When one hears of a winner of the John Bates Clark Medal, the first thought that comes to mind is that of someone that came up with a new economics theory or a formulae that has helps economists solve a problem that has been in great economist minds long enough to make him deserve the medal.
Contrary to this, and unexpected of such a decorated economist, Steven Levitt represents a new form of economist. Though armed with economics honors in form of an undergraduate degree from Harvard and a Doctorate of Philosophy from the Massachusetts Institute of Technology, Levitt admits to knowing very little as far as economic theories and monetary equations are concerned. The only thing that has propelled him to such a status in the economics world is the fact that he does not look at the world from the same perspective as everyone else. Levitt’s third eye has allowed him to spot economic anomalies and strategize from such experiences. This third eye of his led to his getting requests from economically established individuals to solve anomalies, and even from non-economic individuals and groups that know they are missing a certain view of the duties they claim responsibility for.
The Excellent Science that is Economics
Economics is the science that defines the sequential processes involved from the production of utility goods and services to the end consumer. “Levitt considers economics a science with excellent tools for gaining answers, but has a shortage of interesting questions” (Levitt & Dubner 6). The whole economics fraternity is more than glad to have him present all the interesting questions entailed in economics. Economics as a science breaks down market phenomenon in order to explain what triggers certain reactions in the market, and how to get the best out of these reactions. Economists do not need all the interesting questions in the world, as even simple questions can help solve the biggest of problems (52).
The Hidden Side of Everything
Steven Levitt has used this phrase to refer to the basic things that go on around people, but ignorance or a bad situation has redirected their view to things that seem to be the bigger picture, but are insignificant to their causes.
They find themselves looking away and slowly letting go of their dreams as they brace themselves to survive the reality that is life. This leads the reader to a short story narrated by the author. Consider Paul Feldman, a successful agricultural economist who always wanted to liberate the world from hunger, but ended up working for the US Navy (51).
Mr. Feldman had a very well paying job but ended up quitting it to follow his ‘destiny’; and it paid off. His brand new supply chain around Washington DC ended up with him earning as much as he made during his tenure at the white-collar job that he was not supposed to quit. The book could therefore be advocating for all those with their inner voices pointing towards a different direction in life to go against all odds and engage in what they think will reveal the best of their abilities.
Like Paul Feldman, they should be cautious and take their time to analyze the venture they are going to undertake, identify challenges and strategies that will manage them before giving up what they have, lest they find themselves chasing after the wind.
Freakonomics as a guide was a book designed to encourage skepticism in economics as a whole. This, backed by claim that it is human nature to cheat, raises questions on the integrity of economics, the science. The author goes ahead to give the example of sumo-wrestlers, schoolteachers and day-care parents who engage in cheating as a day-to-day vice (51). Sadly, the rest of the world does not follow with this. The algorithm used to detect this cheating, though perfect, did not result in likewise ‘perfect’ outcomes (DiNardo 30). If everyone turns into a skeptic of all concepts that run the procedures involved in economics, arts or even in medicine, the world would then run out of the individuals that take passion in the work they do.
There would be no more believers left of the earth as everyone will be positioned to ask questions instead of addressing the faults they see in humanity. Enron presents another form of skepticism in form of white-collar crime. According to Levitt & Dubner, this is a form of silent crime with no direct victim, and hence the reason why the day ends with a richer employee, but no suspect (53). Yet another form of cheating that goes overlooked if left unchecked. The problem here is that the system becomes a victim of its own perfection as the experts who design it and run it reap off its loopholes in broad daylight.
It is true that incentives play a major role in motivation. The new generation presents with it major and unique economic constraints.
These new breed of challenges have led to people stretching every available opportunity of making an extra buck. This involves coming up with new forms of business, hence the taking root of such services as mortgage and stock brokerage, real estate agents and even escort services. These individuals have specialized and mastered the relevant activities involved in the industries in that they know how to maximize the value for your money so to speak (13). Unfortunately, Levitt does not share the sentiment. He goes ahead to tag them as humans like everyone else who respond to incentives (14). This may be true, though their expertise has helped in saving time taken in the hustle of looking for a buyer and without experience in the field. It plays out as a strategy that catches two fish with single bait.
This is because the owner goes ahead to conduct his/her other side business, while the broker/agent finds the buyer. Realistically, compared to that made within the same period by the seller, the money used to pay up the agent/broker may be significantly low. Economists, among other experts should, and in fact do recognize and appreciate the challenges brokers and agents go through in order to come to terms with clients who already have in them the mindset that all brokers are just out to rip them off of their money. Levitt actually does acknowledge that these experts are human (14). The authors should give the reasons why they expected to respond in a different style to the same challenges faced by other workers in other fields.
Freakonomics versus Economics
The author clearly lacks the scholarly enthusiasm associated with the products of the higher education institutions he attended. For a graduate from Harvard and a doctor of Philosophy from the Massachusetts Institute of Technology, he does not represent the honors as expected.
He views the economic world of economics with utter skepticism and his wish is for the world to follow behind his steps loyally. In a world rigged with, among other economic forces, inflation and diversity from competition, it demands a keen view of the trends the market takes on every product. It may be unclear to him when he points out that the economic boom in the late 1990s did not help in reducing the rate of murders being committed across the States (11). As much as it reduced the number of potential criminals being born, abortion also reduced the number of great achievers and potential leaders who would have influenced positively and jolted this world to greater heights in all fields. As much as Levitt views this as a success as much as criminology is concerned, it has done more harm than good as compared to crime retention and the good that is humanity.
After a complete analysis of the ideology behind the book, a reasonable and crucial point to be noted, is that “Levitt’s only real message is to encourage confrontational questions” (Berg 2005) as these nee d not economist answers, but endless arguments that lead to outright criticism of what economics stands for as a science. It has reached a point that whether we embrace it or not, economics and everything that it comes with plays a major role in the everyday life of the average citizen, regardless of social class or age.
Berg, Chris. Why do drug dealers live with their mums? IPA (Institute of Public Affairs) Review, June 2005, 57 2): 46. Print. DiNardo, John. A Review of Freakonomics.
New York: New York Times, 2005. Print. Levitt, Steven. & Dubner, Stephen. Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.
New York: HarperCollins Publishers, Inc., 2005. Print.