Recurring Decimals…..

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Freakonomics: the society is your test-tube

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It has been a month or so since I finished reading this rather engaging book written by Steven Levitt, an award-winning young Economist at the University of Chicago and journalist Stephen Dubner. I have been procrastinating on writing about it for a while. Yesterday, the book turned one (Happy B’day!) – so I guess it is probably as good time as any to post some thoughts.

The book and its authors have been extensively discussed on the blogosphere and reviewed elsewhere, and they have their own blog. Therefore, it is quite needless to go into a detailed review. Instead, this post will be more of personal musings on my perceptions of Economics (with a capital E) and how economics-blogs and this book has affected it.
(warning: long personal ramblings ahead)

As a scholarly/academic subject, my relationship with Economics has ranged from neutral to extreme hate. While in high school, it never came up seriously as a career choice, even though both my mom and maternal uncle had Bachelor’s degrees in Economics from Presidency College (which at that time used to produce the cream of the crop of Indian economists, including Nobel winner, Amartya Sen). My mom eventually could not finish her Masters degree due to political (Naxalite) problems that kept delaying her final exam, something she really regrets to this date. My uncle went on to get a PhD, a faculty position and eventually the chairmanship of the Economics department at the University of Birmingham (btw, my aunt happens to be an top-notch economist too!).

My own preference definitely veered towards science or engineering and so it was as I enrolled in a ‘technical’ college. My first and only brush with Economics was in second year at college, where we had to study several humanities courses as a part of our curriculum. Unfortunately, an engineering institute, notwithstanding its premier staus, in the middle of a semi-rural town does not attract the best and brightest in terms of humanities instructors. Hence we were saddled with an extremely uninspiring teacher, who turned the lectures on Economics into dour, pedantic sessions. (One of the way the trudge through these 50 minute classes was made bearable was a game where we would try to think up innovative scatological nick-names for our lecturer – commensurate with the disproportionate size of his back-side). Fortunately, the initial part of the course involved microeconomics. This section had enough mathematics, which I was able to pick up from Henderson and Quandt. Samuelson’s well-written book also helped me through. After that came the macro-, followed by discussions on India’s Five-Year plans, both of which turned out to be a horror for me. The fact that I stopped attending many of those lectures did not help at all. At that time I felt a big relief when it was all over and I was able to escape with a slightly above average grade. And then I went on with life, happily growing microorganisms, looking at protein structures etc.

I came back to economics when I started reading blogs regularly. Turns out, a large number of top-bloggers are either economists or lawyers. Leaving aside my problems with lawyers, I found the materials on blogs such as the Marginal Revolution, Assymetrical Information, Cafe Hayek etc. to be highly fascinating and thought provoking. It wasn’t boring at all. In fact, I realized that principles of economics were extremely essential in explaining many events in society. Of course, it was a very trivial and obvious realization – but part of my mental block with the subject was gone. It was while perusing blogs that I came to know about Freakonomics the book (and of course, their excellent blog).

For the sake of those who have not heard of the book, Levitt and Dubner tries to explain everyday issues such as cheating, crime, parenting etc from the perspective of economics. And this is not the dour lectures I attended a decade ago – this is a fun exposition using hard number crunching. For example, they present statistics which reveal that real estate agents sell their own homes at a price which on an average is several thousand dollars higher than what they bargain for the houses of their clients. Turns out that the additional few thousand dollars of sale price translates into a meagre few hundreds in the form of the agent’s commission. That is not enough of an incentive for the agent to put the additional effort in selling the house at the higher price. Incentive, Levitt and Dubner says is what drives human beings in their everyday pursuits. Based on this, the authors explore a series of intruiging and fascinating problems. These include cheating by sumo-wrestlers and public school teachers, life of drug dealers, the sudden fall of crime-rate in US cities (this is also the most controversial) and the effect of names on children. Their explanantions of these phenomenon are based purely on numbers available in and obtainable from the public domain (collected during scholarly studies or by the goverment).

