A Rogue Economist Explores the Hidden Side of Everything - Book Report/Review Example

 Freakonomics: A Rogue Economist Explores the Hidden Side of Everything Background The Freakonomics: A Rogue Economist Explores Levitt & Dubner write the Hidden Side of Everything book. Levitt is a known specialist in studying economics, and he won an award, for the best economist in America, the John Bates Clark Medal. Dubner was an editor and a writer for the New York magazine known as Times Magazine. Dubner was a journalist; he used to interview several economists for the Times Magazine. And that is how he met with Levitt and was amused by his way of approaching economics subjects (Levitt & Dubner, 2014). The motivation of Levitt was from the daily life riddles and curiosity of knowing how the world economy operates. According to Levitt, economics is a science that can give answers to questions and to ask questions in order to know how the world works. Levitt has many questions that only the knowledge of the economy can be able to answer the questions. For example: why do drug dealers stay with their mothers if they make a lot of money from drug business? Between a swimming pool and a gun, which one is more dangerous? Is the interest of the clients at the heart of the real estate agents? And how is a homeless person able to afford headphones worth $50 yet he has tattered clothes? Levitt uses his personal investigations to elaborate how individuals satisfy their needs. This curiosity attracted many readers for the New York Times Magazine that made Dubner more famous (Levitt & Dubner, 2014). Since Levitt was not a good writer, he collaborated with Dubner, and both wrote the Freakonomics: A Rogue Economist Explores the Hidden Side of Everything book. Dubner had featured an article by Levitt in the New York Magazine that was about the hidden side of everything. The aim of Levitt is to reach all people in New York and America at large to explain the hidden things about everything. The science of economy could only answer his questions. His arguments were academic and hence the book helped the students understand the concept of economics and how it operated in the world. The importance of this book has made the concept of economy, easier for students to understand and more interesting to learn. It is because most students looked at economics as a difficult subject to learn and to understand. Summary The book has six chapters that talk about the interesting topics and arguments that the writers were able to discover from the ordinary life of people. Chapter one is about the similarities between the Schoolteachers and Sumo Wrestlers (Levitt & Dubner, 2014). In this chapter, both the Sumo Wrestlers and Schoolteachers have the power of incentives. The incentive is a powerful tool that can control the behavior of human beings. The core task of teachers is to test their students at the end of the term to measure how much they have understood the subjects taught. Sumo Wrestling is in Japan, and the winner is always awarded and this has brought about dishonesty and rigging, the writers say. Other themes featured in this chapter are: cheating and consumer behavior, “something that is worth to have is worth lying for”. And the government regulations that are seen in the form of taxes and regulations in the market. Chapter two shows the relationship between the Ku Klux Klan and real-estate agents (Levitt & Dubner, 2014). The objective of the writers is to demonstrate the difference between the haves and have-nots. Do the real estate agents have the interest of the clients at heart? The agents have a better understanding of the market forces revolving around house renting than the buyers. The Klan’s organization had coded greetings and took away power in secret. In this chapter, it explains the concept of demand and supply economic concept, the competition in the market and the innovation in the technology. In chapter three, Levitt and Dubner explain why drug dealers live with their mothers if they may make such big money in the business. The theme in this chapter is the wisdom in relation to drug traffickers, and why they live with their mothers yet they are rich. The economic concepts that are seen in this chapter are: variable and fixed costs of production, demand, and supply and equilibrium price (Levitt & Dubner, 2014). Chapter four talks about the significant drop in crime and the writers are asking, “Where have the criminals gone to?” There is a drop in crime rates since 1990s and one of the contributing factors is the legalized abortion that happened in 1973. Chapter five discusses issues that are surrounding parenthood. What makes a parent perfect? The case study was to examine the children at school and how the parents continually get educated while raising the children. The society thinks that children who perform well in school work have the best parents while children who perform poorly their parents are less concerned. In economics, this is related to the concept of market failure and scarcity of resources (Levitt & Dubner, 2014). The parents are the sole caretakers of their children and should provide for them according to their needs so that they can be satisfied and protected from injuries. Finally, Chapter Six explores more on parenting and how they name their children. The writers highlight that names of children are predictors of their success Economic concepts, theories and models The concept of incentive is the root of economics, and it has been used in this book to explain how people get what they need or want. For example, if a child excels in the exams, the parent will buy him or her bicycle. This incentive will motivate the student to work hard in school so that the parent can award him/her a bike. The book brings out an incentive as a way of encouraging people to have a positive behavior. On the other hand, motivation can make people dishonest. Suppose a pint of blood went up to $5, 000, people donating blood would drastically rise. People would even give pigs’ blood through faking the identity in order to get the money. That is why W. C. Fields said, “Something that is worth to have is worth lying for.” In addition, teachers would be tempted to be dishonest when giving out the records of the children in order to get the stated incentive of, for example, $25,000. The economic theory of