Freak-Freakonomics

Ariel Rubinstein

W
hen a million and a half sport and even sex. It does not demand much of psychological motives). This worldview seeks
Americans purchase a book the reader. In my view, the secret of the book’s a simple explanation for the behavior of hu-
within a year of its publica- success is its invitation to flirt with a revered man beings that is consistent with their aspira-
tion, when a book is trans- genius. “The most brilliant young economist in tions to attain a goal, attributing high impor-
lated into more than 30 America” (page ix), “acknowledged as a master tance to money and status and low importance
languages, when Super-Freakonomics is already of the simple, clever solution” (87), and “consid- to moral values. All human beings are seen as
on the way (and I would not be surprised if a ered a demigod” (53), are some of the superla- economic agents, except for one group of an-
movie deal is in the works), the book must be an tives the book heaps upon its hero and principal gels looking down at the world from above: the
exemplary work, or at least a cultural phenom- author, Steve Levitt, a professor of economics at economists.
enon. In any case, it is worth examining. the University of Chicago. Freakonomics lashes out at the entire world
Indeed, the book is enjoyable, witty and of- Freakonomics is a collection of anecdotes from the Olympus of economics. My response
fers light reading. Much has been written about and, as the authors note, has no central theme. is an outline of “my new book”—Freak-
the secret of its success. It focuses on everyday Many of the anecdotes are taken from Steve Freakonomics. In my (“brilliant . . . ”) book,
issues. It touches upon crime, family, espionage, Levitt’s academic articles. The book gives ex- I will borrow from the structure and text of
pression to the economic worldview that sees Freakonomics. I will show that if one also looks
Ariel Rubinstein is a professor at Tel Aviv University and at people as “economic agents,” responding to upon economists, including Levitt, as econom-
New York University. He is the recipient of the Bruno Prize mainly material incentives (though in keeping ic agents, one can use the insights of Freako-
(2000), the Israel Prize (2002), the Nemmers Prize (2004),
and the Emet Prize (2006). He was one of the founders of Peace
with the new behavioral economic approach, the nomics to lash out against . . . economics and
Now in Israel. book also recognizes the existence of additional economists.
© The Berkeley Electronic Press Economists’ Voice  www.bepress.com/ev  December, 2006
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 Like Levitt, I have no central theme. My economics to encompass any question that re- chapter 2: why do economists earn more
book will be a series of observations—some quires the use of common sense. than mathematicians?
about economics, some about Freakonomics—
that I hope the reader will find intriguing.
Take, for example, Levitt’s tales of the big
city. The Chicago Municipality administers an
annual test for schoolchildren. A suspicion arose
T he chapter is inspired by Freakonomics’ dis-
cussion of the question of why “the typical
prostitute earns more than the typical architect”
chapter 1: is imperialism still alive? that teachers were “correcting” their students’ (106). The comparison between architects and

