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| Putting the freak in economics | |
| Suveen K Sinha / New Delhi November 06, 2009, 0:50 IST | |
Prostitutes tend to make more money when they have pimps. A drunk walker is eight times more likely to get killed than a drunk driver. Muslim women who observe the one-month fast of Ramadan early in their pregnancy are more likely to have children with cognitive disabilities. Some people who are rushed to emergency rooms might have been better off if they just stayed home. Why aren’t we petrified of elephants, which kill many more people than sharks? This is the kind of stuff that you would not expect to find in a book connected with the otherwise soporific subject of economics.
But this is not really a book on economics. In fact, it nonchalantly circumvents the financial crisis, which had been raging for a year when this book was written. The writers, economist Steven D Levitt and journalist Stephen J Dubner, are unequivocal that macroeconomy is not their domain, and go on to question whether, looking at the recent events, it is anyone’s domain. The fact is that economists have a hard time explaining the past (whether Franklin Delano Roosevelt’s policies quelled the Great Depression or stoked it), much less predicting the future.
This book merely gives insights into actual human behaviour. It delves into incentives that drive human behaviour, which, if understood, can perhaps unravel why the subprime-mortgage bubble came into being and got pricked.
It was incentive that brought the duo together — the first time when they collaborated to write 2005’s runaway hit, Freakonomics, which sold some 4 million copies, and again for this book. Some of the stories are based on Levitt’s academic research, others inspired by economists, engineers, astrophysicists, psychotic killers, doctors, historians and transgender neuroscientists. So you get to read stuffs you never thought you would want to read, but actually enjoy when you get down to reading them.
The writers’ contention is that many crucial decisions get made in an emotional way, and some others appear reasonable but, in fact, lack rationale. When prostitution was criminalised in the United States, most of the policing energy was directed at the prostitutes rather than their customers. As with any illicit market — think drug dealing — governments prefer to punish the suppliers of goods and services rather than those who consume them.
That happens because it appears to be unfair to punish the little guy, the consumer, when he can’t help himself from partaking in vice. But when you remove a supplier, a scarcity is created that inevitably drives the price higher, and that entices more suppliers to enter the market. On the other hand, if, for example, men convicted of hiring a prostitute were sentenced to castration, the market would turn flaccid in a hurry.
What comes shining through is the fun these guys must have had while writing the book. They are out to make economics, which will not be happy bed-time reading for too many people, something to enjoy. They touch upon mundane topics in a random way. Then they crunch some numbers, raise some questions, the topics get meshed together, and suddenly, as if in a flash, there is an expected and interesting conclusion prancing before you.
It is also nice that the writers have no qualms in crediting Gary Becker, the University of Chicago economist who won the Nobel in 1992, with being the original guy who started studying topics that were not typically germane to economics: Crime and punishment, drug addiction, the allocation of time, and the costs and benefits of marriage, child rearing and divorce. Becker was for a long time considered way out and perhaps not really an economist. Levitt and Dubner decided that if what Becker was doing was not really economics, they wanted to do it too. What Becker was doing — marrying the economic approach to a rogue, freakish curiosity — was really Freakonomics, though the word had not been coined yet.
These are regular guys. Typically, one real-life situation leads to another, and to another, until something interesting emerges. While lecturing a group of venture capitalists, Levitt discussed some new research he was doing with Sudhir Venkatesh, the India-born, California-bred sociologist whose adventures with a crack-selling gang were featured in Freakonomics. The new research concerned the hour-by-hour activities of street prostitutes in Chicago.
As it happened, one of the VCs had a date later that evening with a $300-an-hour prostitute, who went by the name of Allie. When this VC arrived at Allie’s apartment, he saw a copy of Freakonomics on her coffee table. A girlfriend of hers, who was also “in the business”, had sent it to her. Hoping to impress Allie (even though the sex was already paid for), the VC said he had attended a lecture that very day by one of the book’s authors, and that Levitt was doing some research on prostitution. A few days later, an e-mail from Allie landed in Levitt’s in-box, offering to assist.
He met her the following Saturday, after handling the tricky issue of explaining to his wife and four kids that he was having brunch with a prostitute. It was vital, he said, to meet her in person to accurately measure the shape of her demand curve. So you read about Allie in this book.
The writers say many of their findings may not be very useful, or conclusive. But they are all right with that. What they are trying is to start a conversation. And they will be disappointed if you did not find a few things to quarrel with.
SUPER FREAK ONOMICS
Global cooling, patriotic prostitutes & why suicide bombers should buy life insurance
Steven D Levitt & Stephen J Dubner;
Allen Lane; 270 pages; Rs 399
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