Bismillah.
In the very beginning of this writing, I’d like to introduce you a brief thought of Steven D.Levitt and Stephen J. Dubner-Freakonomics-. A wonderful book that I should have read in since 2005 ago!!
I hope this blog would be a good medium to share the pith of this awesome book to more people. I try to make the resume every time I finish reading each section.
So Have fun!!
[In fact, it's even better if you read it by your own; it's really interesting to know how the principle of economic could be used to solve many of our daily-life problems]
———————————————-
INTRODUCTION
———————————————-
freakonomics: A Rouge Economist explores the Hidden Side of Everything.
This book was written by a famous Economist from University if Chicago, Steven D.Levitt, who received The John Bates Clark Medal – Awarded every two years to the Best American economist under forty- and Stephen J.Dubner who works as a journalist for the New York Times and The New Yorker. He was a national bestselling author of Turbulent Souls and Confessions of a Hero-Worshiper.
By their credential, I felt convicted that they could serve a good writing of this topics. So Don’t waste your time. Be the firsthand of this thought of “the hidden side of everything”.
In the introduction, the writer gave us a glance of what they will talk in the rest of the chapter of the book. One of the issues they prompted was about whether any relation between abortion and the plummet of crime in many states in U.S. Other issues I found in the table of content were whether any common relationship between schoolteacher and Sumo wrestler? And how about the similarity of Ku Klux Klan with Real-estate agencies? Furthermore, there is an Interesting question about why do drug dealer still live with their mom? Do you want to know what Levitt and Dubner said about how to be a perfect parent? Don’t miss it!!
In this part, I would like to roughly write down a glance about what I’ve read. I’m not a good “summerizer” actually, so I’m only pointing out the interesting line to me, and I try to give my own thought on those line.
If you jump up to page 4, paragraph three you’ll see:
“As far as crime is concerned, it turns out that not all children are born equal. Not even close. Decades of studies have shown that a child born into an adverse family environment is far more likely than other children to become a criminal. And the million of women most likely to have an abortion in the wake of Roe v.Wade- poor, unmarried, and teenage mothers for whom illegal abortions had been too expensive or too hard to get- were often models of adversity. They were the very women whose children, if born, would have been much more likely than average to become criminals. But because of Roe v.Wade, these children weren’t being born. This powerful case would have entered their criminal primes; the rate of crime began to plummet.“
Doesn’t it interesting?!
Was it really true? That abortion took the biggest part to decrease the criminal problems in U.S? How about the better economic condition at that time? That cause more families get prosperous, more job to offer, small amount of people were jobless, of course that condition brought a better family economic condition thus people didn’t have to commit crime in order to fulfill their needs. So the crime’s rate was plummeted!!
Didn’t it make sense?
But it didn’t for Steven D.Levitt and Dubner. They had a conscious that abortion did a big influence. At least in the introduction. They told that!
Another interesting line was in page 6, paragraph one:
“It is one thing to muse about experts’ abusing their position and another to prove it.”
This statement was addressed, essentially – in these context- to real-estate agents. They sort of people who expert and better informed about the house’s value, the state of the housing market, even the buyer’s frame of mind. That’s why people use their expertise to help sell people’s house.
But experts are human, and humans respond to incentives. How any given expert treats you, therefore, will depend on how that expert’s incentives are set up. Sometimes his incentives may work in your favor.
In this book, it is given example that, a study in California auto mechanic found they often passed up a small repair bill by letting failing cars emissions inspections-the reason being that lenient mechanics are rewarded with repeat business. But in a different case, an expert’s incentives may work against you. In a medical study, it turned out that obstetricians in areas with declining birth rates are much more likely to perform C-section deliveries that obstetricians in growing areas-suggesting that, when business is tough, doctors try to ring up more expensive procedure.
It seems true, doesn’t it?!
It applies to Indonesian condition too. If we try to trace back, how “bimbingan belajar”has mushroomed in a past ten years. Teacher tries to make more money with it. Because school don’t pay them well.
In fact, this condition was not healthy at all for the grow of Indonesia’s education.
Or how government officer who try to use their position in order to gain more money from citizens. Actually, that’s NOT good at all. They abused their position which is against the rule.
Let’s jump up to page 8 through 10:
It was about the word “correlation”. We often hear this word, at least me, in my engineering field. Correlation about one problem to another and how we find out the solution over those conditions. Failure to clarify the sense of correlation of one over another condition will result to pick a wrong solution. And that will be fatal. We don’t want this thing happen.
Let see how Levitt explained about this notion.
“But just because two things are correlated doesn’t mean that one causes the other. A correlation simply means that a relationship exists between 2 factors – let’s call them X and Y- but it tells you nothing about the direction of that relationship. It’s possible that X causes Y; it’s also possible that Y causes X; and it may be that X and Y are both being caused by some factor; Z.”
“Consider a folktale of czar who learned that the most disease-ridden province in his empire was also the province with the most doctors. His solution? He promptly ordered all the doctors SHOT DEAD.”
Imagine that! How terrible it was. Is it correct that failure to define the problem will cause misstep in taking the solution? I’m keep thinking on the important message here is how we should really clarify what a heck of problem we face in order to come up with reasonable and logic solution. Do you think the way I’m thinking?
Let’s move forward to page 10 paragraphs 4:
“What this book is about is stripping a layer or two from the surface of modern life and seeing what is happening underneath.”
That’s the purpose of this book, actually.
And look out page 11 paragraph two:
“Economics is above all a science of Measurement. It comprises an extraordinarily powerful and flexible set of tools that can reliably assess a thicket of information to determine the effect of anyone factor, or even the whole effect.”
That was great thought if the author. How economics do not seen only as what it is seen in the stock exchange or what in market today. It may comprise our daily basis day-of-day life. That’s cool!!.
I really want to make my major-civil engineering-to be seen in the way how Levitt see and think about economics. That’s lil bit peculiar. But actually, that’s really touching the “grass root”.
Finally, the writer closes the introduction of this book by giving four fundamental ideas of this book – that might useful for us:
a. Incentives are the cornerstone of modern life.
b. The conventional wisdom is often wrong
c. Dramatic effects often have distant, even subtle causes
d. Knowing WHAT to measure and HOW to measure it makes a complicated world much less so.
That’s all for the introducing.
Next >> What do the schoolteacher and Sumo wrestler have in common?
