Bryan Caplan  

The High Points of Superfreakonomics

Conservative != Libertarian... Now I Believe the Insurance In...
I just read my advance copy of Superfreakonomics.  Overall, it's better than the original.  It's still cutesy, but stronger in the "who cares?" factor.

The highlight: "What Do Al Gore and Mount Pinatubo Have in Common?," a surprisingly skeptical look at global warming, and a shockingly positive defense of geoengineering.  Levitt and Dubner don't seem ready for the Pigou Club:
But when it comes to actually solving climate-change externalities through taxes, all we can say is good luck.  Besides the obvious obstacles - like determining the right size of the tax and getting someone to collect it - there's the fact that greenhouse gases do not adhere to national boundaries... Thus, global warming.
In any case, why bother with taxes when we can fix warming for peanuts?  "Budyko's Blanket could effectively reverse global warming at a total cost of $250 million.  Compared with the $1.2 trillion that Nicholas Stern proposes spending each year to attack the problem, IV's idea is, well, practical free."

L&D's response to Al Gore is worth the Amazon price.  But in case you can't spare the $16.19:
Al Gore, meanwhile, counters with his own logic.  "If we don't know enough to stop putting 70 million tons of global-warming pollution into the atmosphere every day," he says, "how in God's name can we know enough to precisely counteract that?"

But if you think like a cold-blooded economist instead of a warm-hearted humanist, Gore's reasoning doesn't track.  It's not that we don't know how to stop polluting the atmosphere.  We don't want to stop, or aren't willing to pay the price.
There's also quite a bit of Hansonian displeasure with medicine, including an entertaining re-telling of the tale of Semmelweis, and some eye-opening cost-benefit analysis of chemotherapy:
More than $40 billion is spent worldwide each year on cancer drugs... The bulk of this spending goes to chemotherapy, which is used in a variety of ways and has proven effective on some cancers, including leukemia, lymphoma, Hodgkin's disease, and testicular cancer, especially if these cancers are detected early.

But in most other cases, chemotherapy is remarkably ineffective.  An exhaustive analysis of cancer treatment in the United States and Australia showed that the five-year survival rate for all patients was about 63 percent but that chemotherapy contributed barely 2 percent to this result.  There is a long list of cancers for which chemotherapy has zero discernible effect...
They might have gone a step further and said, "Overall, prayer is better than chemo.  At least prayer causes no pain."  Or if you're a Breaking Bad fan, "Walt was right!"

My main complaint about the book appears in the chapter "Why Should Suicide Bombers Buy Life Insurance?"  L&D guide readers through terrorism profiling, and report that lack of life insurance is predictor of terrorism.  Smart terrorists will therefore buy a policy to help avoid detection.  So far, so good. 

But when they're looking for a rational choice explanation, L&D fall back on a popular myth: "[L]ife insurance companies don't pay out if the policyholder commits suicide.  So a twenty-six-year-old family man who suspects he may one day blow himself up probably isn't going to waste money on life insurance."  As far as I have been able to determine, suicide exemptions are normally brief.  Two years is typical throughout the OECD.  In the U.K., where the profiler works, there are some complexities, but the exemption is roughly 1-2 years. 

Bottom line: Terrorist family men have extra incentive to buy insurance.  The fact that they don't is a new puzzle for the world's freakonomists to solve.  Could the reason be that terrorists have costly misconceptions about life insurance as well as the afterlife?

Admittedly, L&D are so clever I'm slightly worried that the myth of the strong suicide exclusion will turn out to be true after all.  Either way, their latest book passes one of my main tests for worthiness: If everyone read Superfreakonomics and believed it, the world would change for the better.

Comments and Sharing

COMMENTS (9 to date)
John Jenkins writes:

Does the average suicide bomber make the decision to commit suicide more than 1-2 years in advance? If not (and I would guess that "no" is the right answer), then doesn't their conclusion hold?

Lord writes:

Since the intent of suicide bombing is murder, it should fall under the criminal activities clause.

"If everyone read Superfreakonomics and believed it, the world would change for the better."

I'm not sure that's a great metric to judge books by. People make the same claim for the Bible. And even in a bizarro-universe where believing in that mess made the world better, I'd be pretty hesitant to endorse the Bible. But maybe I just value epistemic rationality a lot more than most people do.

David C writes:

From briefly glancing through the blanket website, ocean acidification isn't even mentioned. I'm guessing Budyko's Blanket does nothing to solve this related (and possibly much more serious) problem of global warming. Geoengineering seems to me like trying to fix a city's rat problem by releasing a bunch of snakes. And why would anybody want to risk the greatest mass extinction in the history of the Earth on a remote possibility of a breakthrough in the distant future that may or may not work?

Joe Torben writes:

You write "Could the reason be that terrorists have costly misconceptions about life insurance as well as the afterlife?"

I think the correct statement is "Could the reason be that terrorists have costly misconceptions about life?"

The answer, obviously, is yes.

JR writes:

Here is a critical, and it seems well-informed, take on the same bokk:

Michael Rulle writes:

"If everyone read Superfreakonomics and believed it, the world would change for the better."

Jacob beat me to the punch. It is an intriguing quote, but a tautology, I believe. It reminds me of the old joke about an economist's solution to the problem of getting off a deserted island.

"......first, assume we have a boat"

Michael Rulle writes:

Having said that, I think your point is worth pursuing. If we think the premises behind L&D's books are sound, how does one persuade the "polity" it would be better of---by their own standards---if our public policies mirrored these concepts. If belief is the only way, then we are doomed. These ideas must be made easier to understand--which I guess in part is what L&D are trying to accomplish.

But maybe my premise is wrong. Half the country pays no income tax. Who says they would be better off with different public polices? Maybe in the long run they would---but not this year or next.

Tim Lambert writes:
"Budyko's Blanket could effectively reverse global warming at a total cost of $250 million.

They arrive at this "total cost" by adding together a startup cost of $150 million and an annual running cost of $100 million. I am surprised that Bryan didn't notice the obvious problem with this calculation.

Comments for this entry have been closed
Return to top