Freaconomic summary

Topics: Ku Klux Klan, Illegal drug trade, Incentive Pages: 8 (2229 words) Published: October 22, 2013

I read the book for university class! -Freakonomics Summary HERE

Remember. This. Is. A. Spoiler. Those who haven’t read yet- close these… and go read it peeps!!!!

Summary of Freakonomics – short (this’ll be my essay for university :> )

Chapter 1: What Do Schoolteachers and Sumo Wrestlers Have in Common?

This chapter’s main idea is that the study of economics is the study of incentives. We find a differentiation between economic incentives, social incentives and moral incentives. Incentives are described in a funny way as “means of urging people to do more of a good thing or less of a bad thing”, and in this chapter we find some examples –public school teachers in Chicago, sumo wrestling in Japan, take care center in Israel and Paul Feldman’s bagel business – of how incentives drive people and most of the time the conventional wisdom turns to be “wrong” when incentives are in


I definitely agree with this, while reading this I could think of several examples that take place in Mexico’s daily life, and this is a clever explanation for them: Policemen corruption. It is not that policemen are bad people or that they don’t have morals, it is that the monetary incentive is strong enough so that they prefer to “cheat” and profit more from corruption than what they would earn by their monthly wage.

Within this discussion it is explained that incentives sometimes lead to cheating, because “something worth having is something worth cheating for”. I think the incentives placed in daily life –those that we can control, let’s say, in our business – should be established wisely, in order for them to have the desired effect, instead of fostering

cheating among the business (like theft by employees and such). As we can see this happens to the government which such policies as the ones illustrated in the public school in Chicago ones.

From this chapter I mainly learnt that incentives are “the cornerstone of modern life” – they drive our actions more than we notice, even unconsciously, they are there, and it would be useful if we are aware of this, in order to predict others behavior and probably would be useful too in


Chapter 2: How is the Ku Klux Klan like a Group of
Real-Estate Agents?

This chapter is very important from my point of view, since it talks about the importance of information in all ways of life and particularly how information means power. The asymmetries of information are a widespread problem even nowadays and we find it the most in the low class society obviously because of the lack of education.

While reading about asymmetric information I thought of lawyers in Mexico, when they use the misinformation about laws as an advantage to abuse people and get more money from them. I can think of really lots of examples about this and each of them illustrate the importance of information, not only to have power, but to prevent ourselves to be tricked or abused by knowledgeable people.

It’s also interesting to know that the Internet has make it possible for a lot of people to get information of all kinds, since the information is now in had of everyone within some seconds. This obviously let people be more informed,

especially about products and services along the world, which wasn’t possible before.

Another good example of my real life about this is the kind of new Transparency Law which was implemented by president Vicente Fox in Mexico, where we are supposed to be able to access any information about the rules or transactions (as...
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