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Book Review

Book Review: by Lang Reid


Freakonomics (ISBN 978-0-141-03008-1, Penguin Books, 2006) and written by Steven D. Levitt and Stephen J. Dubner is one of those ‘sleepers’ which can unfortunately go unnoticed on the shelves. Perhaps it is the confusing cover with dreadful diagonal wording, or the fact that it might have been mistaken for Thaksinomics, now a bete noir in Thailand. Who knows? However I must thank Ernie Kuehnelt for bring it to my attention.
When you even begin to think of economics you immediately imagine endless ledgers of boring figures trying to show why economic factors rule our lives (the American sub-prime situation for example) and predict how and why the figures go up or down. This book has none of that, in fact it is more of a psychological examination of our society, and what makes it go up and down.
The two authors are Steven D. Levitt, an economist who teaches at the university of Chicago and Stephen J. Dubner, a journalist who wrote a profile on Levitt which caused so much interest that the two collaborated in a book, and Freakonomics was the result.
Consider one of the opening gambits, “Morality represents the way we would like the world to work and economics represents the way it actually does work.” That is fairly meaty stuff to meet head on. If you accept that premise, then you will enjoy the book’s take on the economics of our society.
The study of economics in the society shows that the major factor is information. Experts depend and exist on the fact that they have information that you don’t, so you will be willing to pay for that information. This they describe as an information asymmetry. However, the internet has vastly shrunk the gap between the experts and the public, because the internet is the great depository of information.
Using that, the authors show just how the secret societies as the American Ku Klux Klan can generate fear, a factor also used by your friendly real estate agent when you are going to sell a house. The RE person has the information on how much houses are going for in your area and whether the market is flat or otherwise. When an offer is made on your house, the RE agent instills fear into the seller that if he does not accept the offer, then the house might stay on the market for months (just like the house down the street). You are being economically manipulated.
The authors look critically at such diverse items as crack dealing and the illegal ownership of hand guns. They point out that regulation of a legal market fails when there is a healthy black market for the same item. Gun control laws then cannot work or have any real impact on crime.
We have all heard the truism - there are lies, damned lies and statistics, but this is a book which has taken the statistics inherent in our society and turned them on their ears and come up with some amazing answers. At B. 325 it is definitely an economic bargain waiting for you on Bookazine’s shelves. You will enjoy it!