Greatest Hits

Freakonomics - Levitt & Dubner

WHAT THE BOOK SAYS

 

An economist and inquisitive journalist explore the hidden side of everything.  They find links and patterns in all sorts of strange areas by asking unconventional questions such as:

1. What do estate agents and the Ku Klux Klan have in common?

2. Why do drug dealers live with their mothers?

3. How can your name affect how well you do in life?

By using information about the world around us we can get to the heart of what is really going on.  We need to be much more inquisitive and not accept received wisdom.

 

 

WHAT’S GOOD ABOUT IT

• If you follow the thinking behind the whole book, you will never take anything for granted again
• What appears to be a reason for something rarely is – instead it is often a twisted piece of received wisdom that everyone blindly accepts
• Take an example: parents prevent a child from going to play in a house where the parents own a gun, but allow them to visit another friend who has a swimming pool. In fact the odds are 1: 11,000 of drowning and 1:1 million of gun death
• We are all terrible risk assessors, and as a result, we often make very dim decisions which fly in the face of the facts
• There is a massive difference between correlation (two things appear to be linked) and causality (one actually causes the other). We need to distinguish between the two to make sensible decisions

 

WHAT YOU HAVE TO WATCH

• In the broadest sense, the book has nothing to do with business
• However, the enlightened mind can take the principles and apply them to the discernment of truly relevant data, and the kind of inquisitiveness that is essential for any successful strategy

 

Superfreakonomics - Levitt & Dubner

Fresh off the press, here is a summary of Superfreakonomics. Undoubtedly the bit everyone will latch onto is in chapter 5. When a big volcano erupts it fills the atmosphere with enough sulphur dioxide to cool the earth for a year or two. If we pumped this into the atmosphere anyway, it would achieve the same effect, but ironically upset environmentalists in the process.

 

As those of you who know me will know, I have a few views on volcanos myself (recent Radio 4 interview). Enjoy the debate…

 

 

BOOK: Superfreakonomics

AUTHOR: Levitt & Dubner

 

WHAT THE BOOK SAYS

 

The more that you look at the world with an economist’s mind, the more straightforward it gets, and the funnier. Even the most obscure people respond to incentives.

 

This ‘freakquel’ claims to be bolder, funnier and even more surprising than its predecessor, the multi-million selling Freakonomics. It is full of things you always thought you knew but didn’t, and things you never knew you wanted to know but do.

 

Everything can be explained by economics, such as:

• Suicide bombers should buy life insurance because that would make them less likely to appear on any search for potential terrorists.
• You are more likely to be killed walking home drunk than driving.
• Elephants are more dangerous than sharks (200 deaths a year vs. 4).
• Sex has become cheaper since more women started giving it away for free.
• Some prostitutes are like Santa Claus because they only sell sex at holiday time.
• Crime increases as TV coverage spreads 

Price discrimination affects most markets, and some customers have clearly identifiable traits that place them in the willing-to-pay-more category.

 

There are birthdate bulges everywhere – where certain deadlines, term times and so on dictate that the best in various occupations will be born in the same month (this is also covered in Outliers by Malcolm Gladwell).

 

 

WHAT’S GOOD ABOUT IT

• It should make you look more deeply, ask more questions and think a little differently.
• There is a huge difference between real behaviour and what people claim in surveys: this is the difference between declared and real preferences.
• Going to hospital slightly increases your chance of surviving if you have a serious illness, but increases your odds of dying if you don’t (because of infections and complications).
• People aren’t ‘good’ or ‘bad’ – they respond to incentives and can nearly always be manipulated.
• The Endangered Species Act is actually endangering species because it encourages landowners to cut down trees and make their property less suitable to be designated as protected habitat.
• The final chapter on climate change will cause a stir. Al Gore and Mount Pinatubo in the Philippines have a lot in common - they both influence global cooling.  When a big volcano erupts it fills the atmostphere with enough sulphur dioxide to cool the earth for a year or two.  If we pumped this into the atmosphere anyway, it would achieve the same effect, but ironically upset environmentalists in the process.

 

WHAT YOU HAVE TO WATCH

 

It's not a textbook, so roll with the narrative and dig out the nuggets.