More Freakonomics

I got a feva...and the only puhscription...is more freakonomics.

A few months ago I received an email from Shawn Nicholls, online marketing director for the newly released book Superfreakonomics. "Would I do a book review?" was the question.

Why yes. Yes I would.

I wasn't able to read it until my Christmas break began because school provided enough reading to make my eyes bloody. Once I picked it up, however, I haven't been able to put it down; I finished it on Tuesday.

As is the case with the first book, and the blog that came about afterward, Levitt & Dubner tackle some of the most fascinating questions and case studies. For example, no matter which side of the fence you're on with Global Warmism, the chapter on the commanlities between Al Gore and Mount Pinatubo is a must read. I found it to be quite objective and funny.

Clearly one of the main problems with Gore's message is that the incentives are not good enough to spur behavioral change.

In the aforementioned chapter, there is a discussion on geoengineering--the idea that we can essentially manufacture the atmosphere to negate the effects of pollution through, say emitting a certain amount of sulfur dioxide into the stratosphere--and here is a brief excerpt:

Al Gore, meanwhile counters with his own logic. "If we don't know enough to stop putting 70 million tons of global-warming pollution into the atmosphere every day," he says, "how in God's name can we know enough to precisely counteract that?"

But if you think like a cold-blooded economist instead of a warm-hearted humanist, Gore's reasoning doesn't track. It's not that we don't know how to stop polluting the atmosphere. We don't want to stop, or aren't willing to pay the price...

Gore and other environmentalists are pleading for humankind to consume less and therefore pollute less, and that is a noble invitation. But as incentives go, it's not a very strong one.

Levitt & Dubner open the book with several short studies, one of which relates directly to today's global warming debate: how the advent of the automobile was a direct response to the nasty, polluting mode of transportation of the day -- the horse-drawn carriage. The market eventually came up with a superior substitute for methane-producing horses. You didn't see the government force the change.

Interestingly, the automobile is a rather unique instance of the solution being relatively costly and complex. Many problems can be solved cheaply and simply. For example, doctors can prevent the spread of disease by simply washing their hands; drivers and passengers can save their own lives by wearing a seatbelt; and we can mute the severity of costly hurricanes by deploying simple water-churning devices in the ocean.

Alas, governments aren't exactly famous for cheap or simple solutions; they tend to prefer the costly-and-cumbersome route.

If you read Freakonomics, and you're anything like me, you were probably enthralled with the chapter about why drug dealers live with their moms. In a follow-up to that study, Superfreakonomics takes a look at prostitution and the tradeoffs and choices that women have in that 'profession'. That chapter, while very interesting, is as carnal as you'd imagine. Consider yourself warned. One major takeaway for me was that pimps do a far better job for their clients (in terms of wages and protection) than real estate agents do for theirs (in terms of maximizing sale price). That's not saying a whole lot, but it is funny.

My favorite chapter was the one on altruism. Throughout the last century, numerous economists have tried to gauge altruistic human behavior. "Are people innately altruistic?" was their question.

[That] is the wrong kind of question to ask. People aren't "good" or "bad." People are people, and they respond to incentives. They can nearly always be manipulated--for good or ill--if only you find the right levers.

I take exception to the 'people aren't good or bad' statement, but I fully agree that people respond to incentives. In the altruism chapter Levitt & Dubner explore some of the game theory experiments used to gauge altruism, thus showing how people react to various sets of choices and incentives.

Would there be as much charitable donation in the United States if there were no tax incentives for doing so? I think not.

The book is a fun, insightful read. And the Epilogue is the best part. Seriously. I will leave it at that.

Ironically, I really did have a fever Monday and Tuesday. I read Superfreakonomics while I was forced to stay in bed. Bam! No more fever.