I have my bachelor’s degree in Economics, which means I know enough about economics to know that I know very very little about economics. Nonetheless, this refreshing look at economics and quantifiable human behavior was a fun read for me, as well as a reminder as to why I enjoyed studying economics in college.
While the subtitle of this book certainly overstates it’s aim (is it really possible to explore the hidden side of everything?), the authors did do a great job of showing how ‘conventional wisdom’ is often just plain wrong.
Levitt is a highly sought after economist and professor of Economics at the University of Chicago. In his relatively young career, his trademark has been to ask different questions and apply economic theory to life situations that are not normally considered in the scope of economics. So for example, in this book, the authors ask provocative questions such as, “Why do drug dealers still live with their moms?” And, “How is the Ku Klux Klan like a group of real-estate agents?”
Chapter one asks the question, “What do schoolteachers and sumo wrestlers have in common?” Answer: Given the right conditions and incentives, we’re all tempted to cheat. Whether you’re talking about school teachers cheating on their kids standardized tests, sumo wrestlers trying to make it to the top, or professional athletes who take steroids. We all analyze the risks and rewards in many of the decisions we face every day and act accordingly.
Why do drug dealers live at home? This was a great chapter… worth the entire book. Here the authors were able to obtain and analyze the financial books of an upper level crack gang drug dealer in Chicago. In so doing, the pay scales tend to mirror that of any major U.S. corporation, where the very top may the lions share of the money, while the lowest level ’employees’ can barely get by. For example, in the 1990 at the height of the crack boom, the average dealer on the street made an average of $3 per hour! Yet, those same dealers risked a 1 in 4 chance of violent death, not to mention incarceration. So why would someone agree to take that job? For the same reason the young woman from Indiana heads to Hollywood… for a shot at making it to the top of the pyramid, no matter how long the shot is, the money, power, and fame is a sufficient incentive.
There are many more great little insights into the human condition in this book. It was a fun quick read… highly recommended.
I should note, one of the more controversial chapters is the one entitled, “Where have all the criminals gone?” In the mid 1990’s, many sociologist were predicting an oncoming wave of crime amongst America’s youth. When that crime wave did not come, but rather the crime rate dropped, the experts were left scratching their heads, asking, “why the significant drop?” The answer, according to the analysis of these authors, was not better police methods, education, or the economy (though they did help to a small degree). Rather, the authors believe the legalization of abortion to be the primary reason for the crime drop 20 years after Roe v. Wade. I want to be clear, and even the authors of this book are clear, this does not mean that the ends justify the means. As the authors point out, if you consider abortion to be murder of a person (as I do), then whatever unintended benefits may result, they certainly do not justify the morality and legality of abortion.