Freakonomics review

Freakonomics review

Chapter 1
An incentive is something that gets someone to do a good thing instead of a bad thing. “An incentive is simply a means of urging people to do more of a good thing and less of a bad thing”(Levitt 17) It relates to the study of economics because people are more likely to do something depending on the incentive they’ll be given. “The banning of cigarettes in restaurants and bars is a powerful social incentive” (Levitt 17). If the incentive means more money, there is someone who will most likely give in to what ever it is. If the incentive is harsh jail time, then the person is most likely going to think twice about what crime they’re about to do.
Chapter 2
“But information asymmetries everywhere have been gravely wounded by the Internet” (Levitt 64). Ever since the invention of the Internet, information is much more widely avalible. If a consumer wants to find out more information from what a commercial or advertisement is telling them, they can find out if that business or company is lying to them, simply by going on the internet. “Armed with information, experts can exert a gigantic, if unspoken, leverage: fear (Levitt 67). Fear makes the problem worse because when the consumer is worried about an outcome of something, or something is unsettled on their minds, they can look up this information, thus hurting the business trying to sell their product.
Chapter 3
“If Burger King and McDonald’s launch a price war to gain market share, they partly make up in volume what they lose in price.” (Levitt 105). If someone found a way to make something better and cheaper, then it would cost less then its competitor. Consumers would want to buy that product first because of price and quality. Consumers want more for there dollar. “During the late 1970’s, the wholesale price of cocaine in the United States fell dramatically, even as its purity was rising (Levitt 108). Even if the product improves, it doesn’t mean that consumers will buy.
Chapter 4
“The decline in crime that began in the early 1990s was accompanied by a blistering national economy and a significant drop on unemployment” (Levitt 119-120). Whenever people are able to make money, or when the economy is improving, they are a lot less likely to commit a crime. Working keeps people busy, it puts money in their pockets, and it jumps the economy when they have things to spend on. “During the 1990s, the unemployment rate fell by 2 percentage points; nonviolent crime, meanwhile, fell by roughly 40 percent’ (Levitt 120). The unemployment rate has a big impact on the crime rate. If there are lots of jobs around, and people can grab those jobs, then that puts money in their pockets, making them less likely to commit those crimes as if they didn’t have a job. It shows in the numbers that the unemployment rate has some effect on crime rate in the country.

Chapter 5
Normative analysis is when something good is created to counter something that is bad, and positive analysis is when a good thing causes a negative outcome to something. “It decreed that incoming freshmen could apply to virtually any high school in the district” (Levitt 158). The U.S Department of Education and the Chicago Board of Education teamed up to try and integrate schools to have better outcomes on students, and so that parents would have a better choice on which school they can send they’re children to. This was done because the schools wanted to change the way how students performed. If a student from a low income school had the chance to go to a school that had a better academic record, they might have a better chance at education.”But statistically, they gained no academic benefit by changing school.” (Levitt 160). It’s completely up to the student to get good grades, despite what school he goes to. Intergrading schools doesn’t help the district overall get better testing scores.
Chapter 6
“What the California names data suggest is that an overwhelming number of parents use a name to signal their own expercations of how successful their children will be” (Levitt 207). The data on baby names in California gives us a slight insight on what the parents think on how well their students want to do in life. It also shows the names that come from the low income, high income, highly educated, and low educated, based on what the data shows. “The California data prove just how dissimilarly black and white parents name their children” (Levitt 185). Some parents want their kids to be a little different from the other kids, and want their kids to be successful in life. The socioeconmocs in that suggests that the names given to children might affect there goals in life, or how well they’re able to do, or what they’re able to accomplish.