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BookReview: Freakonomics : A Rogue Economist Explores the Hidden Side of Everything
by Steven D. Levitt, Stephen J. Dubner, William Morrow, May 1, 2005, 006073132X

Levitt is the economist, and Dubner is a New York Times writer. Levitt became famous after he stated his theory that abortions were behind the drop in crime in the 90s. Dubner is an excellent writer.

The book is irreverent about everything. Data give us information about the world that is often hard to refute, even if it fights "conventional wisdom" or political correctness. Like Jamie Whyte, cool logic replaces punditism. The book is a fast and excellent read. He asks brilliant questions like, "Why do drug dealers live with their moms?" And then goes on to prove why this makes sense (only the gang leader(s) make money). He shows how real estate agents keep their own house on the market an average of 10 days longer, and therefore receive an average of $10,000 more than their customers' houses.

[p70] If you were to assume that many experts use their information to your detriment, you'd be right. Experts depend on the fact that you don't have the information they do. Or that you are so befuddled by the complexity of their operation that you wouldn't know what to do with the information if you had it. Or that you are so in awe of their expertise that you wouldn't dare challenge them. If your doctor suggests that you have angioplasty-even though some current research suggests that angioplasty often does little to prevent heart attacks you aren't likely to think that the doctor is using his informational ad vantage to make a few thousand dollars for himself or his buddy.

[p89] It was John Kenneth Galbraith, the hyperliterate economic sage, who coined the phrase "conventional wisdom." He did not consider it a compliment. "We associate truth with convenience," he wrote, "with what most closely accords with self-interest and personal well-being or promises best to avoid awkward effort or unwelcome dislocation of life. We also find highly aceptable what contributes most to self-esteem." Economic and social behavior, Galbraith continued, "are complex, and to comprehend their character is mentally tiring. Therefore we adhere, as though to a raft, to those ideas which represent our understanding."

So the conventional wisdom in Galbraith's view must be simple, convenient, comfortable, and comforting--though not necessarily true.

[p99] So how did the gang work? An awful lot like most American businesses, actually, though perhaps none more so than McDonald's. In fact, if you were to hold a McDonald's organizational chart and a'Black Disciples org chart side by side, you could hardly tell the difference. The gang that Venkatesh had fallen in with was one of about a hundred branches-franchises, really-of a larger Black Disciples or1ization. J. T., the college-educated leader of his franchise, reported to a central leadership of about twenty men that was called, without irony, the board of directors. (At the same time that white suburbanites were studiously mimicking black rappers' ghetto culture, black ghetto criminals were studiously mimicking the suburbanites' dads' corp-think.) J. T. paid the board of directors nearly 20 percent of his revenues for the right to sell crack in a designated twelve-square-block area. The rest of the money was his to distribute as he saw fit.

Three officers reported directly to J. T.: an enforcer (who ensured e gang members' safety), a treasurer (who watched over the gang's liquid assets), and a runner (who transported large quantities of drugs and money to and from the supplier). Beneath the officers were the street-level salesmen known as foot soldiers. The goal of a foot solder was to someday become an officer. J. T. might have had anywhere from twenty-five to seventy-five foot soldiers on his payroll at any given time, depending on the time of year (autumn was the best crack-selling season; summer and Christmastime were slow) and the size of the gang's territory.

[p117] 1966, one year after Nicolae Ceausescu became the Communist dictator of Romania, he made abortion illegal. "The fetus is the property of the entire society," he proclaimed. "Anyone who avoids having children is a deserter who abandons the laws of national continuity."

[p118] The abortion ban stayed in effect until Ceausescu finally lost his grip on Romania. On December 16, 1989, thousands of people took to the streets of Timisoara to protest his corrosive regime. Many of the protestors were teenagers and college students. The police killed dozens of them. One of the opposition leaders, a forty-one-year-old professor, later said it was his thirteen-year-old daughter who insisted he attend the protest, despite his fear. "What is most interesting is that we learned not to be afraid from our children."

[p119] Of all the Communist leaders deposed in the years bracketing the collapse of the Soviet Union, only Nicolae Ceausescu met a violent death. It should not be overlooked that his demise was precipitated in large measure by the youth of Romania--a great number of whom, were it not for his abortion ban, would never have been born at all.

[p129] First, the drop in crime in New York began in 1990. By the end of 1993, the rate of property crime and violent crime, including homicides, had already fallen nearly 20 percent. Rudolph Giuliani, however, did not become mayor-and install Bratton-until early 1994. Crime was well on its way down before either man arrived. And it would continue to fall long after Bratton was bumped from office.

Second, the new police strategies were accompanied by a much more significant change within the police force: a hiring binge. Between 1991 and 2001, the NYPD grew by 45 percent, more than three times the national average. As argued above, an increase in the number of police, regardless of new strategies, has been proven to reduce crime. By a conservative calculation, this huge expansion of New York's police force would be expected to reduce crime in New York by 18 percent relative to the national average. If you subtract that 18 percent from New York's homicide reduction, thereby discounting the effect of the police-hiring surge, New York no longer leads the nation with its 73.6 percent drop; it goes straight to the middle of the pack. Many of those new police were in fact hired by David Dinkins, the mayor whom Giuliani defeated. Dinkins had been desperate to secure the law-and-order vote, having known all along that his opponent would be Giuliani, a former federal prosecutor. (The two men had run against each other four years earlier as well.) So those who wish to credit Giuliani with the crime drop may still do so, for it was his own law-and-order reputation that made Dinkins hire all those police. In the end, of course, the police increase helped everyone-but it helped Giuliani a lot more than Dinkins.

[p141] There are even more correlations, positive and negative, that shore up the abortion-crime link. In states with high abortion rates, the entire decline in crime was among the post-Roe cohort as opposed to older criminals. Also, studies of Australia and Canada have since eslblished a similar link between legalized abortion and crime. And the post-Roe cohort was not only missing thousands of young male criminals but also thousands of single, teenage mothers-for many of the aborted baby girls would have been the children most likely to replicate their own mothers' tendencies.

To discover that abortion was one of the greatest crime-lowering factors in American history is, needless to say, jarring. It feels less Darwinian than Swiftian; it calls to mind a long ago dart attributed to G. K. Chesterton: when there aren't enough hats to go around, the problem isn't solved by lopping off some heads. The crime drop was, the language of economists, an "unintended benefit" of legalized abortion. But one need not oppose abortion on moral or religious grounds to feel shaken by the notion of a private sadness being converted into a public good.

Via Rob 2006
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