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Why do so many drug dealers live with their mothers? What do real estate agents
have in common with the Ku Klux Klan? What circumstances lead both school
teachers and sumo wrestlers to cheat? In his new book Freakonomics: A Rogue
Economist Explores the Hidden Side of Everything, Steven Levitt, a University of
Chicago professor and economist, tackles these and a host of other unorthodox
riddles that more conventional thinkers often leave unasked. Using the tools of
economics and endless reams of data, Levitt and his coauthor, Stephen J. Dubner,
unearth answers that are as surprising as they are controversial. Levitt spoke
to Worth features editor Douglas McWhirter about the practical realities of Roe
v. Wade, the social decline of girls named Britney and why truth and trouble so
often go hand in hand.
Though you are an economist, you often ask and answer the kinds of questions
that normally fall to sociologists, psychologists and political scientists. This
does not seem at all like the “dismal science.”
I don’t think of economics as a subject matter of topics. I think of it as a
set of strategies and approaches for understanding the world.
The way I look
at it is that economics got dealt a great set of tools and a lousy set of
topics. The tools of economics have been very valuable in understanding the
complex workings of the economy. I try to use these tools to tackle some of the
more interesting topics that other disciplines have traditionally owned.
Many people would rather not discuss some of the topics you take up in your
book—abortion, crime, race and class, among others.
A lot of the conventional wisdom of how we view the world is dictated by what
we want the world to look like, as opposed to how it really is. In my work,
I cast aside any sense of political correctness, any emphasis on morality
and ethics, and try to describe the world as it is. Sometimes when you follow
that path, it takes you to places that can be disconcerting, even freaky. I do
not go looking for trouble, but I am also not afraid to look in places where
trouble might be hiding.
Trouble was definitely hiding in the statistical connection you and your
colleague John Donohue made in 2001 between legalized abortion and the national
decrease in crime. What question did you hope to answer in studying this most
contentious topic?
We come at abortion from a perspective that is completely different from
other people. We are not asking whether abortion is right or wrong, or whether
it should be legal or not. We use abortion simply to try to understand why there
was a decrease in the crime rate in the ’90s. This drop in crime was amazingly
large, and if you look at the other explanations for why this happened, none of
them really works. As surprising as this may seem, legalized abortion in the
1970s—both from a theory perspective and from the data—is an important
explanation of why crime fell in the ’90s.
The idea is pretty simple:
Unwanted children are at risk of becoming criminals when they grow up. Legalized
abortion reduced the number of unwanted children. When you put those two
together, legalized abortion should reduce the amount of crime. When you go to
the data, it is really quite compelling that the patterns we see are quite
consistent with this idea.
It might seem strange, but as divisive as our
discussion of this topic may seem, in the end I think it is unifying. The point
we come to is that we should try to do what we can to keep unwanted children
from growing up unwanted. Abortion, I think we can all agree, is one of the
least effective ways of doing that.
Are you concerned that either side in the abortion debate might want to use
these findings to further its agenda?
This is actually one finding that no one wants to use. There is no one who
likes the fact that abortion reduces crime. It outrages those who are pro-life.
I agree completely that if abortion is murder, then the focus on homicides that
stem from legalized abortion is ludicrous. On the other side, if you think that
a woman’s right to choose is paramount, who cares whether or not a few lives
would be saved here or there by legalized abortion. It is just not important.
Our analysis was not really about abortion at all. It was about crime, and maybe
unwantedness.
You state that “incentives are the cornerstone of modern life.” What do you
mean by that?
We mean that in our every activity, almost from birth, there is
an incentive scheme out there that rewards certain kinds of behaviors and
punishes other kinds of behaviors. There are financial incentives and moral
incentives, but it goes far beyond that. Our basic premise is that people do the
best they can to get the most they can for themselves. They do that by
responding to the incentives that are presented to them in ways that generally
make sense. If you can identify the incentives a person has, that is about as
good a baseline for predicting behavior as you are going to find.
You specifically examine the incentives that lead Chicago school teachers,
white-collar workers who eat bagels and sumo wrestlers to cheat. Based on your
findings, does everyone cheat?
I think our view of human nature is not that people are good or bad; it is
that people are sometimes good and sometimes bad. It all depends upon the
incentives they face. We find that sumo wrestlers, white-collar workers buying
bagels and elementary school teachers will all cheat sometimes. But then again,
many times they won’t cheat. What we try to do in each case is to use data that
were collected for completely different purposes to lay bare hidden behaviors in
these three groups.
In another chapter, you note the similarity between the organizational chart
of McDonald’s and that of a Chicago crack gang. Which organization operates more
efficiently?
They do have the same structure, and in fact, many of the same kids who are
selling drugs for the gang are working at McDonald’s at the same time. But I
think without question McDonald’s is the more efficient of the two. It has the
advantage of not having to carry out its activities in a clandestine
manner.
The other difference that makes the gang less efficient is that the
best way to move up in the gang is to kill your superior and take over in a
violent manner. There are more humane ways of promotion in McDonald’s that make
it a more efficient operation.
You try to determine statistically if those with distinctly black names, for
example, Roshanda or DeShawn, suffer an economic penalty in our society. Does
the name one is given affect life outcomes?
We find the name you are given does not impact your life. However, the
circumstances you are born into affect the name that you are given and the life
you lead. So, for instance, young, single African-American mothers are more
likely to choose unique names that no one else has than are, say, middle-class,
white, married parents. It is not the name Emily or LaToya that causes
differences in life outcomes. Rather, it is the age and socioeconomic status of
the parent, and several other factors.
The way we answer this question is to
look at every child born in California over a 40-year period. We look at their
circumstances at birth, and compare their life circumstances 20 or 30 years
later when they themselves give birth and their child’s birth certificate enters
the data set.
What factors drive the migration of a name’s popularity through different
socioeconomic strata? Britney was considered a very posh name a few years
back.
The pioneers in names tend to be very highly educated parents. These people
start trends with names. Over time, as names become popular, they tend to work
their way down the socioeconomic ladder. For instance, a name like Britney was
considered very classy in the ’70s. Now it is actually a name that is a very
strong signal of low socioeconomic status. What appears to happen is
less-educated parents see what the highly educated parents are naming their
kids. Once a name is adopted by less-educated parents, highly educated parents
abandon the name and move on to a new set of names.
You turn the conventional wisdom of parenting on its ear by suggesting that
good parents are defined not by what they do, but by who they are. What should
obsessive parents who force their children to watch Baby Mozart DVDs take from
this?
Our answer would be to relax. There is little evidence in the data that
particular activities that parents engage in with their child have a noticeable
impact on early test scores. For instance, in the data, we see that reading to
your children or taking your children to museums has no impact on how they will
ultimately perform in schools.
It is not that parents aren’t important. It just seems that the decisions you
make that are important to your child’s outcome really happen much earlier in
life. We do find important differences in children’s test scores based on the
educational level and socioeconomic status of their parents, as well as the age
of their parents. That leads us to think it is who you are, not what you do,
that is most important in raising children.
While conclusions like this may seem like common sense, they may also be
politically incorrect. Would you be interested in such topics if they were
not?
I don’t think there is anything per se attractive to me about forbidden
topics. I think, rather, the reason my work has taken me in that direction is
because those are the areas that no one else is thinking about carefully. As a
consequence, we often have the wrong ideas or perceptions about the answers. My
own rule, which I have had since I began as an economist, is to study questions
that I find interesting. I have never worried whether or not anyone else might
find them interesting.
Photograph by Kristofer Dan-Bergman. |