I just finished reading Freakonomics. Quite a book. It was long overdue but when I got to it, it flew like a breeze. Stephen Dubner did a wonderful job capturing the insightful research and anlaysis by Steven Levitt. What really inspired me was his writing style – very engaging and purposeful. I will probably take a break with another book or two before reading Super Freakonomics. But I must say this was hardly like the Economics textbook from way back in business school.
So what was some of the key learning. For one, things are not always what they seem. ‘Conventional Wisdom’ maybe conventional but it is certainly not wisdom. It may seem quite obvious that the risk of a child getting shot by accident in a household with a gun maybe far greater than a child drowning in a house with a swimming pool. But quite the opposite is true. In fact most people would find a swimming pool a great thing to have in a home. Statistically however it has been proven that more children die from drowning than from a gun shot accident.
The same is true for riding in a car and flying in a plane. Mosy people are afraid of flying than they are of riding in a car. Why is that? Data again proves that flying is safer than riding in a car. In a car we feel more in control, especially when we are in the driving seat but in an airplane we are in the hands of someone we usually don’t even see and the unknown sparks a far greater fear in us. We intrinsically fear uncertainty. The more unknown the variable the greater our fear. But the point is this, what we believe or know to be conventional wisdom is not necessarily true.
Looking underneath the surface usually reveals a completely unexpected picture. Like the case of the sudden drop in crime in the United States and more specifically in New York. Surprisingly this topic has been a subject of many books and quite amazingly now looking at some of the examples in retrospect, this case has been used nicely to fit the context of whatever that was being talked about.
I don’t want to be the judge on who is right and who is wrong but in the ‘Tipping Point’ the context was that when small things are taken care of, when graffiti on the streets is removed, when broken windows and damaged street property is kept in shape it eventually leads to a Tipping Point in crime when suddenly the larger crimes being to reduce leading to an overall decline in crime rate. This was the apparent strategy by Mayor Giuliani to bring crime rate down in New York. In Freakonomics the reason for this reduction is completely different. After exploring a number of possible angles and then negating them Steve Levitt concludes that it was the legalization of abortion in the 1970s that eventually led to the reduction in crime in the 1990s. His theory being that women who usually seek abortion are women who for whatever reason are not in a shape or condition to raise a child, from being too young or too poor to everything in between. Therefore when they were allowed abortion it reduced the number of unwanted babies, babies who would not have been cared for, raised, educated and groomed in the same way as a mother who wanted a child and as result are more likely to perform poorly at school, drop out and eventually turn to a life of crime. Quite a theory but very interesting nevertheless.
Now having read Malcolm Gladwell’s Broken Window Theory to crime reduction in New York and Steve Levitt’s Abortion Theory you can’t help but think that it is unlikely both theories are true. I will let you draw your own conclusions, feel free to tell me what they are in the comments below. But I learnt one important thing. It is amazing how powerful writing can be as a tool to convince people and change their opinion. At the time of reading both perspectives I was equally convinced by each. Upon further research for this blog post I learnt that perhaps both are questionable but they both made a damn good case of what they were saying and they surely had me convinced.
These were just some of the highlights from the book. There are a lot more interesting examples and observations in Freakonomics that I would like to talk about. Perhaps in a future blog I will cover those as well, which if I keep to my promise should be not too far away.