Book Review: SuperFreakonomics

Last Updated on 10 months by Piyush Jain


SuperFreakonomics: Global Cooling, Patriotic Prostitutes and Why Suicide Bombers Should Buy Life Insurance

by Stephen J. Dubner, Steven D. Levitt (Rating – ⅘, 1024 reviews)

Book Review

The book is a sequel to the book “Freakonomics.” The authors further retrospect on their thinking while they wrote the previous book. They find that they could extend their thinking also, and see many aspects of the economy linked to behavior and value system the society holds as Gary Becker states it. Gary Becker won the Nobel prize in 1992. Behavioral economics has now become a field of study. 

The decisions are important aspects of life, as one does not live life, they live the decisions (I realize this, not the authors).

Buying an item to check a new variety in grocery isn’t the same as having a baby. Baby is a long term commitment and has an impact on your finances.

In case you are drunk after a party, and want to go home which is a mile away, would you walk or drive? The authors state that deaths due to drunk driving are less than when walking drunk walking. But a drunk driver can kill someone while a drunk walker will not.

The authors state about the bad condition of women’s treatment in India, and further state that how is the birth and life of women seen in India. Though the government spread a lot of about the women empowerment, still a television at home made a stark difference. The women learned to stand and fight for their rights.

Is a solution to one problem, end to all problems? The authors give an example wherein in New York City, there were 200,000 horses for transportation in 1900. This lead to a lot of horse dung. The city was loaded with 5 million pounds of dung every day. The city was stinking, unhygienic, as well as there was 1 death per 17k residents due to the horse carriages accidents. Then came in automobiles, which ran on electricity or fuel. This did reduce the number of deaths (to 1 per 30 k in 2007) and reduced the pungent smell in the city. But this raised the pollution to a great extent. Now the problem has risen from the ground to the air. 

The authors repeat a similar example of insurance against terrorist attacks. Shark attack though just 68 a year was exaggerated, in which only 4 were fatal, compared to 200 elephant attacks worldwide. This depended on the reach of the press to the accident sites, how it was projected in media.

The authors use various professions to convey their learnings. He also states that the learnings are of 2 categories. 1st is that the learnings which you thought you knew, while you did not. And the 2nd learnings are those which you thought you did not know while you knew them.

Read the book. It is filled with tons of facts, exceptions, studies conducted, outcomes of the policies implemented, and evolution of the practices in the society with technology and time.

Chapter 1: HOW IS A STREET PROSTITUTE LIKE A DEPARTMENT-STORE SANTA?

Sudhir Venkatesh enters again. The authors retake his help in understanding the prostitution market in Chicago. Initially, the authors state the difference in the wages of a store worker and a prostitute. Further, they explain various factors in the same. Like who is the client, white or black, is the pimp involved, and many other factors.

One crucial learning which we get from this chapter is that to stop prostitution, why does the law not prohibit prostitution? Why do they catch the people who go to the prostitutes? It was found that if some commodity like drugs or prostitution is banned, it will lead to stopping the business, but that business will become a niche. People will still do the business but charge higher for services. So better to catch people using the service and decrease the demand instead of the supply. The same is the case with Pan-masala, where the government tries to create impediments in demand and not the supply. They ban the pan masala but do not stop the manufacturer.

Whenever the pimp was involved in prostitution, the change of violence decreased as the pimp would screen the client. The pimp would also handle the police. Is this the same as a real estate agent? It depends. As both are doing the same type of work, but when the internet has come in, the middleman’s’ role has decreased.

The authors further discuss the point of why there is a wage difference between genders. Even

The best of the education, exposure, and opportunity maintained the difference. Though this decreased over time, the female gender went ahead with the lower-paying jobs, while males concentrated on the high paying jobs. Could it be that men have a weakness for money just as women have a weakness for children? In 2 experiments conducted based on the exam, in the 1st one, the payment was based on participation. In the 2nd experiment, the payment was based on the exam score; the male participants completely out-performed the female participants. Even highly educated women married to similar counter-part males, later on, went to have less focus on careers. Even change in gender did not change the fact. Few people who went from male to female, got a wage cut, while those who went ahead from female to male got a wage increase.

Chapter 2: WHY SHOULD SUICIDE BOMBERS BUY LIFE INSURANCE?

In this chapter, the authors state various facts that are contrary to our beliefs.

