Economics In Steven Levitt's Freakonomics

Improved Essays
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

Related Documents

  • Improved Essays

    I have read, not skimmed 100% of the Wheelan book. From reading “Naked Economics,” I was able to better understand various concepts in economics and how they apply to the world today. In particular, I learned about tax policy, price discrimination, productivity, and globalization which has allowed me to better understand how economic policies affect my life and the world around me. I thought it was interesting when Wheelan mentioned that the best public policies economically are those that incentivise good habits like hard work or reducing pollution but don’t punish good tendencies at the same time.…

    • 707 Words
    • 3 Pages
    Improved Essays
  • Improved Essays

    Think Like a Freak by Steven D. Levitt and Stephen J. Dubner SOAPstone When economist Steven D. Levitt and journalist Stephen J. Dubner published Freakonomics, many asked the authors, how do they think like this? How can one think like this? In response, Steven D. Levitt and Stephen J. Dubner wrote Think Like a Freak, a how-to guide on extreme outside of the box thinking. By asking obvious questions, thinking like a child, and many other strange behaviors that can only be explained with the help of a seemingly unrelated story, a person can “think like a Freak”.…

    • 1578 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    Levitt and Dubner create a speaker devoid of emotions except for humor in an effort to enhance their credibility by avoiding emotional manipulation. The speaker’s primary role in Freakonomics is simply as a teacher, who provides his class, the audience, with all of the facts and evidence required to draw a specific conclusion, leaving the students to reach that conclusion on their own. By encouraging the audience of teenagers and adults to come to their own conclusions using the provided data, the speaker enhances the meaning behind the revelation. For example, when the speaker states, “” he establishes his own trustworthiness in allowing the audience to think for themselves rather than forcing his opinions upon them (Levitt and Dubner). Additionally,…

    • 134 Words
    • 1 Pages
    Improved Essays
  • Improved Essays

    The scene is 1920 and prohibition just went into effect, police and protesters are storming the streets searching for every last drop of alcohol, in another town illegal bootleggers, such as the mafia, are gathering up 100 gallons of illegal whiskey to sell to the public at the highest cost its ever been. These were the kind of scenes that played out in towns all over America, in the height of the Prohibition era, the steaks were high, but the payout of illegal booze was higher. Its a far cry from what it was, but the crime didn't stop, if anything it turned crime into a business. Just like the infamous mafia groups in the heart of the prohibition era in the 1920's, drug cartels today supply the the demand for illegal substances all over the world. The induction…

    • 639 Words
    • 3 Pages
    Improved Essays
  • Decent Essays

    Abortion laws will always be seen as a controversial subject. In Freakonomics, Steven D. Levitt and John Donahue discuss the correlation between crime rate and abortion laws. They dismiss other factors such as gun control, proactive policing and increased incarceration rates and instead focus on the theory that Roe v. Wade played a greater role in crime rate fall. In 1973 Roe v. Wade ruled anti abortion laws unconstitutional.…

    • 352 Words
    • 2 Pages
    Decent Essays
  • Improved Essays

    Galbraith's Freakonomics

    • 1144 Words
    • 5 Pages

    The three officers under J.T. made only $7 an hour, and the foot soldiers made just $3.30. One also has to consider that for this little pay, gang members also “stand a greater chance of dying while dealing crack in a Chicago housing project than you do while sitting on death row in Texas” (Levitt & Dubner, 2009, p. 102). Gang members do this because when they grow up crack dealing was “the best job they thought they had access to” (Levitt & Dubner, 2009, p. 102). But like most every other “good” jobs, there were more people looking for work than there were jobs to be had; in this case, there were not enough street corners to sell crack (Levitt & Dubner, 2009, p.…

    • 1144 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    Levitt And Dubner Summary

    • 997 Words
    • 4 Pages

    The chapter starts off by how to ask a good question. Levitt and Dubner say asking a good questions doesn’t mean it has never been asked before. The term “conventional wisdom” means is a theory, but sometimes means isn’t always true. A professor who talked to a group of college students about the number of homeless people who die each year said, “45 homeless people die each second- which would mean 1.4 billion homeless people die a year” (Levitt and Dubner, 2009). This is an example of conventional wisdom because the speaker gave a statistic, but was a very misleading.…