demand and supply is also depicted in this book. The case study is in chapter three which talks about why the drug dealers live with their mothers yet they are rich. This principle that the drug traffickers operate with. When the drug sellers are many and are willing to sell the drugs for a gang, it raises competition, and the wages are low because they are many who are willing to sell. The best time to sell the drugs is when there are no many people willing to sell because the wages will be high. In addition, the real estate agent operates on this principle (Levitt & Dubner, 2014). When the demand for houses is high, the prices will usually go high; when the demand is low the rates will drop down to an affordable price. That is why Levitt asks in the book if the real estate agents usually have the best interests of the clients at heart? According the demand and supply theory, they hardly consider their customers because they want to make maximum profits from the business. The demand and supply theory explains why demand is rising in the illegal market for guns and demand for weapons is reduced into the legal market. The introduction of the legal market for guns was to regulate the number of the guns being sold to the population. Due to the high restrictions on buying guns in the legal market, it led to a decrease in the demand. On the other side, the illegal or the black market flourished because it was easy to buy whatever type of guns. The demand increased in the illicit market than in legal markets, and they made more profits. Still the problem of arms circulation was not completely solved. The concept of market failure in economics is also explained in this book. Market failure is a situation where the markets do not supply the needs of the customer in a satisfactory way. The goods and services are inefficient, hence the resources are scarce and difficult to find. This situation has been related to the case study of parenthood. The parents are the immediate caretakers of their children, and they should supply the needs of the kids adequately. Insufficient materials to read is a form of failure that make a child perform poorly in class work. The perfectness of the parent is measured by how much the needs of the child are met as well as a good market is where the customers have access to surplus products and services. Critical review of the book’s arguments Levitt and Dubner have used concepts that are influential in supporting their discussion. There is a power of incentives in motivating good behavior and performance in children. This is also supported by research done in psychology studies that support extrinsic motivation. Children who are motivated by incentives perform better than those who do not have promised incentives. But the extrinsic motivation kills the intrinsic motivation of the student that is a self-driven personal initiative. On the other hand, incentives have highly contributed to the moral decay in the society. It makes people dishonest in their activities. It motivates people to cheat on things that are worth. For example, in the book, there is the case of incentives for donating blood. If it rises to $50,000, many people will fake their identification and give blood that is not good just for the money (Levitt & Dubner, 2014). The purpose of the incentive is to increase the number of people by donating blood in order to save lives. But, if the motivation price is very high, then it will lead to dishonesty and cheating. Demand and supply are seen from chapter one through the last chapter. This is a strong concept that governs the market forces. There is no time a market can be at equilibrium because of the changing rates in demand and supply of goods and services. When the request is high, the supply is small. In this condition, the customer is willing to pay more for the goods, and the supplier will be able to get more profits. Consequently, when the supply is high, there is great competition and the price drops (Levitt & Dubner, 2014). Therefore, the customer enjoys getting more of the goods at cheap prices. Then, the producers reduce the production because they are incurring costs. The strength of this theory is seen working in the drug business and real estate agents. A drug seller will prefer to sell drugs when there is no competition because the wage will be higher. Same to the real estate agents will prefer to sell houses when the demand is high so that they can realize more profits. It explains why the real agents do not have the best interest of the clients at heart because they are more concerned with making profits. In chapter five, there is the market failure discussion that has been related to the aspect of parenthood. It is true that the market can fail to supply the needs of the customers. But the book does not show the benefits of the market. The market can efficient users of the natural resources because it regulates how much to get from the environment. The market will only get a resource from the environment that the final cost of the product will be higher than the cost of production. It is an advantage because it will regulate the natural resource exploitation. Whereas, the supporting case study of the parenting is strong evidence towards market failure. It is because children who are for the haves perform better in school because the parents can meet their needs (Levitt & Dubner, 2014). On the other side, children from the have-nots will have been seen performing poorly because their needs are not well met. Also, they are vulnerable to risks and injuries because of the environment they stay in. Conclusion Incentives are definite sources of supporting healthy human behaviour. But when the incentive is too high, it will bring social problems like cheating and stealing. Therefore, the motivation price should be rational to support the positive behaviour. The parents should encourage their children to have intrinsic motivation and not depend more on incentives because it kills the natural type of motivation. Finally, the markets should aim at satisfying the needs of the clients at fair prices so that both the customer and the seller benefits. There is always a hidden something behind everything. Reference Levitt, S. D., & Dubner, S. J. (2014). Freakonomics: A Rogue Economist Explores the Hidden Side of Everything. New York: Morrow. Read More