  1. Terrorists come from poor and uneducated families. Instead, they are well educated and well-off. They have misaligned their life objectives.
  2. A failed terrorist is also successful. An example is the shoe bomber. Though he could not inflict any damage, he induced terror in the life of people. Now Americans spend more than 1065 years per year in shoe checking at the airport, which is equivalent to 14 lives every year.
  3. The authors state that there are some symptoms of someone who may possibly be a terrorist or not. A terrorist knows that he has to die someday soon. The profile would be something like this.
    1. The first and last name is Muslim.
    2. Aged between 26 to 35 years.
    3. Not married and a student.
    4. Does not have a savings account (Equivalent to a fixed deposit account in India)
    5. Does not take life insurance.
    6. Does not take money out of the ATM on Fridays.
    7. Live in the vicinity of a mosque.
  4. Agencies could identify these traits and catch someone. So in case one has to hide in the haystack, he should buy a life cover.
  5. The author also states various other examples that lead to an outcome of whether the patient will get well or not. It depends on various factors.
    1. Doctor the person is going to. A good doctor may not necessarily be able to save the patient. It depends on what state is the patient in.
    2. Many diseases are such that the outcome is known and the medicines and procedures are useless, but people keep spending money on it.
    3. Many people’s wish to live to see a festival or an occasion also decides until when they live.

Chapter 3: UNBELIEVABLE STORIES ABOUT APATHY AND ALTRUISM

In 1964, in the suburbs of Chicago, 38 people witnessed a murder of Kitty Genovese, and that too in 2 attempts. The whole society wondered why did not anybody object, intervene? The murderer after committing the grizzly crime sat in his car and drove off.

Was the society so alone, so isolated that they did not have feelings for each other? The author states that it is that altruism depends on many factors. It is the values, society, times you are in; the situation different is in the lead to this decision. Generosity also depends on incentives.

Further, the author gives detailed analysis of 2 games, the ultimatum and dictator game. Both these games have various situations and how people react to it. Generally, it is seen that in case of donations for calamities, one can at most part with 20% of his money. Further, depending on how much information one has, he may even ask for money in different situations, instead of giving. This may be a situation in a dictator rule. Gary Becker and John August List did a lot of experiments on this and published their findings in various journals. Gary Becker also received a Noble prize (along with Daniel Kahneman), for his study.

The authors give a good example where the patients in the US have to wait for someone to donate their kidney, while in Iran, since the donor gets a set amount from the patient, there is no waiting list. Even though the US is said to be a developed country, still the law of the land does not allow any guaranteed financial benefit for donating the kidney. Incentive too promotes altruism.

Finally coming back to the murder in 1964, did anyone not intervene? Why did the murderer run away after the first attempt? Because, someone intervened, and shouted at him. He in fear of being recognized ran away. Someone did call the police, but those days, calling the police took time. Police did come but after 2nd time the murdered came and killed her.

Chapter 4: THE FIX IS IN—AND IT’S CHEAP AND SIMPLE

A decrease in the number of deaths by cardiac arrest was due to development of good surgical procedures and advanced surgery. No. As new cheap drugs like aspirin, heparin, and other beta-blockers.

Did the number of road accident deaths decrease from 1950 till now? No. But the rate did decrease. People are covering many more miles than in 1950. Why did the death rate decrease? Is it better cars? No. It was the seat belts. Earlier, Ford introduced seat belts in cars. It’s acceptance increased, and the death rate decreased. Read the book for more understanding of Robert McNamara. He is the same guy who handled the Cuban missile crisis.

Why did the death rate in the hospitals decrease from 1850 to 1900? Was it a better process? No. A simple process like keeping a clean and germ-free process decreased the death rate.

We think that the hurricanes and cyclones devastate the surroundings. But they are not the culprit. It is global warming. The number of instances will rise as the temperature of the oceans will increase.

Did the ADA (American Disability Act) promote employment for disabled people in the US? No.

The Endangered Species Act is endangering rather than protecting species. People removed the trees and other things that may invite the endangered species to come over there.

A lot of big problems have very simple solutions. We have to just figure them out.

Chapter 5: WHAT DO AL GORE AND MOUNT PINATUBO HAVE IN COMMON?

The authors discuss externalities and global warming. It outlines how economics does not necessarily take environmental issues into account. While interviewing Nathan Myhrvold and Ken Caldeira from Intellectual Ventures, the authors posit an alternative way of solving global warming by stratospheric aerosol injection.

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