands. This was nylon. Several years later, DuPont introduced nylon stockings in New York and London. Contrary to lore, the miracle fabric’s name did not derive from a combination of those two cities’ names. Nor was it, as rumored, an acronym for “Now You’ve Lost, Old Nippon,” a snub to Japan’s dominant silk market. The name was actually a hepped-up rendering of “No Run,” a slogan that the new stockings could not in fact uphold, but whose failure hardly diminished their success. Carothers, a longtime depressive, did not live to see his invention blossom: he killed himself in 1937 by drinking cyanide. See Matthew E. Hermes, Enough for One Lifetime: Wallace Carothers, Inventor of Nylon (Philadelphia: Chemical Heritage Foundation, 1996).

  CRACK SLANG: The Greater Dallas Council on Alcohol and Drug Abuse has compiled an extraordinarily entertaining index of cocaine street names. For cocaine powder: Badrock, Bazooka, Beam, Berni, Bernice, Big C, Blast, Blizzard, Blow, Blunt, Bouncing Powder, Bump, C, Caballo, Caine, Candy, Caviar, Charlie, Chicken Scratch, Coca, Cocktail, Coconut, Coke, Cola, Damablanca, Dust, Flake, Flex, Florida Snow, Foo Foo, Freeze, G-Rock, Girl, Goofball, Happy Dust, Happy Powder, Happy Trails, Heaven, King, Lady, Lady Caine, Late Night, Line, Mama Coca, Marching Dust/Powder, Mojo, Monster, Mujer, Nieve, Nose, Nose Candy, P-Dogs, Peruvian, Powder, Press, Prime Time, Rush, Shot, Sleighride, Sniff, Snort, Snow, Snow-birds, Soda, Speedball, Sporting, Stardust, Sugar, Sweet Stuff, Toke, Trails, White Lady, White Powder, Yeyo, Zip. For smokeable cocaine: Base, Ball, Beat, Bisquit
s, Bones, Boost, Boulders, Brick, Bump, Cakes, Casper, Chalk, Cookies, Crumbs, Cubes, Fatbags, Freebase, Gravel, Hardball, Hell, Kibbles’n Bits, Kryptonite, Love, Moonrocks, Nuggets, Onion, Pebbles, Piedras, Piece, Ready Rock, Roca, Rock(s), Rock Star, Scotty, Scrabble, Smoke House, Stones, Teeth, Tornado.

  THE JOHNNY APPLESEED OF CRACK: Oscar Danilo Blandon and his purported alliance with the Central Intelligence Agency are discussed in great detail, and in a manner that stirred great controversy, in a three-part San Jose Mercury News series by Gary Webb, beginning on August 18, 1996. See also Tim Golden, “Though Evidence Is Thin, Tale of C.I.A. and Drugs Has a Life of Its Own,” New York Times, October 21, 1996; and Gary Webb, Dark Alliance: The CIA, the Contras, and the Crack Cocaine Explosion (New York: Seven Stories Press, 1998). The U.S. Department of Justice later examined the matter in detail in “The C.I.A.–Contra–Crack Cocaine Controversy: A Review of the Justice Department’s Investigations and Prosecutions,” available as of this writing at www.usdoj.gov/oig/special/9712/ch01p1.htm.

  GANGS IN AMERICA: See Frederick Thrasher, The Gang (Chicago: University of Chicago Press, 1927).

  THE SHRINKING OF VARIOUS BLACK-WHITe GAPS, PRE-CRACK: See Rebecca Blank, “An Overview of Social and Economic Trends by Race,” in America Becoming: Racial Trends and Their Consequences, ed. Neil J. Smelser, William Julius Wilson, and Faith Mitchell (Washington, D.C.: National Academy Press, 2001), pp. 21–40. / 103 Regarding black infant mortality, see Douglas V. Almond, Kenneth Y. Chay, and Michael Greenstone, “Civil Rights, the War on Poverty, and Black-White Convergence in Infant Mortality in Mississippi,” National Bureau of Economic Research working paper, 2003.