Book Review: Super-freakonomics – Steven D Levitt and Stephen J Dubner

By Babak Moussavi

Economics is often seen as a fairly esoteric discipline, involving complex mathematics and a primary interest in money. Steven D Levitt, a renowned economist at the University of Chicago, and Stephen J Dubner, a witty writer for the New York Times, cast the subject in a different light in their first book, Freakonomics, which came out in 2005.

Did you say this subject could be fun?

The book kicked off the genre of ‘popular economics’ – a title that beforehand would have sounded oxymoronic. In it they explored a seemingly random set of questions, involving cheating Sumo wrestlers and drug-dealers that live with their mothers, using economic tools such as quantitative analysis, but in a completely jargon-free way. The main objective was to show that looking at such topics through the lens of an economist could offer an objective understanding of why people behave as they do. The point is to understand incentives, and how rational, self-interested people respond to them. As such, the book introduced the general reader to the type of thinking done by that much-misunderstood creature: the economist.

The sequel, Superfreakonomics, which came out in 2010, largely follows the same format. Again, an eclectic bunch of topics are examined, with chapter titles including ‘How is a street prostitute like a department-store Santa?’ (the answer being that prostitution is a surprisingly seasonal activity) and ‘Unbelievable stories about apathy and altruism’ (where the word ‘unbelievable’ is used literally). One reason why this book is ‘super’ compared to the original is that it explicitly introduces core economic ideas, that everyone benefit from knowing about, such as price discrimination, adverse selection and externalities. These are introduced in a completely logical way, helping the reader understand the specific topic in more depth by providing a basic understanding of basic economic material. The authors should also be applauded for showing that these concepts can easily be approached by the non-economist, and any fear of their complexity is misplaced. For this reason, I find this book mostly excellent, but with one reservation, which I shall return to.

The authors seem to relish the prospect of finding simple, efficient solutions, but also of revealing truths that refute conventional wisdom. An example is with car seats, where, through an analysis of the data on safety records, they try to show that children’s car seats offer no significant extra safety compared with the standard seat. As is expected, attempting to overhaul conventional wisdom generates controversy and resistance, and one wouldn’t expect parents who read this book to stop strapping their children into special car seats as a result.

Conventional wisdom, often borne out of ideology or inertia, often serves as a block in designing effective policies to combat poverty and other issues related to social justice. A basic understanding of economic thinking, and how to interpret data, could go a long way in this effort, and appreciating the role of incentives in influencing human behaviour seems crucial. To that end, this book (along with its predecessor) has made a useful contribution by popularising and helping people understand basic economic theory, and has, perhaps, helped to persuade people to occasionally think beyond conventional wisdom.

But any battling of the conventional wisdom that relates to car seats pales in comparison to what the authors attempt in their last chapter, where they take on the topic of environmentalism. The authors’ argument about tackling climate change not only generated a large metaphorical storm, but also represents something of a break in theme from the rest of the book. While the other chapters largely seek to understand random phenomena by collecting the data and interpreting them by using economic tools, this chapter offers an alternative account of what should be done to tackle global warming. They advocate geoengineering as a better solution: pumping tonnes of sulfur dioxide into the stratosphere to form sulfates which will reflect the sun’s rays and subsequently cool down the earth. This they say, citing the work of the out-of-the box scientists and thinkers of Intellectual Ventures (a company run by Nathan Myhrvold, formerly Microsoft’s chief technology officer), is a cheap and simple solution to halt global warming. As one might expect, environmentalists have been outraged, viewing the suggestion of pumping more pollutants into the atmosphere, in order to solve a problem caused by pollution, as sacrilege.

Although the authors use an economist’s cool-headed approach of cost-benefit analysis to suggest that the current focus for tackling global warming by cutting carbon emissions is too expensive, inefficient, and even ineffective in comparison to geoengineering, this chapter does not seem to fit comfortably with the rest of the book. While I previously described the book as excellent, therefore, this is its only qualification.

Could geoengineering help in the effort to combat climate change?

Deploying economic tools in order to understand everyday phenomena has been the general approach of the two Freakonomics books; indeed, the first book, they suggest here, was about incentives and how people respond to them (they say their publishers were initially horrified when they couldn’t immediately find the book’s ‘theme’ – how happy they must be that they still decided to publish it though). But this is not what this chapter is about. Rather, the authors seem to venture away from their own expertise and into the realm of science. This is not to say that the idea of geoengineering should be dismissed out-of-hand – it is at least an interesting new contribution that tries to shake the debate from the perils of groupthink – but viewing the solution as the panacea that is portrayed as would clearly be naïve, and it certainly seems as though there are many more aspects to the debate than the authors reveal in this solitary chapter.

That said, if the thinkers at Intellectual Ventures were to write a book on this topic themselves, I’m sure it would make a damn good read.

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