In their book Freakonomics, authors Steven Levitt and Stephen Dubner use economic theory and statistical analysis to delve into everything's shadowy side.
Here are some of the main topics and insights from the book:
Incentives are the forces that motivate human behavior.
Information is power, and information asymmetry is when one party has more or better information than another.
Conventional wisdom is often wrong, or at least incomplete.
Correlation does not imply causation, and causation is hard to prove.
Human behavior is complex and often influenced by hidden factors.
FAQ
The central concept of "Freakonomics" is that everything operates based on economic incentives and disincentives. The authors explore a range of topics from crime to parenting to show that things are often not what they seem.
"Freakonomics" focuses on the role of incentives in human behavior. The authors argue that humans usually make decisions based on the incentives for their actions. These incentives fall into three general categories: economic incentives, moral incentives (i.e., doing the “right thing”), and social incentives (i.e., being praised or criticized by one’s peers).
"Freakonomics" examines cheating in different walks of life. For instance, in the Chicago Public School system, there is an economic incentive for teachers to cheat on the results of standardized tests. In sumo wrestling, an unusually high number of sumo wrestlers with a 7-7 record will defeat opponents with an 8-6 record, likely because the 8-6 wrestler has been bribed to throw the round.
"Freakonomics" discusses the role of information asymmetry, where one person or group has more information than another person or group. The Ku Klux Klan is a classic example of this, controlling lots of private information like passwords and secret handshakes.
"Freakonomics" suggests that conventional thinking often is wrong, and people make decisions based on what they want to do, not on what they should do. Incentives push and pull humans toward those decisions.