E conomists believe that they have a lot to con-

tribute to any field—sociology, zoology or
criminology. The academic imperialism of eco-
answers before sending the tests to be checked.
Levitt obtained the data from the municipality
and developed a computer program that looks
prostitutes can be applied to mathematicians
and economists: the former are more skilled,
highly educated and intelligent. Moreover,
nomics has something in common with political for classes with suspicious combinations of an- just as Levitt has never encountered a girl who
imperialism. Therefore, I will begin my chapter swers. For example, if all of the students in a dreams of being a prostitute, I have never met a
with a fascinating historical review where we particular class responded correctly to ques- child who dreams of being an economist. Like
will learn that imperialism stemmed from the tions 7, 8 and 10, and erred on question 9, a prostitutes, the skill required of economists is
perceived superiority of the conquering people suspicion arises that the teacher falsified the “not necessarily ‘specialized’” (106), so why do
over the conquered peoples, and that the role of answers to four questions. (On question 9, the economists earn so much more than mathema-
the conqueror is to disseminate its lofty culture. teacher either made a mistake himself or tried ticians?
From here, I will move to describe Freako- unsuccessfully to avoid raising suspicion.) In Here, I offer a new explanation for the salary
nomics as a typical work of academic imperial- this way, Levitt discovered dozens of deceitful gap between mathematicians and economists:
ism. The complex interplay of feelings of superi- teachers. The IDF’s intelligence units and credit many economists are hired to justify a view-
ority and deficiency has driven every empire, and card companies use similar algorithms. What point. In contrast, I have never heard of math-
economics is no different. Levitt: “Economics is a have we learned about Levitt? He is a smart guy ematicians who proved a theorem to satisfy their
science with excellent tools for gaining answers, with connections in the municipality. What is masters.
but a serious shortage of interesting questions” the connection to economics? None. Like early
(xi). Freakonomics makes statistical reasoning, imperialists, who conquered other nations in chapter 3: the return of four million
which is used in all the sciences, look like a search of natural resources, economists like Lev- missing children
subdued colony of economics. Furthermore,
Freakonomics expresses the aspiration to expand
itt (and myself) have swaggered off into other
fields in search of interesting questions. A n amazing fact: “It was the night of April
15, 1987. Seven million American children
Economists’ Voice  www.bepress.com/ev  December, 2006
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suddenly disappeared” (25). It turns out that had forgotten to visit the social security offices. not to search further at a stage in which the
the requirement to fill in the social security Supportive evidence: another two million chil- experimental results went in my favor and to
number of each reported child when claiming a dren returned to the lists on April 15, 1988. check findings seven times when they appeared
deduction on the parent’s income tax form led not to support the assumptions I was sure were
to a reduction of seven million children. The chapter 4: what do grocers and economists correct. All this should convince me to place no
corresponding increase in income tax revenue have in common? greater faith in an economist’s findings than in
is estimated at $3 billion a year (a huge sum,
enough to finance about ten days of fighting in
Iraq . . . )!
T he title of this chapter competes with “What
Do Schoolteachers and Sumo Wrestlers
Have in Common?” (19). The chapter will begin
my grocer’s tally.

chapter 5: do numbers lie?

It is not surprising that some people invented
children in order to receive income tax credits,
and that these parents of fictitious children were
with the findings of the study I will conduct on
my grocer’s invoices. Eight out of fifty will be
erroneous, including seven in the grocer’s favor
“T eachers and criminals and real estate
agents may lie, and politicians, and even
CIA analysts. But numbers don’t” (17). The
deterred when they noticed that the tax authori- and one (with a trivial error) in my favor. reader wonders: “How can . . . data be made
ties had stopped ignoring this. But is it conceiv- I do not agree with Levitt, who asks “Who to tell a reliable story?” (161). And Levitt re-
able that “one of every ten children” in the U.S. cheats?” and responds: “Well, just about anyone, sponds: “By subjecting it to the economist’s fa-
was only conceived by the pen of taxpayers? if the stakes are right” (24). My grocer is not a vorite trick: regression analysis. No, regression
With some effort, after private correspondence cheater. But grocers, like economists, make mis- analysis is not some forgotten form of psychi-
with IRS personnel, I obtained the “exact” num- takes, even without being aware of them, with a atric treatment. It is a powerful—if limited—
bers. Two million children resurfaced immedi- tendency to favor their own interests. The gro- tool that uses statistical techniques to identify
ately, because they never disappeared. From the cer wages a struggle for survival against the big otherwise elusive correlations” (161). This is a
start, the number of children drops by five mil- supermarket chains and hopes for a large bill. curious statement in light of the fact that Levitt
lion and not by seven million. To find some of The economist struggles for his professional is aware of the problematic nature of statisti-
the rest, you have to know that a child in the advancement and wants his findings to con- cal analysis, acknowledging: “I just don’t know
U.S. does not receive a social security number firm his hypothesis. In economics, there is no very much about the field of econometrics” (x)
unless his parents request one. One can imagine tradition of checking data and repeating experi- and in general thinks that “regression analysis
that on the spring night when income tax forms ments. In the few cases in which I conducted is more art than science” (163). This is per-
were submitted, many parents realized that they experimental research, I myself felt the pressure haps the central contradiction in the book: on
Economists’ Voice  www.bepress.com/ev  December, 2006
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one hand, a recognition of the limitations of the effort of the American defense establish- They certainly bring more benefit there than at
statistics, and on the other hand, using it as a ment in the 1950s to hire game theorists to de- the guard post at Rachel’s Tomb.
magician’s box. velop Cold War strategy. The effort produced
some studies in game theory and no real ben- afterword
chapter 6: why does the “perfect prophet”
make mistakes?
efit to the Defense Department. Who knows;
maybe Levitt, who exposed cheating teachers L evitt writes: “The typical expert . . . is prone
to sound exceedingly sure of himself. An ex-

