Excerpt from Freakonomics by Steven Levitt, Stephen J. Dubner, plus links to reviews, author biography & more

Summary |  Excerpt |  Reading Guide |  Reviews |  Readalikes |  Genres & Themes |  Author Bio

Freakonomics

A Rogue Economist Explores the Hidden Side of Everything

by Steven Levitt, Stephen J. Dubner

Freakonomics
  • Critics' Opinion:

    Readers' Opinion:

  • First Published:
    Apr 2005, 256 pages
    Paperback:
    Apr 2006, 256 pages

  • Rate this book


Buy This Book

About this Book

Print Excerpt


There's one way to find out: measure the difference between the sales data for houses that belong to real-estate agents themselves and the houses they sold on behalf of clients. Using the data from the sales of those 100,000 Chicago homes, and controlling for any number of variables -- location, age and quality of the house, aesthetics, and so on -- it turns out that a real-estate agent keeps her own home on the market an average of ten days longer and sells it for an extra 3-plus percent, or $10,000 on a $300,000 house. When she sells her own house, an agent holds out for the best offer; when she sells yours, she pushes you to take the first decent offer that comes along. Like a stockbroker churning commissions, she wants to make deals and make them fast. Why not? Her share of a better offer -- $150 -- is too puny an incentive to encourage her to do otherwise.


Of all the truisms about politics, one is held to be truer than the rest: money buys elections. Arnold Schwarzenegger, Michael Bloomberg, Jon Corzine -- these are but a few recent, dramatic examples of the truism at work. (Disregard for a moment the contrary examples of Howard Dean, Steve Forbes, Michael Huffington, and especially Thomas Golisano, who over the course of three gubernatorial elections in New York spent $93 million of his own money and won 4 percent, 8 percent, and 14 percent, respectively, of the vote.) Most people would agree that money has an undue influence on elections and that far too much money is spent on political campaigns.

Indeed, election data show it is true that the candidate who spends more money in a campaign usually wins. But is money the cause of the victory?

It might seem logical to think so, much as it might have seemed logical that a booming economy in the 1990s helped reduce crime. But just because two things are correlated does not mean that one causes the other. A correlation simply means that a relationship exists between two factors -- let's call them X and Y -- but it tells you nothing about the direction of that relationship. It's possible that X causes Y; it's also possible that Y causes X and it may be that X and Y are both being caused by some other factor, Z.

Consider this scenario: cities with a lot of murders also tend to have a lot of police officers. Let's now look at the police/murder correlation in a pair of real cities. Denver and Washington, D.C., have about the same population -- but Washington has nearly three times as many police as Denver, and it also has eight times the number of murders. Unless you have more information, however, it's hard to say what's causing what. Someone who didn't know better might contemplate these figures and conclude that it is all those extra police in Washington who are causing the extra murders. Such wayward thinking, which has a long history, generally provokes a wayward response. Consider the folktale of the czar who learned that the most disease-ridden province in his empire was also the province with the most doctors. His solution? He promptly ordered all the doctors shot dead.

Now, returning to the issue of campaign spending: in order to figure out the relationship between money and elections, it helps to consider the incentives at play in campaign finance. Let's say you are the kind of person who might contribute $1,000 to a candidate. Chances are you'll give the money in one of two situations: a close race, in which you think the money will influence the outcome; or a campaign in which one candidate is a sure winner and you would like to bask in reflected glory or receive some future in kind consideration. The one candidate you won't contribute to is a sure loser. (Just ask any presidential hopeful who bombs in Iowa and New Hampshire.) So front-runners and incumbents raise a lot more money than long shots. And what about spending that money? Incumbents and frontrunners obviously have more cash, but they only spend a lot of it when they stand a legitimate chance of losing; otherwise, why dip into a war chest that might be more useful later on, when a more formidable opponent appears?

The foregoing is excerpted from Freakonomics by Steven D. Levitt and Stephen J. Dubner. All rights reserved. No part of this book may be used or reproduced without written permission from HarperCollins Publishers, 10 East 53rd Street, New York, NY 10022

Membership Advantages
  • Reviews
  • "Beyond the Book" backstories
  • Free books to read and review (US only)
  • Find books by time period, setting & theme
  • Read-alike suggestions by book and author
  • Book club discussions
  • and much more!
  • Just $10 for 3 months or $35 for a year
  • More about membership!
Member Benefits

Join Now!

Check the advantages!
Just $10 for 3 months or $35 for a year

    •  
    • FREE
    • MEMBER
    • Range of media reviews for each book
    • Excerpts of all featured books
    • Author bios, interviews and pronunciations
    • Browse by genre
    • Book club discussions
    • Book club advice and reading guides
    • BookBrowse reviews and "beyond the book" back-stories
    •  
    • Reviews of notable books ahead of publication
    •  
    • Free books to read and review (US Only)
    •  
    • Browse for the best books by time period, setting & theme
    •  
    • Read-alike suggestions for thousands of books and authors
    •  
    • 'My Reading List" to keep track of your books
    •  

Editor's Choice

  • Book Jacket: A Certain Age
    A Certain Age
    by Beatriz Williams
    Lovers of high-society gossip, there's a new set of players in town. A good 20 out of 23 of our...
  • Book Jacket: The Romanovs
    The Romanovs
    by Simon Sebag Montefiore
    The Romanovs chronicles the reigns of the 20 individuals who were considered members of that dynasty...
  • Book Jacket: Barkskins
    Barkskins
    by Annie Proulx
    Barkskins, by Annie Proulx, is not a book to read quickly. After a month of slow reading, I ...

First Impressions

  • Book Jacket

    The Secret Language of Stones
    by M. J. Rose

    "A fantastic historical tale of war, love, loss and intrigue."
    – Melanie Benjamin

    Read Member Reviews

  • Book Jacket

    The Imperial Wife
    by Irina Reyn

    A smart, engaging novel that parallels two fascinating worlds and two singular women.

    Read Member Reviews

Members review books pre-publication. Read their opinions in First Impressions

Book Discussions
Book Jacket
Spinster
by Kate Bolick

A bold, original, moving book that will inspire fanatical devotion and ignite debate.

About the book
Join the discussion!
Summer Stunner
Summer Giveaway

Win 5 books, each week in July!

Enter

Word Play

Solve this clue:

W M T N, W C F All

and be entered to win..

Books that     
entertain,
     engage

 & enlighten

Visitors can view some of BookBrowse for free. Full access is for members only.

Join Today!

Your guide toexceptional          books

BookBrowse seeks out and recommends books that we believe to be best in class. Books that will whisk you to faraway places and times, that will expand your mind and challenge you -- the kinds of books you just can't wait to tell your friends about.

 
X

BookBrowse Summer Giveaway

We're giving away
5 books every
week in July!