Dealing with numbers – now that is something I can do. I deal with numbers as a part of my day job as a biological scientist. Economics, it turns out according to this book, deals with numbers culled from real life. ‘Experiments’ are not as carefully controlled as one can achieve in a test-tube in laboratory settings, but when correctly interpreted after the appropriate mathematical analysis, the numbers are quite revealing. This, I thought was the crux of the book and made it such a fun going through its pages. I even find myself nowadays thinking and analyzing events in light of the principles described in the book, particularly from the perspective of incentives.

I appreciate that reading one popular book and several blogs does not make me an expert on the topic. Far from it, especially for a complicated and vast subject such as economics. However, what has happened is that a topic that was uninspiring and somewhat forbidding for me (and for many others I suspect) has been demystified. Popularizing difficult subjects in this manner is always a good move for piquing people’s interest (Stephen Jay Gould has done it for biology and Stephen Hawking’s for astrophysics). Someday, who knows, I might even be tempted to take an actual course on Economics. Till then, I might at least be able to throw in some jargons and pretend to sound intelligent while talking to my uncle and aunt!

Notes: 1. As I mention briefly, parts of the book is also controversial – you can find out why on the web or preferably by reading the book yourself first. Patrix points out to some examples where students have been rebuked for citing the book. Fortunately, he also mentions people that are more minded.

2. Here is another ‘popular’ economist and his take on the film Crash. (Link via Amit Varma)

3. Before anyone points it out, I know that Amartya Sen did not technically win the Nobel Prize – it was the Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel.

Update: Amit Varma reviews Tim Hartfod’s The Undercover Economist on his blog, and makes a similar point about popularization of economics through blogs and books such as these. He is, of course, more economical and succint in his prose, therefore makeing the point in a much finer manner.

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Written by BongoP'o'ndit

April 14, 2006 at 5:37 pm

Posted in Books, Personal

10 Responses

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  1. Interesting!

    So blogging going on full speed! I can barely keep up.

    Actually Economics has always fascinated me, but the numbers defeat me. I am not an IITian you see..:)

    But seriously, your review has me itching to read this book. Should be an interesting read-with its emphasis on incentive.

    Good point about he Nobel prize, I was about to nitpick:)

    Confused

    April 14, 2006 at 11:44 pm

  2. @ Confused: Heh ! – work was very uninteresting last Friday – hence the slew of posts. Also trying to make up in advance for a break this week.

    Freakonomics avoids the statistical analysis of numbers – mostly presents the interpretation. I should tell you that one thing I did not like about the book was its prose style – I thought the authors jumped topics from one paragraph to another a bit too much. But I guess some of it was necessary in dealing with some complicated stuff in layman’s term

    BongoP'o'ndit

    April 17, 2006 at 11:08 am

  3. I am prompted to stop reading when you judge :”Unfortunately, an engineering institute, notwithstanding its premier staus, in the middle of a semi-rural town does not attract the best and brightest in terms of humanities instructors”.

    Abha Chat, P Basu and the likes were better than what can be expected..a semi-rural township or not !(and I had eco for an elective too and I dont believe I got better than a B..if you think my grades play a role in my (dis)likes)

    In terms of faculty, humanities dept and otherwise, in my years at IIT KGP, I never had a reason to complain personally, inspite of the hype the insti has.

    Maybe, its the disbalance and general laziness and other things in insti life which did you in – in your quest, if there was any, for knowledge of a world which should have been your test-tube :).

    The book is good..especially the sumo wresting analyses. And this blog site is also good…I wouldnt have commented if not provoked this bad — silent surfer.

    salaam namaste !

    September 12, 2007 at 9:39 pm

  4. I have read the book and liked it. Really, Steve has given some really interesting examples of how economics, mainly its numerical part, can be used to relate seemingly remote entities. Worth a read, indeed!

    Kalyan Banerjee

    October 25, 2007 at 10:30 am

  5. The book might be alternatively titled freakostatistics. But then, it would not sound as interesting as freakonomics! 🙂

    Niket

    April 1, 2009 at 12:44 am

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  10. Hello, Very nice site. Universe help us, dont worry man.

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    May 17, 2009 at 4:33 am


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