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Sunday, July 09, 2006


If economics is the study of how people make purchasing decisions, then Freakonomics is about how economic and statistical data can help us understand human behaviour at the most common, man-on-the-street level.

The first time I saw this book in the store, I thought that it was another business book written by an ego-driven author who was too full of himself. Then I watched a documentary about the book and became intrigued.

The book is co-written by Steven D. Levitt, who is claimed to be one of the most brilliant economists today, and Stephen J. Dubner, a journalist for a magazine. Whereas Levitt provides the meat of the book, it is Dubner who makes it easy to read. Thus, it is completely accessible to anyone who has little knowledge about economics. In fact, it is precisely because it deals with "real world" events that the reader doesn't feel like he's reading a textbook.

Instead of asking world-changing questions like how the U.S. federal interest rate affects the economy of China, it posits questions like "what do teachers and sumo wrestlers have in common?" (answer: they cheat). Though no one would think to ask such questions, I found the answers and their explanations to be extremely fascinating.

Just like evidence never lies in crime scene investigations, numbers also don't lie in statistics and economics. Rather, it is the interpretation of those numbers that are subjective. The most eye-opening one, in my reading, was that the decreasing crime rate in America is due to legalised abortion rather than anti-crime policies. Reading the explanation with its evidence made me rethink almost everything I had learned about crime.

And therein lies the nub of the book. It forces you to rethink conventional wisdom. Through its various case studies, I felt that there are many things which we hold to be true, but are not necessarily so. Levitt goes so far as to lay blame for these wisdoms on experts. His argument is that experts, whose currency is information and who exist in a capitalist world, have an incentive to maximise that currency to further their status.

That viewpoint, though, is falsifiable. By overturning and discounting many theories, Levitt portrays himself as an expert. Therefore, is it also in his best interest to make his theories acceptable by the public, and therefore elevate his position in the world? That seems to be the main theme of the book, though the authors claim that it is "theme-less".

The book itself is a breeze to read. I bought it on Tuesday, read it for about two to three hours a day, and finished it on Friday. It's not exactly what you'd call a can't-put-down book, but it pulls you into its arguments such that you want to see how it all pans out.


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