L evitt has studied the “cyclicality of names”—

a new name takes root among successful
people, moves on from there to the masses and
in Chicago, will succeed in catching terrorists
through the databases of rental car companies.
But if he does, it will not be due to his pro-
pert doesn’t so much argue the various sides of
an issue . . . That’s because an expert whose argu-
ment reeks of restraint or nuance often doesn’t
years after becomes so prevalent that “even fessional skill as an economist but due to his get much attention. An expert must be bold if he
lower-end parents may not want it, whereby personal talent. hopes to alchemize his homespun theory into
it falls out of the rotation entirely” (202). The The FBI is caught up in the widespread conventional wisdom” (148). It is possible to
book forecasts that in 2015 Asher and Aviva confusion between professional knowledge and suspect that this paragraph refers to Levitt: an
will be common names in the United States. brilliance. There are many economists who are expert, who is sure of himself, who presents a
I believe that Levitt is wrong and that already very intelligent and also have two legs on the view other than his own only to disprove it, and
in 2008 the country will be full of Ashers and ground. Assign one Levitt to advise the educa- who is brave enough to touch upon a subject
Avivas, the offsprings of the millions of readers tional system in Chicago, the tax authorities in like the right to abortion. But this paragraph is
of the book. That is the way it is in the social Washington or the Mossad in Tel Aviv, and he written in the book in disparagement of other
sciences: our prophecies can (almost) be self- will produce many unexpected ideas. It is good experts (in “parental sciences”).
fulfilling. for a tired organization to occasionally invite a Freakonomics aspires to “thinking sensibly
Levitt to sit in on their brainstorming sessions. about how people behave in the real world. All it
chapter 7: will steve levitt be recruited One good idea out of a hundred is worth the requires is a novel way of looking, of discerning,
for the mossad? investment. But this has no connection to eco- of measuring. This isn’t necessarily a difficult task,

I learned from the book that “The Central

Intelligence Agency wanted to know how
Levitt might use data to catch money launder-
nomics. An original and brilliant thinker like
Levitt produces interesting ideas. The Israeli de-
fense forces apparently understood this decades
nor does it require super-sophisticated thinking”
(205). The authors believe that “the most likely re-
sult of having read this book is a simple one: you
ers and terrorists” (xii). This reminded me of ago and hired Levitt in various consulting roles. may find yourself asking a lot of questions” (206).
Economists’ Voice  www.bepress.com/ev  December, 2006
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 I do not believe in magicians who know references and further reading
how to teach people to think, to feel and to in- Levitt, Steven D., and Stephen J. Dubner (2005)
vent. Levitt claims: “A long line of studies . . . Freakonomics: A Rogue Economist Explores the
had already concluded that genes alone are re- Hidden Side of Everything. New York: William
sponsible for perhaps 50 percent of a child’s per- Morrow.
sonality and abilities” (154). I dare to attribute
(without research) 49% to the mother, father acknowledgments
and kindergarten teacher. These numbers do This piece derives from a piece originally published
not leave much room for Freakonomics. in Hebrew in Haaretz and was translated, modified
and published in the Economists’ Voice with per-
and another afterword: am i envious of mission of Haaretz.
steve levitt?

I n the concluding chapter, I turn to introspec-

tion. There is no parallel chapter in Freako-
nomics.
Perhaps I am a bit envious of Levitt? I like
the fact that “he is unafraid of using personal ob-
servations and curiosities; he is also unafraid of
anecdote and storytelling” (xi). I am impressed
by the way he challenges conventions. Freak-
Freakonomics will sell fewer copies but will “of
course” be a better book . . .

Letters commenting on this piece or others may

be submitted at http://www.bepress.com/cgi/
submit.cgi?context=ev.
Economists’ Voice  www.bepress.com/ev  December, 2006
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erratum
January 17, 2006
The final sentence on page 4, column 2, “The
Israeli defense forces apparently understood this
decades ago and hired Levitt in various consult-
ing roles,” includes a typo. The sentence should
read: “The Israeli defense forces apparently un-
derstood this decades ago and hired Levitts in
various consulting roles.”

Economists’ Voice  www.bepress.com/ev  December, 2006

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