Tuesday, July 12, 2011

People respond to incentives

I had been waiting for what felt like forever to start reading SuperFreakonomics: Global Cooling, Patriotic Prostitutes and Why Suicide Bombers Should Buy Life Insurance by Steven D. Levitt and Stephen J. Dubner. Not just because I wanted to read it but was in the middle of the China Rican reading challenge. I was/am a big fan of their first book Freakonomics: A Rogue Economist Explores the Hidden Side of Everything and was looking forward to a follow up as soon as I finished this one. But I wanted the book in paperback and I had to wait for it. I would read through a few pages whenever Boyfriend dragged me to the Apple store, so thank you Jobs for making SuperFreakonomics one of the example books in your book store.

SuperFreakonomics is a mix of economics and sociology, albeit a simplified version of both. Levitt's credentials, an economics professor at the University of Chicago, covers the economics details, while Dubner, a former writer and editor for The New York Times, takes on the writing duties. The title quote covers the basic theme to both books, and they elaborate on this further: "People respond to incentives, although not necessarily in ways that are predictable or manifest. Therefore, one of the most powerful laws in the universe is the law of unintended consequences." (xiv) They ask what seem like unusual or even pointless questions: what does a department store Santa and street prostitute have in common? or should a suicide bomber buy life insurance? and then use statistics to tease out an answer.

They examine problems but don't necessarily offer solutions. They're not really trying to persuade anyone that the results they provide mean we have to take any sort of action. Indeed, if there's anything one should take away from this it's the idea that things are related in crazy ways that may not seem obvious at first, second, third look and before dismissing something it's important to look at the problem from lots of different angles. They never claim their results are infallible and encourage people to challenge them on their blog. I've seen complaints about how the conclusions they come to are garbage and they're research methods are incomplete. That could certainly be the case, but you can't actually tell what their research methods are in this book because the book isn't made up of academic papers. If it was, I don't think it would be nearly as interesting because, let's face it, academic research papers aren't usually the most interesting thing to read and an NYT Bestseller they do not make.

If you liked Freakonomics, you'll probably like this one. It's really just more of the same, but that's not a bad thing. There are an unlimited amount of questions to be asked and this book just asks a few that didn't get asked with the first book. To be honest, if they end up writing another book, I'll probably read that one as well.

Title quote from page xiv

Dubner, Stephen and Steven Levitt. SuperFreakonomics: Global Cooling, Patriotic Prostitutes and Why Suicide Bombers Should Buy Life Insurance. Harper Perennial, 2009.