    • 997 Words
    • 4 Pages
    Improved Essays
  • Improved Essays

    Along with this, it was interesting to find how a gang leader named JT came into a life of drugs (Venkatesh, 2009). A college educated man, who grew up relatively well considering his circumstances, came into a life of drugs after he could not find a job based on the color of skin. While there a variety of other factors that could have hampered in his pursuit of employment, the premise that people of color naturally have a harder time finding, and holding employment still holds true. As such, JT took matters into his own hands and started dealing drugs from the same housing complex, the Robert Taylor Homes, from which he grew up from (Venkatesh, 2009). His rise to become one of the leading drug dealers of his housing project exposed the complex, interconnected system that helped glorify the drug trade in its peak (Venkatesh, 2009).…

    • 1709 Words
    • 7 Pages
    Improved Essays
  • Improved Essays

    The author of freakonomics, Steven Levitt, wrote the article Flesh Trade in an effort to bring awareness to the idea in monetizing our organs. He is able to effectively communicate his controversial viewpoint with credible evidence and easy to read language. Therefore, common people are able to understand his argument and form their own opinion on the matter. The purpose of discussing such a repugnant topic is made clear by the author’s mention of the people who die waiting for an organ transplant.…

    • 311 Words
    • 2 Pages
    Improved Essays
  • Improved Essays

    The author used financial data from J.T.’s gang to determine that a large majority of gang members earned very little to afford their own places, but then saw that the incentive of leading their own gang and earning thousands overweighed that cost. Also, in order to hold up his thesis, the author makes sure that everything is backed with substantial evidence to prove his point. Freakonomics is meant to make readers realize the extent in which economics covers when the right questions are…

    • 1007 Words
    • 5 Pages
    Improved Essays
  • Improved Essays

    I've discovered the economics field in my first year of high school but it never quite intrigued me as much as it does now for I thought it was mostly about numbers, rates… Being a huge reader, I was recommended the book Freakonomics and that’s when I realized it was more than just stats; it’s the study of trends, group behaviors, how the world works and why mostly. It was intriguing and so eye-opening and I wanted to learn more. So I went through other books, Malcolm Gladwell, Jon Ronson, Noam Chomsky…

    • 297 Words
    • 2 Pages
    Improved Essays
  • Decent Essays

    Week Three Freakonomics Analysis Question The authors of Freakonomics (2006) relate a gang of drug dealers and how their operation works to a tournament or a winner take all market. They imply that a person starts on the bottom of the chain like an athlete or game player would in a sporting tournament, then they work their way to the next level of the game by winning or beating all of the other opponents on that level. The player would eventually work their way through all of the levels until they are the top athlete or the boss of all of the other gang members. A street level drug dealer may be willing to accept low pay and poor working conditions if he were to believe that after he put in his time and played his way to the top he would…

    • 435 Words
    • 2 Pages
    Decent Essays
  • Decent Essays

    Levitt's Freakonomics

    • 172 Words
    • 1 Pages

    I believe that this book is mainly intended for young adults and new couples or parents. The reason why I believe that this book is meant for young adults and new couples or parents is because of the many topics that the book speaks about: Schooling, Purchasing Houses, and Parenting. These topics are things that new couples or parents can relate to, and would have interest in when they want to start a new family. I also believe that this book was meant for people of the general public who are interested in economics. As readers read Freakonomics, they will have the chance to understand the depths of society and economics as Levitt and Dubner provide facts and statistics to uncover and “explore the hidden side of… everything” (Levitt, 14).…

    • 172 Words
    • 1 Pages
    Decent Essays
  • Superior Essays

    Gang Leader For A day by Sudhir Venkatesh `Zi’Asia Y. Richardson Elmira College In Sudhir Venkatesh’s novel “Gang Leader For A Leader”, he wrote about his journey learning about the way that the underground economy worked in the projects. Venkatesh novel focused on blaming the economy for the increased gang activity and poverty rates. He argues that the capitalist system caused those who lived in the projects to turn to corrupt and illegal activities to make ends meet. Venkatesh notices that are there are diverse posses, which are separated into a few classifications.…

    • 1610 Words
    • 7 Pages
    Superior Essays
  • Decent Essays

    He looks at other countries like Germany and proposes ideas to the reader to rethink their beliefs on how Economy works.…

    • 236 Words
    • 1 Pages
    Decent Essays