David R. Henderson  

SuperFreakonomics, II

The Bonus Issue... A Simple Proof that "National ...

As I work my way through SuperFreakonomics, I'm starting to take back my claim that it's better than Freakonomics. It seems to have the same strength and the same weakness. The strength is its focus on incentives and facts to back up its claims. Its weakness is that it sometimes misses the big picture. On top of that, the authors sometimes even get the incentives wrong in the interest of being cute.

Here are the good and the bad.

. Prostitution.
Strength: Excellent discussion of the incentives, both on the demand side and the supply side, and the facts.
Weakness: Blows it, so to speak, on the incentives of politicians. The authors point out, correctly, that the prostitution industry, unlike the steel industry and the sugar industry, lacks a lobby to advocate restrictions on supply. But the authors say that this is "despite, it should be said, its many, many connections with men of high government office." But they've got this exactly wrong. Many of the men of high government office use prostitutes' services and, therefore, don't want to restrict supply and drive up price. Sugar consumers, after all, don't lobby for restrictions on imports.

. Feminist revolution.
Weakness: They write: "[O]pportunities for smart women began to multiply. The Equal Pay Act of 1963 and the Civil Rights Act of 1964 were contributing factors, as was the societal shift in the perception of women's roles."
But surely the Equal Pay Act, if it had any effect, must have, all other things equal, slowed the assimilation of women into the labor market. When a group is discriminated against, as women clearly were at the time [I think of some of the stories Milton Friedman's secretary Gloria Valentine, told me about how women were treated in the 1960s when she worked for Continental Bank], narrowing the pay differential reduces the cost of discriminating and, therefore, leads to more discrimination than otherwise. It's surprising that Levitt, in particular, who hails Gary Becker's work on economics, misses this key insight from Becker's classic book, based on his dissertation, The Economics of Discrimination.

. Economics of terrorism.
Strength: solid reasoning and some great lines. My favorite: "[T]he kind of person most likely to be a terrorist is the kind of person most likely to . . . vote. Think of terrorism as civic passion on steroids."
Strength: Pointing out how well-coordinated terrorism, by spreading panic, can bring a country to its knees.
Weakness: Not pointing out that, in light of their reasoning, the TSA rules that have caused us to surrender a great deal of our freedom to travel and have significantly diminished the pleasure of travel (with, for example, the Big Brother 1984 warnings that come over the loudspeakers about every 15 minutes telling us to look for suspect bags or suspect people) are absurd. At times, they don't seem to care much about the larger social implications of their work.
Weakness: This one has already been pointed out by Bryan. The typical life insurance policy, contrary to their claim, does pay off in the event of suicide, but only the policy holder has had the policy for two years.

Comments and Sharing


COMMENTS (6 to date)
Andrew C writes:

This is an example of one of the few times I wish I wasn't reading a book on my Kindle, because it is hard to find quotes on the device, but I'm positive Levitt and Dubner have a few paragraphs discussing the impact terrorists can have even when they fail (i.e. Reid, the shoe bomber), and most of this impact is discussed in terms of TSA regulations.

Art Billips writes:

Could you address one of the many other fallacies I thought I saw? Drunk Walking and drunk driving were both compared on a per-mile basis.

It would seem like time spent is the much more relevant measure.

So that walking for ten minutes drunk and driving for ten minutes drunk -- it would seem like there is no comparison in the danger posed to self and others, even though the driver covers much more distance. A careful reader could overlook (if it is there at all -- I missed it) the point that accidents involving cars are much more likely to be severe and involve injuries to others.

Eric H writes:

"Cute" is exactly the word. I felt the same way after reading Freakonomics. That's an incentive for general readership. Malcolm Gladwell gives me the same feeling too. His work is laden with the kind of ironic twists today's young urban professionals find appealing.

Bjorn writes:

Wasnt (some) the point of a terrorist buying life insurance that terrorists normaly do not do this and therefore detecting the terrorist with an algoritm would be harder?

Levitt says something like even though the term suicide bomber hides alot of the murder that goes on it is still suicide and life insurance arent usually paid out to "suicide victims" like these.

David R. Henderson writes:

Andrew C,
You're absolutely right. They do discuss the Richard Reid shoe bomber case and how that led to the government forcing us all to take off our shoes. But they're wrong to say, as they do, "he levied a tax." The government levied the tax. It chose to do so. I'm not positive that people demanded this: I see this as a panicked government. Notice that the main lesson of the Richard Reid event was not learned, just as the main lesson of United #93 was not learned: namely that when passengers are aware of the payoff matrix, they can take care of things themselves.

Art Billips,
I disagree that they got the drunk walking and drunk driving comparison wrong. Remember that the whole point, when you leave the bar, is to get home. The distance is almost the same whether you're driving or walking.


JR writes:

"Could you address one of the many other fallacies I thought I saw? Drunk Walking and drunk driving were both compared on a per-mile basis. "

That wasn't the problem with the chapter. There were others however as Ezra Klein explains: http://voices.washingtonpost.com/ezra-klein/2009/10/the_shoddy_statistics_of_super.html

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