I am an applied microeconomist, a misunderstood breed. I do not look like an economist, so when people find out they are always surprised and eager to probe my brain for answers to the nation’s problems. “So, when is this recession going to end?” “Can you give me advice on stocks?” Sometimes, with what I am sure they think is mature wit, they ask me, “So, are you going to solve the deficit crisis?” I then have to explain to them that I am a micro economist, which means I don’t work with movements of the economy on a national level, but more with individual choices, and marketing strategies. “Oh, like Freakonomics, then?”
Freakonomics was published while I was still an undergraduate. I remember seeing its mascot, the apple which, when cut open, reveals an orange, plastered all over the walls of the Yale School of Management. Get it? Apples and Oranges? I always thought it was a book on marketing showing how to trick the consumer into buying more stuff than they wanted. It isn’t. It’s a book about how a journalist with an above average understanding of Econ 101 and an economist with a bloated sense of false modesty can team up to convince a nation that it will never understand anything it reads.
The work is a brilliant product as is evidenced by its ubiquity and massive sales volume. However, as a an economist, and a teacher, I feel compelled to set the record straight on one critical point: questions. The book begins with a description of the meeting between Levitt and Dubner, the books co authors. Levitt, after winning the most prestigious award in economics short of the Nobel, tells Dubner that he is a crap economist because he doesn’t know how to do math, theory or econometrics and because he can’t talk about the stock market or growth or deflation. Given the similarity with my own skill set, I was drawn to this character. Perhaps, I thought, his success was a sign that my own style of economic research could be recognized as successful by my colleagues. Dubner goes on to describe Levitt’s strength in his ability to ask good questions, and it is here where the deception begins.
Asking good questions is in many ways the be all and end all of economic research. We don’t place much weight on math skills because Wikipedia exists, and so do co-authors and grad students. We don’t require every economist to know how to process data either. The reason is the same. Whatever skill you are lacking, you can hire a research assistant to fill in the details for you provided you are keen enough to know which questions are good ones to ask. To anyone but an economist, Levitt sounds modest, but the truth is that he is boasting, “My only skill is the only one that matters and I get by with more handicaps than basically everybody else.” A little boasting is fair when you just won the John Bates Clark medal. But lying about your skills in order to sell a book, especially on so critical a topic, this is unacceptable. I’m sure it was the journalist’s idea.
Questions. How do we ask good questions? This is the primary skill I attempt to teach my students from Basic Micro all the way through my graduate courses. We must first become familiar with the subject we are studying. We have to be able to feel what makes sense and what does not. Then, we must be able to translate our subject into the formal language of economics. What is the correct theory, the most relevant model to capture the phenomena we wish to understand? Applying the model and processing it helps us to isolate the causes and effects we are interested in. We are then compelled to tweak our model to check its robustness, play with the variables to see if the cause and effect go in the direction we suspect, change the theoretical analogs to the variables we actually have access to in the real world to see if we can affect the outcome in a positive way. What we do not do is throw two apparently unrelated items together in a data set and sit around waiting for eureka and hoping to win a medal. This is how Dubner presents the findings of Levitt to the world and it is wholly dishonest.
Chapter one: What do Schoolteachers and Sumo Wrestlers Have in Common? It turns out the answer is that they both cheat in statistically measurable ways. This is a great title for an article in a newspaper (blog?) but when in the body of the book Dubner goes on to say, “The two previous chapters were built around a pair of admittedly freakish questions: What do schoolteachers and sumo wrestlers have in common? and How is the Ku Klux Klan like a group of real-estate agents?” he is leading the reader into believing that these were the questions that motivated Levitt to start compiling data in the first place. “…If you ask enough questions, strange as they seem at the time, you may eventually learn something worthwhile.” What he says here is true and what he does is a typical marketing trick used to get around the truth-in-advertising laws: Juxtapose two statements that are not necessarily describing each other and the reader will interpret them as a pair. The chapters were organized around these questions, but the research is not. Asking questions is doing research. Writing chapters is doing journalism. To use one of my favorite phrases, Dubner has successfully confounded the two.
The book, while incredibly deceptive and destructive to any mind in search of actual truths, is not without its merits. In fact, I believe that in spite of being written by a journalist, the very subject matter of the book makes it a great tool for self empowerment. For anyone who has ever been frustrated by the fickleness of scientific discoveries as they are reported in the media, Levitt and Dubner’s goal of exposing the “hidden underside of everything” lays out some very good strategies for wading through the bullshit statistics and their errant conclusions that we see daily, and these days even hourly, published in media.
If inclined, one might divide the goals of Freakonomics into two categories: providing the thrill of seeing the world as totally different than you thought it was, and breaking down the mental barriers built up by the practice of “conventional wisdom.” I like that the authors name this idea and define it, because it’s the kind of thing that we don’t know we are obeying until someone points it out. It is this second goal that is the book’s saving grace.
We associate truth with convenience, with what most closely accords with self-interest and personal well-being or promises best to avoid awkward effort or unwelcome dislocation of life. We also find highly acceptable what contributes most to self-esteem — John Kenneth Galbraith
Levitt and Dubner go on to discuss many conventionally accepted truths and describe how they get implanted into our collective psyche without ever being established as truths. They talk about how journalists and experts feed off each other to build stories that are credible enough to capture the attention of the public. As an example, a 1980s homelessness advocate claimed that “there were 3 million homeless Americans,” or 1% at 1980s population levels, or 1 out of every 100 people. It turns out that this number was un researched and wrong, but because a journalist asked an expert, the expert felt compelled to answer, and because it was an expert that answered, the journalist did not feel compelled to double check the source. He later gives a statistic so outrageous that it suggests that one third of all deaths in the United States are a result of homelessness. Kinda whack when you think about it.
From the perspective of an economist, Freakonomics is really just sensational journalism mixed up with applied microeconomic theory and a bit of creative deception. From the perspective of a layperson, Freakonomics is a great way to understand how the truth that we accept is not acceptable at face value. Because I am an advocate of informed consent, I recommend reading this book. It is a truly wonderful eye-opener for how the world we operate in gets constructed around us by people who do not necessarily care about our well-being, and may in fact be opposed to it. My recommendation, however, comes with a warning: please do not mistake its contents for actual economics.