Book Review: Freakonomics: A Rogue Economist Explores the Hidden Side of Everything.
This paper aims to present the book review of ‘Freakonomics: A Rogue Economist Explores the Hidden Side of Everything’ along with the main arguments, course applications and personal opinions.
The Main Arguments
The authors have given entirely different viewpoints about various economic aspects. For instance, they have compared gun with a swimming pool, sumo wrestlers and school teachers etc. In addition to this, they have revealed the misuse of power by the real estate agents, the common elements between drug dealers and high school quarterback, sudden decline in crime rates of USA after 1990s and the ...view middle of the document...
The book relates to different economic concepts that we have learned already. In the discussion about ‘Drug Dealers living with their Moms’ authors have described the fundamental economic concept of supply and demand (Levitt). For instance, they argue that the demand of job services primarily depends upon different factors including unpleasantness of the job and the specialized skills. Since a prostitute has to work in comparatively more unpleasant situations while having all the specialized skills therefore she earns fairly more than a typical architect. This is also influenced by the fact that an architect can hire a prostitute which actually increases their demand whereas a prostitute cannot employ an architect (Levitt). This in fact decreases the supply of architect services in comparison to prostitutes. Market is another important economic concept as it gives the basic platform for the exchange of goods and services while also facilitating the human interactions. When it comes to Real Estate the economic value of market becomes even more crucial because as per the analysis of authors the experts of different markets actually know how to manipulate information. This subsequently helps them in gaining more incentives which they actually strive for.
There are different concepts that authors have introduced which actually contradict with the conventional economic theories. For instance, the account of day-care center is purely based upon the matter of incentives which are not unrelated to the traditional idea of economic rewards. The story tells us that the day care center management identified that the parents were picking up their children very late. In order to control this behavior they imposed $3 charge on late comers (Levitt). This gave entirely different results than expected as majority parents gained a peace of mind and began to pick up children even late. Authors argue that people broadly face different incentives including economic, social and moral rewards (Levitt). This is subsequently related to the idea that if the day-care centre had significantly higher charges for parents coming late then they could have substituted the economic rewards with the moral guilt. However, this concept presented by the authors actually does not relate with the traditional economic theories. If this was the case that people could have easily paid others whom they have caused harm. The economic concept of incentives cannot be simple judged or explained through this example of day-care center as discussed in the book rather it has to be studied under some other unpredictable and complex ideas. For instance, people’s reaction to incentives largely depends upon their motives and perceptions regarding the giving authority. Moreover, incentives are also influenced by the motives of person who is receiving it. Research indicates that incentives can actually rebound if in case the donor’s motives are corrupted, misleading or...