Freakonomics

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Freakonomics a Rogue Economist Explores the Hidden Side of Everything was written by Steven D. Levitt and Stephen J. Dubner that study everyday life and they reach conclusions with conventional wisdom. They researched about crack gangs, the secrets of the Ku Klux Klan, the truth about real estate agents, and answering questions like why drug dealers live with their moms, and which is more dangerous a gun or a swimming pool? There were several themes in this book such as knowing what to measure and how to measure it makes a complicated world much less so, incentives are the cornerstones of modern life, dramatic effects often have distance, even subtle causes, conventional wisdom is often wrong, and experts use their informational advantage to serve their own agenda. Levitt and Dubner’s most important theme is Conventional Wisdom is often wrong because they proved what the public thought was wrong such as swimming pools are more dangerous than guns and the actual wages of drug dealers. Conventional Wisdom is what the public thinks, but it is often proved wrong. The authors prove the theme that Conventional Wisdom is often wrong most compellingly. One way Levitt and Dubner prove their point that Conventional Wisdom is often wrong is in the discussion of why drug dealers live with their moms in Chapter 3. The authors explain how a university student studying Sociology that was living in Chicago, went into a building that was filled with gang members to make them take a survey. He was assigned to go to Chicago’s poorest black neighborhoods and make people take a multiple choice survey. But, the student, Venkatesh, didn’t know the building had gang members until he bumped into them. When Venkatesh asked the gang members questions, they laughed at him and tortured him a little, but they let him go home. Venkatesh went home trying to think of better questions and came back to the building asking the gang leader, J.T., if he could hang out with them. After convincing J.T., Venkatesh lived with the gang members and observed them every day. Venkatesh found out the wages of the gang leader, his officers, and foot soldiers. Foot soldiers are those who sell drugs and it’s the most dangerous job, because you could get killed or get caught. The conventional wisdom that was applied in this situation was that drug dealers make good amount of money, because drugs are expensive and people assume that money goes to them, but the authors proved this to be wrong. On page 100 the author state “J.T.’s hourly wage was $66. His three officers, meanwhile, each took home $700 a month, which works out to about $7 an hour. And the foot soldiers earned just $3.30 an hour, less than the minimum wage.” It is proved wrong because for every big earner, there were hundreds of others on the bottom. The top 120 men in the gang were only 2.2 percent of the full gang membership, but they took home more than half the money. Additionally, this worked like a capitalist enterprise, if you were on top you made got a better wage. Even though foot soldiers have the most dangerous job, foot soldiers have no other choice because when they were younger they thought of being in a gang was a dream job.

Another way the authors proved the Conventional Wisdom this is in Chapter 2, the authors discussed how the Ku Klux Klan is like a group of Real-Estate agents. Levitt and Dubner told a true story on how conventional wisdom is proved wrong. A person named K. wanted to buy a house that was $469,000, but he offered $450,000, but the seller had called the agent to state the lowest price that the homeowner was most likely to accept. The agent had yelled at K. saying it is “clearly a violation of real-estate ethics.” The conventional wisdom of this is most people think that the agents will only get money if the homeowners get money. Levitt and Dubner prove this wrong on page 70 of chapter 2, they state “…K. then offered $425,000 for the house instead of $450,000, he...
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