Economics In Steven Levitt's Freakonomics

In their book, Freakonomics: A Rogue Economist Explores the Hidden Side of Everything, Steven Levitt and Stephen Dubner apply economics to questions and problems that we generally would not view from an economic standpoint. They show how economics isn’t strictly for goods and services, but can be applied to many—if not all—aspects of our lives. They look at seemingly unrelated subjects and link them together economically, such as how schoolteachers and sumo wrestlers are alike, or how the Ku Klux Klan is like a group of real estate agents. They also applied economics to strange phenomena such as the unexpected drop in crime rate in the 90’s, or why drug dealers still live at home with their mothers. They even discuss the economics of simple …show more content…
This seems a strange phenomenon since on the surface it appears drug dealers make quite a bit of money. The authors jump into this question with a story about Sudhir Venkatesh, who, in pursuit of a PhD in sociology, spent time with a Chicago gang—The Black Disciples—where he set out to discover the gang’s innerworkings from top to bottom. After several years with the gang, Venkatesh was given several spiral notebooks by one of the gang members who was fearing death, and wanted to leave something behind for future generations. The notebooks contained all the gang’s transactions going back four years. Years later, Venkatesh met Steven Levitt, and they decided to analyze the notebooks together to see how the gang actually worked. What they found is that the crack gang was basically the same as any capitalist enterprise—you have to be at the top in order to make the largest wage, while the folks at the bottom were basically getting scraps. The top 120 employees in the Black Disciples were paid very well—$100,000-$500,000 a year—while there were roughly 5300 men underneath making a measly $3.30-$7.00 an hour, and another 20,000 unpaid rank-and-file members who were paying dues just in the hopes of eventually securing spot as a foot soldier in the gang. Over half of the money brought in by the gang was paid out to the top 2.2% of the members. Consequently, while there is definitely money …show more content…
It opened my eyes to a new way of viewing the world. While we all deal with economics every day, ironically, the concepts were basically foreign to me until I took my first economics classes this year. The reason I picked this book is because those classes piqued my interest on the subject. Reading this book shed a whole new light on how to apply those concepts. The topics themselves are random, and not likely anything that I will be able specifically apply to my life on a regular basis; however, what I can apply is the thought process used to analyze those topics. I will probably never have the economic skills that Steven Levitt possesses, but I can be mindful of the concepts. Everything seems to simply come back to incentives. Having that knowledge and being able to decipher those incentives will be incredibly helpful to me in all aspects of life. I found that to be the best part about this book—even though economics is usually associated with business, you don’t have to be going into a business career to understand and utilize the take home points, nor do you have to apply them to the business world. However, it will still be very helpful for my future career endeavors. I currently plan to pursue a career in human resources. Since this is a career focused on people, it will be greatly helpful to be able to understand the incentives that make people tick, and understand why they do the things that they do, and how to better