Freakonomics: A Rogue Economist Explores the Hidden Side of Everything

by Steven D. Levitt

pitted a moral incentive against an economic incentive. In this case, they wanted to learn about the motivation behind blood donations. Their discovery: when people are given a small stipend for donating blood rather than simply being praised for their altruism, they tend to donate less blood. The stipend turned a noble act of charity into a painful way to make a few dollars, and it wasn’t worth it.

the difference between the sale prices of homes that belonged to real-estate agents themselves and the houses they sold for their clients. The study found that an agent keeps her own house on the market an average ten extra days, waiting for a better offer, and sells it for over 3 percent more than your house—or $10,000 on the sale of a $300,000 house. That’s $10,000 going into her pocket that does not go into yours, a nifty profit produced by the abuse of information and a keen understanding of incentives. The problem is that the agent only stands to personally gain an additional $150 by selling your house for $10,000 more, which isn’t much reward for a lot of extra work. So her job is to convince you that a $300,000 offer is in fact a very good offer, even a generous one, and that only a fool would refuse it.

Advertising too is a brilliant tool for creating conventional wisdom. Listerine, for instance, was invented in the nineteenth century as a powerful surgical antiseptic. It was later sold, in distilled form, as a floor cleaner and a cure for gonorrhea. But it wasn’t a runaway success until the 1920s, when it was pitched as a solution for “chronic halitosis”—a then obscure medical term for bad breath. Listerine’s new ads featured forlorn young women and men, eager for marriage but turned off by their mate’s rotten breath. “Can I be happy with him in spite of that?” one maiden asked herself. Until that time, bad breath was not conventionally considered such a catastrophe. But Listerine changed that. As the advertising scholar James B. Twitchell writes, “Listerine did not make mouthwash as much as it made halitosis.” In just seven years, the company’s revenues rose from $115,000 to more than $8 million.

poverty and a single-parent household—are among the strongest predictors that a child will have a criminal future. Growing up in a single-parent home roughly doubles a child’s propensity to commit crime. So does having a teenage mother. Another study has shown that low maternal education is the single most powerful factor leading to criminality.

Legalized abortion led to less unwantedness; unwantedness leads to high crime; legalized abortion, therefore, led to less crime.

just about every parent seems to believe that her child will thrive if only he can attend the right school, the one with an appropriate blend of academics, extracurriculars, friendliness, and safety.

the black-white income gap is largely a product of a black-white education gap that could have been observed many years earlier. “Reducing the black-white test score gap,” wrote the authors of one study, “would do more to promote racial equality than any other strategy that commands broad political support.”

But the typical black student’s school has a far higher rate of troublesome indicators, such as gang problems, nonstudents loitering in front of the school, and lack of PTA funding. These schools offer an environment that is simply not conducive to learning. Black students are hardly the only ones who suffer in bad schools. White children in these schools also perform poorly. In fact, there is essentially no black-white test score gap within a bad school in the early years once you control for students’ backgrounds. But all students in a bad school, black and white, do lose ground to students in good schools. Perhaps educators and researchers are wrong to be so hung up on the black-white test score gap; the bad-school/good-school gap may be the more salient issue.

child’s academic abilities are far more influenced by the IQs of his biological parents than the IQs of his adoptive parents, and mothers who offer up their children for adoption tend to have significantly lower IQs than the people who are doing the adopting.

on average, a person with a distinctively black name—whether it is a woman named Imani or a man named DeShawn—does have a worse life outcome than a woman named Molly or a man named Jake. But it isn’t the fault of their names.

Just as a child with no books in his home isn’t likely to test well in school, a boy named DeShawn isn’t likely to do as well in life.

Amber and Heather, meanwhile, two of the overall most popular names from 1980, are now among the “low-end” names. There is a clear pattern at play: once a name catches on among high-income, highly educated parents, it starts working its way down the socioeconomic ladder.

Some of these ideas might make you uncomfortable, even unpopular. To claim that legalized abortion resulted in a massive drop in crime will inevitably lead to explosive moral reactions. But the fact of the matter is that Freakonomics-style thinking simply doesn’t traffic in morality.